Federal Reserve Bulletin, 2002-08

Volume 88 • Number 8 • August 2002 Federal Reserve BULLETIN Board of Governors of the Federal Reserve System, Washington, D.C. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

PUBLICATIONS COMMITTEE Lynn S. Fox, Chair • Jennifer J. Johnson • Karen H. Johnson • Stephen R. Malphrus • J. Virgil Mattingly, Jr. • Vincent R. Reinhart • Dolores S. Smith • Richard Spillenkothen • David J. Stockton 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 Christine S. Griffith, and Publications Services supervised by Linda C. Kyles. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Table of Contents 333 MONETARY POLICY REPORT TO THE exchange value of the dollar, should bolster U.S. CONGRESS exports. Finally, the exceptional performance of productivity has supported household and busi- The pace of economic activity in the United ness incomes while relieving pressures on price States picked up noticeably in the first half of inflation, a combination that augurs well for the 2002 as some of the powerful forces that had future. been restraining spending for the preceding year and a half abated. The economy expanded espe- 360 THE USE OF CHECKS AND OTHER cially rapidly early in the year. As had been NONCASH PAYMENT INSTRUMENTS anticipated, much of the first quarter's strength IN THE UNITED STATES in production resulted from the efforts of firms to limit a further drawdown of inventories after Statistical estimates indicate that the use of the enormous liquidation in the fourth quarter of checks in the United States has been declining 2001. Economic activity appears to have moved since the mid-1990s, even as the population and up further in recent months but at a slower pace the level of economic activity have been increasthan earlier in the year. ing. In contrast, the use of electronic payments Notable crosscurrents remain at work in the has been growing at high and accelerating rates. outlook for economic activity. Although some of Nonetheless, the paper check remains the prethe most recent indicators have been encour- dominant means of making retail payments and aging, businesses still appear to be reluctant to will likely continue to play a significant role add appreciably to workforces or to boost capi- in the U.S. payment system for the foreseeable tal spending, presumably until they see clearer future. The number and value of checks paid signs of improving prospects for sales and prof- varies across depository institutions according its. These concerns, as well as ongoing disclo- to type, size, and location, in part a result of sures of corporate accounting irregularities and differences in the use of checks and electronic lapses in corporate governance, have pulled payments by households, businesses, and govdown equity prices appreciably on balance this ernments. Overall, household's share of total year. The accompanying decline in net worth is checks written has increased relative to that of likely to continue to restrain household spending businesses and governments. in the period ahead, and less favorable financial market conditions could reinforce business 375 ANNOUNCEMENTS caution. Federal Open Market Committee directive. Nevertheless, a number of factors are likely to boost activity as the economy moves into the Nominations sought for Consumer Advisory second half of 2002. With the inflation-adjusted Council and notice of meeting. federal funds rate barely positive, monetary pol- Publication of revisions to Regulation C. icy should continue to provide substantial support to the growth of interest-sensitive spending. Amendment to interagency rule on the use of Low interest rates also have allowed businesses branches for deposit production. and households to strengthen balance sheets by Issuance by banking agencies of host state loanrefinancing debt on more favorable terms. Fiscal to-deposit ratios. policy actions in the form of lower taxes, investment incentives, and higher spending are provid- Plans for redesigned currency. ing considerable stimulus to aggregate demand Virtual tour added to Board web site. this year. Foreign economic growth has strengthened and, together with a decline in the foreign Enforcement actions. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

379 LEGAL DEVELOPMENTS A70 INDEX TO STATISTICAL TABLES Various bank holding company, bank service corporation, and bank merger orders; and pend- ML BOARD OF GOVERNORS AND STAFF ing cases. A74 FEDERAL OPEN MARKET COMMITTEE AND AI FINANCIAL AND BUSINESS STATISTICS These tables reflect data available as of STAFF; ADVISORY COUNCILS June 26, 2002. A76 FEDERAL RESERVE BOARD PUBLICATIONS A3 GUIDE TO TABLES A78 MAPS OF THE FEDERAL RESERVE SYSTEM A4 Domestic Financial Statistics A42 Domestic Nonfinancial Statistics A80 FEDERAL RESERVE BANKS, BRANCHES, A44 International Statistics AND OFFICES A57 GUIDE TO SPECIAL TABLES AND STATISTICAL RELEASES Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress Report submitted to the Congress on July 16, 2002, goals of price stability and maximum sustainable pursuant to section 2B of the Federal Reserve Act economic growth, a view maintained through its June meeting. The durability and strength of the expansion were recognized to depend on the trajectory of final MONETARY POLICY AND THE sales. The extent of a prospective strengthening of ECONOMIC OUTLOOK final sales was—and still is—uncertain, however, and with inflation likely to remain contained, the Com- The pace of economic activity in the United States mittee has chosen to maintain an accommodative picked up noticeably in the first half of 2002 as some stance of policy, leaving the federal funds rate at its of the powerful forces that had been restraining level at the end of last year. spending for the preceding year and a half abated. The economy expanded especially rapidly early in With inventories in many industries having been the year. As had been anticipated, much of the first brought into more comfortable alignment with sales, quarter's strength in production resulted from the firms began boosting production around the turn of efforts of firms to limit a further drawdown of inventhe year to stem further runoffs of their stocks. And tories after the enormous liquidation in the fourth while capital spending by businesses has yet to show quarter of 2001. With respect to first-quarter sales, any real vigor, the steep contraction of the past year purchases of light motor vehicles dropped back from or so appears to have come to an end. Household their extraordinary fourth-quarter level, but other spending, as it has throughout this cyclical episode, consumer spending increased substantially. Housing continued to trend up in the first half. With employ- starts, too, jumped early in the year—albeit with the ment stabilizing, the increases in real wages made help of weather conditions favorable for building in possible by gains in labor productivity and the effects many parts of the country—and spending on national of a variety of fiscal actions have provided noticeable defense moved sharply higher. All told, real GDP is support to disposable incomes. At the same time, low now estimated to have increased at an annual rate in interest rates have buoyed the purchase of durable excess of 6 percent in the first quarter. goods and the demand for housing. Growth was not Economic activity appears to have moved up furstrong enough to forestall a rise in the unemployment ther in recent months but at a slower pace than earlier rate, and slack in product and labor markets, along in the year. Industrial production has continued to with declining unit costs as productivity has soared, post moderate gains, and nonfarm payrolls edged up has helped to keep core inflation low. The exception- in the second quarter after a year of nearly steady ally strong performance of productivity over the past declines. However, several factors that had contribyear provides further evidence of the U.S. economy's uted importantly to the outsized gain of real output in expanded capacity to provide growth over the longer the first quarter appear to have made more modest haul. contributions to growth in the second quarter. Avail- The Federal Reserve had moved aggressively in able data suggest that the swing in inventory invest- 2001 to counter the weakness that had emerged in ment was considerably smaller in the second quarter aggregate demand; by the end of the year, it had than in the first. Consumer spending has advanced lowered the federal funds rate to VA percent, the more slowly of late, and while the construction of lowest level in forty years. With only tentative signs new homes has expanded further, its contribution to that activity was picking up, the Federal Open Mar- the growth of real output has not matched that of ket Committee (FOMC) decided to retain that earlier in the year. unusual degree of monetary accommodation by leav- Notable crosscurrents remain at work in the outing the federal funds rate unchanged at its January look for economic activity. Although some of the meeting. Confirmation of an improvement in activity most recent indicators have been encouraging, busiwas evident by the time of the March meeting, and nesses still appear to be reluctant to add appreciably the FOMC moved toward an assessment that the risks to workforces or to boost capital spending, presumto the outlook were balanced between its long-run ably until they see clearer signs of improving pros- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

334 Federal Reserve Bulletin • August 2002 pects for sales and profits. These concerns, as well as continued subdued inflation remained favorable given ongoing disclosures of corporate accounting irregu- the reduced utilization of resources and the further larities and lapses in corporate governance, have pass-through of earlier declines in energy prices. pulled down equity prices appreciably on balance this Taken together, these conditions led the FOMC to year. The accompanying decline in net worth is likely leave the stance of monetary policy unchanged, keepto continue to restrain household spending in the ing its target for the federal funds rate at PA percent. period ahead, and less favorable financial market In light of the tentative nature of the evidence sugconditions could reinforce business caution. gesting that the upturn in final demand would be Nevertheless, a number of factors are likely to sustained, the FOMC decided to retain its assessment boost activity as the economy moves into the sec- that the more important risk to achieving its long-run ond half of 2002. With the inflation-adjusted federal objectives remained economic weakness—the possifunds rate barely positive, monetary policy should bility that growth would fall short of the rate of continue to provide substantial support to the growth increase in the economy's potential and that resource of interest-sensitive spending. Low interest rates utilization would fall further. also have allowed businesses and households to When the FOMC met on March 19, economic strengthen balance sheets by refinancing debt on indicators had turned even more positive, providing more favorable terms. Fiscal policy actions in the encouraging evidence that the economy was recoverform of lower taxes, investment incentives, and ing from last year's recession. Consumer spending higher spending are providing considerable stimulus had remained brisk in the early part of the year, the to aggregate demand this year. Foreign economic decline in business expenditures on equipment and growth has strengthened and, together with a decline software appeared to have about run its course, and in the foreign exchange value of the dollar, should housing starts had turned back up. Industrial producbolster U.S. exports. Finally, the exceptional perfor- tion, which had been falling for nearly a year and a mance of productivity has supported household and half, increased in January and February as businesses business incomes while relieving pressures on price began to meet more of the rise in sales from current inflation, a combination that augurs well for the production and less from drawing down inventories. future. Indications that an expansion had taken hold led to noticeable increases in broad stock indexes and in long-term interest rates. But the strength of the recov- Monetary Policy, Financial Markets, and ery remained unclear. The outlook for business fixed the Economy over the First Half of 2002 investment—which would be one key to the strength of economic activity once the thrust from inventory The information reviewed by the FOMC at its meet- restocking came to an end—was especially uncertain, ing of January 29 and 30 seemed on the whole to with anecdotal reports indicating that businesses indicate that economic activity was bottoming out remained hesitant to enter into major long-term comand that a recovery might already be under way. mitments. While the FOMC believed that the fiscal Consumer spending had held up remarkably well, and monetary policies already in place would conand the rates of decline in manufacturing production tinue to stimulate economic activity, it considered the questions surrounding the outlook for final demand and business purchases of durable equipment and over the quarters ahead still substantial enough to software had apparently moderated toward the end of justify the retention of the current accommodative 2001. In addition, the expectation that the pace of stance of monetary policy, particularly in light of the inventory runoff would slow after several quarters of relatively high unemployment rate and the prospect substantial and growing liquidation constituted that the lack of price pressures would persist. Given another reason for anticipating that economic activity the positive tone of the available economic indicawould improve in the period immediately ahead. tors, the FOMC announced that it considered the Nonetheless, looking beyond the near term, the risks to achieving its long-run objectives as now FOMC faced considerable uncertainty about the being balanced over the foreseeable future. strength of final demand. Because household spending had not softened to the usual extent during the By the time of the May 7 FOMC meeting, it had recession, it appeared likely to have only limited become evident that economic activity had expanded room to pick up over coming quarters. Intense com- rapidly early in 2002. But the latest statistical data petitive pressures were thought to be constraining the and anecdotal reports suggested that the expansion growth of profits, which could damp investment and was moderating considerably in the second quarter equity prices. At the same time, the outlook for and that the extent to which final demand would Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 335 Selected interest rates NOTE. The data are daily and extend through July 10, 2002. The dates on the horizontal axis are those of scheduled FOMC meetings and of any intermeeting policy actions. strengthen was still unresolved. Business sentiment the dollar and the drop in long-term interest rates. remained gloomy as many firms had significantly Although the FOMC believed that robust underlying marked down their own forecasts of growth in sales growth in productivity, as well as accommodative and profits over coming quarters. These revised pro- fiscal and monetary policies, would continue to supjections, along with the uncertainty surrounding the port a pickup in the rate of increase of final demand robustness of the overall economic recovery, had over coming quarters, the likely degree of the contributed to sizable declines in market interest rates strengthening remained uncertain. The FOMC and weighed heavily on equity prices, which had decided to keep unchanged its monetary policy stance dropped substantially between the March and May and its view that the risks to the economic outlook meetings. The outlook for inflation had remained remained balanced. benign despite some firming in energy prices, as excess capacity in labor and product markets held the pricing power of many firms in check, and the appar- Economic Projections for 2002 and 2003 ent strong uptrend in productivity reduced cost pressures. In these circumstances, the FOMC decided to The members of the Board of Governors and the keep the federal funds rate at its accommodative level Federal Reserve Bank presidents, all of whom particiof 13A percent and maintained its view that, against pate in the deliberations of the FOMC, expect the the background of its long-run goals of price stability economy to expand rapidly enough over the next six and sustainable economic growth, the risks to the quarters to erode current margins of underutilized outlook remained balanced. capital and labor resources. The central tendency of Over the next seven weeks, news on the economy the forecasts for the increase in real GDP over the did little to clarify questions regarding the vigor of four quarters of 2002 is 3Vi percent to 33A percent, the ongoing recovery. The information received in and the central tendency for real GDP growth in 2003 advance of the June 25-26 meeting of the FOMC is Vh percent to 4 percent. The central tendency of continued to suggest that economic activity had the projections of the civilian unemployment rate, expanded in the second quarter, but both the upward which averaged just under 6 percent in the second impetus from the swing in inventory investment and quarter of 2002, is that it stays close to this figure for the growth in final demand appeared to have dimin- the remainder of the year and then moves down to ished. In financial markets, heightened concerns between 5lA percent and 5Vi percent by the end of about accounting irregularities at prominent corpora- 2003. tions and about the outlook for profits had contrib- Support from monetary and fiscal policies, as well uted to a substantial decline in equity prices and as other factors, should lead to a strengthening in correspondingly to a further erosion in household final demand over coming quarters. Business spendwealth. But some cushion to the effects on aggregate ing on equipment and software will likely be boosted demand of the decline in share prices had been proby rising sales, improving profitability, tax incenvided by the fall in the foreign exchange value of tives, and by the desire to acquire new capital Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

336 Federal Reserve Bulletin • August 2002 Economic projections for 2002 and 2003 Change in real GDP Percent Federal Reserve Governors I-flt and Reserve Bank presidents Indicator Central Range tendency 2002 Change, fourth quarter • to fourth quarter1 Nominal GDP 4'/2-5'/2 43/4-5!/4 Real GDP 3-4 3'/2-33/4 PCE chain-type price index . 1 '/4-2 W2-VA Average level, fourth quarter Civilian unemployment rate . 5'/2-6'/4 53A-6 2003 1996 1998 2000 2002 Change, fourth quarter to fourth quarter1 NOTE. Here and in subsequent charts, except as noted, change for a given N Re o a m l i G na D l P G DP 4 3 1 V /2 * -6 - 4lA 3'/ 5 > - - 5 4 % p p e e r r i i o o d d . is measured to its final quarter from the final quarter of the preceding PCE chain-type price index . 1-2 !/t IVi-PA Average level, fourth quarter Civilian unemployment rate . 5-6 5'/4-5'/2 household and government spending were partly off- 1. Change from average for fourth quarter of previous year to average for set by weak business fixed investment and a widenfourth quarter of year indicated. ing gap between imports and exports. In addition, inventory liquidation slowed sharply as businesses embodying ongoing technological advances. Improv- stepped up production to bring it more closely in line ing labor market conditions and a robust underlying with the pace of final sales. The increase in real GDP trend in productivity growth should further bolster was particularly rapid early in the year, with the household income and contribute to an uptrend in first-quarter gain elevated by a steep reduction in spending. In addition, the liquidation of last year's the pace of the inventory run-off, a surge in defense inventory overhangs has left businesses in a position spending, and a weather-induced spurt in constructo begin rebuilding stocks as they become more tion. Real GDP is currently estimated to have risen persuaded that the recovery in final sales will be at an annual rate of just over 6 percent in the first sustained. quarter and appears to have posted a more moderate Most FOMC participants expect underlying infla- gain in the second quarter. tion to remain close to recent levels through the end Private payroll employment declined through of 2003. Core inflation should be held in check by April, and at midyear the unemployment rate stood productivity gains that hold down cost increases, a somewhat above its average in the fourth quarter lack of pressure on resources, and well-anchored of 2001. Core inflation—which excludes the direct inflation expectations. Overall inflation, which was influences of the food and energy sectors—remained depressed last year by a notable decline in energy subdued through May, held down by slack in resource prices, is likely to run slightly higher this year. In utilization and continued sizable advances in labor particular, the central tendency of the projections of productivity. Overall inflation was boosted by a surge the increase in the chain-type index for personal in energy prices in March and April, but energy consumption expenditures over the four quarters of prices have since retreated a bit. Inflation expectaboth 2002 and 2003 is IV2 percent to PA percent, tions remained in check in the first half of this year. compared with last year's pace of 1 lA percent. As judged by declines in most interest rates over the first half of the year, financial market participants have marked down their expectation of the vigor of ECONOMIC AND FINANCIAL DEVELOPMENTS the economic expansion. Interest rates, along with IN 2002 most equity indexes, rose noticeably toward the end of the first quarter in reaction to generally stronger- The pace of economic activity picked up consider- than-expected economic data. But Treasury yields ably in the first half of 2002 after being about and equity prices more than rolled back those unchanged, on balance, in the second half of 2001. increases on renewed questions about the strength of the rebound in the economy, including growing Final sales advanced modestly as substantial gains in Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 337 Change in PCE chain-type price index but financial stress among households to date has been limited. Percent, annual rate • Total • Excluding food and energy Consumer Spending — — 3 Real consumer expenditures increased at an annual n rate of 3V4 percent in the first quarter. Demand for — 2 motor vehicles dropped from an extraordinary fourth- Ql quarter pace, but purchases remained supported in part by continued large incentive packages. Outlays — 1 for other goods and services advanced smartly in the first quarter. In the second quarter, the rate of increase in consumer spending looks to have eased somewhat. 1996 1998 2000 2002 Motor vehicle purchases were little changed, and NOTE. The data are for personal consumption expenditures (PCE). most other major categories of consumer spending likely posted smaller gains than earlier in the year. Real disposable personal income moved sharply uncertainty regarding prospective corporate profits higher in the first quarter and appears to have risen a and concerns about escalating geopolitical tensions little further in the second quarter. Wages and salaries and about the governance and transparency of U.S. have increased only moderately this year. But tax corporations. Private demands on credit markets payments have fallen markedly; last year's legislamoderated in the first half of the year, as businesses tion lowered withheld tax payments again this year, substantially curbed their net borrowing. For the most and final payments this spring on tax obligations for part, this reduction reflected further declines in busi- 2001 were substantially below last year's level (likely ness investment, a pickup in operating profits, and a related at least in part to a decline in capital gains return to net equity issuance. But, in addition, lenders realized last year). All told, real disposable income became more cautious and selective, especially for increased at an annual rate of 8 percent between the borrowers of marginal credit quality. fourth quarter of last year and May. However, house- Market perceptions that the recovery in the United hold net worth has likely fallen further because the States might turn out to be less robust than antici- negative effect of the decline in stock prices has been pated also put downward pressure on the foreign only partly offset by an apparent continued appreciaexchange value of the dollar as measured against the tion in the value of residential real estate. According currencies of our major trading partners, especially to the flow of funds accounts, by the end of the first during the second quarter of 2002. Central banks in quarter, the ratio of household net worth to dispossome foreign countries, including Canada, tightened able income had reversed close to two-thirds of its policy as growth firmed. The euro-area economy run-up in the second half of the 1990s; this ratio has recovered modestly during the first half, and some brighter signs were evident in Japan. In contrast, the dollar strengthened on balance against the currencies Change in real income and consumption of our other important trading partners; in particular, Percent, annual rate the Mexican peso lost ground, and financial markets reacted to political and economic problems in several South American countries. The Household Sector Household spending began the year on a strong note and continued to rise in the second quarter. Further gains in disposable income have supported a solid underlying pace of spending. The decline in stock prices in the first half of 2002 reduced household wealth, and the debt-service burden remained high, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

338 Federal Reserve Bulletin • August 2002 Wealth and saving Private housing starts Millions of units, annual rate 1994 1996 1998 2000 2002 NOTE. The data for 2002:Q2 are the averages for April and May; the data Personal saving rate for earlier periods are quarterly. level of activity appears to have remained robust in the second quarter. The first-quarter surge was spurred partly by unseasonably warm and dry winter weather, which apparently encouraged builders to move forward some of their planned construction. At the same time, underlying housing activity has been supported by the gains in income and confidence noted above, and, importantly, by low interest rates on mortgages. In the single-family sector, starts aver- 1982 1986 1990 1994 aged an annual rate of 1.35 million units over the first NOTE. The data are quarterly. The wealth-to-income ratio is the ratio of five months of the year—up 6V2 percent from the household net worth to disposable personal income and extends through already buoyant pace registered in 2001. Sales of 2002:Q1. The personal saving rate extends through 2002:Q2; the reading for that quarter is the average for April and May. existing homes jumped in early 2002 after moving sideways during the preceding three years; sales of new homes have also been running quite high in undoubtedly registered additional declines since the recent months. end of March. Consumer sentiment improved over Home prices have continued to move up strongly. the first several months of the year, with indexes from For example, over the year ending in the first quarter, both the Conference Board and the Michigan Survey Research Center reversing last fall's sharp deteriora- Mortgage rates tion. However, both indexes have given up some of those gains more recently. The personal saving rate increased in the first half of this year, as the decline in wealth over the past two years likely held down consumer spending relative to disposable personal income. In May, the saving rate stood at 3 percent of disposable income, up from an average of IV2 percent over 2001. Movements in the saving rate have been very erratic over the past year, reflecting cyclical factors, the timing of tax cuts, and adjustments in incentives to purchase motor vehicles. Residential Investment Real residential investment increased at an annual NOTE. The data, which are monthly and extend through June 2002, are contract rates on thirty-year mortgages. rate of about 15 percent in the first quarter, and the SOURCE. Federal Home Loan Mortgage Corporation. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 339 the constant-quality price index for new homes rose Delinquency rates on selected types of household loans 5!/4 percent, and the repeat-sales price index for existing homes was up 6'A percent. Despite these increases, low mortgage rates have kept housing affordable. Rates on thirty-year conventional fixedrate loans averaged less than 7 percent in the first half of this year, and rates on adjustable-rate loans continued the downtrend that began in early 2001. The share of median household income required to finance the purchase of a median-price house is close to its average for the past ten years and well below the levels that prevailed in the 1970s and 1980s. In the multifamily sector, housing starts averaged 340,000 units at an annual rate over the first five months of the year, a pace close to the average of the previous five years. However, conditions in this mar- All borrowers — 6 ket have deteriorated somewhat during the past year. In the first quarter, the vacancy rate for apartments spiked to the highest level since the late 1980s, and rents and property values were below year-earlier readings. — — 3 — Mortgages y>'fft" 2 Household Finance As it did last year, household debt appears to have LJ J 1 I I 1 I I I I I I L I I expanded at more than an 8 percent annual rate 1988 1990 1992 1994 1996 1998 2000 2002 during the first half of 2002. Although consumer NOTE. The data are quarterly and extend through 2002:Q1. credit (debt not secured by real estate) has increased, SOURCE. For auto loans, Federal Reserve staff estimates based on data the bulk of the expansion in household debt has come from Moody's Investors Service; for mortgages, the Mortgage Bankers Association and LoanPerformance; for credit cards, bank Call Reports. from a sizable buildup of home mortgage debt. Refinancing activity has fallen below last year's record pace, but it has remained strong as households have The aggregate household debt-service burden—the continued to extract a portion of the accumulated ratio of estimated minimum scheduled payments on equity in their homes. mortgage and consumer debt to disposable personal income—although still elevated, has moved little this Household debt service burden year. The effect of the fast pace of household borrowing on the debt burden has been offset by lower Percent interest rates and the brisk growth in disposable income. On balance, indicators of credit quality do not suggest much further deterioration in the financial condition of households. While delinquency rates for subprime borrowers have risen further for auto loan pools and have stayed high for mortgages, mortgage delinquencies for all borrowers have changed little, and delinquencies on credit card accounts at banks have not risen significantly since the mid-1990s. The number of personal bankruptcy filings also has essentially moved sideways this year, albeit at a historically high rate. Lenders have apparently reacted to I L_l L_J LJ LJ I l_l I I LJ I I I 1986 1988 1990 1992 1994 1996 1998 2000 2002 these indicators of household credit quality by tightening standards for consumer loans, as reported on NOTE. The data are quarterly and extend through 2002:Q1. Debt burden is an estimate of the ratio of debt payments to disposable income; debt pay- the Federal Reserve's Senior Loan Officer Opinion ments consist of the estimated required payments on outstanding mortgage Surveys. Standards for mortgage loans, however, and consumer debt. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

340 Federal Reserve Bulletin • August 2002 Net percentage of domestic banks tightening standards on Change in real business fixed investment consumer loans and residential mortgage loans Percent, annual rate Percent • Structures flj Equipment and software 20 10 I II I I 10 20 Residential mortgage loans Qi J L 2002 • High-tech equipment and software NOTE. The data are based on a survey generally conducted four times per • Other equipment — 40 year; the last reading is from the April 2002 survey. Net percentage is the percentage reporting a tightening less the percentage reporting an easing. — 30 SOURCE. Federal Reserve Senior Loan Officer Opinion Survey on Bank Lending Practices. — 20 Ql — 10 have changed little, and, on the whole, credit appears + to have remained readily available to the household 0 7 sector. 10 I L The Business Sector 1996 1997 1998 1999 2000 2001 2002 NOTE. High-tech equipment consists of computers and peripheral equipment and communications equipment. Spending in the business sector appears to have bottomed out recently, but a strong recovery has not yet taken hold. Real business fixed investment, which for computers posted large gains in inflation-adjusted declined sharply last year, fell again in the first quar- terms in both the fourth and first quarters; many ter, but seems to have firmed in the second quarter. businesses apparently postponed computer replace- Excess capacity in some sectors and uncertainty ment over much of last year but now seem to be about the pace of the economic expansion are likely taking advantage of ongoing technological progress still restraining equipment demand, but rising output, and the associated large declines in prices. In conimproving corporate profits, and continuing techno- trast, real expenditures for communications equiplogical advances appear to be working in the opposite ment were little changed in the first quarter after direction. Many businesses have worked off their having plunged by one-third during 2001. Excess excess stocks, and the substantial inventory runoff capacity in the provision of telecom services is conthat began in the first quarter of last year seems to be tinuing to weigh heavily on the demand for communidrawing to a close. The combination of higher profits cations equipment. Business outlays for software and weak investment spending has led to a drop in edged down in real terms in the first quarter. borrowing by the nonfinancial business sector thus Real spending on transportation equipment far this year. dropped in the first quarter. Outlays for aircraft shrank dramatically as the reduction in orders after last year's terrorist attacks began to show through to Fixed Investment spending. Outlays for motor vehicles fell sharply early in the year owing to weakness in the market for Real business spending on equipment and software heavy trucks and a reported reduction in fleet sales to (E&S) was little changed in the first quarter after rental companies related to the downturn in air travel. having dropped sharply last year. In the high-tech Real E&S spending outside of the high-tech and category, real expenditures moved up in the first transportation categories moved up in the first quarter quarter after a double-digit decline in 2001. Outlays after sizable declines in the three preceding quarters. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 341 This pattern probably reflects the deceleration and Change in real business inventories subsequent acceleration in business output, which Billions of chained 1996 dollars, annual rate is an important determinant of spending in this category. — 75 In the second quarter, real E&S spending likely 50 rose, borne along by increases in sales and a rebound in profits. Incoming data on orders and shipments — 25 suggest that real outlays for high-tech equipment advanced and that expenditures for other nontransportation equipment also rose. Spending on aircraft 25 probably contracted further, but orders for heavy 50 trucks surged this spring, as some companies reportedly shifted purchases forward in anticipation of — 75 stricter emissions requirements that are scheduled J L J L to take effect in the fall. Because of lags in the 1996 1998 2000 2002 ordering and building of new equipment, the provision for partial expensing in the Job Creation and Worker Assistance Act passed by the Congress in suggest that overhangs persist in a few areas. In early March will likely bolster investment spending contrast to inventories in other sectors, motor vehicle gradually. stocks increased in the first half of this year, as Real outlays for nonresidential structures regis- automakers boosted production in order to rebuild tered a very large decline in the first quarter after stocks that had been depleted by the robust pace of having slipped appreciably in 2001. Outlays for sales in late 2001. Motor vehicle inventories were no office and industrial structures, lodging facilities, and longer lean as of the middle of this year. public utilities dropped substantially. Vacancy rates for offices jumped in the first quarter to their highest level since the mid-1990s; in addition, rents and Corporate Profits and Business Finance property values were noticeably below their levels one year earlier. Vacancy rates have risen dramati- The economic profits of the U.S. nonfinancial corpocally in the industrial sector as well. Construction of rate sector grew 5 percent at a quarterly rate in the drilling structures also contracted sharply in the first first quarter of this year after a surge of 13% percent quarter, thereby continuing the downtrend that began in the fourth quarter of 2001. The corresponding ratio in the middle of last year in the wake of the decline in of profits to sector GDP has edged up to 83A percent, the prices of oil and natural gas from their peaks a reversing a portion of the steep decline registered few quarters earlier. Incoming data point to further over the preceding few years but remaining well declines in spending for nonresidential structures in below its peak in the mid-1990s. Early indicators the second quarter. point to further profit gains in the second quarter. The rise in profits since late 2001, combined with weak capital expenditures and low share repurchase Inventory Investment and cash-financed merger activities, have helped keep nonfinancial corporations' need for external funds Businesses ran off inventories at an annual rate of (the financing gap) below the average of last year. In nearly $30 billion in the first quarter. This drawdown addition, corporations have turned to the equity marfollowed a much larger liquidation—at an annual rate kets to raise a portion of their needed external funds: of roughly $120 billion—in the fourth quarter, and Corporations have sold more new equity than they the associated step-up in production contributed have retired this year—the first period of net equity almost V/i percentage points to the first-quarter issuance in nearly a decade. They have used much of increase in real GDR Book-value data on inventories these funds to repay debt. As a result, the growth of outside of the motor vehicle sector point to a further nonfinancial business debt appears to have slowed slackening of the drawdown more recently. Since last considerably in the first half of 2002 after rapid gains fall, inventory-sales ratios have more than reversed in preceding years. the run-up that occurred as the economy softened. Much of the growth in nonfinancial business debt Currently, inventories do not appear to be excessive this year has been concentrated in the corporate bond for the economy as a whole, although industry reports market (though issuance has not been quite so strong Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

342 Federal Reserve Bulletin • August 2002 Before-tax profits of nonfinancial corporations Major components of net business financing as a percent of sector GDP Billions of dollars Percent [ j Commercial paper Bonds Sum of major components NOTE. Seasonally adjusted annual rate for nonfarm nonfinancial corporate business. The data for the sum of major components are quarterly. The data NOTE. The data are quarterly and extend through 2002:Q1. Profits are from domestic operations of nonfinancial corporations, with inventory valuation for 2002:Q2 are estimated. and capital consumption adjustments. ings have been concentrated in the higher quality end as in 2001), as firms have taken advantage of histori- of that market. Troubles in the two largest sectors of cally attractive yields. Many corporations have used the market—telecommunications and energy—have the proceeds of their bond offerings to pay down continued to weigh on issuance this year. commercial and industrial (C&I) loans at banks and Although many businesses have apparently substicommercial paper. In recent months, however, net tuted bond debt for shorter-term financing by choice, corporate bond issuance has slowed, and the contrac- others, especially investment-grade firms in the teletion in short-term funding appears to have moderated. communications sector, have done so by necessity: About one fifth of total bond offerings over the first They were pushed out of the commercial paper marhalf of 2002 have been in the speculative-grade mar- ket or otherwise encouraged by investors and creditket. This fraction is about unchanged from last year rating agencies to curb their reliance on short-term but still well below the proportions seen in the latter sources of financing to limit the associated rollover half of the 1990s, and speculative-grade bond offer- risk. Indeed, commercial paper outstanding ran off sharply in February and early March, when several companies that were perceived as having question- Financing gap and net equity retirement able accounting practices were forced to tap bank at nonfarm nonfinancial corporations lines to pay off maturing commercial paper. With Billions of dollars lower-quality borrowers leaving the market in the Nonfinancial commercial paper outstanding Net equity retirement Billions of dollars NOTE. The data are annual through 2001; the final observation is for 2002:Q1 at an annual rate. The financing gap is the difference between capital expenditures and internally generated funds. Net equity retirement is the difference between equity retired through share repurchases, domestic cash-financed mergers, or foreign takeovers of U.S. firms and equity issued 1998 1999 2000 2001 2002 in public or private markets, including funds invested by venture capital partnerships. NOTE. The data are period-end figures and extend through 2002:Q2. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 343 Net percentage of domestic banks tightening Net interest payments of nonfinancial corporations standards on commercial and industrial loans relative to cash flow to large and medium-sized firms I I I I I I I I I I M I 1978 1981 1984 1987 1990 1993 1996 1999 2002 NOTE. The data are quarterly and extend through 2002:Q1. NOTE. The data are based on a survey generally conducted four times per year; the last reading is from the April 2002 survey. Large and medium-sized firms are those with annual sales of $50 million or more. Net percentage is although the delinquency rate on C&I loans at banks the percentage reporting a tightening less the percentage reporting an easing. has risen a bit further this year, it has stayed well SOURCE. Federal Reserve Senior Loan Officer Opinion Survey on Bank Lending Practices. below rates observed in the early 1990s. In part, however, this performance may be attributable to more aggressive loan sales and charge-ofifs than in face of elevated risk spreads, commercial paper out- the past. It may be that problems have risen more for standing shrank nearly 30 percent in the first half of large firms than for smaller ones, as the increase the year after a sizable decline in 2001. in C&I loan delinquencies over recent quarters was Some firms that exited the commercial paper mar- limited to large banks, where loans to larger firms are ket turned, at least temporarily, to banks as an alterna- more likely to be held. Credit rating downgrades tive. Nonetheless, on net, commercial and industrial continued to outpace upgrades by a substantial marloans at banks have declined this year, reflecting gin, as was the case in the last quarter of 2001. borrowers' preference for lengthening the maturity Spreads of corporate bond yields over those on comof their liabilities and the overall reduction in the parable Treasuries have remained high by historical demand for external financing, noted earlier. To a standards and have risen considerably across the more limited extent, a somewhat less receptive lend- credit-quality spectrum for telecom firms. Corporate ing environment probably also weighed on business borrowing at banks. In particular, banks continued to Default rate on outstanding bonds tighten terms and standards on C&I loans on net over the first half of this year, although the fraction of Percent banks that reported having done so fell noticeably in the Federal Reserve's Senior Loan Officer Opinion Survey in April. Banks have also imposed stricter underwriting standards and higher fees and spreads on backup lines of credit for commercial paper over most of 2001 and early 2002; banks cited increased concerns about the creditworthiness of issuers and a higher likelihood of lines being drawn down. Indicators of credit quality still point to some trouble spots in the nonfinancial business sector. The ratio of net interest payments to cash flow has trended up since the mid-1990s for the nonfinancial corporate sector as a whole, with increases most pronounced NOTE. The default rate is monthly and extends through May 2002. The rate for weaker speculative-grade firms. The default for a given month is the face value of bonds that defaulted in the twelve rate on outstanding corporate bonds has remained months ending in that month divided by the face value of all bonds outstanding at the end of the calendar quarter immediately preceding the quite elevated by historical standards. By contrast, twelve-month period. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

344 Federal Reserve Bulletin • August 2002 Delinquency rates on commercial and industrial insurance companies have remained near their hisloans at banks torical lows. The low level of risk spreads for CMBS suggests Percent i&jgwr that concerns about terrorism insurance have not jf^i';-,been widespread in the market for commercial mortgages, and responses to the Federal Reserve's Senior Loan Officer Opinion Survey in April indicate that — 5 most domestic banks required insurance on less than \ 10 percent of the loans being used to finance high- — 4 profile or heavy-traffic properties. Nonetheless, that fraction was much higher at a few banks, and some credit-rating agencies have placed certain CMBS issues—mainly those backed by high- — 2 profile properties—on watch for possible downgrade 1 1 1 1 1 i 1 1 1 1 1 1 1 because of insufficient terrorism insurance. 1992 1994 1996 1998 2000 2002 NOTE. The data, from bank Call Reports, are quarterly, seasonally adjusted, and extend through 2002:Q1. The Government Sector bond spreads also widened, though to a much smaller The federal unified budget moved into deficit in fiscal extent, for a few highly rated firms in other industries 2002 after having posted a substantial surplus in owing to concerns about their accounting practices. fiscal 2001. The deterioration reflects a sharp drop in After having surged late last year, growth in com- tax collections (resulting in part from the effects of mercial mortgage debt dropped back in the first half the economic downturn, the decline in stock prices, of this year amid a sharp decline in construction and legislated tax cuts) and unusually large suppleactivity. Issuance of commercial mortgage backed mental spending measures. As a consequence, federal securities (CMBS), a major component of commer- debt held by the public increased in the first half of cial mortgage finance, has been especially weak. the year after rapid declines during the previous Nonetheless, investor appetite for CMBS has appar- several years. The budgets of states and localities ently been strong, as yield spreads have narrowed have also been strained by economic events, and this year. Delinquency rates on CMBS pools, which many state and local governments have taken steps to had been rising during the early part of the year, seem relieve these pressures. to have stabilized in recent months, and delinquency rates on commercial mortgages held by banks and Federal Government Spreads of corporate bond yields over Over the first eight months of fiscal year 2002 (Octothe ten-year Treasury yield ber through May) the unified budget recorded a deficit of $147 billion, compared with a surplus of $137 billion over the same period of fiscal year 2001. Nominal receipts were 12 percent lower than during the same period of fiscal 2001, and daily Treasury data since May suggest that receipts have remained subdued. Individual tax payments are running well below last year's pace; this weakness reflects general macroeconomic conditions, the legislated changes in tax policy, and the decline in stock prices and consequent reduction in capital gains realizations in 2001. The extent of the weakness was not widely anticipated—this spring's nonwithheld tax payments, i i i i i i i 1 i i i i i i i i i i i I i i i i t i i i i i i I which largely pertain to last year's liabilities, gener- 2000 2001 2002 ated the first substantial negative April surprise in NOTE. The data are daily and extend through July 10, 2002. The spreads revenue collections in a number of years. Corporate compare the yields on the Merrill Lynch AA, BBB, and 175 indexes with the tax payments have also dropped from last year's level yield on the ten-year off-the-run Treasury note. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 345 Federal receipts and expenditures Federal saving, which equals the unified budget surplus adjusted to conform to the accounting prac- Percent of nominal GDP tices followed in the national income and product accounts, has fallen considerably since the middle of last year. Net federal saving, which accounts for the depreciation of government capital, turned negative in the first quarter of this year. At the same time, the net saving of households, businesses, and state and local governments has moved up from its trough of last year. On balance, net national saving as a share of GDP has held roughly steady in the past several quarters after having moved down sharply since 1999. Federal debt held by the public, which had been 1984 1987 1990 1993 1996 1999 2002 declining rapidly over the past few years, grew at a NOTE. The budget data are from the unified budget; through 2001 they are 3V4 percent annual rate in the first quarter of 2002 for fiscal years (October through September), and GDP is for Q3 to Q3. For and is estimated to have increased considerably more 2002, the budget data are for the twelve months ending in May, and GDP is for 2001 :Q1 to 2002:Q1. in the second quarter. The ratio of federal government debt held by the public to nominal GDP fell because of weak profits and the business tax provi- only slightly in the first quarter following several sions included in the Job Creation and Worker Assis- years of steep declines. In response to the changing tance Act of 2002. budget outlook, the Treasury suspended its buyback Nominal federal outlays during the first eight operations through mid-August and increased the months of fiscal 2002 were 10 percent higher than number of auctions of new five-year notes and tenduring the same period last year; excluding a drop in year indexed securities. net interest payments owing to the current low level During the second quarter, the Treasury took of interest rates, outlays were up 14 percent. The rate unusual steps to avoid breaching its statutory borrowof increase was especially large for expenditures on ing limit of $5.95 trillion. In early April, it tempoincome security, health, and national and homeland rarily suspended investments in the Government defense. Real federal expenditures for consumption Securities Investment Fund—the so called G-fund of and gross investment, the part of government spend- the Federal Employees' Retirement System. Incoming that is a component of real GDP, rose at an annual ing individual nonwithheld tax receipts later that rate of roughly ll'/2 percent in the first calendar month allowed the Treasury to reinvest the G-fund quarter of 2002 as defense spending surged. The assets with an adjustment for interest. Late in May, available data suggest that real federal expenditures the Treasury declared a debt ceiling emergency, for consumption and gross investment increased further in the second quarter. Federal government debt held by the public Percent of nominal GDP Net national saving Percent of nominal GDP I I 1 I I M M I I I I I I I I I I I I I I I II I I I I I I I I I I II I I I I I I 1962 1972 1982 1992 2002 NOTE. Through 2001, the data for debt are year-end figures and the corresponding value for GDP is for Q4 at an annual rate; the final observation 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 is for 2002:Q1. Excludes securities held as investments of federal government NOTE. The data are quarterly and extend through 2002:Q1. accounts. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

346 Federal Reserve Bulletin • August 2002 which allowed it to disinvest a portion of the Civil Trade and the Current Account Service Retirement and Disability Fund, in addition to the G-fund, to keep its debt from breaching the The U.S. deficit on trade in goods and services widstatutory limit. At the time of the declaration, the ened about $27 billion in the first quarter, to nearly Treasury indicated that disinvestments from these $380 billion at an annual rate, as a surge in imports two funds, combined with other stopgap measures, overwhelmed a slower expansion of exports. U.S. net would be sufficient to keep it from breaching the investment income decreased $33 billion to a slight debt ceiling only through late June. The Congress deficit position after recording modest surpluses in approved legislation raising the statutory borrowing all four quarters last year. The U.S. deficit on other limit to $6.4 trillion on June 27. income and transfers widened about $9 billion, to nearly $70 billion at an annual rate. The U.S. current account, which is the sum of the above, recorded a State and Local Governments deficit in the first quarter of $450 billion at an annual rate, 4.3 percent of GDP and nearly $70 billion larger Slow growth of revenue resulting from the economic than the deficit in the fourth quarter of 2001. downturn has also generated a notable deterioration Real exports of goods and services increased 3 perin the fiscal position of many state and local governcent at an annual rate in the first quarter, after five ments over the past year. In response, many states quarters of decline. This improvement resulted from and localities have been trimming spending plans a very large step-up in service receipts, as payments and, in some cases, raising taxes and fees. In addiby foreign travelers moved back up to near pretion, many states have been dipping into rainy-day September 11 levels and other private service receipts and other reserve funds. Together, these actions are increased as well. The real value of exported goods helping to move operating budgets toward balance. contracted in the first quarter, but at only a 3l/z per- Real consumption and investment spending by cent annual rate. Goods exports had declined much state and local governments rose at an annual rate of more steeply in the previous three quarters under the 4'/ percent in the first quarter, but available data 4 effects of slower output growth abroad, continued suggest that outlays were little changed in the second appreciation of the dollar, and plunging global quarter. Outlays for consumption items seem to have demand for high-tech products. The better perforheld to only moderate increases in the first half of this mance in the first quarter of 2002 included a markyear, a step-down from last year's more robust gains. edly slower rate of decline of machinery exports and Investment spending rose briskly in the first quarter a small increase in exported aircraft. While exports of and retreated in the second quarter; this pattern computers continued to fall, exports of semiconduclargely reflects the contour of construction expenditors rose for the first time in nearly two years. Export tures, which were boosted early in the year by unseaprices continued to edge down in the first quarter. sonably warm and dry weather. U.S. real imports of goods and services expanded Debt growth in the state and local government in the first quarter at an 8 percent annual rate. As was sector has slowed so far in 2002 from last year's very rapid pace. States and localities have continued to borrow heavily in bond markets to finance capital U.S. trade and current account balances expenditures and to refund existing obligations, including short-term debt issued last year. The overall credit quality of the sector has remained high despite the fiscal stresses associated with the recent economic slowdown, and yield ratios relative to Treasuries have changed little this year, on net. The External Sector Stronger growth in the United States contributed to a widening of U.S. external deficits in the first quarter of this year. The United States has continued to receive large net private financial inflows in 2002, but both inflows and outflows have been at lower levels than in recent years. NOTE. The data are quarterly and extend through 2002:Q1. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 347 Change in real imports and exports of goods and services winter weather in the United States—along with low prices—helped keep the value of oil imports at a very Percent, annual rate low level in the first quarter. But oil prices began to Q Imports rise in February and March as global economic activ- 20 • Exports ity picked up and as OPEC reduced its production 15 • l u ll targets in an agreement with five major non-OPEC 10 producers (Angola, Mexico, Norway, Oman, and — 5 Russia). Oil prices remained firm in the second quarter around $26 per barrel amid turmoil in the Middle IF Qi East, a one-month suspension of oil exports by Iraq, disruption of supply from Venezuela, and increasing 10 global demand. The price of gold also has reacted to 15 heightened geopolitical tensions and moved up more than 13 percent over the first half of 2002. 1996 1998 2000 2002 NOTE. Change for the half-year indicated is measured from the preceding half-year, and the change for 2002:Q1 is from 2001:Q4. Imports and exports The Financial Account for each period are the average of the levels for component quarters. The shift in the pattern of U.S. international financial the case with exports, a substantial part of the flows observed in the second half of 2001 continued increase came from larger service payments related into the first quarter of this year. Influenced by to increased travel abroad by U.S. residents. Reflectincreased economic uncertainty, questions about coring the rebound in U.S. economic activity, imports of porate governance and accounting, and sagging share real goods rose at about a 4 percent pace in the first prices, foreign demand for U.S. equities remained quarter of 2002, the first increase in four quarters, weak. Foreign net purchases of U.S. bonds slowed; as a decline in oil imports was more than offset by a substantial increase in imports of other goods. U.S. international securities transactions Growth of non-oil imports was led by increased imports of computers, autos, and consumer goods. Billions of dollars The price of imported non-oil goods declined at about a 2lA percent annual rate, in line with its trend Private foreign purchases of U.S. securities in 2001; prices fell for a wide range of capital goods • Bonds, net — 200 and industrial supplies. • Equities, net Declining demand during the second half of last — 150 year put the price of West Texas intermediate (WTI) crude oil in December 2001 at around $19 per barrel, its lowest level since mid-1999. Unusually warm Prices of oil and gold Dollars per troy ounce Dollars per barrel Private U.S. purchases of foreign securities LJ Bonds, net • Equities, net 100 . M MIM IL ; — U — 25 2000 2001 2002 I I i i i I i i i I i i i I i I 1999 2000 2001 2002 NOTE. The data are monthly. The oil price is the spot price of West Texas intermediate crude oil. The gold price is the price in London. SOURCE. Department of Commerce and the Federal Reserve Board. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

348 Federal Reserve Bulletin • August 2002 although purchases of corporate bonds continued to Net change in payroll employment be robust, demand for agency and Treasury bonds Thousands of jobs, monthly average slackened. Nonetheless, because U.S. net purchases of foreign securities also fell off, the contribution of Private nonfarm net inflows through private securities transactions to 300 financing the U.S. current account deficit remained at a high level. Preliminary and incomplete data for the 200 second quarter of 2002 suggest a continuation of this 100 pattern. Slower economic activity, both in the United States and abroad, and reduced merger activity caused direct investment inflows and outflows to drop sharply late 100 last year. Direct investment inflows, which were strong through the first half of 2001, plummeted in the second half. U.S. direct investment abroad stayed 1990 1992 1994 1996 1998 2000 2002 at a high level through the third quarter but then fell Manufacturing sharply. Both inflows and outflows remained weak • Help supply in the first quarter of 2002. Available data point to a • Other private nonfarm pickup of capital inflows from official sources during the first half of 2002, as the recent weakening of the foreign exchange value of the dollar prompted some official purchases. The Labor Market Labor markets weakened further in the first few months of the year; they now appear to have stabi- 2001 2002 lized but have yet to show signs of a sustained and substantial pickup. Growth of nominal compensation slowed further in the first part of the year after having amount as in the first quarter. Retail employment decelerated in 2001. With productivity soaring in declined somewhat after rising a bit in the first quarrecent quarters, unit labor costs have fallen sharply. ter, and the employment gain in services other than help supply was slightly smaller than in the first quarter. However, employment losses in several other Employment and Unemployment categories abated in the second quarter. The unemployment rate in the second quarter aver- After having fallen an average of nearly 160,000 per aged 5.9 percent, up from a reading of 5.6 percent month in 2001, private payroll employment declined in both the fourth quarter of last year and the first at an average monthly rate of 88,000 in the first quarter of this year. The higher unemployment rate in quarter and was about unchanged in the second quarrecent months is consistent with weak employment ter. Employment losses in the manufacturing sector gains, and it probably was boosted a bit by the federal have moderated in recent months, and employment temporary extended unemployment compensation in the help supply services industry—which provides program. Because this program provides additional many of its workers to the manufacturing sector—has benefits to individuals who have exhausted their reguincreased. These two categories, which were a major lar state benefits, it encourages unemployed individulocus of weakness last year, gained an average of als to be more selective about taking a job offer and 11,000 jobs per month over the past three months, likely draws some people into the labor force to compared with an average loss of 76,000 jobs per become eligible for these benefits. month in the first quarter of the year and 163,000 jobs per month over 2001. Apart from manufacturing and help supply, private Productivity and Labor Costs payrolls fell 12,000 per month in the first quarter and declined 8,000 per month in the second quarter. In the Labor productivity has increased rapidly in recent second quarter, hiring in construction fell by the same quarters. After rising at an average annual rate of Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 349 Measures of labor utilization ing until they became more convinced of the vigor of the expansion. Smoothing through the recent cyclical fluctuations, productivity advanced at an average annual rate of close to 3Vz percent between the fourth quarter of 2000 and the first quarter of this year. Although this pace is unlikely to be sustained, it further bolsters the view that the underlying trend in productivity has moved up since the first half of the 1990s. The employment cost index (ECI) for private nonfarm businesses increased just under 4 percent during the twelve months ended in March of this year, after rising about 4lA percent in the preceding twelvemonth period. The recent small step-down likely 1972 1982 1992 2002 reflects the lagged effects of the greater slack in labor NOTE. The data extend through June 2002. The civilian rate is the number markets and lower consumer price inflation. The of civilian unemployed divided by the civilian labor force. The augmented wages and salaries component and the benefits comrate adds to the numerator and the denominator of the civilian rate the number of those who are not in the labor force but want a job. The small break in the ponent of the ECI both decelerated by lA percentage augmented rate in January 1994 arises from the introduction of a redesigned point relative to the preceding year. The slowing in survey. For the civilian rate, the data are monthly; for the augmented rate, the data are quarterly through December 1993 and monthly thereafter. benefits costs occurred despite a 2l/i percentage point pickup in health insurance cost inflation, to a IOV2 percent rate of increase. around 1 percent in the first three quarters of last year, output per hour in the nonfarm business sector Nominal compensation per hour in the nonfarm jumped at an annual rate of 5Vi percent in the fourth business sector—an alternative measure of compenquarter of last year and 8V2 percent in the first quarter sation based on the national income and product of this year. Productivity likely continued to rise in accounts—rose 3V2 percent during the year ending in the second quarter, albeit at a slower pace. Labor the first quarter. This rate represented a sharp slowing productivity often rises briskly in the early stages from the llA percent pace recorded four quarters of economic recoveries, but what makes the recent earlier, which likely had been boosted significantly surge unusual is that it followed a period of modest by stock options; stock options are included in this increases, rather than declines. In earlier postwar measure at their value when exercised. The decelerarecessions, productivity deteriorated as firms retained tion in this measure of compensation is much more more workers than may have been required to meet dramatic than in the ECI because the ECI does reduced production needs. The strength in productiv- not include stock options. The moderate increase in ity growth around the beginning of this year suggests that employers may have doubted the durability of Measures of change in hourly compensation the pickup in sales and, therefore, deferred new hir- Percent Change in output per hour Percent, annual rate 8 Ql 1994 1996 1998 2000 2002 NOTE. The data extend through 2002:Q1. For nonfarm compensation, change is over four quarters; for the employment cost index (ECI), change is 1992 1994 1996 1998 2000 2002 over the twelve months ending in the last month of each quarter. Nonfarm compensation is for the nonfarm business sector; the ECI is for private in- NOTE. Nonfarm business sector. dustry excluding farm and household workers. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

350 Federal Reserve Bulletin • August 2002 nominal compensation combined with the spike in Change in consumer prices excluding food and energy productivity growth led unit labor costs to drop at an Percent annual rate in excess of 5 percent in the first quarter, after a decline of 3 percent in the fourth quarter. [J Consumer price index • Chain-type price index for PCE Information about the behavior of compensation in more recent months is limited. Readings on average hourly earnings of production or nonsupervisory workers suggest a further deceleration in wages: The twelve-month change in this series was 3V4 percent in June, 3A percentage point below the change for the preceding twelve months. Prices A jump in energy prices in the spring pushed up NOTE. Change for 2002 is from December 2001 to May 2002 at an annual rate; changes for earlier periods are from December to December. overall inflation in the first part of 2002, but core inflation remained subdued. The chain-type price index for personal consumption expenditures (PCE) for coal and natural gas, which are used as inputs increased at an annual rate of 2 lA percent over the in electricity generation. All told, energy prices first five months of the year, compared with a rise of increased at an annual rate of 20 percent over the first just over 1 percent for the twelve months of 2001. five months of the year, reversing a little more than Core PCE prices rose at an annual rate of just over half of last year's decline. IV2 percent during the first five months of this year, Consumer food prices increased at an annual rate which was the pace recorded for 2001. of 1 Vi percent between December and May. A poor Energy prices rose sharply in March and April but winter crop of vegetables pushed up prices early this have turned down more recently. Gasoline prices year, but supplies subsequently increased and prices spiked in those two months, as crude oil costs moved came down. In addition, consumer prices for meats higher and retail gasoline margins surged. Since and poultry, which began to weaken late last year, April, gasoline prices have, on balance, reversed a remained subdued this spring. small part of this rise. Natural gas prices stayed low Core inflation was held down over the first five in early 2002 against a backdrop of very high inven- months of the year by continued softness in goods tories; however, these prices have, on average, moved prices, including a significant decline in motor vehihigher in more recent months. Electricity prices have cle prices. Non-energy services prices continued to dropped this year, a move reflecting deregulation move up at a faster pace than core goods prices, of residential prices in Texas as well as lower prices although the very sizable increases in residential rent and the imputed rent of owner-occupied housing have eased off in recent months. The rate of increase Change in consumer prices in core consumer prices has been damped by several forces. One is the lower level of resource utilization that has prevailed over the past year. Core price O Consumer price index • Chain-type price index for PCE increases were also held down by declines in non-oil -4 import prices and the lagged effects of last year's decline in energy prices on firms' costs. In addition, — 3 inflation expectations have stayed in check: The Michigan Survey Research Center index of median expected inflation over the subsequent year has il — 2 I rebounded from last fall's highly unusual tumble, but — 1 its average in recent months of 23A percent is below the average reading of 3 percent in 2000. Like core PCE inflation, inflation measured by the _U core consumer price index (CPI) has remained sub- 1992 1994 1996 1998 2000 2002 dued. However, the levels of inflation corresponding NOTE. Change for 2002 is from December 2001 to May 2002 at an annual to these two alternative measures of consumer prices rate; changes for earlier periods are from December to December. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 351 are markedly different: Core PCE inflation was about U.S. Financial Markets IV2 percent over the twelve months ended in May, while core CPI inflation was about 2Vi percent. This Market interest rates have moved lower, on net, since gap is more than V2 percentage point larger than the the end of 2001, as market participants apparently average difference between these inflation measures viewed the ongoing recovery as likely to be less during the 1990s (based on the current methods used robust than they had been expecting late last year. to construct the CPI instead of the official published Such a reassessment of the strength of economic CPI). The larger differential arises from several activity and associated business earnings, along with factors. First, the PCE price index (unlike the CPI) worries about the accuracy of published corporate includes several components for which market-based financial statements, weighed heavily on major equity prices are not available, such as checking services indexes, which dropped 12 to 31 percent. The debt of provided by banks without explicit charges; the the nonfinancial sectors expanded at a moderate pace, imputed prices for these components have increased but lenders have imposed somewhat firmer financing considerably less rapidly in the past couple of years terms, especially on marginal borrowers. than previously. Second, the substantial acceleration Households' preferences for safer assets, which in shelter costs since the late 1990s has provided a had intensified following last year's terrorist attacks, larger boost to the CPI than to the PCE price index diminished early in 2002, as evidenced by strong because housing services have a much larger weight flows into both equity and bond mutual funds. Equity in the CPI. Third, PCE medical services prices— fund inflows lessened in May and turned into outwhich are largely based on producer price indexes flows in June, however, as concerns about the rather than information from the CPI—have strength and accuracy of corporate earnings reports increased more slowly than CPI medical services mounted. But the net shift toward longer-term assets prices over the past couple of years. this year appears to have contributed to a significant The chain-type price index for gross domestic deceleration in M2, which has also been slowed by purchases—which captures prices paid for consump- reduced mortgage refinancing activity and a leveling tion, investment, and government purchases—rose at out of the opportunity cost of holding M2 assets. an annual rate of roughly 1 percent in the first quarter of 2002, putting the four-quarter change at 3A percent. This pace represents a marked slowing relative Interest Rates to the 2lA percent rise in the year-earlier period, owing to both a drop in energy prices (as the decline Uncertain about the robustness of the economic in the second half of 2001 was only partly offset by recovery, the FOMC opted to retain its accommodathe increase this spring) and more rapid declines in tive policy stance over the first half of 2002, leaving the prices of investment goods such as computers. its target for the federal funds rate at 13A percent. The GDP price index rose at an annual rate of Market participants, too, have apparently been unsure VA percent in the first quarter and was up almost about the strength of the recovery, and shifts in their 11/2 percent relative to the first quarter of last year. views of the economic outlook have played a signifi- The GDP price index decelerated somewhat less than the index for gross domestic purchases, in part Rates on selected Treasury securities because declining oil prices receive a smaller weight in U.S. production than in U.S. purchases. Percent Alternative measures of price change Percent Price measure mmmrnHK^MMMmk Chain-type Gross domestic product . Gross domestic purchases Personal consumption expenditures Excluding food and energy .. Fixed-weight Consumer price index Excluding food and NOTE. Changes are based on quarterly averages and are measured from QL to QL. NOTE. The data are daily and extend through July 10, 2002. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

352 Federal Reserve Bulletin • August 2002 Corporate bond yields wide range since the end of 2001, but, on net, it has edged up only slightly. Even the small widening of this spread likely overstates a shift in sentiment regarding future price pressures in the economy. In mid-February, the Treasury reassured investors that it would continue to issue indexed debt, an announcement that was reinforced in May when the Treasury made public its decision to add one more auction of ten-year indexed notes to its annual schedule of offerings. This reaffirmation of the Treasury's commitment to issue indexed securities may have pulled indexed yields down by bolstering the actual and expected liquidity of the market. PlfrfflliBBBMllff"^ Yields on longer-maturity bonds issued by 1990 1992 1994 1996 1998 2000 2002 investment-grade corporations have stayed close to NOTE. The data are monthly averages and extend through June 2002. The their lows of the past ten years, but speculative-grade AA rate is calculated from bonds in the Merrill Lynch AA index with seven yields remained near the high end of their range since to ten years remaining maturity. The high-yield rate is the yield on the Merrill Lynch 175 high-yield index. the mid-1990s. Spreads relative to Treasury yields have widened most recently for both investment- and cant role in movements in market interest rates so far speculative-grade bonds as concerns about corporate this year. During the first quarter of the year, news earnings reporting intensified. Such concerns have on aggregate spending and output came in well also played a prominent role in the commercial paper above expectations, and Treasury coupon yields rose market, especially early this year, when investors, between 35 and 65 basis points. The second quarter, who had become increasingly worried about accounthowever, brought renewed concerns about the ing scandals, imposed high premiums on lowereconomic outlook, compounded by sharp declines quality borrowers. Subsequently, however, many such in equity prices. In recent months, Treasury coupon borrowers either left the commercial paper market or yields have more than reversed their earlier increases reduced their reliance on commercial paper financand are now 40 to 50 basis points below their levels ing, and the average yield spread on second-tier at the end of 2001. commercial paper over top-tier paper has narrowed Survey measures of long-term inflation expecta- considerably. tions have been quite stable this year, implying that Interest rates on car loans have changed little, on real rates changed about as much as nominal rates. net, this year, and mortgage rates have moved lower. The spread between nominal and inflation-indexed However, according to the Federal Reserve's Survey Treasury yields, another gauge of investors' expectations about inflation, has moved over a relatively Spread of average business loan rate over the intended federal funds rate Spread of low-tier CP rates over high-tier CP rates Percentage points Basis points — 150 — 2.5 — 125 I I 1 1 I I 1 I I I I 1 1 1 1990 1992 1994 1996 1998 2000 2002 NOTE. The data are for loans made by domestic commercial banks and are NOTE. The data are daily and extend through July 10, 2002. The series based on a survey conducted in the middle month of each quarter; the final shown is the difference between the rate on A2/P2 nonfinancial commercial observation is for 2002:Q2. paper and the AA rate. SOURCE. Federal Reserve Survey of Terms of Business Lending. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 353 of Terms of Business Lending, interest rates on C&I Price-earnings ratio for the S&P 500 loans at domestic banks have moved a bit higher this Ratio year, as banks have raised the spread of the average interest rate on business loans over the target federal funds rate. The wider spread reflects higher risk premiums on C&I loans to lower-quality borrowers; spreads for higher-quality borrowers have changed little on net. Equity Markets After falling in January in reaction to pessimistic assessments of expected business conditions over the coming year—especially in the tech sector— stock prices rebounded smartly toward the end of NOTE. The data are monthly and extend through June 2002. The ratio is the first quarter on stronger-than-expected macro- based on I/B/E/S consensus estimates of earnings over the coming twelve months. economic data. Most first-quarter corporate earnings releases met or even exceeded market participants' expectations, but many firms included sobering year). Nonetheless, the ratio remained elevated relaguidance on sales and earnings prospects in those tive to its typical values before the mid-1990s, sugannouncements. These warnings, combined with gesting that investors continued to anticipate rapid mounting questions about corporate accounting praclong-term growth in corporate profits. tices, worries about threats of domestic terrorism, and escalating geopolitical tensions, have taken a considerable toll on equity prices since the end of March. Monetary Policy Instruments On net, all major equity indexes are down substantially so far this year. Share prices in the telecom At its March 19 meeting, the FOMC assessed the and technology sectors have performed particularly priorities, given limited resources, it should attach to poorly, and, on July 10, the Nasdaq was 31 percent further studies of the feasibility of outright purchases lower than at the end of 2001. The Wilshire 5000, a for the System Open Market Account (SOMA) of broad measure of equity prices, fell 18^2 percent over mortgage-backed securities guaranteed by the Govthe same period, returning to a level 40 percent below ernment National Mortgage Association (GNMAits historical peak reached in March 2000. MBS) and the addition of foreign sovereign debt Declining share prices pulled down the price- securities to the list of collateral eligible for U.S. earnings ratio for the S&P 500 index (calculated dollar repurchase agreements by the System. As using operating profits expected over the coming noted in the February and July 2001 Monetary Policy Reports to the Congress, such alternatives could Major stock price indexes prove useful if outstanding Treasury debt obligations were to become increasingly scarce relative to the January 3, 2000 = 100 necessary growth in the System's portfolio, and the Nasdaq FOMC had requested that the staff explore these options. Noting that many of the staff engaged in these studies were also involved in contingency planning, which had been intensified after the September 11 attacks, the FOMC decided to give the highest priority to such planning. Federal budgetary developments over the past year meant that constraints on Treasury debt supply would not become as pressing an issue as soon as the FOMC had previously thought. Still, given the inherent uncertainty of budget forecasts, the likely significant needs for large SOMA operations in coming years, and the lead 2002 times required to implement new procedures, the NOTE. The data are daily and extend through July 10, 2002. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

354 Federal Reserve Bulletin • August 2002 FOMC decided that the exploratory work on the 2002. If the Board then votes to revise its lending possible addition of outright purchases of GNMA- programs, the changes likely would take place sev- MBS should go forward once it was possible to do so eral months later. without impeding contingency planning efforts. The Federal Reserve also addressed possible Debt and Financial Intermediation changes to the structure of its discount window facility. On May 17, 2002, the Federal Reserve Board Growth of the debt of domestic nonfinancial sectors released for public comment a proposed amendment other than the federal government is estimated to to the Board's Regulation A that would substantially have slowed during the first half of 2002, as busirevise its discount window lending procedures. Regunesses' needs for external funds declined further lation A currently authorizes the Federal Reserve owing to weak capital spending, continuing inventory Banks to operate three main discount window proliquidation, and rising profits. In addition, growth in grams: adjustment credit, extended credit, and seaconsumer credit moderated following a surge in auto sonal credit. The proposed amendment would estabfinancing late last year. On balance, nonfederal debt lish two new discount window programs called expanded at a 5lA percent annual rate in the first primary credit and secondary credit as replacements quarter of the year after growing IVi percent in 2001. for adjustment and extended credit. The Board also In contrast, the stock of federal debt held by the requested comment on the continued need for the public, which had contracted slightly in 2001, grew seasonal program but did not propose any substantive 3V4 percent at an annual rate in the first quarter and changes to the program. The proposal envisions that primary credit would be available for very short terms, ordinarily over- Change in domestic nonfinancial debt night, to depository institutions that are in generally sound financial condition at an interest rate that —— Percent would usually be above short-term market interest rates, including the federal funds rate; currently, the discount rate is typically below money market interest rates. The requirement that only financially sound institutions should have access to primary credit should help reduce the stigma currently associated with discount window borrowings. In addition, because the proposed discount rate structure will eliminate the incentive that currently exists for depository institutions to borrow to exploit a positive spread between short-term money market rates and the discount rate, the Federal Reserve will be able to reduce the administrative burden on borrowing banks. As a result, depository institutions should be more likely to turn to the discount window when money markets tighten significantly, enhancing the window's ability to serve as a marginal source of reserves for the overall banking system and as a backup source of liquidity for individual depository institutions. Secondary credit would be available, subject to Reserve Bank approval and monitoring, for depository institutions that do not qualify for primary credit. The proposed amendment is intended to improve the functioning of the discount window and the 1988 1990 1992 1994 1996 1998 2000 2002 money market more generally. Adoption of the NOTE. For 2002, change is from 2001 :Q4 to 2002:Q1 at an annual rate. For proposal would not entail a change in the stance of earlier years, the data are annual and are computed by dividing the annual monetary policy. It would not require a change in the flow for a given year by the level at the end of the preceding year. The total consists of nonfederal debt and federal debt held by the public. Nonfederal FOMC's target for the federal funds rate and would debt consists of the outstanding credit market debt of state and local not affect the overall level of market interest rates. governments, households, nonprofit organizations, nonfinancial businesses, and farms. Federal debt held by the public excludes securities held as The comment period on the proposal ends August 22, investments of federal government accounts. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 355 expanded further in the second quarter, as federal tax quarter, in part as yields on mortgage-backed securirevenues fell short of expectations and government ties, which are a major component of their holdings spending increased substantially. The sharp rise in of financial assets, compared less favorably to yields federal debt outstanding followed a few years of on the debt they issue. Net lending by insurance declines. providers in the first quarter was especially strong The proportion of total credit supplied by deposi- among life insurance companies, which experienced tory institutions over the first half of the year is a surge in sales late last year in the aftermath of the estimated to have been near its lowest value since September 11 terrorist attacks. Net lending by the 1993. Although banks have continued to acquire GSEs amounted to 14 percent of the net funds raised securities at about the same rapid pace observed in by both the financial and nonfinancial sectors in the 2001, the shift in household and business preferences credit markets in the first quarter of 2002, and the toward longer-term sources of credit greatly reduced figure for insurance companies was 10 percent; the demand for bank loans. As noted, banks' loans depository credit accounted for 13 percent of all net to businesses ran off considerably, as corporate bor- borrowing over the same period. rowers turned to the bond market in volume to take advantage of favorable long-term interest rates. Growth of real estate loans slowed markedly this Monetary Aggregates year, partly as outlays for nonresidential structures declined, but growth of consumer loans was fairly The broad monetary aggregates decelerated considerwell maintained. With some measures of credit qual- ably during the first half of this year. M2 rose AV2 perity in the business and household sectors still point- cent at an annual rate after having grown IOV4 pering to pockets of potential strain, loan-loss provisions cent in 2001. Several factors contributed to the remained high at banks and weighed on profits. slowing in M2. Mortgage refinancing activity, which Nonetheless, bank profits in the first quarter stayed in results in prepayments that temporarily accumulate in the elevated range observed over the past several deposit accounts before being distributed to investors years, and virtually all banks—98 percent by assets— in mortgage-backed securities, moderated over the remained well capitalized. first half of this year. In addition, the opportunity cost Among nondepository financial intermediaries, of holding M2 assets has leveled out in recent government-sponsored enterprises (GSEs) curtailed months, so the increase in this aggregate has been their net lending (net acquisition of credit market more in line with income. Because the rates of return instruments) during the first quarter of the year, but provided by many components of M2 move slugavailable data suggest that insurance companies more gishly, the rapid declines in short-term market interthan made up for the shortfall. The GSEs appeared to est rates last year temporarily boosted the attractivecontinue to restrain their net lending in the second ness of M2 assets. In recent months, however, yields on M2 components have fallen to more typical levels Percent of all U.S. commercial bank assets M2 growth rate at well-capitalized banks 1990 1992 1994 1996 1998 2000 2002 1990 1992 1994 1996 1998 2000 2002 NOTE. M2 consists of currency, travelers checks, demand deposits, other NOTE. The data are quarterly and extend through 2002:Q1. Capital status is checkable deposits, savings deposits (including money market deposit determined using the regulatory standards for the leverage, tier 1, and total accounts), small-denomination time deposits, and balances in retail money capital ratios. market funds. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

356 Federal Reserve Bulletin • August 2002 M2 velocity and opportunity cost for by M2, resulted from the weakness of institutional money market funds, which declined slightly, Ratio, ratio scale Percentage points, ratio scale after having surged about 50 percent last year. Yields on these funds tend to lag market yields somewhat, and so the returns on the funds, like those on many M2 velocity M2 assets, became less attractive as their yields caught up with market rates. M2 International Developments opportunity cost Signs that economic activity abroad had reached a turning point became clearer during the first half of 2002, but recovery has been uneven and somewhat tepid on average in the major foreign industrial coun- NOTE. The data are quarterly and extend through 2002:Q1. The velocity of tries. Improving conditions in the high-tech sector M2 is the ratio of nominal gross domestic product to the stock of M2. The have given a boost to some emerging-market econoopportunity cost of holding M2 is a two-quarter moving average of the difference between the three-month Treasury bill rate and the weighted mies, especially in Asia, but several Latin American average return on assets included in M2. economies have been troubled by a variety of adverse domestic developments. Foreign financial markets became increasingly skittish during the first half relative to short-term market interest rates. Lastly, of the year amid worries about global political and precautionary demand for M2, which was high in the economic developments, including concerns about aftermath of last year's terrorist attacks, seems to corporate governance and accounting triggered by have unwound in 2002, with investors shifting their portfolios back toward longer-term assets such as equity and bond mutual funds. With growth in nomi- Foreign interest rates nal GDP picking up significantly this year, M2 velocity—the ratio of nominal GDP to M2—rose about 1 Vi percent at an annual rate in the first quarter Short-term (three-month) of 2002, in sharp contrast to the large declines regis- — 6 tered throughout 2001. U.K. interbank M3—the broadest monetary aggregate—grew Euro-area interbank 31/2 percent at an annual rate through the first six I — 4 months of the year after rising 123/4 percent in 2001. Most of this deceleration, apart from that accounted — 2 Japanese CD M3 growth rate Percent, annual rate Long-term (ten-year government bonds) Canada United Kingdom Germany Japan 1990 1992 1994 1996 1998 2000 2002 NOTE. M3 consists of M2 plus large-denomination time deposits, balances 2001 2002 in institutional money market funds, repurchase-agreement liabilities (overnight and term), and eurodollars (overnight and term). NOTE. The data are weekly and extend through July 5,2002. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 357 Foreign equity indexes close to the more than sixteen-year high reached in 1 1 January. In the second quarter, however, the dollar Week ending January 5, 2001 = 100 trended downward as earlier market enthusiasm about U.S. recovery dimmed. Concerns about profitability, corporate governance, and disclosure at U.S. corporations appeared to dampen the attraction of U.S. securities to investors, as did worries that the United States was particularly vulnerable to the consequences of global geopolitical developments. With U.S. investments perceived as becoming less attractive, the financing requirements of a large and growing U.S. current account deficit also seemed to emerge as a more prominent negative factor. The dollar has lost more than 9 percent against the major currencies since the end of March and is down, on NOTE. The data are weekly and extend through July 5,2002. balance, more than 8 percent so far in 2002. In contrast, the dollar has gained about 2 percent this U.S. events. Oil prices reversed a large part of their year, on a weighted-average basis, against the curren- 2001 decline. cies of our other important trading partners. During the first half, monetary authorities in some The dollar's exchange rate against the Japanese foreign countries where signs of recovery were most yen was quite volatile in the first half and, on balevident and possible future inflation pressures were ance, the dollar has fallen more than 10 percent since becoming a concern—Canada, Australia, New the beginning of the year. Although Japan's domestic Zealand, and Sweden, among others—began to roll economy continued to struggle with deflation and back a portion of last year's easing, raising expecta- severe structural problems, including mounting bad tions that policy tightening might become more wide- loans in the financial sector and growing bankruptspread. However, policy was held steady at the Euro- cies, some indicators (including strong reported firstpean Central Bank (ECB) and the Bank of England. quarter GDP, a firming of industrial production, and The Bank of Japan (BOJ) maintained short-term a somewhat better reading on business sentiment in interest rates near zero and kept balances of bank the BOJ's second-quarter Tankan survey) suggested deposits at the BOJ at elevated levels. Yield curves in that a cyclical recovery has begun. The yen's rise most foreign industrial countries became a bit steeper occurred despite downgradings of Japan's governduring the first quarter as long-term rates rose in ment debt by leading rating services in April and reaction to news suggesting stronger U.S. growth and May and several episodes of intervention sales of yen improving prospects for global recovery. Since then, in foreign exchange markets by Japanese authorities long-term rates have edged lower, on balance, in part in May and June. Japanese stock prices, which had as investors shifted out of equity investments. Foreign equities performed well in most countries early U.S. dollar exchange rate against selected currencies in the year, but share prices in many countries have fallen since early in the second quarter—in some Week ending January 5, 2001 = 100 cases more steeply than in the United States. The broad stock indexes for the major industrial countries are down since the beginning of the year, except in Japan, where stock prices, on balance, are about unchanged. High-tech stocks have been hit especially hard. During the first quarter of 2002, the foreign exchange value of the dollar (measured by a tradeweighted index against the currencies of major industrial countries) appeared to react primarily to shifting market views about the relative strength of the U.S. recovery and its implications for the timing and extent of future monetary tightening. Despite some NOTE. The data are weekly and extend through July 5, 2002. Exchange fluctuations in this period, the dollar stayed fairly rates are in foreign currency units per dollar. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

358 Federal Reserve Bulletin • August 2002 fallen to eighteen-year lows in early February, turned Canadian exports—particularly automotive exports— up later as economic prospects became less gloomy. benefited early in the year from the firming of U.S. At midyear, the TOPIX index was about where it was demand, but the expansion has become more wideat the start of the calendar year. spread, and employment growth has been strong. After declining in the final quarter of 2001, euro- Although headline consumer price inflation has area GDP appears to have increased in the first half, remained in the bottom half of the Bank of Canada's though at only a modest rate. Exports firmed and target range of 1 percent to 3 percent, core inflation inventory destocking appeared to be winding down, has crept up this year. In April, the Bank of Canada but consumption remained weak. The pace of activity increased its overnight rate 25 basis points, citing varied across countries, with growth in Germany— stronger-than-expected growth in both the United the euro area's largest economy—lagging behind. States and Canada, and it increased that rate again by Despite lackluster area-wide growth, concerns about the same amount in June. The Canadian dollar, which inflation became increasingly prominent. For most of had been at a historically low level against the U.S. the first half, euro-area headline inflation persisted at dollar in January, moved up quite steeply in the or above the ECB's 2 percent target limit, partly on second quarter and has gained about 5 percent for the higher energy and food price inflation; even exclud- year so far. ing the effects of those two components, inflation The Mexican economy was hit hard by the global picked up somewhat during the period. Inflation con- slump in 2001 and especially by the weaker perforcerns also were fanned by difficult labor market nego- mance of the U.S. economy. Mexican exports stabitiations this spring, but the strength of the euro may lized early this year as U.S. activity picked up, and blunt inflationary pressures to some extent. The new other indicators also now suggest that the Mexican euro notes and coins were introduced with no notice- economy is beginning to recover. In February, despite able difficulties at the beginning of the year, but the euro drifted down against the dollar for several weeks thereafter. Since then, however, the euro has reversed Selected emerging markets direction and moved steadily higher. On balance, the Week ending January 5, 2001 = 100 dollar has lost nearly 11 percent against the euro so far in 2002. The United Kingdom seemed to weather last year's — 140 slump better than most industrial countries, as ' • : • " strength in consumption counteracted weakness in investment and net exports, though growth did — 120 weaken in the last quarter of 2001 and into the first quarter of 2002. Notable increases in industrial production and continued strength in the service sector — 100 indicate that growth picked up in the second quarter. Household borrowing has increased briskly, sup- I—1—1—I—1—1—1—1—1—I—1—1 I I 1 I 1 1 I I 1 I 1 1—1 ported by rapid increases in housing prices, and unemployment rates remain near record lows. At the Percentage points same time, retail price inflation has remained below the Bank of England's 2Vi percent target. Sterling has fallen nearly 5 percent against the euro since the beginning of the year, while it has gained more than 6 percent against the dollar. Elsewhere in Europe, the exchange value of the Swiss franc has been driven up by flows into Swiss assets prompted in part by uncertainties about global political developments. The Swiss National Bank eased its official rates in May to counteract this pressure and provide support for the Swiss economy. Economic recovery appears to be well under way in Canada. Real GDP increased 6 percent at an annual NOTE. The data are weekly and extend through July 5, 2002. Exchange rate in the first quarter, and other indicators point to rates (top panel) are in foreign currency units per dollar. Bond spreads (bottom panel) are the J.P. Morgan Emerging Market Bond Index (EMBI+) continued strong performance in the second quarter. spreads over U.S. Treasuries. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 359 the weak level of activity at the time, the Bank of In recent months financial markets elsewhere in the Mexico tightened monetary policy to keep inflation region have become more volatile. Brazilian markets on track to meet its 4Vi percent target for 2002, and have been roiled by political uncertainties related to the Mexican peso moved up a bit against the dollar national elections coming in the fall. Attention has during February and March. In April, with inflation focused on vulnerabilities associated with Brazil's apparently under control, the central bank eased pol- large outstanding stock of debt, much of which is icy, and since then the peso has moved down substan- short-term. Since April, the value of the real against tially. Against the dollar, the decline since the begin- the dollar has fallen nearly 20 percent, and Brazilian ning of the year has amounted to almost 7 percent. spreads have widened substantially. Several other After rising through April, Mexican share prices South American countries, including Uruguay and also fell sharply, leaving them at midyear about Venezuela, also have been beset by growing financial unchanged from their end-2001 levels. and economic problems. Financial and economic conditions deteriorated Asian economies that rely importantly on exports significantly in Argentina this year. The Argentine of computers and semiconductors (Korea, Singapore, peso was devalued in January and then allowed to Malaysia, and Taiwan) have grown quite vigorously float in early February; since then, it has lost more so far this year, a buoyancy reflecting in part the than 70 percent of its value versus the dollar. The recent turnaround of conditions in the technology peso's fall severely strained balance sheets of Argen- sector and stronger U.S. growth. The currencies of tine issuers of dollar-based obligations. Various several countries of this group have moved up against stop-gap measures intended to restrict withdrawals the dollar. In Korea, the expansion has been more from bank accounts and to force conversion of broad-based, as domestic demand was fairly resilient dollar-denominated loans and deposits into peso- during the recent global downturn and has remained denominated form put banks and depositors under firm. China, which is less dependent on technology further stress. Meanwhile, economic activity has con- exports, has continued to record strong growth as tinued to plummet, and the government has struggled well. Other countries in the region also have started to gain support for reforms that would address to recover from steep slowdowns or contractions in chronic fiscal imbalances. Since late 2001, the gov- 2001, although Hong Kong has continued to be ernment has been servicing its obligations only to its troubled by the collapse of property prices. Most multilateral creditors, and spreads on Argentina's stock markets in the region have recorded gains so far international debt have soared to more than 65 per- this year. • centage points. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

360 The Use of Checks and Other Noncash Payment Instruments in the United States Geoffrey R. Gerdes and Jack K. Walton II, of the Taken together, the data show that an estimated Board's Division of Reserve Bank Operations and 32.8 billion checks were paid in the United States Payment Systems, prepared this article. Thomas in 1979, 49.5 billion in 1995, and 42.5 billion in Guerin andAmin Rokni provided research assistance. 2000 (chart 1). The exact year in which check use peaked is unknown, but it appears that the number Over the past several decades, the payments industry paid began to decline sometime in the mid-1990s. By has undergone significant change. New electronic 2000, retail electronic payments had gained considerpayment instruments have been introduced, and the able ground. Nonetheless, checks remained the premeans for making electronic payments have become dominant type of retail noncash payment. Checks increasingly available for use in everyday commerce. also continued to account for a large proportion of Further, the adaptation of technology has driven the total value of retail noncash payments in 2000, down the costs of processing electronic payments though the real value of total checks paid had relative to check payments. Partial statistics and anec- declined since 1979. dotal evidence suggest that consumers and businesses are increasingly using electronic payments. Neverthe- OVERALL TRENDS IN THE USE OF CHECKS less, the paper check continues to be the most commonly used type of noncash payment instrument In the United States, most noncash payments are in the U.S. economy. Checks' share in noncash paymade using checks, credit cards, debit cards, and the ments has been declining, however, and recent evielectronic payment system called the automated dence suggests that the total number of checks paid clearinghouse (ACH)—collectively referred to as has been declining as well. retail noncash payments.1 Consumers, businesses, To shed light on the use of checks and other noncash payment instruments in the United States, 1. The term check refers to a demand draft drawn on or payable the Federal Reserve recently sponsored three related through or at a depository institution or a federal, state, or local surveys collectively referred to as the Retail Pay- government entity, including cashiers and certified checks, travelers checks, money orders, and rebate checks. The ACH is an electronic ments Research Project. The survey data were used payments network that enables the processing of credit and debit to estimate the number and value of payments made payments, such as payroll and prearranged bill payments, between in 2000 using checks and several types of electronic depository institutions. payment instruments as well as to study the characteristics of individual checks paid in 2000. The magni- 1. Number of check and retail electronic payment tude and diversity of the samples also enabled a transactions, selected years comparison of check use across type and size of depository institution and across geographic regions. In addition, the data provided a basis for looking at changes in noncash payments since 1979, when the Federal Reserve collected data on checks for an analysis of the check-clearing system, and since 1995, when the Federal Reserve collected data on checks for a report to the Congress on funds availability and check fraud. The surveys are described in detail in the appendix. NOTE. Darrel Parke and Samuel Slowinski, of the Board'S Division of Research and Statistics, provided valuable assistance with the production and interpretation of the statistical estimates. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

361 1. Number and value of retail noncash payments, 2000 and acceptability of alternatives to cash influenced the proportion of payments made with retail noncash Number /alue instruments. From 1979 to 2000, the number of retail Percent of Trillions of Percent of noncash payments grew approximately 3 percent a total dollars total year, about the same as the rate of growth of real Check' 42.5 59.5 39.3 84.4 GDP. Hence, both the number of retail noncash pay- Retail electronic payments 28.9 40.5 7.3 15.6 ments and the amount of economic output roughly Debit card ,3 >,, .3 .7 doubled over the period. Over the same period, the Credit card General-purpose2 ... 12.3 17.2 1.1 2.3 number of households increased from 78.8 million to Private-label3 2.7 3.8 .2 .3 Retail ACH4 5.6 7.9 5.7 12.2 105.5 million, for an annual rate of growth of almost 1.5 percent. Total 71.5 100.0 46.6 100.0 The growth in retail noncash payments leading up NOTE. In this and subsequent tables, components may not sum to totals, and calculations may not yield averages and percentages shown, because of to the mid-1990s may have resulted from a general rounding. increase in payments, an increase in the number of 1. Includes checks paid by depository institutions, U.S. Treasury checks, and postal money orders. households with checking accounts, and the replace- 2. Includes co-branded credit cards, charge cards, co-branded charge cards, ment of some cash payments by noncash payment secured credit cards, travel and entertainment cards, commercial cards, and new payment technologies that route transactions through the card associations' alternatives.2 About 9.2 billion more retail electronic networks. payments were made in 1995 than in 1979. The 3. Includes retailer cards, oil company cards, third-party fleet cards, and cards issued by third-party receivable owners. number of checks also rose considerably over the 4. Excludes ACH transactions classified as cash concentration and disburse- period. In fact, about 16.7 billion more checks were ment, which, for purposes of this study, are not considered payments. paid in 1995. However, the number of checks paid as a share of all retail noncash payments declined, from 85.7 percent to 77.1 percent. and government entities made about 71.5 billion retail noncash payments in 2000 (table 1). The total The decline in the number of checks as a share of value of these payments was about $46.6 trillion, retail noncash payments continued over the period approximately four and three-fourths times U.S. gross 1995 to 2000, and the number of checks paid declined domestic product (GDP) for that year. Checks were as well, from an estimated 49.5 billion in 1995 to the predominant type of retail noncash payment, 42.5 billion in 2000. (In comparison, the annual accounting for 59.5 percent of these payments by number of electronic payments increased 14.2 billion number. By comparison, checks constituted 85.7 per- over the period.) Whether the number of checks paid cent of retail noncash payments in 1979 (table 2). in nearby years was higher or lower than in 1995 is Although the number of check payments increased unknown. However, these estimates suggest that the from 1979 to 2000, the number of checks as a share number of checks paid peaked during the mid-1990s. of retail noncash payments declined about 26 percentage points. 2. The proportion of households without a checking account fell Growth in overall economic activity and popula- from 18.7 percent in 1989 to 13.2 percent in 1998. See Arthur B. tion led to a general growth in payments, including Kennickell, Martha Starr-McCluer, and Brian J. Surette, "Recent Changes in U.S. Family Finances: Results from the 1998 Survey of cash payments, between 1979 and 2000. Such factors Consumer Finances," Federal Reserve Bulletin, vol. 86 (January as technological change and increased availability 2000), pp. 1-29. 2. Number and rate of growth of retail noncash payments, selected years n m—! j Number (billions) Growth (percent, annual rate) Type of payment 2000 1979-95 1995-2000 1979-2000 Check 32 2.6 -3.0 1.2 Retail electronic payments .. 6.3 14.6 8.2 Debit card 41.8 Credit card General-purpose 10.9 9.5 10.5 Private-label ... -2.3 .9 -1.6 Retail ACH 19.0 15.1 18.0 iwiii^iIBS Total 3.3 2.2 3.0 NOTE. See table 1, notes SOURCES. Federal Reserve; National Automated Clearing House Association; . . . Not applicable. Nilson Report, selected issues; and ATM & Debit News, EFT Data Book, 2002 edition. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

362 Federal Reserve Bulletin • August 2002 The apparent decline in the number of checks paid 3. Number and value of checks paid, between 1995 and 2000 was likely not driven by a by type of institution, selected years change in the general level of economic activity. Memo: Both years were part of an economic expansion that Value Transaction Number began in the early 1990s and peaked in March 2001 Year and type of institution (billions) (trillions deposits of dollars) (billions (according to the National Bureau of Economic of dollars) Research), and spending by consumers and busi- 1979 nesses, which make the predominant number of pay- Commercial banks 31.4 n.a. 744 Credit unions .3 n.a. 4 ments in the economy, increased during the period. Savings institutions .3 n.a. 4 Instead, the decline in check use appears to have been All depository institutions .. 32.0 49.6 752 related to increased use of electronic payments by U.S. Treasury checks and consumers and businesses. postal money orders ... .8 1.1 Although the number of checks paid appears to Total 32.8 50.7 have declined during the latter part of the period, the 1995 number increased on net from 1979 to 2000. The Commercial banks 42.0 n.a. 855 Credit unions 3.5 n.a. 34 value of checks paid, however, decreased—from an Savings institutions 3.4 n.a. 64 estimated $50.7 trillion in 1979 to $39.3 trillion in All depository institutions .. 48.9 n.a. 953 2000 (both in 2000 dollars; table 3).3 The declines U.S. Treasury checks and in overall check value and related measures (the postal money orders ... .7 .6 estimated average value of a check, for example, Total 49.5 n.a. declined from $1,544 in 1979 to $925 in 2000) pro- 2000 vide supporting evidence that electronic payments Commercial banks 33.3 36.6 602 Credit unions 4.7 .9 51 have replaced checks for at least some types of trans- Savings institutions 4.0 1.6 62 actions. In addition, most large-value payments for All depository institutions .. 42.0 39.0 715 settlement of financial market transactions that were U.S. Treasury checks and once made by check are now made electronically, postal money orders ... .5 .3 many using the large-value funds transfer systems Total 42.5 39.3 (such as Fedwire and CHIPS). Such payments are NOTE. All values are in 2000 dollars, discussed separately because they are not considered n.a. Not available. retail noncash payments. . . . Not applicable. Trends across Depository Institutions VARIATIONS IN CHECK PAYMENTS ACROSS DEPOSITORY INSTITUTIONS Credit unions and savings institutions generally did not offer checking accounts (or their equivalent) until Almost 15,000 depository institutions in the United the late 1970s. Since that time, transaction deposits States—commercial banks, credit unions, and savat, and the number and value of checks paid by, these ings institutions—provide checking or share draft institutions have grown briskly. accounts. However, the distribution of transaction Despite the overall decline in the number of checks deposits and the number and value of checks paid paid between 1995 and 2000, the number paid by are skewed toward a small number of very large institutions.4 credit unions and savings institutions continued to grow (table 3). These institutions together paid an 3. All historical values reported in this article are given in 2000 estimated 14 percent of checks in 1995 but more than dollars. Adjustments to historical values were made using the implicit 20 percent in 2000. The 1.8 billion increase in the price deflator for GDP. Given that prices have roughly doubled since number of checks paid annually by these institutions, 1979, $1 in 1979 was equivalent to about $2.05 in 2000. An estimate of the value of checks paid in 1995 could not be constructed. however, was more than offset by a dramatic decline 4. Depository institution subsidiaries of multibank holding compa- of about 8.7 billion in the number paid annually by nies are treated as a single depository institution. Commercial banks commercial banks.5 include branches of foreign banks; checks paid by the latter group constitute a vety small proportion of the total number and value of checks paid. Savings institutions include savings and loan institutions, 5. The increase in checks paid by credit unions is consistent with cooperative banks, and savings banks. Transaction deposits are depos- independent evidence from the Survey of Consumer Finances conits held in transaction accounts—types of accounts for which the ducted periodically by the Federal Reserve: The share of households number of payments is not restricted by regulation. Although pay- that reported using credit unions for checking accounts rose from ments may be made from other types of depository institution 10.5 percent in 1989 to 17.4 percent in 1998. The share that reported accounts, such as savings accounts, such payments are limited by using savings institutions for checking accounts declined, however, regulation to six per month. from 20.2 percent to 11.5 percent, perhaps suggesting that the increase Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

The Use of Checks and Other Noncash Payment Instruments in the United States 363 Differences across Depository Institutions However, looking at the number and value of checks in 2000 paid in terms of the value of an institution's transaction deposits can give some indication of the The average value of checks paid in 2000 varied by importance—or intensity—of check use. Specifically, type and size of depository institution, presumably the relative intensity of check use can be approxibecause of the mix of business and consumer custom- mated as the number and value of checks paid ers served by different institutions. Large commercial per $1,000 of transaction deposits—the number-tobanks and some large savings institutions serve cor- deposits ratio and value-to-deposits ratio respecporations and other businesses as well as consumers. tively. In 2000, these ratios appear to have varied by Because large corporations tend to make larger-value type and size of depository institution (table 4). The payments, the average value of checks paid by largest commercial banks, for example, had the highdepository institutions that serve them tends to be est value-to-deposits ratio among all categories of larger. Community banks (small commercial banks depository institutions, likely reflecting the high averand savings institutions) typically serve smaller busi- age value of checks paid by these institutions. In nesses and consumers, so the average value of checks contrast, these banks had a number-to-deposits ratio they pay is smaller. Credit unions overall have the similar to those of the smallest banks and small smallest average check value because they generally savings institutions. Midsize banks had the lowest provide accounts only to consumers (table 4).6 number-to-deposits ratio and a value-to-deposits ratio The importance of check payments relative to other below the ratios for the largest and smallest banks. types of payments at individual depository institu- These results suggest that checks may be used less tions cannot be known precisely because data on the intensively at midsize commercial banks than at proportion of total payments made using checks at institutions in other categories. individual depository institutions are unavailable. The amount of transaction deposits held by a depository institution can be affected by both the willingness of account holders to hold idle balances in check use at savings institutions was due to increased use by and the institution's use of sweep accounts to reduce businesses. The share that reported using commercial banks increased the balances their customers hold overnight in transslightly, from 68.6 percent to 69.5 percent. See Dean F. Amel and Martha Starr-McCluer, "Market Definition in Banking: Recent Evi- action accounts.7 The use of such deposits in meadence," Antitrust Bulletin, vol. 47 (Spring 2002), pp. 63-89. 6. In some cases, however, credit union accounts are used for business purposes. In 1998, about 3.8 percent of small businesses used 7. Generally, depository institutions use two types of sweep proa credit union for checking. See Marianne P. Bitler, Alicia M. Robb, grams. Wholesale sweeps, which have been offered to business cusand John D. Wolken, "Financial Services Used by Small Businesses: tomers since the 1970s, keep customers' non-earning assets low, by Evidence from the 1998 Survey of Small Business Finances," Federal moving funds between non-interest-earning demand deposits, such as Reserve Bulletin (April 2001), vol. 87, pp. 183-205. transaction deposits, and interest-earning money market mutual funds 4. Checks paid by and transaction deposits of depository institutions, by type and size of institution, 2000 Checks paid Transaction deposits Memo 77 II TT yypp ii (( nn ee tt rr mm aa aa •• nn nn ii dd ll ss ll aa ii ss cc oo ii tt nn zz ii ss oo ee nn •• oo oo ff ff dd ee dd iinn pp oo ss oo ll tt ll ss ii aa ii tt rr tt uu ss ss tt )) ii oonn NN iinn tt uu ii ss mm oo oo ttii ff nn tt bb ss uu ee -- rr ( N bi u ll m io b n e s g r ) (t V ril a o l l i f u o e n s A v v a e l r u a e g e in P t e e r r o c b f e a n n t k i A nt v v e a e o r l b r f u a a e g n e k P o e n rc -u en s t ( A b m il o l o i f o u n n s t N de u p m to o b - si e t r s - d V ep a to o lu - s e it - s N a u s m t s o e b - t e s r - V as a t s o l e u - t e s - MM dollars) (dollars) checks checks dollars) ratio1 ratio2 ratio 3 ratio4 returned returned (dollars) ......rrssii^^JJ..IIJJ^^..AAiikk aa&&ll Commercial banks 6,852 33.3 36.6 1,099 .79 859 34 602 55 60,682 53 58,256 250-60,000 170 23.6 29.6 1,254 .82 964 38 411 57 72,090 54 67,681 50-250 1,104 4.3 3.4 790 .72 646 26 99 43 34,106 48 37.897 0-50 5,578 5.4 3.6 663 .75 595 26 93 58 38,523 53 35,386 Credit unions 6,551 4.7 .9 186 1.03 244 6 51 93 17,254 111 20,613 75-2,000 106 1.2 •3 208 .98 305 6 16 75 15.621 96 20,068 0-75 6,445 3.5 .6 178 1.05 223 6 35 101 18,028 117 20,845 Savings institutions 1,293 4.0 1.6 389 .99 507 18 62 65 25,226 34 13,296 200-6,500 35 2.2 .9 413 1.22 533 14 30 72 29,567 36 14,752 0-200 1,258 1.8 .7 360 .67 444 22 31 58 20,985 32 11,706 All institutions 14,696 42.0 39.0 928 .85 700 29 715 59 54,522 53 49,539 NOTE. Excludes U.S. Treasury checks and postal money orders, which are 1. Number of checks paid per $1,000 of transaction deposits, paid by the Federal Reserve Banks. Transaction deposit ranges may include 2. Value of checks paid per $1,000 of transaction deposits, amounts equal to the upper boundary but do not include amounts equal to the 3. Number of checks paid per $1,000,000 of assets, lower boundary. Institutions without transaction deposits are not included. 4. Value of checks paid per $1,000,000 of assets. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

364 Federal Reserve Bulletin • August 2002 sures of the relative intensity of check use may 2. Distribution of credit unions by average number of share exaggerate the intensity of check use at the largest drafts paid monthly per account, 2000 institutions because such institutions also tend to use sweep accounts most extensively. An alternative approximation that may control for various effects on transaction deposits is the number and value of checks paid per $ 1 million of assets—the number-toassets ratio and value-to-assets ratio respectively. While the number-to-assets ratio exhibits the same general U-shaped pattern as the number-to-deposits and value-to-deposits ratios, the value-to-assets ratio for commercial banks does not. Instead, the value-toassets ratio increases as the size category of commercial banks increases. Whether viewed in terms of transaction deposits or assets, credit unions stand out as the type of institu- 0-5 5-10 10-15 15-20 20-25 25-30 30+ Average number of share drafts per account tion at which checks are used the most intensively by NOTE. Ranges may include the upper boundary but do not include the number. The intensity of check use by both number lower boundary. and value declines as size increases, suggesting that check use is less intense at larger credit unions. Without directly measuring the number and value year (about nineteen; chart 3). One reason for the of all payments initiated by depository institutions, difference is that some households write checks on approximating the intensity of check use is difficult accounts at more than one institution. because of the complexity of factors affecting the data. Nevertheless, the results presented here provide preliminary evidence that the intensity of "On Us" Checks check use does vary by type and size of depository institution. A check that is deposited in or cashed at the same The average number of check payments per transdepository institution on which it is drawn is referred action account can be estimated for credit unions to as an on-us check. An estimated 29 percent of because data are available on the number of transchecks paid in 2000 were on-us checks (table 4), action (share draft) accounts at these institutions. about the same as in 1979. Because credit unions generally do not offer business The apparent absence of an increase in the aggreaccounts, the number of checks (share drafts) paid gate share of on-us checks is surprising in light of per account is an approximation of the number of the consolidation of the banking industry that has checks paid per consumer account. The average numoccurred since 1979. When institutions merge, the ber of checks per account varies across these institutions (chart 2). Differences in payment services offered may explain some of the variation. The 3. Average number of retail noncash payments monthly average number of checks paid per share per household per month, 2000 draft account in 2000 (about fifteen) was somewhat lower than the monthly average number of checks estimated to have been written by households in that or other financial instruments. Retail sweeps, which first appeared in 1994, move idle funds from transaction deposit accounts to specialpurpose money market deposit accounts (MMDAs) and return them to transaction accounts only as needed to cover payments, limiting the number of withdrawals from the MMDAs to six per month in accordance with regulatory restrictions. This practice does not adversely alfect the account holder but allows the depository institution to reduce its non-interest-earning assets. Both types of sweep programs reduce the amount of funds depository institutions must hold to meet their reserve requirements. See Cheryl L. Edwards, "Open Market Operations in the 1990s," Federal Reserve Bulletin, vol. 83 (November 1997), pp. 859-74, for a discussion of sweep programs. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

The Use of Checks and Other Noncash Payment Instruments in the United States 365 probability that a check written by a customer of one Returned Checks of the institutions will be an on-us check for the new institution generally increases; the increase is large Because an account has been closed, funds in the if the institutions that merged tended to serve custom- payer's account are insufficient, or another reason, ers that wrote checks to each other, though not so some checks presented to a paying institution are large if they tended to serve customers that did not. If returned unpaid to the collecting institution. An estithe merger is between institutions in different geo- mated 251 million interbank (non-on-us) checks were graphic areas, and assuming that most checks are returned in 2000, about 0.85 percent of interbank local, the effect of the merger on the proportion of checks paid, or 8.5 checks out of every 1,000 interon-us checks is small. That the share of on-us checks bank checks paid (table 4).9 This estimate is an upper remained virtually unchanged from 1979 to 2000 as bound on the number of returns, as some checks may extensive consolidation of depository institutions be returned more than once, leading to some double both within and across regions was taking place counting.10 suggests that other, behavioral changes in check- The estimated proportion of checks that are writing offset the effects of consolidation. One such returned unpaid appears to vary by type and size of change likely was the way account holders obtain depository institution. Credit unions as a group had cash: In the 1970s, account holders commonly the highest return rate (10.3 checks returned for every obtained cash by cashing checks at the counter 1,000 paid), suggesting that interbank checks written of their own banks; since then, the use of ATMs to by consumers are returned more frequently than are obtain cash has increased dramatically, reducing the those written by businesses. The estimated average use of checks for this purpose. value of a returned check in 2000 was $700. Several factors in addition to the effects of consolidation or banking concentration may affect the prob- VARIATIONS IN CHECK USE BY REGION AND ability that a check paid by a particular institution is DEGREE OF URBANIZATION an on-us check. These include the extent of branching, the range of customers served, and the extent of The size and diversity of the sample of depository business activity of account holders with nonlocal institutions were sufficient to estimate the number payment counterparties or financial institutions.8 A and value of checks paid in 2000 for four broad comparison of the proportions of on-us checks paid regions of the country—Northeast, South, Midwest, in 2000 reveals some patterns among depository instiand West. The apparent variation among regions can tutions of different types and sizes (table 4). Among be explained in part by population size and level of commercial banks, the proportion of on-us checks economic activity (table 5).11 Differences persist after was greater for larger institutions than for smaller controlling for those variables, however, an indicainstitutions. Among credit unions, however, no relation that regional differences may be associated with tionship between size and proportion of on-us checks other factors, such as the availability of and willingwas evident; as a group, credit unions had the smallness to use payment instruments other than checks. est share of on-us checks, consistent with the finding By number of checks paid per capita, the Midwest that in 2000, the share of consumer checks for which led the regions, followed by the South, West, and the payee was also a consumer was relatively small (23 percent). The estimated proportion of on-us checks for small savings institutions was large rela- 9. An on-us check would not be returned to another depository tive to the proportion for large savings institutions, institution, as the payer and payee are using the same institution; an possibly because of the types of communities the on-us check could be returned unpaid to the payee, however. The smaller institutions serve. In fact, many community surveyed depository institutions reported only the number and value of checks returned to other institutions. The percentage of returned banks reported a large share of on-us checks. The checks was computed as the number of returned checks divided by the 1979 study also found a large share of on-us checks difference between the number of checks paid and the number of among community banks. on-us checks. (As a share of total checks paid, interbank returned checks accounted for an estimated 0.60 percent.) 10. Technological advances in the processing of returned checks may have reduced the incidence of multiple returns of the same check by helping collecting banks re-present checks when there is a greater likelihood of sufficient funds in the account on which the check is 8. A complete analysis of the effects of these factors is beyond the drawn. scope of this article; a simple cross-sectional regression of the share of 11. Economic activity was measured by economic output, which on-us checks on the logarithm of transaction deposits and the number was estimated as the sum of the gross products of the states making up of own-bank branches revealed no significant relationship between the the regions. Gross state product is a measure of state output similar to number of branches and the share of on-us checks. GDP. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

366 Federal Reserve Bulletin • August 2002 5. Number and value of checks paid by depository institutions, by location of deposits, 2000 Number Willie- MMeemmoo:: TTrraannss-- ....•• LL "" oo VV ccaa ttiioonn oo .. ff .. ddeeppoossiittss -- --""''..VV,, NN iinn tt uu ii ss mm oo oo ttii ff nn tt bb ss uu ee -- rr (b T il o li t o a n l s) ca P p e i r t a o $ u 1 P t o , p e 0 f r u 0 t 0 1 N de r u a p m t t o o i b - s o e i 2 t r s - ( d tr o T i l l o o l l a t f i a o r l s n ) s (th d c o o a P l u o p l e s a f i r a t r a n s ) d s o $ u 1 P t o , p 0 e f r u 0 t 0 1 d V r e a p a t t o o l i u - s o e i 3 t - s ( A d c v o h p e l e e l r a c r a k r g s e ) dd (( dd bb aa ee oo ii cc pp ll ll oo tt ll ll oo ii ii aa ff oo ss oo rr nn ii nn ss tt )) ss ss By region Northeast4 2,417 7.1 132.6 3.3 46.0 9.1 169.8 4,233 58,909 1,280 154 Multiregion institutions 55 3.6 40.2 7.0 77,883 1,938 89 Single-region institutions 2,362 3.5 54.0 2.1 32,763 606 65 B^JQS&S* . " ifisHr-j South5 4,841 15.3 152.8 4.7 61.9 14.6 145.8 4,467 59,096 955 247 Multiregion institutions 92 4.9 59.6 5.7 68,824 1,155 82 Single-region institutions 4,749 10.4 63.1 9.0 54,242 860 165 Midwest6 5,396 10.8 168.4 5.0 61.6 8.0 123.9 3,683 45,362 736 176 Multiregion institutions 94 4.1 . 51.9 4.4 56,387 1,086 78 Single-region institutions 5,302 6.8 69.4 3.6 36,570 527 98 West7 2,182 8.8 138.5 3.7 64.1 7.3 115.5 3,102 53,437 834 137 Multiregion institutions 72 4.2 69.1 4.0 65,235 944 61 Single-region institutions 2,110 4.6 BE ... $ 60.1 3.3 43,959 732 76 By urbanization *' Urban | 10,173 33.3 ^ 1453 57.6 33.0 144.2 57,215 992 578 m Rural smmmm.a..m^imiSmMiMtm 5,970 8.7 167.0 | I • • 'H 63.8 6.0 114.0 43,575 683 137 NOTE. Includes only checks paid by commercial banks, savings institutions, 4. Includes Connecticut, Maine, Massachusetts, New Hampshire, New Jerand credit unions. Multiregion institutions are those that have deposits in more sey, New York, Pennsylvania, Rhode Island, and Vermont. than one region; single-region institutions have deposits in only one region. 5. Includes Alabama, Arkansas, Delaware, District of Columbia, Florida, Urban areas are those defined as metropolitan statistical areas or New England Georgia, Kentucky, Louisiana, Maryland, Mississippi, North Carolina, Oklacounty metropolitan statistical areas; rural areas are those defined to be outside homa, South Carolina, Tennessee, Texas, Virginia, and West Virginia. urban areas. Figures for the number of institutions do not sum to the total 6. Includes Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, number of institutions because some institutions operate in more than one region Nebraska, North Dakota, Ohio, South Dakota, and Wisconsin. or in both urban and rural areas. 7. Includes Alaska, Arizona, California, Colorado, Hawaii, Idaho, Montana, 1. Output is measured as the sum of the gross products of the states in the Nevada, New Mexico, Oregon, Utah, Washington, and Wyoming. region. . . . Not applicable. 2. See table 4, note 1. SOURCES. Federal Reserve; and Department of Commerce, Bureau of Eco- 3. See table 4, note 2. nomic Analysis and Bureau of the Census. Northeast. By value of checks paid per capita, the Interestingly, the average check value and value-to- Northeast led, followed by the South, Midwest, and deposits ratio for depository institutions operating West. Thus, no region stood out as the greatest user only in the Northeast (single-region institutions) were of checks by both number and value. Nonetheless, considerably lower than for institutions operating in some differences among regions appear to have been the Northeast and at least one other region (multilarge. For example, the number of checks paid per region institutions). Among single-region institutions, capita was 27 percent higher in the Midwest than in those in the Northeast and Midwest had the lowest the Northeast, and the value of checks paid per capita average check values and value-to-deposits ratios, was 47 percent higher in the Northeast than in the suggesting that these institutions were used less fre- West. quently for paying larger-value business checks. Cor- The Northeast had the lowest number of checks per respondingly, the very high average check value and capita, the lowest number of checks per $1,000 of value-to-deposits ratio for multiregion institutions output, and the highest average check value. In addi- operating in the Northeast suggest that these institution, the Northeast had the lowest number-to-deposits tions were used more often than others for paying ratio. The smallest region as measured by area and such larger-value business checks. population size, the Northeast includes New York The Midwest, the region with the largest number State, which is home to a significant concentration of of depository institutions per capita, had the highest financial and corporate activity. This activity appears number of checks per capita. The West had the smallto have had a large effect on checks and deposits in est value of checks per capita and per $1,000 of the region. For example, average check value for the output, possibly indicating that payers in the region, region was more than 20 percent lower when New perhaps led by businesses, had a greater propensity York State was excluded from the calculation, bring- to replace higher-value checks with electronic paying the average value for the rest of the Northeast ments. The South had the highest value of checks per closer to the average values for the other regions. $1,000 of output and a value-to-deposits ratio similar Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

The Use of Checks and Other Noncash Payment Instruments in the United States 367 to that for the Northeast, suggesting that checks were by consumers and the corresponding decline in the used by businesses more often in these two regions share written by businesses and governments partly than in the other regions. explain the decline in the real value of checks over Almost 80 percent of checks were paid using trans- time. action deposits located in urban areas (table 5).12 On Checks can be classified according to the broad a per capita basis, however, the number of checks purpose of the payment—point-of-sale (POS) (generpaid was more than 14 percent higher in rural areas, ally, in-person purchases of merchandise at such locaperhaps because of lesser availability of or willing- tions as grocery and office-supply stores); income ness to use electronic payment alternatives. The aver- (payments to consumers by businesses and govage value of rural checks was about 30 percent lower ernments, including payroll, rebates, refunds, and than that of urban checks. dividends); remittance (payments of one-time or recurring bills); and casual (consumer-to-consumer payments). The value of checks paid in 2000 varied DISTRIBUTION OF CHECK PAYMENTS by purpose of payment (table 6). For example, nearly BY PAYER, PAYEE, AND PURPOSE three-fourths of POS checks were for less than $ 100. In contrast, slightly fewer than half of casual-payment The share of checks written by consumers appears to checks were for less than $100, and nearly as many have increased somewhat since the 1970s. According were for $100 to $1,000. to the 2000 survey, consumers wrote about 58 per- Comparison of the results from the 1970s with the cent of the sampled checks for which the payer could results for 2000 shows that, combined, the share of be classified, with business and government checks checks written by consumers at the point of sale and making up the rest.13 Studies by the Bank Adminis- for the payment of bills decreased about 13 percent tration Institute and Arthur D. Little, Inc., in the early over the period, with a proportionate increase in and mid-1970s that classified check payments by consumer-to-consumer check payments.15 Consumpayer and payee found that consumers wrote about ers apparently, over time, replaced checks written at half of all checks.14 The increase in the share written the point of sale and for bill payment with electronic payments to a greater extent than they replaced 12. Urban areas were defined as metropolitan statistical areas (MSAs) or New England county metropolitan statistical areas (NECMAs), and rural areas as all other areas. 15. In 1979, individuals wrote an estimated 50 percent of their 13. Approximately 11 percent of checks could not be classified into checks to pay bills. Another 40 percent were written at the point of payer and payee categories. sale (of which 80 percent were written to make retail purchases and 14. See L.M. Fenner and R.H. Long, "The Check Collection about 20 percent were written for cash), and about 10 percent were System: A Quantitative Description" (Chicago: Bank Administration written to other consumers. In 2000, 36 percent of checks written by Institute, 1970), and Arthur D. Little, Inc., "The Consequences of consumers that could be classified by purpose were for bill payment Electronic Funds Transfer: A Technology Assessment of Movement and 29 percent were written at the point of sale; an additional toward a Less Cash/Less Check Society," prepared for the National 13 percent were identified as either for bill payment or written at the Science Foundation, Research Applied to the National Needs point of sale. The remaining 23 percent were consumer-to-consumer (RANN), under contract NSF-C844 (Government Printing Office, payments. (Only 1.6 percent of checks written by consumers in 2000 1975). could not be classified by purpose.) 6. Distribution of check values, by payer, payee, and purpose, 2000 Percent NOTE. Check value ranges may include checks written for amounts equal to 3. Payments from any type of payer to either a business or a government the upper boundary but do not include checks written for amounts equal to the payee that did not occur at the point of sale. lower boundary. 4. Payments to an individual from either a business or a government entity. 1. Includes state and local government checks, which constituted only a 5. Payments from one individual to another. small percentage of checks paid by and to businesses. 2. Point-of-sale payments from any type of payer to either a business or a government payee. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

368 Federal Reserve Bulletin • August 2002 checks written to pay other consumers. In 2000, 7. Average value of retail noncash payments, 2000 consumer-to-consumer payments accounted for about 23 percent of checks that could be classified as hav- Type of payment Average value Percent of checks (dollars) below average ing been written by consumers. •s § The average value of checks written in 2000 was Debit card considerably greater than the average value of credit Credit card General-purpose 87 44 and debit card payments (table 7). In contrast, the Private-label 59 36 Retail ACH 1,009 87 average value of ACH payments, which are used more often for larger-value, recurring payments such NOTE. See table 1, notes 1-4. as mortgages, credit card bills, and payroll, was somewhat higher than the average value of check cards extensively, and a large proportion of ACH payments. payments are undoubtedly made by businesses and Despite the high average value of checks relative governments. To estimate an upper bound for retail to debit and credit card payments, many checks in noncash electronic payments made by households, 2000 were for small amounts (table 7). About 29 per- assume that households made all debit and credit card cent were for less than the average value of debit card payments in 2000 and were the payers for half of all payments ($42), and 85 percent were for less than the ACH payments.16 Under these assumptions, the averaverage check value of $925. In comparison, approxi- age number of retail electronic payments per housemately 95 percent of checks written in 1979 were for hold per month in 2000 would have been about less than the average check value that year of $1,544. twenty-one (chart 3), or slightly more than half the The proportion of checks for less than $500 decreased retail noncash payments per household per month in from 85 percent in 1979 to 77 percent in 2000. 2000. For purposes of comparison, assume that in However, the proportion of the highest-value checks 1979, households made all retail electronic payments (those above $500,000) also decreased. Thus, most of but half of all check payments. Under these assumpthe decline in the average (and total) value of checks tions, the average number of retail electronic payfrom 1979 to 2000 was due to the replacement of the ments per household per month would have been highest-value checks with electronic payments. about six, or about one-fourth of the retail noncash payments made per household per month in 1979; check payments would have accounted for the other three-fourths (about seventeen per household per ELECTRONIC PAYMENTS month). The number of retail electronic payments made in Although the number of checks written per house- 1979 was small, accounting for about 15 percent of hold increased from 1979 to 2000 (in part because the all retail noncash payments (table 2). Since then, the number of households with some type of checking number made annually has grown at a high rate. Over account increased), electronic payments per housethe latter part of the period, the growth in electronic hold as a proportion of retail noncash payments payments accelerated, nearly doubling between 1995 increased more than checks. The apparent increase in and 2000 and accounting for 40 percent of all retail the share of retail electronic payments suggests that noncash payments in 2000. Most of the growth was consumer checks have been replaced by electronic due to a dramatic increase in the number of debit card payments to some extent. The increase in the estipayments. mated number of checks written per household per month, however, suggests that further growth in electronic payments could occur through the replacement of some consumer checks. Payments by Households An estimate of the average number of check pay- 16. Data are not available to estimate precisely the share of retail ACH payments made by households, but research suggests that the ments made monthly by a household in 2000 can be share is about half. Of those household payments, about 40 percent are estimated from data collected in the survey on check ACH debits—mainly prearranged payments (authorized by houseuse. Because of the nature of the data from the holds and initiated by business recipients) that households have traditionally made by check, such as payments of recurring obligations to electronic payments survey, however, a household mortgage, insurance, and utility companies. The other 60 percent are average for retail electronic payments cannot be esti- ACH credits—mainly payroll payments from businesses to housemated without making assumptions. A large propor- holds but also some payments by households. See Vantis International, "Market Analysis and Segmentation for Direct Deposit and tion of credit and debit card payments are likely made Direct Payment among Consumers, Businesses, and Financial Instituby households, although businesses also use credit tions" (1998). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

The Use of Checks and Other Noncash Payment Instruments in the United States 369 Payments by Businesses and Governments made by check, are now made using large-value funds transfer systems. Increased use of these sys- The use of electronic payments by businesses and tems helps explain the decline in the average value of governments has also increased since 1979. Many checks from $1,544 in 1979 to $925 in 2000. Relative businesses have adopted direct deposit of payroll, for to retail noncash payments, payments made using example. The proportion of payroll payments made these systems are few in number but tend to be large via direct deposit rather than paper check increased in value.19 From 1979 to 1995, the rate of growth of from close to zero in 1979 to about 50 percent in large-value payments by number (table 8) was simi- 2000.17 Some businesses have also begun to experi- lar to that for retail electronic payments (table 2). ment with programs for converting checks to elec- From 1995 to 2000, however, the number of retail tronic payments at point-of-sale locations and for the electronic payments grew more than twice as fast processing of bill payments. In addition, a number of as the number of payments processed by the largebusinesses are seeking ways to combine electronic value funds transfer systems. payment processing with invoicing, which could Some payments made using large-value funds reduce the number of check payments. The U.S. transfer systems replaced some larger-value business Department of the Treasury now makes most of its and government payments made by check, and this payments using the ACH (chart 4) (though federal switch apparently had a significant effect on the government payments constituted only about 1.5 per- real value of check payments over time. One largecent of all retail noncash payments in 2000).18 scale change in business practices that motivated the replacement of some large-value checks was the switch to same-day funds for the settlement of trades Large-Value Payments between securities dealers in the U.S. equities markets in 1996. In addition to the retail payments that are the focus of this article, some very large payments, including federal government and business payments once NONCASH PAYMENTS IN OTHER COUNTRIES A look at noncash payments in other countries pro- 17. National Automated Clearing House Association; and Vantis International, "Market Analysis and Segmentation for Direct Deposit vides some perspective on the use of checks and and Direct Payment" (1998). electronic payments in the United States. Compared 18. For more on federal government payments, see Paula V. Hillery with other industrialized economies—Japan, the and Stephen E. Thompson, "The Federal Reserve Banks as Fiscal Agents and Depositories of the United States," Federal Reserve European Monetary Union (EMU), the United King- Bulletin, vol. 86 (April 2000), pp. 251-59. dom, and Canada—the number of noncash payments of any type per capita is considerably higher in the United States, as is the number of check payments 4. Number of retail payments initiated by the U.S. Treasury, per capita (chart 5). The number of electronic pay- 1979-2001 ments per capita is also higher in the United States, though not substantially so. Detailed data (not shown) indicate that the number of electronic payments per capita in some countries of the EMU, such as Finland, Germany, and the Netherlands, is higher than in the United States (similarly, the use of electronic payments may be greater in some regions of the United States than in others). The number of noncash payments per capita is higher in the United States than in the other economies mainly because of the more extensive use of checks. Given the very low level of noncash pay- 19. Nonetheless, many payments made via the large-value funds transfer systems, such as Fedwire, are low in value compared with the NOTE. The 2001 uptick in check payments was due to the midyear tax average ($3.8 million). In fact, about one-fourth of Fedwire payments refund payment sent to almost 100 million taxpayers as prescribed by the Economic Growth and Tax Relief Reconciliation Act of 2001. The U.S. in 2000 were for amounts less than $4,000. The median Fedwire Treasury also makes a small number of payments using other mechanisms payment was $30,000, the 75th percentile was $183,000, and the 95th such as Fedwire. percentile was $5.1 million. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

370 Federal Reserve Bulletin • August 2002 8. Number, value, and rate of growth of large-value funds transfer payments, selected years •• aaggaaMM Growth (percent, annua, rate) IItteemm 11997799 11999955 22000000 lllljjlliilllljjBBiiffttJJWW** JJiiiiWWii 1979-95 1995-2000 1979-2000 Number (millions) 45.9 126.9 168.1 6.6 5.8 6.4 Value (trillions of dollars) 186.6 581.5 671.9 7.4 2.9 6.3 NOTE. Includes Fedwire fund transfers and fund transfers processed by the SOURCES. Federal Reserve and CHIPS. Clearing House Inter-Bank Payment System (CHIPS). ments per capita in some countries, it seems likely lion in 1979 to 49.5 billion in 1995 but declined to that cash is used more extensively in these countries 42.5 billion in 2000. These three estimates are highly than in the United States.20 If that is true, measures of suggestive, though not conclusive, evidence that the the importance of checks as a share of noncash pay- total number of checks paid per year peaked in the ments may overstate the relative use of paper-based 1990s. Despite the apparent decline since 1995, the payment instruments in the United States. Without number of checks paid remained higher in 2000 than reliable measures of cash use, however, a compre- in 1979. hensive comparison across countries of the extent to The estimated value of checks paid declined from which electronic payments have replaced paper-based $50.7 trillion in 1979 to $39.3 trillion in 2000, sugpayments (mostly cash and checks) is not possible. gesting that electronic payments have increasingly replaced larger-value checks. Moreover, although the real value of transaction deposits declined slightly SUMMARY AND CONCLUSIONS from 1979 to 2000, the decline was not as great as the Statistical estimates indicate that the number of decline in the value of checks paid, a further suggeschecks paid in the United States rose from 32.8 bil- tion that electronic payments originated from transaction deposits likely replaced check payments. 20. Some researchers have argued that in the 1980s and 1990s, the The number and value of checks paid vary among number of payments by cash was lower in the United States than in institutions in interesting ways. The average value other countries. See Diana Hancock and David B. Humphrey, "Payof checks paid, as well as the intensity of check use, ment Transactions, Instruments, and Systems: A Survey," Journal of Banking & Finance, vol. 21 (1998), pp. 1573-624. differs by type and size of institution, reflecting in part the types of customers served. Differences also 5. Number of noncash payments per capita in one year, exist according to geographic region. Generally, the selected economies per capita value of checks paid is highest in the Northeast, and the number of checks paid per capita is highest in the Midwest. In addition, the number of • — 1 Checks — checks paid per capita apparently is greater in rural • Electronic payments 300 areas than in urban areas. Although the number and value of checks may have begun to decline, it appears likely that checks will continue to play a significant role in the U.S. payment system, particularly when electronic payments are not well suited for meeting consumer or business needs. U.S. authorities have generally relied on market forces to provide new payment products and services. In this environment, the fact that checks are still widely used suggests either that checks are an efficient means of payment for many purposes NOTE. Includes both retail payments and payments made using large-value relative to alternatives or that barriers to innovation funds transfer systems. Data for United States are for 2000; for France, 1998; are inhibiting the development of alternatives. The for others, 1999. The European Monetary Union includes Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, Luxemburg, Netherlands, Federal Reserve has emphasized the need for the Portugal, and Spain. public and private sectors to identify any such barri- SOURCE. European Central Bank, "Blue Book: Payment and Securities Settlement Systems in the European Union"; Bank for International ers and to work to reduce or eliminate them when Settlements, "Statistics on Payment Systems in the Group of Ten Countries"; doing so is in the public interest. and Federal Reserve. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

The Use of Checks and Other Noncash Payment Instruments in the United States 371 APPENDIX: DATA SOURCES AND transactions are processed through a small number METHODS OF ESTIMATION of networks, and payments flow through these networks, even if the payer and payee are customers of Described in this appendix are the surveys that pro- the same bank. Because more than one network can vided the data analyzed in this article. Also described process the same payment, double counting could are methods used to estimate the total number and have been an issue. To avoid this potential problem, value of checks for 2000, 1995, and 1979. the networks were asked to report only those payments that were originated on their own network. The check-clearing system is far less centralized 2000 Data than the electronic payments processing system. Checks are paid by several types of institutions— The most recent data were collected through a set of commercial banks, credit unions, savings instituthree surveys sponsored by the Federal Reserve and tions, and U.S. branches of foreign banks. To obtain known collectively as the Retail Payment Research payment for a check, the depository institution into Project.21 The three surveys were which the check is first deposited, usually the payee's bank, must present it to the paying bank. Presentment • Depository Institution Check Study—Survey of a commonly requires that the check be physically stratified random sample of insured commercial delivered to the paying bank to receive payment banks, credit unions, and savings institutions in the (though presentment can be made electronically if United States to estimate the number and value of the paying bank agrees). Presentment can be done checks paid in 2000 from data for March and April directly or through an intermediary such as a corre- 200122 spondent bank, a clearinghouse, or a Federal Reserve • Check Sample Study—Survey of individual checks Bank. Although the number and value of checks submitted for collection by a stratified random collected by the Reserve Banks each year are known, sample of depository institutions during 2000 to the number and value of checks presented directly or characterize check payments in that year in terms through other intermediaries are unknown. Because of payer, payee, and purpose such data are not included in reports filed by deposi- • Electronic Payment Instruments Study—Survey of tory institutions, they must be estimated on the basis the universe of electronic payment networks, card of surveys. Sample design and methods of estimation issuers, and third-party processors to estimate the are described below. number and value of retail electronic payments originated in the United States in 2000. Covered in the survey were credit cards (both general-purpose Estimation of the Number and and private-label cards), debit cards (both on-line Value of Checks Paid cards, which are used by entering a personal identification number, and signature-based cards, which The number and value of checks paid, the share of generally involve signing a receipt), and ACH on-us checks, and the number and value of returned transactions. checks for 2000 were estimated using data from the Depository Institution Check Study. In this study, the The collection of data on electronic payments was surveyed depository institutions were instructed to straightforward because the processing of electronic report only those checks paid on behalf of their own payments is largely centralized. Credit and debit card customers and to exclude checks that they collected on behalf of other depository institutions. To account for checks written on money market and other 21. Global Concepts, Inc., and Westat assisted with the first and accounts at brokerages, respondents were instructed second surveys, and Dove Consulting assisted with the third. The to include in their figures the checks they settled on preliminary results of the three surveys were announced in November 2001. A complete description of the project is available at the Federal behalf of those nondepository institutions. Reserve Financial Services web site (www.frbservices.org) under the topic Key Initiatives. Sample design. Whether checks are written on tradi- 22. Almost all checks in the United States are written against insured transaction deposits held at these types of institutions. Deposi- tional checking accounts provided by depository tory institutions serve as paying banks for checks written by the institutions, on accounts provided at brokerages or customers of nondepository institutions, such as checks written against other nondepository institutions, or are money orders, money market and mutual fund deposit accounts with check-writing privileges. cashiers checks, rebate checks, or travelers checks, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

372 Federal Reserve Bulletin • August 2002 they are generally paid by depository institutions. Check figures were annualized by summing the The population of depository institutions from which figures for March and April 2001 and multiplying the sample was drawn encompassed commercial by six. For simplicity, these annualized figures were banks (including branches of foreign banks), credit assumed valid for 2000, an assumption supported by unions, and savings institutions. Depository institu- data on Federal Reserve check collections: The numtion subsidiaries of multibank holding companies ber of checks collected by the Federal Reserve Banks, were treated as a single institution. Depository institu- which may track total checks for short intervals, tions in the population that had transaction deposits declined slightly but was relatively flat between 2000 at the close of business on September 30, 2000 and 2001. The annualization factor implied by the (June 30, 2000, for credit unions), were grouped number of checks collected by the Reserve Banks by type—commercial bank, credit union, or savings would have been slightly smaller than six because institution—and stratified by value of transaction check collection volume in March and April tends to deposits (excluding the transaction deposits of other be higher than in other months. banks and the U.S. government), as reported to fed- Estimates of the number and value of checks were eral depository institution regulators. based on separate ratio estimators for each stratum The sampling procedure was designed to achieve using transaction deposits as the covariate. (Within 95 percent confidence intervals no larger than ±5 per- a stratum, the amount of transaction deposits was cent of the size of the estimates of total number and highly correlated with the number and value of value of checks paid. Six strata were defined for checks reported by the responding institutions.) The commercial banks, five for credit unions, and three estimate of total number (or value) of checks paid for savings institutions. The boundaries of the strata by depository institutions was equal to the sum of and the probability of selection for institutions in the estimates for the strata. Data on the number (or each stratum were set to maximize the precision of value) of U.S. Treasury checks and postal money the estimates of the number and value of checks. orders paid in 2000 were added to that estimate to Because transaction deposits are concentrated in the obtain the estimated total for 2000. largest institutions, the probability of an institution's The precision of the estimates is characterized by being sampled increased with the value of its trans- the 95 percent confidence intervals reported below. action deposits, although the probability of selection Confidence intervals were computed by multiplying was the same for all the institutions in a given stra- ±1.96 by the sampling standard errors. The sampling tum. Using the assumption of a response rate of standard errors reflect the variability within the 65 percent or greater, 2,365 depository institutions sample data as well as the number of survey were sampled. The probability of selection for the responses. largest 533 commercial banks, 104 credit unions, and The estimates reported in this article for the num- 40 savings institutions was 100 percent. ber of checks paid in 2000—42.5 billion (95 percent There were 1,256 valid responses for the number confidence interval of 40.9 billion to 44.1 billion)— and value of checks; 1,011 valid responses for the and the value of checks paid in 2000—$39.3 trillion share of on-us checks; and 1,036 valid responses for (95 percent confidence interval of $36.9 trillion to the number of returned checks. For the total number $41.8 trillion)—are revised from preliminary estiand value of checks, the overall response rate was mates released in November 2001.23 about 53 percent. In part because response rates were higher for strata with larger depository institutions, the desired precision was achieved for the estimate of Estimation of the Number and check number; it was not, however, for the estimate Value of Checks Paid by Location of Deposits of check value. Although the survey of depository institutions was Estimation. To improve the accuracy of the estimates, not explicitly designed to facilitate a comparison of the strata used for estimation were updated using check use by geographic region, sufficient responses transaction deposit information for the population were received to make such a comparison possible. of depository institutions with transaction deposits For each of four regions—Northeast, South, Midat the close of business on March 31, 2001 (Decem- west, and West—separate estimates of the number ber 31, 2000, for credit unions) (14,696 institutions). For the final estimation, commercial banks were grouped into seven strata, credit unions into six, and 23. Revisions were based on the correction of several data errors savings institutions into four. identified during the preparation of this article. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

The Use of Checks and Other Noncash Payment Instruments in the United States 373 and value of checks paid were made for single-region Estimates of urban and rural check use were coninstitutions (those having deposits in only one region) structed using a method similar to that used to and multiregion institutions (those having deposits in construct estimates by region. Urban areas were more than one region). For multiregion commercial defined as metropolitan statistical areas (MSAs) and banks and savings institutions, checks and transaction New England county metropolitan statistical areas deposits were allocated to regions according to the (NECMAs), and rural areas as all other areas. proportion of the institution's total deposits in each of the regions. The allocation method assumed that within these institutions, the ratios of transaction Characterization of Checks by Payer, Payee, deposits to total deposits, check number to transac- and Purpose tion deposits, and check value to transaction deposits were constant. Information on the location of depos- The survey of individual checks was intended to its at credit unions and branches of foreign banks was gather information about the shares of checks written unavailable, and data for these institutions were as- by and received by businesses, consumers, and govsigned to the state in which the head office of the ernments and the purposes of the payments. Data depository institution was located. Except for several were collected on almost 30,000 checks from nearly of the largest credit unions (about ten), most of these 150 depository institutions. institutions operate within the boundaries of a single A two-tiered sample design was used to collect a state. representative sample of checks. First, a stratified, random sample of depository institutions was gen- To produce the regional estimates, institutions were erated from the population of commercial banks, stratified first by region and then by type and size. savings institutions, and credit unions. Then each For each region, the strata were constructed by sepaselected institution was asked to retrieve a random rating institutions into multiregion and single-region, sample of the checks it collected in 2000, using its type, and size categories, with strata boundaries internal records. The number of checks provided by selected according to an approximation to Neyman allocation.24 New ratio estimators were produced an institution was in proportion to the amount of its transaction deposits. For each sampled check, the using these strata, following the procedure described in the preceding section.25 institution recorded certain objective characteristics useful in determining the type of payer and payee and About 138 institutions had branches in more than the purpose of the payment. The institution also one of the four regions. (These institutions paid about recorded a subjective assessment of the type of payer 40 percent of all checks and accounted for just over and payee—information that was used later to verify 40 percent of transaction deposits.) For each of these the validity of the categories assigned using the multiregion institutions, prior to estimation, transacobjective characteristics. To protect privacy, the instition deposits and check data (number and value of tutions did not provide information that could be used checks) were allocated to regions in proportion to the to specifically identify the payer or payee. For the location of their total deposits. Allocating transaction reported figures, separate ratio estimates for the deposits according to total deposits assumes that, for strata were summed to produce an estimate for the the institutions in the sample, transaction deposits population. and checks are in the same proportion to total deposits for every region. This allocation method appears reasonable for the construction of an aggregate 1979 Data regional estimate but may not hold true for some institutions. Whether large regional differentials in The 1979 data were collected in a survey conducted this proportion for some very large institutions would in that year by the Federal Reserve Bank of Atlanta weaken or strengthen the apparent regional differand cosponsored by the Reserve Bank, the American ences reported here is unclear. Bankers Association, and the Bank Administration Institute.26 The estimates of the number and value of 24. The approximation method used was from Tore Dalenius and checks for 1979 were produced from separate ratio Joseph L. Hodges, "Minimum Variance Stratification," Journal of the American Statistical Association, vol. 54 (1959), pp. 88-101. estimates of the total number of checks reported by a 25. The national estimates obtained from aggregating these stratified sample of 343 banks. regional estimates for commercial banks and savings institutions were about the same as those obtained from the original study but were slightly more precise. The increased precision appears to have been a 26. Federal Reserve Bank of Atlanta, "A Quantitative Description result of additional homogeneity among the institutions in the result- of the Check Collection System: A Report of Research Findings on ing strata. the Check Collection System" (1980). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

374 Federal Reserve Bulletin • August 2002 1995 Data Unlike the 2000 estimate, the population in this study was defined as individually chartered depository The 1995 data were collected in a survey conducted institutions. in 1996 for a report to the Congress on funds avail- For the estimation of the number of checks paid, ability and check fraud.27 The estimate of number of the population of depository institutions was stratichecks paid was based on the sum of two figures fied using the value of transaction deposits in Decemrequested in the survey questionnaire: number of ber 1995, with optimal strata boundaries set using an checks paid during 1995 that had been received from approximation to Neyman allocation as described other institutions and number of checks paid during above. Seven strata were defined for commercial 1995 that were on-us checks. The survey provided banks, three for credit unions, and three for savings information on checks paid by a random sample of institutions. The estimate of the total number of depository institutions. On the basis of 606 valid checks paid by depository institutions was equal to responses, Board staff produced, for this article, an the sum of separate ratio estimates for the strata. The estimate of the number of checks paid in 1995 for number of U.S. Treasury checks and postal money comparison with the estimates for 1979 and 2000. orders paid in 1995 was added to that estimate to The definition of the amount of transaction deposits obtain the estimate of the total for 1995. The estimate was the same as that used for the 2000 estimates. was 49.5 billion (95 percent confidence interval of 44.3 billion to 54.8 billion). The estimate for 1995 was higher than the 2000 estimate, and the difference 27. Board of Governors of the Federal Reserve System, "Report to was statistically significant, showing that the differ- Congress on Funds Availability Schedules and Check Fraud at Deposience is unlikely to be due to sampling error. • tory Institutions" (Board of Governors, 1996). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

375 Announcements FEDERAL OPEN MARKET COMMITTEE • Complete name, title, address, telephone, e-mail DIRECTIVE address, and fax numbers • Organization's name, brief description of organi- The Federal Open Market Committee decided on zation, address, telephone and fax numbers June 26, 2002, to keep its target for the federal funds • Past and present positions rate unchanged at \3A percent. • Knowledge, interests, or experience related to The information that has become available since community reinvestment, consumer protection reguthe last meeting of the Committee confirms that eco- lations, consumer credit, or other consumer financial nomic activity is continuing to increase. However, services both the upward impetus from the swing in inventory • Positions held in community and banking assoinvestment and the growth in final demand appear ciations, councils, and boards. to have moderated. The Committee expects the rate of increase of final demand to pick up over coming Nominations should also include the complete quarters, supported in part by robust underlying name, organization name, title, address, telephone, growth in productivity, but the degree of the strength- e-mail address, and fax numbers for the nominator. ening remains uncertain. Letters of nomination with complete informa- In these circumstances, although the stance of tion, including a resume for each nominee, must be monetary policy is currently accommodative, the received by August 19, 2002. Electronic nomina- Committee believes that, for the foreseeable future, tions are preferred. The appropriate form can be against the background of its long run goals of price accessed at http://www.federalreserve.gov/forms/ stability and sustainable economic growth and of cacnominationform.cfm. the information currently available, the risks are balanced with respect to the prospects for both goals. The Federal Reserve Board announced on June 3, Voting for the FOMC monetary policy action were 2002, that the Consumer Advisory Council would Alan Greenspan, Chairman; William J. McDonough, hold its next meeting on Thursday, June 27. Vice Chairman; Susan S. Bies; Roger W. Ferguson, Jr.; Edward M. Gramlich; Jerry L. Jordan; Robert D. McTeer, Jr.; Mark W. Olson; Anthony M. PUBLICATION OF REVISIONS TO Santomero; and Gary H. Stern. Voting against the REGULATION C (HOME MORTGAGE action: none. DISCLOSURE ACT) The Federal Reserve Board published on June 21, NOMINATIONS SOUGHT FOR CONSUMER 2002, revisions to its Regulation C, which imple- ADVISORY COUNCIL AND MEETING NOTICE ments the Home Mortgage Disclosure Act. Data collected under Regulation C are used to help The Federal Reserve Board announced on June 17, determine whether financial institutions are serving 2002, that it is seeking nominations for appointments the housing needs of their communities and to assist to its Consumer Advisory Council. in enforcing the fair lending laws. The Council advises the Board on the exercise of The amendments do the following: its responsibilities under the Consumer Credit Protection Act and on other matters on which the Board • Set the thresholds for determining the loans for seeks advice. The group meets in Washington, D.C., which financial institutions must report loan pricing three times a year. data, as required under a final rule approved on Ten new members will be appointed to serve three- January 23, 2002. Institutions will report the rate year terms beginning in January 2003. Nominations spread (between the annual percentage rate on a loan should include a resume and the following informa- and the yield on comparable Treasury securities) tion about nominees: if the spread equals or exceeds 3 percentage points Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

376 Federal Reserve Bulletin • August 2002 for first-lien loans and 5 percentage points for duction. As further discussed in the attachment, secsubordinate-lien loans. tion 109 also prohibits branches of banks controlled • Require lenders to report the lien status of appli- by out-of-state bank holding companies from operatcations and originated loans. ing primarily for the purpose of deposit production. • Require lenders to ask applicants their ethnicity, Section 109 provides a process to test compliance race, and sex in applications taken by telephone. with the statutory requirements. The first step in the process involves a loan-to-deposit ratio screen that Compliance with the amendments relating to the compares a bank's statewide loan-to-deposit ratio thresholds and lien status is mandatory on January 1, to the host state loan-to-deposit ratio for banks in a 2004. The amendment requiring lenders to ask tele- particular state. phone applicants for monitoring information is effec- A second step is conducted if a bank's statewide tive for applications taken beginning January 1, 2003, loan-to-deposit ratio is less than one-half of the pubthrough a technical amendment to the current regula- lished ratio for that state or if data are not available tions also published on June 21, 2002. at the bank to conduct the first step. The second step requires the appropriate banking agency to determine whether the bank is reasonably helping to meet the RULE AMENDMENT ON INTERSTATE BRANCH credit needs of the communities served by the bank's DEPOSITS interstate branches. A bank that fails both steps is in violation of The Federal Deposit Insurance Corporation, the section 109 and is subject to sanctions by the appro- Board of Governors of the Federal Reserve System, priate banking agency. and the Office of the Comptroller of the Currency issued on June 5, 2002, final regulations amending their rules that currently prohibit interstate branches PLANS FOR REDESIGNED CURRENCY from being used primarily for deposit production. The Riegle-Neal Interstate Banking and Branching In keeping with their strategy of maintaining the Efficiency Act prohibits any bank from establishing security of Federal Reserve notes by enhancing the or acquiring a branch outside its home state primarily design of U.S. currency every seven to ten years, the for the purpose of deposit production. Section 106 of Department of the Treasury's Bureau of Engraving the Gramm-Leach-Bliley Act expands this prohibiand Printing (Bureau) and the Federal Reserve Board tion to include any branch of a bank controlled by an announced on June 20, 2002, plans to release the next out-of-state bank holding company. To conform their generation of redesigned notes, with improved securegulations to this statutory change, the agencies have rity features to deter counterfeiting. amended their rules so that the prohibition against The new design, referred to as NexGen, affects the deposit production offices also applies to any bank or $100, $50, and $20 notes. Circulation of the NexGen branch of a bank controlled by an out-of-state bank series could begin as early as fall 2003 with the holding company. introduction of the redesigned $20 note. The $100 The regulations, published in the Federal Register, and $50 notes will follow in twelve to eighteen are effective October 1, 2002. months. Consistent with past design changes, the NexGen notes will remain the same size and use BANKING AGENCIES ISSUE HOST STATE similar portraits and historical images to maintain an LOAN-TO-DEPOSIT RATIOS American appearance. The NexGen designs will include the introduction of subtle background colors. The Board of Governors of the Federal Reserve Sys- While color is not in itself a security feature, the use tem, the Federal Deposit Insurance Corporation, and of color provides the opportunity to add additional the Office of the Comptroller of the Currency issued features that could assist in deterring counterfeiting. on June 24, 2002, the host state loan-to-deposit ratios The introduction of additional colors will also help that the banking agencies will use to determine com- consumers to identify the different denominations. pliance with section 109 of the Riegle-Neal Interstate The new series will retain current security features, Banking and Branching Efficiency Act of 1994. including watermarks similar to the portrait and These ratios update data released in June 2001. visible when held up to a light, enhanced security In general, section 109 prohibits a bank from estab- threads that glow under ultraviolet light, microprintlishing or acquiring a branch or branches outside its ing, and color-shifting ink that changes color when home state primarily for the purpose of deposit pro- the note is tilted. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Announcements 377 The purpose of the currency redesign is to stay retary of the Treasury establishes the design and ahead of advanced computer technologies used for appearance of U.S. currency. some types of counterfeiting. According to the U.S. Information about the previous redesigned 1996 Secret Service, $47.5 million in counterfeit money notes and the history of U.S. currency is available at entered into circulation in fiscal year 2001. Of this the Bureau's web site at www.moneyfactory.com. amount, 39 percent was computer generated, compared with only 0.5 percent in 1995. The redesign of $10 and $5 notes is still under VIRTUAL TOUR ADDED TO BOARD WEB SITE consideration, but a redesign of the $2 and $1 notes is not included in the plans for the NexGen series. The Federal Reserve Board launched on June 3, Release of NexGen notes will have no effect on 2002, a new addition to the Board's web site, "Tourmoney already in circulation. These notes will ing the Board." The site provides information about co-circulate with older series notes. The U.S. govern- visiting the Federal Reserve in person and includes a ment has never recalled or devalued its currency. "virtual tour" offering photos of the Board's build- As part of the introduction of NexGen currency, ings and art collection, as well as an architectural the Bureau and the Federal Reserve System are plan- history of the Board's Eccles Building. ning an extensive public education effort aimed at This site gives the public a chance to tour the informing target groups—such as financial institu- Board from the comfort of home or office. Since tions, law enforcement, and retail and vending public tours of many federal buildings have been industries—and the general public about the new limited since September 11, the virtual tour is an designs. This effort will encourage people who use opportunity to see where our nation's central U.S. currency to familiarize themselves with the rede- bankers work each day. Touring the Board can be signed money so they can easily authenticate cur- viewed at http://www.federalreserve.gov/generalinfo/ rency as genuine. virtualtour/. The first initiative of the public education effort is already under way. The Bureau is working with manufacturers of currency-accepting machinery to ENFORCEMENT ACTIONS expedite the development of software and other devices, so vending machines and similar equipment The Federal Reserve Board announced on June 28, accept NexGen notes. The cooperative effort allows a 2002, the execution of a written agreement by and smooth transition for vending machine owners, mass between the Madison Bank, Blue Bell, Pennsylvania, transit agencies, the gaming industry, and other pro- and the Federal Reserve Bank of Philadelphia. prietors that rely on currency-accepting machinery to conduct business transactions. The Federal Reserve Board announced on June 10, The redesigned currency program is a partnership 2002, the termination of the following enforcement among the Federal Reserve System, the Department action: Bank of New York, New York, New York. of the Treasury, the Bureau of Engraving and Print- Written Agreement dated February 8, 2000. Termiing, and the United States Secret Service. The Sec- nated June 3, 2002. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

379 Legal Developments FINAL RULE—AMENDMENT TO REGULATION C (14) The lien status of the loan or application (first lien, subordinate lien, or not secured by a lien on a The Board of Governors is amending 12 C.F.R. Part 203, dwelling). its Regulation C (Home Mortgage Disclosure). The amendments establish the thresholds for determining the loans for which financial institutions must report loan pricing data 3. Appendix A is amended by: (the spread between the annual percentage rate on a loan a. Revising Paragraph I.A.8.; and the yield on comparable Treasury securities) as re- b. Revising Paragraph I.D.2.; quired under a final rule approved in January 2002; the c. Revising Paragraph I.G.I.; thresholds are a spread of 3 percentage points for first-lien d. Redesignating Paragraph I.G.2. as Paragraph I.G.3. loans and 5 percentage points for subordinate-lien loans. and adding a new Paragraph I.G.2.; The amendments require lenders to report the lien status of e. Adding a new Paragraph I.H.; a loan or application. The amendments also require that f. Revising the Loan/Application Register; and lenders ask applicants their ethnicity, race, and sex in g. Revising the Loan/Application Register Code Sheet. applications taken by telephone; this monitoring requirement is made applicable as of January 1, 2003. Appendix A to Part 203—Form and Instructions for Effective January 1, 2004, 12 C.F.R. Part 203 is amended Completion of HMDA Loan/Application Register as follows: Part 203—Home Mortgage Disclosure (Regulation C) 1. Instructions for Completion of Loan/Application Register. 1. The authority citation for Part 203 continues to read as follows: A. Application or Loan Information. 8. Request for Preapproval of a Home Purchase Loan. Authority: 12 U.S.C. 2801-2810 Indicate whether the application or loan involved a request for preapproval of a home purchase loan by entering the 2. Section 203.4 is amended by: applicable code from the following: a. Revising Paragraph (a)(12); and b. Adding a new Paragraph (a)(14). Code 1-Preapproval requested Code 2-Preapproval not requested Code 3-Not applicable Section 203.4—Compilation of loan data. a. Enter code 2 if your institution has a covered preap- (a) Data format and itemization. * * * proval program but the applicant does not request a preapproval. (12) For originated loans subject to Regulation Z, b. Enter code 3 if your institution does not have a 12 C.F.R. Part 226, the difference between the preapproval program as defined in section 203.2(b). loan's annual percentage rate (APR) and the yield c. Enter code 3 for applications or loans for home on Treasury securities having comparable periods improvement or refinancing, and for purchased of maturity, if that difference is equal to or greater loans. than 3 percentage points for loans secured by a first lien on a dwelling, or equal to or greater than 5 percentage points for loans secured by a subordinate lien on a dwelling. The lender shall use the D. Applicant Information-Ethnicity, Race, Sex, and Inyield on Treasury securities as of the 15th day of come. the preceding month if the rate is set between the 1st and the 14th day of the month and as of the 15th day of the current month if the rate is set on 2. Mail, Internet, or Telephone Applications. All loan apor after the 15th day, as prescribed in Appendix A plications, including applications taken by mail, Interto this part. net, or telephone must use a collection form similar to that shown in Appendix B regarding ethnicity, race, and sex. For applications taken by telephone, the informa- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

380 Federal Reserve Bulletin • August 2002 tion in the collection form must be stated orally by the figure or truncate the digits beyond two decimal lender, except for information that pertains uniquely to places. applications taken in writing. If the applicant does not e. If the difference between the APR and the Treasury provide these data in an application taken by mail or yield is less than 3 percentage points for a first-lien telephone or on the Internet, enter the code for "infor- loan and less than 5 percentage points for a mation not provided by applicant in mail, Internet, or subordinate-lien loan, enter "NA." telephone application" specified in paragraphs I.D.3., 2. Date the interest rate was set. The relevant date to use 4., and 5. of this appendix. (See Appendix B for com- to determine the Treasury yield is the date on which the plete information on the collection of these data in mail, loan's interest rate was set by the financial institution Internet, or telephone applications.) for the final time before closing. If an interest rate is set pursuant to a "lock-in" agreement between the lender and the borrower, then the date on which the agreement G. Pricing-Related Data. fixes the interest rate is the date the rate was set. If a rate 1. Rate Spread. is re-set after a lock-in agreement is executed (for a. For a home purchase loan, a refinancing, or a example, because the borrower exercises a float-down dwelling-secured home improvement loan that you option or the agreement expires), then the relevant date originated, report the spread between the annual per- is the date the rate is re-set for the final time before centage rate (APR) and the applicable Treasury yield closing. If no lock-in agreement is executed, then the if the spread is equal to or greater than 3 percentage relevant date is the date on which the institution sets the points for first-lien loans or 5 percentage points for rate for the final time before closing. subordinate-lien loans. To determine whether the rate spread meets this threshold, use the Treasury yield for securities of a comparable period of maturity as of the 15th day of a given month, depending on when Lien Status. the interest rate was set, and use the APR for the loan, as calculated and disclosed to the consumer Use the following codes for loans that you originate and under sections 226.6 or 226.18 of Regulation Z for applications that do not result in an origination: (12 C.F.R. Part 226). Use the 15th day of a given Code 1-Secured by a first lien. month for any loan on which the interest rate was set Code 2-Secured by a subordinate lien. on or after that 15th day through the 14th day of the Code 3-Not secured by a lien. next month. (For example, if the rate is set on Sep- Code 4-Not applicable (purchased loan). tember 17, 2004, use the Treasury yield as of Septem- a. Use Codes 1 through 3 for loans that you originate, ber 15, 2004; if the interest rate is set on Septem- as well as for applications that do not result in an ber 3, 2004, use the Treasury yield as of August 15, origination (applications that are approved but not 2004). To determine the applicable Treasury security accepted, denied, withdrawn, or closed for incomyield, the financial institution must use the table pleteness). published on the FFIEC's web site (http:// b. Use Code 4 for loans that you purchase. www.ffiec.gov/hmda) entitled "Treasury Securities of Comparable Maturity under Regulation C." b. If the loan is not subject to Regulation Z, or is a home 4. Appendix B is amended by revising Paragraph II.A to improvement loan that is not dwelling-secured, or is read as follows: a loan that you purchased, enter "NA." c. Enter "NA" in the case of an application that does Appendix B to Part 203—Form and Instructions for not result in a loan origination. Data Collection on Ethnicity, Race, and Sex d. Enter the rate spread to two decimal places, and use a leading zero. For example, enter 03.29. If the difference between the APR and the Treasury yield is a figure with more than two decimal places, round the II. Procedures. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

LOAN/APPLICATION REGISTER CODE SHEET Use the following codes to complete the Loan/Application Register. The instructions to the HMDA-LAR explain the proper use of each code. Application or Loan Information 7— Preapproval request denied by financial 1—Fannie Mae institution 2—Ginnie Mae Loan Type: 8— Preapproval request approved but not 3—Freddie Mac 1—Conventional (any loan other than FHA, accepted (optional reporting) 4— Farmer Mac VA, FSA, or RHS loans) 5— Private securitization 2—FHA-insured (Federal Housing Applicant Information 6—Commercial bank, savings bank or savings Administration) association 3—VA-guaranteed (Veterans Administration) Ethnicity: 7—Life insurance company, credit union, 4—FSA/RHS (Farm Service Agency or Rural 1—Hispanic or Latino mortgage bank, or finance company Housing Sen/ice) 2— Not Hispanic or Latino 8—Affiliate institution 3—Information not provided by applicant in mail, 9—Other type of purchaser Property Type: Internet, or telephone application 1—One to four-family (other than manufactured 4—Not applicable (see App. A, I.D.) housing) Reasons for Denial (optional reporting) 5— No co-applicant 2—Manufactured housing 3—Multifamily Race: 1—Debt-to-income ratio 1—American Indian or Alaska Native 2—Employment history Purpose of Loan: 2—Asian 3—Credit history 1—Home purchase 3— Black or African American 4—Collateral 2—Home improvement 4— Native Hawaiian or Other Pacific Islander 5— Insufficient cash (downpayment, closing costs) 3— Refinancing 5—White 6—Unverifiable information Owner-Occupancy: 6— Information not provided by applicant 7—Credit application incomplete 1—Owner-occupied as a principal dwelling in mail, Internet, or telephone application 8—Mortgage insurance denied 2—Not owner-occupied 7—Not applicable (see App. A, I.D.) 9—Other 3—Not applicable 8— No co-applicant Preapproval (home purchase loans only): Sex: Other Data 1—Preapproval was requested 1—Male 2— Preapproval was not requested 2— Female HOEPA Status (only for loans originated or 3—Not applicable 3— Information not provided by applicant purchased): in mail, Internet, or telephone application 1—HOEPA loan Action Taken: 4—Not applicable (see App. A, I.D.) 2—Not a HOEPA loan 1—Loan originated 5— No co-applicant 2—Application approved but not accepted Lien Status (only for applications and originations): 3—Application denied by financial institution Type of Purchaser 1—Secured by a first lien 4—Application withdrawn by applicant 2—Secured by a subordinate lien 5— File closed for incompleteness 0— Loan was not originated or was not 3— Not secured by a lien 6—Loan purchased by financial institution sold in calendar year covered by register 4—Not applicable (purchased loans) Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

LOAN/APPLICATION REGISTER Page of Form FR HMDA-LAR Agency Reporter's Identification Number Code NamaafRaportfciglnattullon Clt* Stato, ZIP All columns (except Reasonst orD enial) must be completedf ore ach entry. See the Instructionsf ord etails. l__l I I I I I L LoanMormaUan A-Apptort^CA-Co-A^jptcart Four- DW Malrapc*- Thraa- Appfcdkm •wnar Pi* O* Sh-Olt* Racaivad Occu- •P- Courty Canaua (nvn/dd/ccyy) pancy prowl (mmAddteoyy) Coda Tract bnpla of Loan Originated Following Preapproval L|»|-|6|8|7|4|3»|l9» l I 03/23/2004 Kxaapla of PrMpproval Xaquoat Moiad '|3|3|1| 2,3,4 01 91 817 06/30/3004 ixiapl* of Application Following Prwpproral «|7|«|»|- lil J L ' i ll J L • III! I I I I I I I I J L J L I I I I J L J L I I I I J L i i I I J L I I I I J L I I I I J L I I I I I I I I J L i i i I Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 383 A. You must ask the applicant for this information (but the date on which the financial institution set the interest you cannot require the applicant to provide it) whether rate on the loan for the final time before closing. See the application is taken in person, by mail or telephone, Appendix A, Paragraphs I.G.I, and 2. or on the Internet. For applications taken by telephone, the information in the collection form must be stated Paragraph 4(a)(14) Lien status orally by the lender, except for that information which 1. Determining lien status for applications and loans origpertains uniquely to applications taken in writing. inated. i. Lenders are required to report lien status for loans they originate and applications that do not result in 5. In Supplement I to Part 203: originations. Lien status is determined by reference a. Under Section 203.2-Definitions, a new heading 2(i) to the best information readily available to the lender Manufactured Home and a new paragraph 1 are at the time final action is taken and to the lender's added. own procedures. Thus, lenders may rely on the title b. Under Section 203.4-Compilation of Loan Data, un- search they routinely perform as part of their underder Paragraph 4(a)(12), paragraph 1 is revised; and a writing procedures-for example, for home purchase new heading Paragraph 4(a)(14) and a new para- loans. Regulation C does not require lenders to pergraph 1 are added. form title searches solely to comply with HMDA reporting requirements. Lenders may rely on other Supplement I to Part 203—Staff Commentary information that is readily available to them at the time final action is taken and that they reasonably believe is accurate, such as the applicant's statement on the application or the applicant's credit report. For Section 203.2—Definitions example, where the applicant indicates on the application that there is a mortgage on the property or ^ ^ jfc where the applicant's credit report shows that the 2(i) Manufactured Home applicant has a mortgage-and that mortgage is not 1. Definition of a manufactured home. going to be paid oflf as part of the transaction-the The definition in section 203.2(i) refers to the federal lender may assume that the loan it originates is building code for factory-built housing established by secured by a subordinate lien. If the same application the Department of Housing and Urban Development did not result in an origination-for example, because (HUD). The HUD code requires generally that housing the application is denied or withdrawn-the lender be essentially ready for occupancy upon leaving the would report the application as an application for a factory and being transported to a building site. Modular subordinate-lien loan. homes that meet all of the HUD code standards are ii. Lenders may also consider their established proceincluded in the definition because they are ready for dures when determining lien status for applications occupancy upon leaving the factory. Other factory-built that do not result in originations. For example, a homes, such as panelized and pre-cut homes, generally consumer applies to a lender to refinance a $100,000 do not meet the HUD code because they require a first mortgage; the consumer also has a home equity significant amount of construction on site before they line of credit for $20,000. If the lender's practice in are ready for occupancy. Loans and applications relat- such a case is to ensure that it will have first-lien ing to manufactured homes that do not meet the HUD position-through a subordination agreement with the code should not be identified as manufactured housing holder of the mortgage on the home equity line-then under HMDA. the lender should report the application as an application for a first-lien loan. Section 203.4—Compilation of Loan Data 4(a) Data Format and Itemization * * * JOINT FINAL RULE—AMENDMENT TO REGULATORY Paragraph 4(a)(12) Rate spread information PROHIBITION AGAINST BRANCHES BEING USED AS 1. Treasury securities of comparable maturity. To deter- DEPOSIT PRODUCTION OFFICES mine the yield on a Treasury security, lenders must use the table entitled "Treasury Securities of Comparable The Office of the Comptroller of the Currency, Treasury Maturity under Regulation C," which will be published (OCC); Board of Governors of the Federal Reserve System on the FFIEC's web site (http://www.ffiec.gov/hmda) (Board); and Federal Deposit Insurance Corporation and made available in paper form upon request. This (FDIC) (collectively, the "Agencies") are amending their table will provide, for the 15th day of each month, uniform regulations implementing section 109 of the Treasury security yields for every available loan matu- Riegle-Neal Interstate Banking and Branching Efficiency rity. The applicable Treasury yield date will depend on Act of 1994 (Interstate Act) to effectuate the amendment Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

384 Federal Reserve Bulletin • August 2002 contained in section 106 of the Gramm-Leach-Bliley Act (B) Could not have been established or acof 1999. Section 109 prohibits any bank from establishing quired outside of the bank's home State or acquiring a branch or branches outside of its home State but for the establishment or acquisition of under the Interstate Act primarily for the purpose of de- a branch described in paragraph (b)(2)(i) posit production, and provides guidelines for determining of this section; and whether such bank is reasonably helping to meet the credit (ii) Any bank or branch of a bank controlled by an needs of the communities served by these branches. Sec- out-of-State bank holding company. tion 106 of the Gramm-Leach-Bliley Act of 1999 ex- (3) Home State means: panded the coverage of section 109 of the Interstate Act to (i) With respect to a State bank, the State that charinclude any branch of a bank controlled by an out-of-State tered the bank; bank holding company. This final rule amends the regula- (ii) With respect to a national bank, the State in which tory prohibition against branches being used as deposit the main office of the bank is located; production offices to include any bank or branch of a bank (iii) With respect to a bank holding company, the State controlled by an out-of-State bank holding company, in- in which the total deposits of all banking subsidiarcluding a bank consisting only of a main office. ies of such company are the largest on the later of: The text of the other Agencies' final rules can be found (A) July 1, 1966; or in 12 C.F.R. Parts 25 and 369, and was published in the (B) The date on which the company becomes a Federal Register on June 6, 2002 (67 Federal Register bank holding company under the Bank 38844 (2002)). Holding Company Act. Effective October 1, 2002, 12 C.F.R. (iv) With respect to a foreign bank: (A) For purposes of determining whether a Part 208 is amended as follows: U.S. branch of a foreign bank is a covered interstate branch, the home State of the Part 208—Membership of State Banking foreign bank as determined in accordance Institutions in the Federal Reserve System with 12 U.S.C. 3103(c) and 12 C.F.R. (Regulation H) 211.22; and 1. The authority citation for Part 208 continues to read as (B) For purposes of determining whether a follows: branch of a U.S. bank controlled by a foreign bank is a covered interstate branch, Authority: 12 U.S.C. 24, 36, 92a, 93a, 248(a), 248(c), the State in which the total deposits of all 321-338a, 371d, 461, 481^486, 601, 611, 1814, banking subsidiaries of such foreign bank 1816, 1818, 1820(d)(9), 1823(j), 1828(o), 1831, are the largest on the later of: 1831o, 1831p-l, 1831r-l, 1831w, 1835a, 1882, (7) July 1, 1966; or 2901-2907, 3105, 3310, 3331-3351, and 3906- (2) The date on which the foreign bank 3909; 15 U.S.C. 78b, 781(b), 781(g), 781(i), becomes a bank holding company un- 78o-4(c)(5), 78q, 78q-l, and 78w; 31 U.S.C. der the Bank Holding Company Act. 5318, 42 U.S.C. 4012a, 4104a, 4104b, 4106 and (4) Host State means a State in which a covered 4128. interstate branch is established or acquired. 2. In section 208.7, redesignate existing paragraphs (b)(6) and (b)(7) as (b)(7) and (b)(8), respectively, revise para- (6) Out-of-State bank holding company means, graphs (b)(2), (b)(3), (b)(4) and (c)(1), and add new with respect to any State, a bank holding comparagraph (b)(6) to read as follows: pany whose home State is another State. Section 208.7—Prohibition against use of interstate branches primarily for deposit production. (c) (1) Application of screen. Beginning no earlier than one year after a covered interstate branch is acquired or established, the Board will consider whether the bank's ^ * * * statewide loan-to-deposit ratio is less than 50 percent (2) Covered interstate branch means: of the relevant host State loan-to-deposit ratio. (i) Any branch of a State member bank, and any uninsured branch of a foreign bank licensed by a State, that: FINAL RULE—AMENDMENT TO RULES REGARDING (A) Is established or acquired outside the ACCESS TO PERSONAL INFORMATION UNDER THE bank's home State pursuant to the inter- PRIVACY ACT state branching authority granted by the Interstate Act or by any amendment made The Board of Governors is amending its Rules Regarding by the Interstate Act to any other provision Access to Personal Information under the Privacy Act of law; or (Privacy Act Rules) to reflect the implementation of a new Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 385 system of records. Notice of this new system of records, tivities as a result of the acquisition.1 RBC Centura Bank entitled Visitor Log (BGFRS-32) was published in the ("Bank"), Rocky Mount, North Carolina, RBC's wholly Federal Register (67 Federal Register 44605 (2002)). owned subsidiary, has requested the Board's approval un- Effective August 12, 2002, 12 C.F.R. Part 261a is der section 18(c) of the Federal Deposit Insurance Act amended as follows: (12 U.S.C. § 1828(c)) ("Bank Merger Act") to acquire the assets of, and to subsequently merge with, Tucker.2 Bank Part 261a—Rules Regarding Access to Personal also has applied under section 9 of the Federal Reserve Act Information Under the Privacy Act of 1974 (12 U.S.C. § 321) ("FRA") to retain and operate branches at the main and branch offices of Tucker.3 1. The authority citation for Part 261a continues to read as Notice of the proposal, affording interested persons an follows: opportunity to comment, has been published in the Federal Register (67 Federal Register 21,243; 67 Federal Register 30,928-929 (2002)) and locally in accordance with the Authority: 5 U.S.C. 552a. Bank Merger Act and the Board's Rules of Procedure (12 C.F.R. 262.3(b)). As required by the Bank Merger Act, 2. In section 261a. 13, add a new paragraph (b)(10) to read reports on the competitive effects of the merger were as follows: requested from the United States Attorney General and relevant banking agencies. The time for filing comments Section 261 a. 13—Exemptions. has expired, and the Board has considered the application and notices and all comments received in light of the factors set forth in section 4 of the BHC Act, the Bank Merger Act, and the FRA. * * * Royal Bank, with total assets of $226.1 billion, is the (10) BGFRS - 32 Visitor Log. largest banking organization in Canada.4 RBC operates depository institutions in Georgia, Florida, North Carolina, South Carolina, and Virginia. RBC's subsidiary, Bank, controls deposits of $204.2 million in Georgia, representing less than 1 percent of total deposits of insured deposi- ORDERS ISSUED UNDER BANK HOLDING COMPANY tory institutions in the state ("state deposits").5 ACT Eagle's subsidiary, Tucker, controls deposits of $829.6 million in Georgia, representing less than 1 percent Orders Issued Under Section 4 of the Bank Holding of state deposits. On consummation of the proposal, Bank Company Act would become the tenth largest depository institution in Georgia, controlling deposits of approximately $1 billion, Royal Bank of Canada representing less than 1 percent of state deposits. Montreal, Canada RBC Centura Banks, Inc. Rocky Mount, North Carolina 1. RBC would engage in lending and lending-related activities through its acquisition of Eagle subsidiaries, Eagle Bancshares Capital RBC Centura Bank Group, Inc.; Prime Eagle Mortgage Corporation; and Eagle Service Rocky Mount, North Carolina Corporation, all in Tucker, Georgia, and TFB Management Inc., TFB Management (NC) Inc., and TFB Management (RE) Inc., all in Wilmington, Delaware. RBC also would engage in discount broker- Order Approving the Acquisition of a Savings age activities through its acquisition of Eagle Service Corporation, Association, Merger of Depository Institutions, and and in community development activities through its acquisition of Establishment of Branches Eagle's subsidiary, Hampton Oaks, LLP, also in Tucker. 2. The transaction would be effected through a series of steps. Eagle would merge with and into a wholly owned subsidiary of Royal Bank, Royal Bank of Canada ("Royal Bank"), a foreign banking with Eagle surviving. Eagle then would merge with and into Bank, organization subject to the provisions of the Bank Holding and Bank would be the surviving entity. Immediately thereafter, Company Act ("BHC Act"), and its wholly owned subsid- Tucker would merge with and into Bank, and Bank would be the iary, RBC Centura Banks, Inc. ("RBC") (collectively, survivor. "Notificants"), have requested the Board's approval under 3. The Tucker branches to be acquired by Bank are listed in the Appendix. sections 4(c)(8) and 4(j) of the BHC Act (12 U.S.C. 4. Royal Bank is treated as a financial holding company ("FHC") in §§ 1843(c)(8) and 1843(j)) and sections 225.14 and 225.24 accordance with sections 225.90 and 225.91 of Regulation Y of the Board's Regulation Y (12 C.F.R. 225.14 and 225.24) (12 C.F.R. 225.90 and 225.91). Through its subsidiaries and affiliates, to acquire Eagle Banc shares, Inc. ("Eagle") and its wholly Royal Bank engages in a variety of nonbanking activities, including investment banking, asset management, and mortgage lending. owned subsidiary, Tucker Federal Bank ("Tucker"), both 5. Deposit data are as of June 30, 2001. Asset data are as of in Tucker, Georgia, and thereby engage in operating a March 31, 2002. In this context, depository institutions include comsavings association and conducting certain nonbanking ac- mercial banks, savings banks, and savings associations. 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386 Federal Reserve Bulletin • August 2002 The Board previously has determined by regulation that notes that Bank is and will remain well capitalized on the operation of a savings association by a bank holding consummation of the proposal. Based on all the facts of company is closely related to banking for purposes of record, the Board concludes that the financial and managesection 4(c)(8) of the BHC Act.6 The Board requires that rial resources and future prospects of the institutions insavings associations acquired by bank holding companies volved and other supervisory factors are consistent with conform their direct and indirect activities to those permis- approval of the proposal.11 sible for bank holding companies under section 4 of the BHC Act. RBC has committed to conform all the activities Competitive Considerations of Tucker to those permissible under section 4(c)(8) of the BHC Act and Regulation Y. Eagle engages in mortgage As part of the Board's review under the Bank Merger Act lending and related activities, discount brokerage, and com- and its consideration of the public interest factors under munity development activities that the Board also has section 4 of the BHC Act, the Board has considered determined to be closely related to banking.7 carefully the competitive effects of the proposal in light of In reviewing the proposal, the Board is required by all the facts of record. Bank and Tucker compete directly in section 4(j)(2)(A) of the BHC Act to determine that the the Atlanta, Georgia, banking market ("Atlanta banking acquisition of Eagle and Tucker by Notificants "can rea- market").12 Bank is the 27th largest depository institution sonably be expected to produce benefits to the public . . . in the market, controlling $204.2 million in deposits, reprethat outweigh possible adverse effects, such as undue con- senting less than 1 percent of total deposits in depository centration of resources, decreased or unfair competition, institutions in the market ("market deposits"). Tucker is conflicts of interests, or unsound banking practices."8 As the 13th largest depository institution in the market, conpart of its evaluation of a proposal under these public trolling $414.8 million in deposits, representing less than interest factors, the Board reviews the financial and mana- 1 percent of market deposits. On consummation of the gerial resources of the companies involved, as well as the proposal, Bank would become the eighth largest depository effect of the proposal on competition in the relevant mar- institution in the Atlanta banking market, controlling kets. $1 billion in deposits, representing 1.8 percent of market deposits.13 Financial, Managerial, and Future Prospects The Herfindahl-Hirschman Index ("HHI") for the Atlanta banking market would not increase, the market would In reviewing the proposal under section 4 of the BHC Act remain moderately concentrated, and numerous competiand the Bank Merger Act, the Board also has carefully tors would remain in the market.14 The Department of reviewed the financial and managerial resources and the Justice has reviewed the proposal and advised the Board future prospects of the institutions involved.9 The Board has reviewed, among other things, confidential reports of that it maintains strict "source of funds" guidelines and "know your examination and confidential supervisory information asclient" rules and makes clear to any potential client participating in sessing the financial and managerial resources of the orga- Royal Bank's international private banking operations that clients are nizations received from their primary federal supervisors, obligated to declare income in their home countries and may be liable and information provided by RBC and Bank.10 The Board for tax. Royal Bank also has cooperated with the Internal Revenue Service in its investigation of these practices. 11. One commenter alleged that an insurance company subsidiary of RBC, Liberty Life Insurance Co. of Greenville, South Carolina 6. 12 C.F.R. 225.28(b)(4)(ii). ("Liberty Life"), discriminated against African American clients by 7. 12 C.F.R. 225.28(b)(1); 12 C.F.R. 225.28(b)(2)(H); 12 C.F.R. charging them higher premiums than white clients. This matter is 225.28(b)(2)(iv); 12 C.F.R. 225.28(b)(12)(i). currently under review before the Administrative Law Judge Division 8. 12 U.S.C. § 1843(j)(2)(A). of the South Carolina Department of Insurance. The Board will 9. One commenter criticized Royal Bank for its oversight of its U.S. monitor the proceeding and take whatever action might be appropriate subsidiaries, particularly RBC Mortgage Company ("RBC Mort- based on the determinations of Liberty Life's primary regulator in any gage") and RBC's subprime lenders, First Greensboro Home Equity, final adjudication. Inc. ("First Greensboro") and NCS Mortgage Lending Co. ("NCS"). 12. The Atlanta banking market is defined as the counties of RBC stated that its ownership interest in First Greensboro was di- Bartow, Cherokee, Clayton, Cobb, Coweta, DeKalb, Douglas, Fayvested fully by the end of September 2001, and that RBC has sold ette, Forsyth, Fulton, Gwinnett, Hall (excluding the town of Clersubstantially all the assets of NCS and is not originating any new mont), Henry, Newton, Paulding, Rockdale and Walton; and the towns loans through that subsidiary. of Auburn and Winder in Barrow County. 10. One commenter noted a news article that stated that Royal Bank 13. Tucker's deposits are weighted at 50 percent before and refunded $17 million to some of its Visa cardholders due to confusion 100 percent after the merger. by the company on how to treat the calculation of interest charges 14. Under the Department of Justice Merger Guidelines, 49 Federal accruing to new purchases when an account is paid in full by the Register 26,823 (1984), a market in which the post-merger HHI is cardholder. RBC stated that it voluntarily refunded the money after between 1000 and 1800 is considered to be moderately concentrated. the matter came to its attention and confirmed that the company The Department of Justice has informed the Board that a bank merger amended the cardholder agreement to eliminate any confusion. or acquisition generally will not be challenged (in the absence of other The commenter also referred to a general news article on taxpayers' factors indicating anticompetitive effects) unless the post-merger HHI evasion of U.S. taxes through the misuse of offshore credit cards. The is at least 1800 and the merger increases the HHI by more than commenter stated that Royal Bank issues credit cards from some 200 points. The Department of Justice has stated that the higher than jurisdictions discussed in the news article, but provided no evidence of normal thresholds for an increase in the HHI when screening bank improper or illegal behavior by Royal Bank. Royal Bank has indicated mergers and acquisitions for anticompetitive effects implicitly recog- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 387 that consummation would not likely have a significantly borrowers than lenders in those MSAs in the aggregate. adverse effect on competition in any relevant market. No The commenter also expressed concern about Bank's level other agency has indicated that competitive issues are of community development loans from 1999 to 2000, and raised by this proposal. its possible involvement with payday lenders.15 Based on all the facts of record, the Board concludes that Another commenter criticized, among other things, the consummation of the proposal would not result in any subprime lending activities of the parent holding compasignificantly adverse effects on competition or on the con- nies' mortgage lending subsidiaries. This commenter also centration of banking resources in the Atlanta banking advocated denial of the proposal based on Tucker's CRA market or in any other relevant banking market. rating and expressed concerns about Bank's plans to improve Tucker's CRA performance in the assessment areas Convenience and Needs Considerations served by Tucker.16 In acting on this proposal, the Board also must consider the A. CRA Performance Evaluations convenience and needs of the communities to be served and take into account the records of performance of the As provided in the CRA, the Board has evaluated the relevant depository institutions under the Community Rein- convenience and needs factor in light of examinations by vestment Act (12 U.S.C. § 2901 et seq.) ("CRA"). The the appropriate federal supervisors of the CRA perfor- CRA requires the federal supervisory agencies to encour- mance records of Bank and Tucker. An institution's most age financial institutions to help meet the credit needs of recent CRA performance evaluation is a particularly imporlocal communities in which they operate, consistent with tant consideration in the applications process because it safe and sound operation, and requires the appropriate represents a detailed, on-site evaluation of the institution's federal financial supervisory agency to take into account an overall record of performance under the CRA by its approinstitution's record of meeting the credit needs of its entire priate federal supervisor.17 community, including low- and moderate-income ("LMI") Bank received a "satisfactory" CRA rating at its most neighborhoods, in evaluating bank expansionary proposals. recent CRA performance examination, as of February 28, The Board has considered carefully the convenience and 2000, by the Federal Reserve Bank of Richmond. Tucker needs factor and the CRA performance records of Bank received a "needs to improve" CRA rating at its most and Tucker in light of all the facts of record, including recent CRA performance examination, as of February 22, public comments received on the effect of the proposal on 2001, by the OTS. Examiners found no evidence of prohibthe communities to be served by the combined organiza- ited discrimination or other illegal credit practices at either tion. institution and found no violations of the substantive provi- Two community groups submitted comments on the sions of fair lending and consumer protection laws. proposal. One commenter commended Bank on its improvement in meeting the credit needs of African Ameri- B. Bank's CRA Performance Record cans throughout Bank's North Carolina assessment areas. The commenter noted in particular Bank's increase in its Examiners reported that Bank primarily served its assesspercentage of African-American applicants in North Caro- ment areas through direct lending and offered a variety of lina from 1999 to 2000 and Bank's general decrease in credit products, including residential mortgage, residential denial disparity ratios for African Americans in North construction, home improvement, small business, commer- Carolina from 1999 to 2000. The commenter also noted cial, consumer, agricultural, and community development that in almost all North Carolina Metropolitan Statistical Areas ("MSAs") in which Bank operates, the percentage 15. In response, Bank noted that banks and other companies that of African-American borrowers in Bank's loan portfolio provide payday lending services maintain ordinary deposit accounts increased from 1999 to 2000. Finally, the commenter noted with Bank. However, Bank stated that it does not engage in payday that Bank's percentage of LMI applicants in North Caro- lending activities directly, does not offer or have agency arrangements lina increased from 1999 to 2000. with any third-party payday lenders, and has not made loans to payday This commenter, however, also expressed concern about lenders. 16. One commenter criticized another RBC subsidiary, Security Bank's lending in certain areas, noting some MSAs in First Network Bank ("SFNB"), with respect to its level of lending to North Carolina where Bank had fewer home mortgage low-income borrowers in the Atlanta, Georgia, MSA. The commenter applications from African Americans than lenders in those also alleged that SFNB improperly sought to limit its CRA-related MSAs in the aggregate, and MSAs where Bank's denial activities in the Atlanta, Georgia, and Tampa, Florida, MSAs because it conducted business nationwide through its Internet focus. The disparity ratios for African Americans had increased. The Board notes that SFNB was rated "outstanding" at its most recent commenter also contended that Bank has been inconsistent evaluation by the Office of Thrift Supervision ("OTS"), as of Septemin improving its services to LMI home mortgage borrowers ber 20, 1999. In addition, the Board notes that the OTS reviewed in North Carolina, lending less of its portfolio to LMI SFNB's assessment areas as part of the institution's most recent CRA examination and determined that the delineated areas complied with CRA regulatory requirements. SFNB was merged with and into Bank on May 31,2002. nize the competitive effects of limited-purpose and other nondeposi- 17. See Interagency Questions and Answers Regarding Community tory financial entities. Reinvestment, 66 Federal Register 36,620 and 36,639 (2001). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

388 Federal Reserve Bulletin • August 2002 loans.18 Examiners noted that 96 percent of the bank's secondary market.22 From February 1, 1998, to March 8, loans are provided to businesses and consumers in its 2000, Bank provided $44 million in AHP loans. Examiners assessment areas. Examiners found that overall, Bank's noted that overall, Bank's lending penetration in LMI areas dispersion of small business and small farm loans, loans in North Carolina was reasonable when using aggregate subject to the Home Mortgage Disclosure Act (12 U.S.C. lending and demographic statistics as proxies for de- § 2801 et seq. ("HMDA"), and consumer loans in LMI mand.23 areas was reasonable.19 In addition, examiners found that Examiners concluded that Bank extended an adequate Bank's distribution of loans to businesses and farms with level of community development loans during the review revenues of $1 million or less was generally reasonable. period, with approximately $54 million in community de- Although Bank received an examination rating of "low velopment loans in its assessment areas, which primarily satisfactory" under the lending test for the review period in supported the creation of affordable housing for LMI indiits most recent CRA performance evaluation, examiners viduals and extended over a broad geographic region. found that the volume of HMDA-reportable and consumer Examiners noted that in North Carolina, Bank made loans to be adequate. Examiners also noted that Bank's use 33 community development loans totaling $47.6 million of specialized lending programs and its participation in during the review period. government subsidized loans showed that the bank was After the examination, Bank reported that it made making efforts to help meet the credit needs of its assess- $26.4 million in community development loans to finance ment areas.20 961 affordable housing units for the benefit of low- to As noted by examiners, during the review period Bank moderate-income families throughout its assessment areas extended $1.8 billion in HMDA-reportable loans, which in 2000 and 2001. In addition, Bank has used its Affordable included Federal Housing Administration, Veterans Ad- Mortgage Manager employee to visit the market and estabministration, Farm Service Housing and/or Rural Housing lish an outreach plan and strategy to meet CRA-related Service, and Wilmington Home Ownership Pool ("WP") mortgage goals for that market. Bank stated that it also has loans.21 Examiners also noted that Bank offered "Afford- held four conferences or seminars in the Wilmington, able Housing Program" ("AHP") loans to borrowers who North Carolina, MSA in the first quarter of 2002 to inform did not meet the underwriting criteria necessary for the first-time homebuyers, other interested persons, and Wilmington Housing Authority employees about affordable housing. Bank also stated that it is recruiting an Affordable Mortgage Specialist for the Greensboro market and has 18. One commenter expressed concern that mortgage lending sub- expanded its Community Centered Bank program, a mortsidiaries of Royal Bank and RBC engage in subprime lending. RBC gage banking initiative involving community church leadstated that RBC Mortgage offers subprime loan products, but that three of its four loan products were discontinued, as of May 17, 2001. ers, in the Fayetteville market. The remaining loan product, the "Rewards Loan" program, reflects Similarly, Bank stated that it has committed new rethe product and underwriting guidelines of Residential Funding Corsources in the organization to address the CRA-related poration ("RFC"), the investor to whom the loan is sold shortly after needs of LMI and minority populations in its assessment closing. The program offers a 30-year, fixed-term-rate loan, and its pricing is based on the interest rate set by RFC. The Board notes that areas. Specifically, Bank represented that it hired a new subprime lending is a permissible activity that provides needed credit Customer Segment and Product Manager to assess methto consumers who have difficulty meeting conventional underwriting ods of delivering products and services aimed at LMI and standards. The Board, however, expects bank holding companies and predominantly minority segments of the market. Bank also their affiliates to conduct their subprime lending activities without any abusive lending practices. RBC has provided information about the stated that it intends to offer home ownership workshops in policies and procedures of RBC Mortgage to help ensure compliance the markets noted by one commenter and to work with with fair lending and other consumer protection laws and regulations. community groups to supplement its efforts to meet the In addition, RBC has provided information about the steps that Bank credit needs of all the communities served by Bank. and RBC Mortgage take to ensure that applicants who qualify for The Board notes that examiners have recently reviewed conventional loans are given the opportunity to apply for prime credit products. The Board notes that the commenter provided no evidence the CRA performance of Bank. Although the examination of abusive lending practices by RBC Mortgage, Bank, or any RBC report is not yet complete, the Board has consulted with subsidiary. examiners on their preliminary findings and has considered 19. The review period for Bank's CRA evaluation was February 1, those findings in reviewing the overall performance of 1998, through September 30, 1999. During the review period, Bank's Bank. assessment areas included 15 MS As and 13 non-MS As. Full scope reviews were conducted in eight of the bank's assessment areas that together accounted for 56 percent of the bank's lending volume. 20. Examiners noted that Bank continues to participate in the Community Investment Corporation of North Carolina ("CICNC"), which is a statewide affordable housing loan consortium that provides 22. The AHP offers home purchase loans to families whose incomes long-term permanent financing for LMI multifamily housing develop- do not exceed 80 percent to 100 percent of the HUD median family ments. During the review period, Bank extended 12 loans totaling income for the county of residence. approximately $667,000 in combination with CICNC. 23. Examiners noted that in Bank's North Carolina assessment 21. Bank, along with 10 other lenders, participates in WP, which areas, 3 percent of residents reside in low-income areas and 17 percent was established to facilitate and increase home ownership among reside in moderate-income areas. Examiners found that Bank's level Wilmington's LMI residents. During the review period, Bank ex- of lending in LMI areas is adequate considering the population pertended one WP loan of $58,450. centages in combination with the poverty rates for such areas. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 389 Investments. Examiners rated Bank "high satisfactory" C. Tucker's CRA Performance Record on its record of investment in light of its level of response to community development needs. During the review pe- As noted above, Tucker, which would be acquired by riod, Bank maintained a securities portfolio of $11.5 mil- Bank, received an unsatisfactory CRA rating at its most lion in qualified investments. Examiners noted that Bank recent examination. Examiners found that Tucker's level also continued to maintain investments in various partner- of lending was low compared to the percentage of deposits ships that funded affordable housing throughout North derived from its assessment areas. Examiners noted that Carolina.24 In addition, Bank made two investments total- Tucker's penetration of LMI geographies in its assessment ing approximately $2.8 million in Federal Home Loan areas was poor compared to the distribution of owner- Mortgage Corporation mortgage-backed securities benefit- occupied housing in those areas. In addition, examiners ing Virginia and South Carolina. Examiners noted that found that Tucker made no community development loans Bank also was awarded the Bank Enterprise Act award in during the review period, and characterized Tucker's level recognition of its lending and services in economically of qualified investments as too low. Examiners also considdistressed areas of North Carolina. Bank donated the award ered its community development services inadequate in to a nonprofit organization with subsidiaries that operate as light of Tucker's resources and the needs in its assessment community development lenders serving LMI individuals, areas. small businesses, and other nonprofit organizations Since the examination, Tucker has established a CRA throughout North Carolina. committee with the mandate to help improve its rating. The Services. Bank was rated "high satisfactory" on its committee meets regularly with Tucker's board of direcprovision of retail banking and community development tors to report on efforts to enhance lending, investment, and services at its last examination. Examiners found that service activities in its communities. Tucker increased Bank's delivery systems, which included automated teller lending in its assessment areas from 7 percent to 55 percent machines, personal computer home-based banking, and in 2001, and has purchased a total of $8.7 million of branch locations and their hours of operations, were readily CRA-related first mortgage loans in its assessment areas. accessible. Examiners noted that 19 of the bank's branches Tucker also has enhanced its small business lending, conwere in LMI geographies. In addition, examiners found centrating on small businesses with revenues of $1 million that bank personnel provided technical assistance to sev- or less. Of approximately $70 million in small business eral community development organizations, including loans originated by Tucker during 2001, almost 82 percent Bank's Community Centered Banking program ("CCB"), were made to businesses in its assessment areas. which serve LMI residents and residents in predominantly Tucker also has improved its community development minority areas. Through its CCB program, the bank part- lending since the most recent examination. Loans qualifyners with local churches to provide underserved markets ing as community development loans are specifically diswith financial education programs and financial products cussed at the thrift's weekly lending meetings. Tucker has and services. The program's financial products include developed an expertise in financing apartment units in LMI checking and savings accounts, personal loans and credit areas. During 2001, Tucker extended two loans totaling cards, check cashing identification cards, and a mortgage $1.3 million for apartment complexes in LMI areas of loan with flexible underwriting criteria and market-based Atlanta and, overall, Tucker extended ten community deinterest rates that permits pre-approval on completion of an velopment loans totaling $5.1 million. Tucker also purextensive homebuyers counseling program. Bank also chased seven certificates of deposit in institutions serving stated that it participates with several nonprofit agencies to predominantly minority customers in its assessment areas offer Individual Development Accounts ("IDA") to famiand has committed conditionally to invest $ 1 million in an lies saving for education or home ownership, or to individ- Atlanta small business enterprise in organization that is uals starting a business. Through IDA, Bank provides managed by minorities. special accounts that require no minimum balance and RBC stated that it intends to supplement Tucker's recent charge no fees, in addition to providing special services. efforts with its own corporate CRA program after the Bank stated that it also provides financial literacy and merger. RBC stated that it would meet with local commutraining seminars on a variety of topics in the markets it nity groups in communities currently served by Tucker to serves.25 understand better the needs of those communities and would establish and monitor goals developed for those communities. In addition, RBC stated that it would provide new products or services as appropriate to meet the communities' credit and banking needs, including mortgage 24. During the review period, Bank invested in five partnerships products designed to benefit LMI communities, low-cost that funded approximately $8.6 million in affordable housing projects in eastern and central North Carolina and the Charlotte-Gastonia- deposit products for LMI individuals, and small business Rock Hill, Raleigh-Durham-Chapel Hill, and Rocky Mount MSAs, all loan products for small businesses, and that it would make in North Carolina. additional investments in community development lending 25. One financial literacy training program is available to high for affordable housing. The Board notes that Tucker will be school students. Another program is available to low-income particiimmediately merged into Bank, which is twice its size and pants through its partnership with the Newport News Redevelopment has a satisfactory CRA rating. and Housing Authority Self-Sufficiency Program. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

390 Federal Reserve Bulletin • August 2002 D. HMDA most recent examination, examiners found no evidence of prohibited discriminatory practices or of substantive viola- The Board also has carefully considered the lending record tions of fair lending laws. The Board notes that although of Bank in light of comments on its 1999 and 2000 HMDA the number of mortgage loan applications received by data. These data reflect improvements in Bank's lending to Bank from African-American applicants and applicants in African-American borrowers statewide. Moreover, from predominantly minority census tracts were fewer than the 1999 to 2000, Bank's percentage of African-American number of applications received by the lenders in the applicants increased, and the denial disparity ratios de- aggregate, Bank's volume of HMDA-reportable loan origicreased statewide, particularly in certain North Carolina nations to African-American applicants remained constant MSAs.26 One commenter expressed concern, however, or increased in eight of eleven markets in North Carolina about the low percentage of African-American mortgage compared with increases in five markets for lenders in the applicants and the high denial disparity ratios for African- aggregate. In addition, from 2000 to 2001, Bank's volume American applicants in certain MSAs in North Carolina. of HMDA-reportable loan originations increased in pre- The HMDA data also reflect disparities in certain MSAs dominantly minority census tracts in six of nine MSAs in with respect to loan originations and applications in LMI North Carolina with predominantly minority tracts, while areas and to LMI borrowers.27 originations for lenders in the aggregate increased or remained unchanged in three of the nine MSAs. With respect The Board is concerned when the record of an institution to loans to LMI individuals and in LMI census tracts, the indicates disparities in lending and believes that all banks Board notes that although Bank's percentages of loans to are obligated to ensure that their lending practices are LMI individuals and in LMI census tracts as compared to based on criteria that ensure not only safe and sound their loans to all persons and in all areas is lower than the lending, but also equal access to credit by creditworthy percentage for lenders in the aggregate in several markets, applicants regardless of their race or income level. The the Bank's origination rates for such loans approximated or Board recognizes, however, that HMDA data alone provide exceeded the origination rates for lenders in the aggregate an incomplete measure of an institution's lending in its in the same markets. community because these data cover only a few categories of housing-related lending. HMDA data, moreover, pro- As the Board previously noted, Bank has implemented a vide only limited information about the covered loans.28 number of programs and made efforts to improve its perfor- HMDA data, therefore, have limitations that make them an mance in certain markets since its February 2000 examinainadequate basis, absent other information, for concluding tion. Bank also stated that it increased its HMDAthat an institution has not assisted adequately in meeting its reportable lending after its most recent examination. Bank community's credit needs or has engaged in illegal lending reported that in 2000, it originated 1,921 mortgage loans to discrimination. LMI applicants, representing 27.8 percent of its total mort- Because of the limitations of HMDA data, the Board has gage loan originations. In North Carolina, Bank originated considered these data carefully in light of other informa- 1,619 loans to LMI applicants, representing 28.5 percent of tion, including examination reports that provide on-site its total mortgage lending in North Carolina. Similarly, evaluation of Bank's compliance with fair lending laws, Bank stated that in 2001, it originated 2,689 mortgage and the overall lending and community development activ- loans to LMI applicants, representing 22.8 percent of its ities of Bank.29 In particular, the Board notes that at Bank's total mortgage loan originations. In North Carolina, Bank originated 2,254 loans to LMI applicants, representing 22.9 percent of its total mortgage lending in that state. The record described above also shows that Bank helps to meet 26. Statewide, the percentage of African-American applicants increased from 11.2 percent in 1999 to 13.3 percent in 2000. the credit needs of the communities it serves, including 27. The commenter noted that the percentage of applications from LMI areas. LMI households increased statewide from 27.2 percent in 1999 to 29.4 percent in 2000. The commenter also reported, however, that in five of twelve MSAs, the percentage of low-income applicants decreased and in six of twelve MSAs, the percentage of LMI borrowers decreased. In addition, the commenter stated that in nine of twelve MSAs, Bank had a lower percentage of loans in its loan portfolio to LMI borrowers than the lenders in those MSAs in the aggregate. commenter also questioned whether RBC Mortgage is complying 28. The data, for example, do not account for the possibility that an with the requirements of HMDA. Royal Bank has provided informainstitution's outreach efforts may attract a larger proportion of margin- tion about the policies and procedures it has implemented to comply ally qualified applicants than other institutions attract and do not with fair lending laws and HMDA and to ensure accurate HMDA provide a basis for independent assessment of whether an applicant reporting. The Board has forwarded the commenter's letter to HUD who was denied credit was, in fact, creditworthy. Credit history and the Federal Trade Commission, the agencies responsible for problems and excessive debt levels relative to income (reasons most enforcing compliance with fair lending laws of nondepository institufrequently cited for a credit denial) are not available from HMDA tions. data. The commenter also criticized the fair lending records of First 29. One commenter criticized the denial disparity ratios of RBC Greensboro and NCS, which, as noted above, have either been di- Mortgage for Latino and African-American applicants in certain vested by Royal Bank or ceased making loans as of July 2001. The MSAs served by RBC Mortgage, and alleged that RBC Mortgage is Board previously reviewed the fair lending policies and procedures of focusing on Latinos and African Americans for high-cost loans and these entities. See Royal Bank of Canada, 87 Federal Reserve Bulletin failing to offer prime credit products to qualifying applicants. This 467, 469 n. 11 (2001). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 391 E. Conclusion on Convenience and Needs Public Benefits Considerations As part of its evaluation of the public interest factors, the In reviewing the effect of the proposal on the convenience Board also has reviewed carefully the other public benefits and needs of the communities to be served, the Board has and possible adverse effects of the proposal.32 The record considered carefully all the facts of record, including the indicates that consummation of the proposal would result comments received and the responses to the comments, in benefits to consumers and businesses currently served evaluations of the performance of Bank and Tucker under by Tucker. The Board notes that the merger would improve the CRA, other information provided by Bank, and confi- Tucker's financial position and future business prospects dential supervisory information.30 The Board also has re- and enhance its ability to serve the needs of the public. viewed information submitted by Bank concerning its CRA Tucker's individual and business customers would have performance and activities to help ensure compliance with access to Bank's greater capital resources and expanded fair lending laws since its last performance evaluation. In lines of products and services. The Board notes that there addition, the Board has considered Bank's plans to im- are also public benefits to be derived from allowing capital prove Tucker's CRA performance after the transaction. markets to operate so that bank holding companies can The record indicates that Bank has sound performance in make potentially profitable investments in nonbanking a number of areas under the CRA. The record also indi- companies and from permitting banking organizations to cates that there are opportunities for improvement in allocate their resources in the manner they consider to be Bank's overall satisfactory CRA record, and the Board most efficient when such investments and actions are conexpects Bank to pursue those opportunities and to take the sistent, as in this case, with the relevant considerations steps it has proposed to improve Tucker's CRA perfor- under the BHC Act.33 mance. Based on all the facts of record, and for the reasons Based on the foregoing and all the facts of record, the discussed above, the Board concludes that considerations Board has determined that consummation of the proposal relating to the convenience and needs of the communities can reasonably be expected to produce public benefits that to be served, including the CRA performance records of would outweigh any likely adverse effects under the stanthe institutions involved, are consistent with approval of dard of review set forth in section 4(j)(2) of the BHC Act. the proposal.31 In addition, as noted above, Bank also has applied under section 9 of the FRA to establish branches at the former sites of Tucker's branches in Georgia. The Board has considered the factors it is required to consider when 30. One commenter requested that Bank enter into certain commitreviewing an application under section 9 of the FRA and, ments and provide specific plans and goals on various issues. The Board notes that the CRA requires that, in considering an acquisition for the reasons discussed in this order, finds those factors to proposal, the Board carefully review the actual performance records be consistent with approval.34 of the relevant depository institutions in helping to meet the credit needs of their communities. Neither the CRA nor the federal banking agencies' CRA regulations require depository institutions to provide commitments regarding future performance under the CRA. Bank's Conclusion proposed activities will be reviewed by the Federal Reserve Bank of Richmond in future performance evaluations, and its CRA perfor- Based on the foregoing, the Board has determined that the mance record will be considered by the Board in any subsequent proposal should be, and hereby is, approved. The Board's applications by Bank to acquire a depository institution. approval is specifically conditioned on compliance by RBC 31. One commenter requested that the Board hold a public hearing or meeting in this case. Neither the Bank Merger Act nor the BHC Act and Bank with all the commitments made in connection requires the Board to hold a public hearing or meeting on an applica- with the applications. The Board's determination also is tion. Under its rules, the Board may, in its discretion, hold a public subject to all the conditions in Regulation Y, including meeting on an application to clarify factual issues related to the those in sections 225.7 and 225.25(c) (12 C.F.R. 225.7 and application and to provide an opportunity for testimony, if necessary. 225.25(c)), and to the Board's authority to require such See 12 C.F.R. 262.25(e). Similarly, the Board's rules allow for a hearing on a notice to acquire nonbanking companies if there are disputed issues of material fact that cannot be resolved in some other manner. 12 C.F.R. 225.25(a)(2). The Board has carefully considered the commenter's request in light of all the facts of record. The Board has accumulated a substantial record in this case that includes examination information, supervisory information, public records, and information submitted by Bank. The public has had ample opportunity to 32. A commenter noted that SFNB recently laid olf 100 employees. submit comments on the proposal and, in fact, the commenters have The effect of a proposed transaction on employment in a community is submitted written comments that the Board has considered carefully not among the factors the Board may consider under the BHC Act or in acting on the proposal. The commenter's request fails to demon- the Bank Merger Act, and the convenience and needs factor has been strate why its written comments do not present its views adequately. consistently interpreted by the federal banking agencies, the courts, The commenter's request also fails to identify disputed issues of fact and the Congress to relate to the effect of a proposal on the availability that are material to the Board's decision and that would be clarified by and quality of banking services in the community. See Wells Fargo & a public meeting or hearing. For these reasons, and based on all the Company, 82 Federal Reserve Bulletin 445, 457 (1996). facts of record, the Board has determined that a public meeting or 33. See BB&T Corporation, 87 Federal Reserve Bulletin 545 hearing is not required or warranted in this case. Accordingly, the (2001). request for a public meeting or hearing on the proposal is denied. 34. 12 U.S.C. § 322. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

392 Federal Reserve Bulletin • August 2002 modification or termination of the activities of a holding ORDERS ISSUED UNDER BANK MERGER ACT company or any of its subsidiaries as the Board finds necessary to ensure compliance with, or to prevent evasion Westamerica Bank of, the provisions and purposes of the BHC Act and the San Rafael, California Board's regulations and orders issued thereunder. The commitments and conditions relied on by the Board in reaching Order Approving the Merger of Commercial Banks this decision shall be deemed to be conditions imposed in writing by the Board in connection with its findings and Westamerica Bank, San Rafael ("Westamerica"), a state decision and, as such, may be enforced in proceedings member bank and a wholly owned subsidiary of Wesunder applicable law. tamerica Bancorporation, Fairfield, has requested the The merger may not be consummated before the fif- Board's approval under section 18(c) of the Federal Deteenth calendar day after the effective date of this order, posit Insurance Act (12 U.S.C. § 1828(c)) ("Bank Merger and not later than three months after the effective date of Act"), to merge with Kerman State Bank, Kerman ("Kerthis order, unless such period is extended for good cause by man"), all in California.1 Westamerica also has applied the Board or the Federal Reserve Bank of Richmond, under section 9 of the Federal Reserve Act (12 U.S.C. acting pursuant to delegated authority. §321) ("FRA") to retain and operate branches at the By order of the Board of Governors, effective June 24, locations of the main office and branch offices of Kerman.2 2002. Notice of the proposal, affording interested persons an opportunity to comment, has been published locally in Voting for this action: Chairman Greenspan, Vice Chairman Fergu- accordance with the Bank Merger Act and the Board's son, and Governors Gramlich, Bies, and Olson. Rules of Procedure (12 C.F.R. 262.3(b)). As required by the Bank Merger Act, reports on the competitive effect of ROBERT DEV. FRIERSON the merger were requested from the United States Attorney Deputy Secretary of the Board General and relevant banking agencies. The time for filing comments has expired, and the Board has considered the applications and all comments received in light of the factors set forth in the Bank Merger Act and the FRA. Westamerica is the 19th largest depository institution in Appendix California, controlling deposits of $3.2 billion, representing less than 1 percent of total deposits of insured deposi- Addresses of Branches to be acquired by Bank tory institutions in the state ("state deposits").3 Kerman is 1. 1052 Peachtree Industrial Blvd. the 215th largest depository institution in California, con- Suwanee, GA 30024 trolling total deposits of $90.4 million, representing less 2. 4855 Briarcliff Rd. than 1 percent of state deposits. On consummation of the Atlanta, GA 30345 proposal, Westamerica would remain the 19th largest de- 3. 1300 Dunwoody Village Pkwy. pository institution, controlling deposits of approximately Dunwoody, GA 30338 $3.3 billion, representing less than 1 percent of state deposits. 4. 2710 Wesley Chapel Rd. Decatur, GA 30034 Competitive Considerations 5. 1500 Mansell Rd. Alpharetta, GA 30201 The Bank Merger Act prohibits the Board from approving 6. 4650 Jonesboro Rd. a proposal that would result in a monopoly or be in Union City, GA 30291 furtherance of any attempt to monopolize the business of 7. 9115 Roosevelt Hwy. banking. The Bank Merger Act also prohibits the Board Palmetto, GA 30268 from approving a proposal that would substantially lessen 8. 1585 Southlake Pkwy. competition or tend to create a monopoly in any relevant Morrow, GA 30260 market, unless the Board finds that the anticompetitive 9. 7906 Tara Blvd. effects of the proposal are clearly outweighed in the public Jonesboro, GA 30236 interest by the probable effects of the transaction in meet- 10. 2550 Odum St. Snellville, GA 30045 11. 395 Grayson Hwy. Lawrenceville, GA 30045 1. Kerman would merge with and into Westamerica, and West- 12. 494 Indian Trail Rd. america would be the surviving bank. Lilburn, GA 30247 2. The Kerman branches to be acquired by Westamerica, all in 13. 5424 Buford Hwy. California, are at 5751 South Elm Street, Easton; 1312 P Street, Firebaugh; and 306 S. Madera Avenue, Kerman. Doraville, GA 30340 3. Deposit and ranking data are as of June 30, 2001. In this context, 14. 4419 Cowan Road depository institutions include commercial banks, savings banks, and Tucker, GA 30084 savings associations. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 393 ing the convenience and needs of the community to be local communities in which they operate, consistent with served.4 safe and sound operation, and requires the appropriate The Board has considered carefully the competitive ef- federal financial supervisory agency to take into account an fects of the proposal in light of all the facts of record. institution's record of meeting the credit needs of its entire Westamerica competes directly with Kerman in the Fresno, community, including low- and moderate-income ("LMI") California, banking market ("Fresno banking market").5 neighborhoods, in evaluating bank expansionary proposals. Westamerica is the sixth largest depository institution in The Board has considered carefully the convenience and the market, controlling $270 million in deposits, represent- needs factor and the CRA performance records of Westing approximately 5 percent of total deposits in depository america and Kerman in light of all the facts of record, institutions in the market ("market deposits"). Kerman is including public comments received on the effect of the the 13th largest depository institution in the market, con- proposal on the communities to be served by the combined trolling $77 million in deposits, representing 1.5 percent of organization. market deposits. On consummation of the proposal, West- Two community groups submitted comments expressing america would become the fourth largest depository institu- concerns about the record of Westamerica in meeting the tion in the Fresno banking market, controlling $347 million convenience and needs of the communities it serves.7 One in deposits, representing approximately 6.6 percent of mar- commenter criticized Westamerica's level of home mortket deposits. gage lending to low-income and minority borrowers in the The change in market concentration in the Fresno bank- bank's Marin and Fresno Counties assessment areas and its ing market, as measured by the Herfindahl-Hirschman level of community development investments and grants as Index ("HHI"), is consistent with Board precedent and the being too low. Another commenter expressed concern Department of Justice Merger Guidelines ("DOJ Guide- about the loss of Kerman's local community banking praclines").6 The Department of Justice has reviewed the pro- tices, products, and services.8 posal and advised the Board that consummation of the proposal would not likely have a significantly adverse A. CRA Performance Evaluations effect on competition in any relevant market. No other agency has indicated that competitive issues are raised by As provided in the CRA, the Board has evaluated the this proposal. convenience and needs factor in light of examinations by Based on all the facts of record, the Board concludes that the appropriate federal supervisors of the CRA perforconsummation of the proposal would not result in any mance records of Westamerica and Kerman. An institusignificantly adverse effects on competition or on the con- tion's most recent CRA performance evaluation is a particcentration of banking resources in the Fresno banking ularly important consideration in the applications process market or in any other relevant banking market. because it represents a detailed, on-site evaluation of the institution's overall record of performance under the CRA Convenience and Needs Considerations by its appropriate federal supervisor.9 In acting on this proposal, the Board also must consider the convenience and needs of the communities to be served and take into account the records of performance of the 7. These commenters also alleged that Westamerica threatened to bring a libel action against one of the groups for comments it made in relevant depository institutions under the Community Reinconnection with this proposal and that the threatened action was vestment Act (12 U.S.C. § 2901 et seq.) ("CRA"). The intended to suppress the group's right to comment on the proposal. CRA requires the federal supervisory agencies to encour- The commenters asked the Board to take steps to prevent banks from age financial institutions to help meet the credit needs of interfering with the free speech rights of community groups commenting on applications. Only the courts may adjudicate and enforce an applicant's or commenter's respective free speech rights under the United States Constitution and libel laws. Through its policies and 4. 12 U.S.C. §§ 1828(c)(5)(A) and (B). procedures for submitting comments, however, the Board maintains 5. The Fresno banking market is defined as the Fresno Ranally an open application process designed to give all interested persons an Metropolitan Area and the towns of Chowchilla, Dinuba, Orange opportunity to express their views on an application during the com- Cove, Reedley, and Parlier. ment period and to submit comments for an institution's CRA file. 6. Under the DOJ Guidelines, 49 Federal Register 26,823 (1984), a These policies and procedures were followed in this proposal and, as market in which the post-merger HHI is between 1000 and 1800 is noted above, the commenters submitted timely comments that the considered to be moderately concentrated. The Department of Justice Board has carefully considered. has informed the Board that a bank merger or acquisition generally 8. Specifically, the commenter was concerned about the loss of will not be challenged (in the absence of other factors indicating Kerman's practices in making lending decisions locally, and its perforanticompetitive effects) unless the post-merger HHI is at least 1800 mance in meeting the lending needs of immigrants, farmers, and small and the merger increases the HHI by more than 200 points. The businesses. Westamerica represented that it intends to keep the loan Department of Justice has stated that the higher than normal thresh- decision-making process in Fresno County, and that almost all comolds for an increase in the HHI when screening bank mergers and mercial loan decisions would be made by employees who live and acquisitions for anticompetitive effects implicitly recognize the com- work in the county. Westamerica also stated that it would maintain petitive effects of limited purpose and other nondepository financial Kerman's farm lending program and would continue Kerman's policy entities. On consummation of the proposal, the HHI would increase of offering small business loans. 15 points to 1482, and the market would remain moderately concen- 9. See Interagency Questions and Answers Regarding Community trated. Reinvestment, 66 Federal Register 36,620 and 36,639 (2001). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

394 Federal Reserve Bulletin • August 2002 Westamerica received a "satisfactory" CRA rating at its Westamerica made a high percentage of its loans in its most recent CRA performance examination, as of April 10, assessment areas, maintained a reasonable geographic dis- 2000, by the Federal Reserve Bank of San Francisco.10 tribution of its loans throughout those areas, and did not Likewise, Kerman received a "satisfactory" CRA rating at unreasonably exclude LMI communities. Examiners also its most recent CRA performance examination, as of Feb- noted that Westamerica's use of flexible lending standards ruary 17, 1999, by the Federal Deposit Insurance Corpora- helped it meet the credit needs of its assessment areas. tion. Examiners of both banks found no evidence of prohib- As noted by examiners, Westamerica's main focus is on ited discrimination or other illegal credit practices at the small business lending. During the review period, examinbanks and found no violations of the substantive provisions ers found that Westamerica made 60 percent of its small of fair lending laws. business loans to small businesses, and that the majority of those loans were in amounts of $100,000 or less, which B. Westamerica Bank's CRA Performance Record examiners found met the most significant credit needs of small businesses.14 In Marin County, Westamerica made In addition to the most recent CRA evaluation reports, the 65 percent of its loans to small businesses, of which Board has carefully considered confidential supervisory 60 percent were in amounts of $100,000 or less. In Fresno information on the CRA performance and fair lending County, Westamerica made 62 percent of its loans to small records of Westamerica. The Board also has reviewed a businesses, with 63 percent of those loans in amounts of substantial amount of information submitted by West- $100,000 or less. america concerning its CRA performance and its activities Since the last examination, Westamerica has maintained to help ensure compliance with fair lending laws since the a high level of small business lending, particularly loans to bank's last performance evaluation. small businesses, loans to businesses in LMI census tracts, Lending. Westamerica received an examination rating of and loans in smaller amounts. Westamerica represented "high satisfactory" under the lending test for the review that it made almost 51 percent of its commercial loans to period in its most recent CRA performance evaluation.11 small businesses during 2000 and 2001. For all of West- Examiners reported that Westamerica's main focus was on america's assessment areas during 2000 and 2001, the small business lending.12 Examiners noted that, although bank stated that it extended more than $280 million in Westamerica's lending activities included both consumer small business loans to small businesses, including loans and business loans, the bank's primary business strategy totaling approximately $135 million to businesses in LMI was to serve the needs of small- and middle-market busi- census tracts. Westamerica represented that its loans to nesses in its assessment areas. For the review period, small businesses totaled more than $51 million in Marin examiners found that Westamerica's lending record re- County and more than $32 million in Fresno County durflected an affirmative effort and good responsiveness in ing this time period.15 meeting the credit needs of its assessment areas. In addi- In 2000, the percentage of Westamerica's small business tion, examiners found that Westamerica's level of con- loans in amounts of $100,000 or less and the percentage of sumer lending to borrowers of different income levels was its small business loans in LMI census tracts compared adequate.13 For all types of loans, examiners found that favorably with the percentage achieved by the aggregate of lenders in Marin and Fresno Counties ("aggregate lenders").16 In addition, Westamerica's percentage of small 10. One commenter disagreed with Westamerica's "satisfactory" CRA performance rating. The commenter expressed concerns that the bank provided a low volume of lending, services, and investments that level of owner-occupied housing in low-income census tracts, Westbenefited LMI and minority individuals and communities, particularly america' s distribution of loans in the assessment area was reasonable. in the bank's Marin and Fresno Counties assessment areas. 14. In this context, "small business loans" are business loans in 11. The review period for Westamerica's CRA evaluation was amounts of $1 million or less, and "small businesses" are businesses January 1, 1998, through December 31, 1999. During the review with annual gross revenues of less than $1 million. period, Westamerica's assessment areas included all or portions of 15. Westamerica also represented that it participates in the 21 counties in Northern and Central California. Full scope reviews government-sponsored Small Business Administration ("SBA") 504 were conducted in Westamerica's Marin, Fresno, and Sacramento loan programs which are designed to promote economic expansion Counties assessment areas. and job growth. Westamerica stated that it offers all forms of SBA 504 12. Examiners found that Westamerica's strong record of small loan programs, including purchase money, construction, and permabusiness lending during the review period was a significant compo- nent financing. During 2000 and 2001, Westamerica funded 22 loans, nent in the bank's overall "satisfactory" CRA performance rating. totaling $13.9 million, under the SBA 504 loan programs that were 13. Examiners noted that the housing composition of LMI census distributed in the Bay Area and the Central Valley of California. tracts in many of the bank's assessment areas limited opportunities for 16. In Marin County, Westamerica made approximately 18 percent housing-related lending in those areas, and that prohibitive housing of its small business loans in amounts of $100,000 or less to busicosts often limited the bank's ability to provide housing-related loans nesses in LMI census tracts compared to 8.4 percent made by the to LMI individuals. For example, examiners found that the median aggregate lenders. Also, Westamerica made 15 percent of its small home sales price of $450,000 in Marin County (as of November 1999) business loans in moderate-income census tracts in Marin County, severely affected the home ownership opportunities of LMI and compared with 7 percent made by the aggregate lenders. In Fresno middle-income individuals in the county. Similarly, examiners found County, Westamerica made 28 percent of its small business loans in that even the median home sales price of $90,000 in Fresno County amounts of $100,000 or less to businesses in LMI census tracts generally made home ownership unaffordable for LMI families. Ex- compared with 22 percent made by the aggregate lenders. Also, aminers noted that, given housing affordability issues and the low Westamerica made 23 percent of its small business loans in LMI Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 395 business loans to small businesses compared favorably need for affordable housing to LMI individuals.20 Examinwith that of the aggregate lenders.17 ers noted that Westamerica's primary form of qualified Examiners concluded that Westamerica extended a satis- investment was through the purchase of more than factory level of community development loans during the $40 million of mortgage-backed securities comprised of review period. Westamerica provided $59 million in com- loans to LMI individuals or in LMI tracts.21 In addition, munity development loans in its assessment areas, the Westamerica purchased a $5 million mortgage revenue majority of which supported the creation of affordable bond issued by the California Housing Finance Agency, housing for LMI individuals, with the remainder designed the proceeds of which facilitated mortgage loans to LMI to provide social services to LMI individuals.18 individuals throughout the state. Westamerica also pur- Westamerica represented that, during 2000 and 2001, it chased $2.6 million in certificates issued by Fresno County funded 62 community development loans totaling more school districts serving primarily LMI students. Examiners than $64 million. The loans were used for affordable hous- also noted that Westamerica continued to fund its ing, low-income senior citizen housing, substance abuse $8.2 million dollar equity investment in the California education to low-income individuals, school rehabilitation Corporate Tax Credit Fund, an organization that acquires a and new classrooms in lower-income communities, and diversified portfolio of affordable housing properties hospitals to provide care for farm workers. Westamerica throughout California. stated that these loans were distributed throughout its as- Westamerica represented that, since its last examination, sessment areas, including the Bay Area, the northern and its community development investment strategy has been southern areas of the Central Valley, and in more rural to assist in the creation of affordable housing primarily counties. Westamerica stated that, during 2000 and 2001, it through purchases of low-income housing tax credits and made community development loans totaling $3.5 million municipal bonds. The bank stated that it has maintained in Marin County to help provide affordable housing and investments totaling more than $76 million (including inprovided additional funding for a low-income, senior- vestments made during 2000 and 2001 and investments citizen housing project. In addition, Westamerica lent retained in the bank's portfolio).22 $1.3 million to a nonprofit agency that provides services Services. Westamerica received a "low satisfactory" for low-income substance abusers. Westamerica also stated rating on its provision of retail banking and community that it funded $6.3 million in community development development services at its last examination.23 Examiners loans in Fresno County during this time period. found that Westamerica's branches promoted reasonable Investments. Examiners rated Westamerica "high satis- accessibility of bank products and services to the majority factory" on its record of investment based on the bank's of homes and businesses in its assessment areas. In addiconsiderable level of investment activity in the various tion, examiners noted that the wide range of products and assessment areas. During the review period, Westamerica significantly increased the amount of qualified investments it purchased since the date of the previous examination, 20. A commenter argued that Westamerica's amount of charitable from $21 million to $50 million, and made $104,000 in donations was too low and alleged that Westamerica's donations as a qualified grants.19 Examiners found that Westamerica's percentage of its pre-tax income and the compensation of its Chief qualified investments benefited all the bank's assessment Executive Officer ("CEO") were far below that of its competitors. areas, with the majority of the investments addressing the The Board notes that the CRA requires the agencies to encourage depository institutions to help meet the credit needs of its community. The adequacy of an institution's community development investments may only be determined in light of its overall CRA program, the types of community development investments made by the institution, and the needs of the local community. As noted above, examiners reviewcensus tracts compared with 21 percent made by the aggregate lend- ing these factors rated Westamerica's record of community developers. ment investments as "high satisfactory." 17. In Marin County, Westamerica made 54 percent of its small 21. Westamerica purchased $833,657 of mortgage-backed securities business loans to small businesses compared with 40 percent made by that benefited Fresno County. In Marin County, Westamerica purthe aggregate lenders. In Fresno County, Westamerica made 64 per- chased $1.7 million of securities consisting of loan pools of 10 home cent of its small business loans to small businesses compared with 39 mortgages to LMI individuals in Marin County. percent made by the aggregate lenders. 22. Westamerica stated that it held three community development 18. In Marin County, Westamerica made one community develop- investments in Fresno County totaling $2.7 million. In addition, ment loan totaling $1.3 million to a nonprofit corporation that pro- Westamerica represented that, in light of the comparatively higher vides affordable housing. Examiners noted that the lack of available average income in Marin County, it decided to focus its community land for development and the participation of much larger banking development investments in lower-income communities in other parts institutions might have limited Westamerica's opportunities for greater of the state. participation in community development activities in the county. 23. One commenter criticized Westamerica for maintaining "check Examiners found that Westamerica made community development cashing stores" separate from its banking branches in Marin County. loans in Fresno County totaling more than $7 million to a developer Westamerica stated that it previously had operated a payday lending specializing in the construction of affordable housing for LMI and operation through a separate subsidiary, but that it had discontinued middle-income borrowers. Examiners determined that this level of the operation. This commenter also criticized Westamerica for failing community development lending was adequate to address the ongoing to provide Spanish-speaking loan officers at each of its branches, need for affordable housing in the county. particularly those in the Fresno assessment area. Westamerica stated 19. The date of the previous CRA performance examination was that, although it does not have bilingual loan officers at every branch, April 1998. it does have bilingual bank personnel at every branch. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

396 Federal Reserve Bulletin • August 2002 services that Westamerica offered included reduced-cost record indicates that Westamerica has a number of areas of deposit services. strong performance under the CRA. The bank also has Examiners found, however, that the scope and amount of opportunities for improvement of its overall satisfactory Westamerica's community development services was lim- CRA record, and the Board encourages Westamerica to ited. In the Marin County assessment area, examiners pursue those opportunities. Based on all the facts of record, determined that the bank provided an adequate level of and for the reasons discussed above, the Board concludes community development services, including service by that considerations relating to the convenience and needs bank personnel in various advisory capacities to organiza- are consistent with approval of the proposal.27 tions serving primarily LMI individuals, the elderly, abused women, and first-time homebuyers. Bank personnel in the Financial, Managerial, and Future Prospects Fresno County assessment area provided similar community development services. Examiners noted that, during In reviewing the proposal under the Bank Merger Act and the review period, Westamerica developed a seminar pro- the FRA, the Board also has carefully reviewed the finangram on basic budgeting, credit management, and saving cial and managerial resources and the future prospects of skills. The bank presented the seminar in partnership with the institutions involved. The Board has reviewed, among locally based nonprofit agencies.24 Examiners also noted other things, confidential reports of examination and confithat other service activities were primarily conducted at the dential supervisory information assessing the financial and branch level and consisted of activities to promote afford- managerial resources of the organizations received from able housing for LMI individuals, provide community ser- their primary federal supervisors, and information provices to LMI individuals, and support the development of vided by Westamerica. The Board notes that Westamerica small businesses and small farms. will remain well capitalized on consummation of the pro- In addition, examiners found that Westamerica had not posal. In addition, the Board has considered Westamerica's closed any branches during the review period. Examiners record of successfully integrating acquired organizations. noted that Westamerica's comprehensive branch closing Based on all the facts of record, the Board concludes that policy provided that the bank may close a branch only after the financial and managerial resources and future prospects evaluating the potential impact of that closure.25 of the institutions involved and other supervisory factors With respect to its retail and community services since are consistent with approval of the proposal.28 the last examination, Westamerica stated that it offers lowcost checking and savings accounts and community outreach programs that are designed to benefit LMI individu- Board notes that the CRA requires that, in considering an acquisition als in all its assessment areas. Westamerica also stated that, proposal, the Board carefully review the actual performance records during 2000 and 2001, it conducted 100 financial literacy of the relevant depository institutions in helping to meet the credit seminars that were attended by almost 1,400 individuals, needs of their communities. Neither the CRA nor the federal banking agencies' CRA regulations require depository institutions to provide and promoted this program in all its communities through commitments regarding future performance under the CRA, confer its involvement with the California Head Start Association. authority on the agencies to enforce commitments made to third parties, or require depository institutions to meet with particular C. Conclusion on Convenience and Needs persons. Westamerica's future activities will be reviewed by the Considerations Federal Reserve Bank of San Francisco in future performance evaluations, and its CRA performance record will be considered by the Board in any subsequent applications by Westamerica to acquire a In reviewing the effect of the proposal on the convenience depository institution. and needs of the communities to be served, the Board has 27. One commenter requested that the Board hold a public hearing considered carefully all the facts of record, including the or meeting in this case. The Bank Merger Act does not require the comments received and the responses to the comments, Board to hold a public hearing or meeting on an application. Under its rules, the Board may, in its discretion, hold a public meeting on an evaluations of the performance of Westamerica and Kerapplication to clarify factual issues related to the application and to man under the CRA, other information provided by West- provide an opportunity for testimony, if necessary. See 12 C.F.R. america, and confidential supervisory information.26 The 262.25(e). The Board has carefully considered the commenter's request in light of all the facts of record. In the Board's view, the public has had ample opportunity to submit comments on the proposal and, in fact, the commenters have submitted written comments that the 24. The seminars are designed for LMI individuals, women re- Board has considered carefully in acting on the proposal. The comentering the workforce, at-risk youth, and welfare-to-work trainees. menter's request fails to demonstrate why its written comments do not Examiners noted that, during the review period, 719 individuals present its views adequately. The commenter's request also fails to participated in the 14 classes cosponsored by Westamerica. identify disputed issues of fact that are material to the Board's 25. One commenter expressed concern about the possible closing of decision and that would be clarified by a public meeting or hearing. branches as a result of this merger. Westamerica represented that it For these reasons, and based on all the facts of record, the Board has plans to consolidate its existing branch office in Kerman after the determined that a public meeting or hearing is not required or warmerger but would retain Kerman's main office, which is less than ranted in this case. Accordingly, the request for a public meeting or one-half mile away, so there would be no discontinuance of services hearing on the proposal is denied. in Kerman or elsewhere as a result of this merger. 28. One commenter criticized Westamerica for allegedly failing to 26. One commenter requested that Westamerica make certain com- disclose its CEO's compensation and asserted that the compensation mitments and answer certain questions, and that the Board impose was "excessive" and could endanger the safety and soundness of the specific conditions or take specific actions against Westamerica. The bank. This commenter also speculated that the bank's safety and Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 397 Conclusion amended the IBA, provides that a foreign bank must obtain the approval of the Board to establish a representative Based on the foregoing, the Board has determined that the office in the United States. proposal should be, and hereby is, approved.29 The Board's Notice of the application, affording interested persons an approval is specifically conditioned on compliance by West- opportunity to submit comments, has been published in a america with all the commitments made in connection with newspaper of general circulation in New York, New York the applications. For purposes of this action, the commit- (The New York Post, December 4, 2001). The time for ments and conditions relied on by the Board in reaching filing comments has expired, and all comments have been this decision shall be deemed to be conditions imposed in considered. writing by the Board in connection with its findings and Bank, with total consolidated assets of approximately decision and, as such, may be enforced in proceedings $81.7 billion,1 is a public law institution and operates as a under applicable law. central bank for regional banks and as a full-service com- The transaction may not be consummated before the mercial bank. Bank operates branches in Hong Kong, fifteenth calendar day after the effective date of this order, China; London, United Kingdom; and Singapore; and repand not later than three months after the effective date of resentative offices in Hanoi, Vietnam and Shanghai, China. this order, unless such period is extended for good cause by Bank is owned by Landesbank Schleswig-Holstein Girothe Board or the Federal Reserve Bank of San Francisco, zentrale ("Landesbank Schleswig-Holstein"), Kiel, Geracting pursuant to delegated authority. many, and the City of Hamburg.2 Landesbank Schleswig- By order of the Board of Governors, effective June 4, Holstein, the 15th largest bank in Germany, is a public law 2002. institution and operates as a central bank for the savings banks of the State of Schleswig-Holstein and as a commer- Voting for this action: Chairman Greenspan, Vice Chairman Fergu- cial and investment bank both domestically and internason, and Governors Gramlich, Bies, and Olson. tionally. The proposed representative office would solicit loans ROBERT DEV. FRIERSON and other banking business, conduct research, and act as a Deputy Secretary of the Board liaison with customers of Bank. In acting on an application to establish a representative office, the IBA and Regulation K provide that the Board ORDERS ISSUED UNDER INTERNATIONAL BANKING shall take into account whether the foreign bank engages ACT directly in the business of banking outside of the United States and has furnished to the Board the information it Hamburgische Landesbank Girozentrale needs to assess the application adequately. The Board also Hamburg, Germany shall take into account whether the foreign bank and any foreign bank parent is subject to comprehensive supervi- Order Approving Establishment of a Representative sion or regulation on a consolidated basis by its home Office country supervisor (12 U.S.C. § 3107(a)(2); 12 C.F.R. 211.24(d)(2)).3 In addition, the Board may take into ac- Hamburgische Landesbank Girozentrale ("Bank"), Hamburg, Germany, a foreign bank within the meaning of the International Banking Act ("IBA"), has applied under section 10(a) of the IBA (12 U.S.C. § 3107(a)) to establish a 1. Unless otherwise indicated, data are as of December 31, 2001. 2. The shareholders of Landesbank Schleswig-Holstein Girozentrale representative office in New York, New York. The Foreign are Westdeutsche Landesbank Girozentrale, Diisseldorf, Germany; Bank Supervision Enhancement Act of 1991, which the State of Schleswig-Holstein; the Savings Bank and Clearing Association of Schleswig-Holstein, Kiel, Germany; and Landesbank Baden-Wiirttemberg, Stuttgart, Germany. soundness could be affected by Westamerica's decision to allow the 3. In assessing this standard, the Board considers, among other same individual to hold the positions of CEO, Chairman of the Board, factors, the extent to which the home country supervisors: and President in the organization. The Board has reviewed these (i) Ensure that the bank has adequate procedures for monitoring allegations in light of confidential reports of examination and other and controlling its activities worldwide; information on the financial and managerial resources of Westamerica. (ii) Obtain information on the condition of the bank and its 29. One commenter requested that the Board delay action on the subsidiaries and offices through regular examination reports, proposal. The Board has accumulated a significant record in this case, audit reports, or otherwise; including reports of examination, confidential supervisory informa- (iii) Obtain information on the dealings with and relationship tion, public reports and information, and considerable public com- between the bank and its affiliates, both foreign and domestic; ment. In the Board's view, and for the reasons discussed above, (iv) Receive from the bank financial reports that are consolidated commenters have had sufficient opportunity to submit their views and, on a worldwide basis or comparable information that permits in fact, have provided substantial written submissions that the Board analysis of the bank's financial condition on a worldwide has considered carefully in acting on the proposal. Based on a review consolidated basis; of all the facts of record, the Board has concluded that the record in (v) Evaluate prudential standards, such as capital adequacy and this case is sufficient to warrant action at this time, and that a delay in risk asset exposure, on a worldwide basis. These are indicia of considering the proposal or a denial of the proposal on the grounds comprehensive, consolidated supervision. No single factor is discussed above or on the basis of informational insufficiency is not essential, and other elements may inform the Board's determiwarranted. nation. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

398 Federal Reserve Bulletin • August 2002 count additional standards set forth in the IBA and Regula- garding access to information. Bank and its parents have tion K (12 U.S.C. § 3105(d)(3)-(4); 12 C.F.R. committed to make available to the Board such informa- 211.24(c)(2)). tion on the operations of Bank and any of their affiliates As noted above, Bank and Landesbank Schleswig- that the Board deems necessary to determine and enforce Holstein engage directly in the business of banking outside compliance with the IBA, the Bank Holding Company Act the United States. Bank also has provided the Board with of 1956, as amended, and other applicable federal law. To information necessary to assess the application through the extent that the provision of such information to the submissions that address the relevant issues. With respect Board may be prohibited by law or otherwise, Bank and its to supervision by home country authorities, the Board parent companies have committed to cooperate with the previously has determined, in connection with applications Board to obtain any necessary consents or waivers that involving other German banks, including Landesbank might be required from third parties for disclosure of such Schleswig-Holstein by separate order also issued today, information. In addition, subject to certain conditions, the that those banks were subject to home country supervision German Federal Financial Supervisory Agency may share on a consolidated basis.4 Bank is supervised by the German information on Bank's operations with other supervisors, Federal Financial Supervisory Agency on substantially the including the Board. In light of these commitments and same terms and conditions as the other banks.5 Based on other facts of record, and subject to the condition described all the facts of record, it has been determined that Bank is below, it has been determined that Bank has provided subject to comprehensive supervision and regulation on a adequate assurances of access to any necessary information consolidated basis by its home country supervisor. that the Board may request. The additional standards set forth in section 7 of the On the basis of all the facts of record, and subject to the IBA and Regulation K (see 12 U.S.C. § 3105(d)(3)-(4); commitments made by Bank and its parent companies, and 12 C.F.R. 211.24(c)(2)) have also been taken into account. the terms and conditions set forth in this order, Bank's The German Federal Financial Supervisory Agency has no application to establish the representative office is hereby objection to the establishment of the proposed representa- approved.6 Should any restrictions on access to informative office. tion on the operations or activities of Bank or any of its With respect to the financial and managerial resources of affiliates subsequently interfere with the Board's ability to Bank, taking into consideration Bank's record of opera- obtain information to determine and enforce compliance by tions in its home country, its overall financial resources, Bank or its affiliates with applicable federal statutes, the and its standing with its home country supervisor, financial Board may require or recommend termination of any of and managerial factors are consistent with approval of the Bank's direct and indirect activities in the United States. proposed representative office. Bank appears to have the Approval of this application also is specifically conditioned experience and capacity to support the proposed represen- on compliance by Bank and its parent companies with the tative office and has established controls and procedures commitments made in connection with this application and for the proposed representative office to ensure compliance with the conditions in this order.7 The commitments and with U.S. law. conditions referred to above are conditions imposed in Germany is a member of the Financial Action Task writing by the Board in connection with its decision and Force and subscribes to its recommendations regarding may be enforced in proceedings against Bank and its measures to combat money laundering. In accordance with affiliates under 12 U.S.C. § 1818. these recommendations, Germany has enacted laws and By order, approved pursuant to authority delegated by created legislative and regulatory standards to deter money the Board, effective June 21, 2002. laundering. Money laundering is a criminal offense in Germany and credit institutions are required to establish ROBERT DEV. FRIERSON internal policies and procedures for the detection and pre- Deputy Secretary of the Board vention of money laundering. With respect to access to information on Bank's operations, the restrictions on disclosure in relevant jurisdictions in which Bank operates have been reviewed and relevant government authorities have been communicated with re- 4. See DePfa Bank AG, 87 Federal Reserve Bulletin 710 (2001); 6. Approved by the Director of the Division of Banking Supervision RHEINHYP Rheinische Hypothekenbank AG, 87 Federal Reserve and Regulation, with the concurrence of the General Counsel, pursu- Bulletin 558 (2001); Deutsche Hyp Deutsche Hypothekenbank, 86 ant to authority delegated by the Board. See 12 C.F.R. 265.7(d)(12). Federal Reserve Bulletin 658 (2000); Deutsche Bank AG, 85 Federal 7. The Board's authority to approve the establishment of the pro- Reserve Bulletin 509 (1999); Westdeutsche ImmobilienBank, 85 Fed- posed representative office parallels the continuing authority of the eral Reserve Bulletin 346 (1999); Commerzbank AG, 85 Federal State of New York to license offices of a foreign bank. The Board's Reserve Bulletin 336 (1999). approval of this application does not supplant the authority of the 5. On May 1, 2002, the German Federal Banking Supervisory Office State of New York or its agent, the New York State Banking Departmerged with the Federal Insurance Supervisory Office and the Securi- ment ("Department"), to license the proposed office of Bank in ties Supervisory Office to create a single cross-sector structure for accordance with any terms or conditions that the Department may financial supervision. impose. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 399 Landesbank Schleswig-Holstein Girozentrale the information it needs to assess the application ade- Kiel, Germany quately. The Board also shall take into account whether the foreign bank and any foreign bank parent is subject to Order Approving Establishment of a Branch comprehensive supervision or regulation on a consolidated basis by its home country supervisor (12 U.S.C. Landesbank Schleswig-Holstein Girozentrale ("Bank"), § 3105(d)(2); 12 C.F.R. 211.24).3 The Board may also take Kiel, Germany, a foreign bank within the meaning of the into account additional standards as set forth in the IBA International Banking Act ("IBA"), has applied under sec- and Regulation K (12 U.S.C. § 3105(d)(3)-(4); 12 C.F.R. tion 7(d) of the IBA (12 U.S.C. § 3105(d)) to establish a 211.24(c)(2)-(3)). branch in New York, New York. The Foreign Bank Super- As noted above, Bank and West LB engage directly in vision Enhancement Act of 1991, which amended the IBA, the business of banking outside the United States. Bank provides that a foreign bank must obtain the approval of also has provided the Board with information necessary to the Board to establish a branch in the United States. assess the application through submissions that address the Notice of the application, affording interested persons an relevant issues. With respect to supervision by home counopportunity to submit comments, has been published in a try authorities, the Board previously has determined, in newspaper of general circulation in New York, New York connection with applications involving other German (The New York Post, March 18, 2002). The time for filing banks, including West LB, that those banks were subject to comments has expired, and all comments have been con- home country supervision on a consolidated basis.4 Bank is sidered. supervised by the German Federal Financial Supervisory Bank, with total consolidated assets of approximately Agency on substantially the same terms and conditions as $124 billion,1 is the 15th largest bank in Germany. Bank is the other banks.5 Based on all the facts of record, it has a public law institution and operates as a central bank for been determined that Bank is subject to comprehensive the savings banks of the State of Schleswig-Holstein and as supervision and regulation on a consolidated basis by its a commercial and investment bank both domestically and home country supervisor. internationally with its focus on northern Europe and the The additional standards set forth in section 7 of the Baltic States. Bank operates six offices in Germany, and IBA and Regulation K (see 12 U.S.C. § 3105(d)(3)-(4); three branches and four representative offices in other 12 C.F.R. 211.24(c)(2)) have also been taken into account. countries in Europe.2 Upon establishment of the proposed The German Federal Financial Supervisory Agency has no branch, Bank will be a qualifying foreign banking organi- objection to the establishment of the proposed branch. zation within the meaning of Regulation K (12 C.F.R. Germany's risk-based capital standards are consistent 211.23(b)). with those established by the Basel Capital Accord. Bank's Bank's largest shareholder is Westdeutsche Landesbank capital is in excess of the minimum levels that would be Girozentrale ("West LB"), Diisseldorf, Germany, which owns approximately 40 percent of Bank. West LB operates 3. In assessing this standard, the Board considers, among other as a central bank for the savings banks in North Rhinefactors, the extent to which the home country supervisors: Westphalia and also conducts commercial and investment (i) Ensure that the bank has adequate procedures for monitoring banking activities. The State of Schleswig-Holstein and the and controlling its activities worldwide; Savings Bank and Clearing Association of Schleswig- (ii) Obtain information on the condition of the bank and its subsidiaries and offices through regular examination reports, Holstein, Kiel, Germany, each own approximately 25 peraudit reports, or otherwise; cent of Bank. The remaining interest in Bank is held by (iii) Obtain information on the dealings with and relationship Landesbank Baden-Wiirttemberg, Stuttgart, Germany. between the bank and its affiliates, both foreign and domestic; The proposed branch would assist Bank with its existing (iv) Receive from the bank financial reports that are consolidated business activities in the United States and would be used on a worldwide basis or comparable information that permits analysis of the bank's financial condition on a worldwide to develop new business in areas in which the bank specialconsolidated basis; izes such as real estate and transport financing. The pro- (v) Evaluate prudential standards, such as capital adequacy and posed branch would also participate in syndicated loans, risk asset exposure, on a worldwide basis. These are indicia of issue commercial paper and other debt instruments, and comprehensive, consolidated supervision. No single factor is essential, and other elements may inform the Board's determiprovide trade and public financing. nation. In order to approve an application by a foreign bank to 4. See Allgemeine HypothekenBank Rheinboden AG, 88 Federal establish a branch in the United States, the IBA and Regu- Reserve Bulletin 196 (2002); DePfa Bank AG, 87 Federal Reserve lation K require the Board to determine that the foreign Bulletin 710 (2001); RHEINHYP Rheinische Hypothekenbank AG, 87 Federal Reserve Bulletin 558 (2001); Deutsche Hyp Deutsche Hybank applicant engages directly in the business of banking pothekenbank, 86 Federal Reserve Bulletin 658 (2000); Deutsche outside of the United States, and has furnished to the Board Bank AG, 85 Federal Reserve Bulletin 509 (1999); Westdeutsche ImmobilienBank, 85 Federal Reserve Bulletin 346 (1999); Commerzbank AG, 85 Federal Reserve Bulletin 336 (1999); West Merchant 1. Unless otherwise indicated, data are as of December 31, 2001. Bank Limited, 81 Federal Reserve Bulletin 519 (1995). 2. By separate order issued today, the Board has approved the 5. On May 1, 2002, the German Federal Banking Supervisory Office application of Hamburgische Landesbank Girozentrale, Hamburg, merged with the Federal Insurance Supervisory Office and the Securi- Germany, a subsidiary of Bank, to establish a representative office in ties Supervisory Office to create a single cross-sector structure for New York, New York. financial supervision. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

400 Federal Reserve Bulletin • August 2002 required by the Basel Capital Accord and is considered record, and subject to the condition described below, it has equivalent to capital that would be required of a U.S. been determined that Bank has provided adequate assurbanking organization. Managerial and other financial re- ances of access to any necessary information that the sources of Bank also are considered consistent with ap- Board may request. proval, and Bank appears to have the experience and On the basis of all the facts of record, and subject to the capacity to support the proposed branch. In addition, Bank commitments made by Bank and its parents, and the terms has established controls and procedures for the proposed and conditions set forth in this order, Bank's application to branch to ensure compliance with U.S. law, as well as establish the branch is hereby approved.6 Should any recontrols and procedures for its worldwide operations strictions on access to information on the operations or generally. activities of Bank or any of its affiliates subsequently Germany is a member of the Financial Action Task interfere with the Board's ability to obtain information to Force and subscribes to its recommendations regarding determine and enforce compliance by Bank or its affiliates measures to combat money laundering. In accordance with with applicable federal statutes, the Board may require or these recommendations, Germany has enacted laws and recommend termination of any of Bank's direct and indicreated legislative and regulatory standards to deter money rect activities in the United States. Approval of this applilaundering. Money laundering is a criminal offense in cation also is specifically conditioned on compliance by Germany and credit institutions are required to establish Bank and its parents with the commitments made in coninternal policies and procedures for the detection and pre- nection with this application and with the conditions in this vention of money laundering. order.7 The commitments and conditions referred to above With respect to access to information on Bank's opera- are conditions imposed in writing by the Board in connections, the restrictions on disclosure in relevant jurisdictions tion with its decision and may be enforced in proceedings in which Bank operates have been reviewed and relevant against Bank and its affiliates under 12 U.S.C. § 1818. government authorities have been communicated with re- By order, approved pursuant to authority delegated by garding access to information. Bank and its parents have the Board, effective June 21, 2002. committed to make available to the Board such information on the operations of Bank and any of their affiliates ROBERT DEV. FRIERSON that the Board deems necessary to determine and enforce Deputy Secretary of the Board compliance with the IB A, the Bank Holding Company Act of 1956, as amended, and other applicable federal law. To the extent that the provision of such information to the 6. Approved by the Director of the Division of Banking Supervision Board may be prohibited by law or otherwise, Bank and its and Regulation, with the concurrence of the General Counsel, pursuparents have committed to cooperate with the Board to ant to authority delegated by the Board. See 12 C.F.R. 265.7(d)(12). obtain any necessary consents or waivers that might be 7. The Board's authority to approve the establishment of the prorequired from third parties for disclosure of such informa- posed branch parallels the continuing authority of the State of New tion. In addition, subject to certain conditions, the German York to license offices of a foreign bank. The Board's approval of this application does not supplant the authority of the State of New York Federal Financial Supervisory Agency may share informaor its agent, the New York State Banking Department ("Departtion on Bank's operations with other supervisors, including ment"), to license the proposed office of Bank in accordance with any the Board. In light of these commitments and other facts of terms or conditions that the Department may impose. 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 4 Applicant(s) Bank(s) Effective Date Capital Corp. of the West, Regency Investment Advisors, Inc., June 27, 2002 Merced, California Fresno, California Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 401 APPLICATIONS APPROVED UNDER BANK HOLDING COMPANY ACT By Federal Reserve Banks Recent applications have been approved by the Federal Reserve Banks as listed below. Copies are available upon request to the Reserve Banks. Section 3 Applicant(s) Bank(s) Reserve Bank Effective Date Banknorth Group, Inc., Bancorp Connecticut, Inc., Boston June 10, 2002 Portland, Maine Southington, Connecticut Southington Savings Bank, Southington, Connecticut Citizens Cumberland Bancshares, Citizens Bank of Cumberland County, St. Louis May 31, 2002 Inc., Inc., Burkesville, Kentucky Burkesville, Kentucky County Bancorp, Inc., North County Bank, San Francisco June 4, 2002 Arlington, Washington Arlington, Washington First Citizens Bancorporation of Trinity Bank, Richmond June 5, 2002 South Carolina, Inc., Monroe, North Carolina Columbia, South Carolina FNB Corp., Rowan Bancorp, Inc., Richmond June 17, 2002 Asheboro, North Carolina China Grove, North Carolina Rowan Savings Bank SSB, Inc., China Grove, North Carolina Grace Investment Company, Inc., Alva State Bank & Trust Company, Kansas City June 14, 2002 Alva, Oklahoma Alva, Oklahoma Hometown Independent Bancorp, Morton Community Bank, Chicago June 5, 2002 Inc. Employee Stock Ownership Morton, Illinois Plan & Trust, Morton, Illinois Hometown Independent Bancorp, Inc., Morton, Illinois Metropolitan Bank Group, Inc., Upbancorp, Inc., Chicago June 5, 2002 Chicago, Illinois Chicago, Illinois Uptown National Bank of Chicago, Chicago, Illinois Monticello Bancshares, Inc., Bank of Monticello, St. Louis June 5, 2002 Monticello, Missouri Monticello, Missouri Mountain National Bancshares, Inc., Mountain National Bank, Atlanta June 14, 2002 Sevierville, Tennessee Sevierville, Tennessee People's Community BancShares, People's Community Bank of the Atlanta June 21, 2002 Inc., West Coast, Sarasota, Florida Sarasota, Florida State Bank of Hawley Employee State Bank of Hawley, Minneapolis June 26, 2002 Stock Ownership Plan and Trust, Hawley, Minnesota Hawley, Minnesota Bankshares of Hawley, Inc., Hawley, Minnesota Synovus Financial Corp., Community Financial Group, Inc., Atlanta June 20, 2002 Columbus, Georgia Nashville, Tennessee Wadena Bankshares Inc., Baron Bancshares II, Inc., Minneapolis June 6, 2002 Wadena, Minnesota White Bear Lake, Minnesota Security State Bank of Deer Creek, Deer Creek, Minnesota Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

402 Federal Reserve Bulletin • August 2002 Section 4 Applicant(s) Nonbanking Activity/Company Reserve Bank Effective Date First Community Bancshares, Inc., To engage in financial and advisory Kansas City June 14, 2002 Overland Park, Kansas activities and management consulting activities First Mariner Bancorp, Finance Maryland, LLC, Richmond June 5, 2002 Baltimore, Maryland Baltimore, Maryland First Mutual of Richmond, Inc., AmTrust Capital Corporation, Chicago June 11,2002 Richmond, Indiana Peru, Indiana Richmond Mutual Bancorporation, American Trust Federal Savings Bank, Inc., Peru, Indiana Richmond, Indiana Indiana Financial Service Corporation, Peru, Indiana IBC Bancorp, Inc., IBC Processing Corporation, Chicago June 5, 2002 Chicago, Illinois Chicago, Illinois Lost Pines Bancshares, Inc., To engage de novo in lending activities Dallas June 14, 2002 Smithville, Texas Tennessee Central Bancshares, Inc. System Ventures, Inc., St. Louis June 7, 2002 Parsons, Tennessee Parsons, Tennessee Texas United Bancshares, Inc., The Bryan-College State Financial Dallas June 12, 2002 La Grange, Texas Holding Company, Bryan, Texas First Federal Savings Bank, FSB, Bryan, Texas Sections 3 and 4 Effective Applicant(s) Nonbanking Activity/Company Reserve Bank Date Meader Insurance Agency, Inc., 1st Financial Bancshares, Inc., Kansas City June 12, Waverly, Kansas Overland Park, Kansas 2002 APPLICATIONS APPROVED UNDER BANK MERGER ACT By Federal Reserve Banks Recent applications have been approved by the Federal Reserve Banks as listed below. Copies are available upon request to the Reserve Banks. Applicant(s) Bank(s) Reserve Bank Effective Date Equity Bank, Founders' Bank, Philadelphia May 28, 2002 Marlton, New Jersey Bryn Mawr, Pennsylvania Regions Bank, Brookhollow National Bank, Atlanta May 23, 2002 Birmingham, Alabama Dallas, Texas Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 403 PENDING CASES INVOLVING THE BOARD OF GOVERNORS This list of pending cases does not include suits against the Radfar v. United States, No. 1:01CV1292 (PLF) (D.D.C., Federal Reserve Banks in which the Board of Governors is not complaint filed June 11, 2001). Action under the Federal named a party. Tort Claims Act for injury on Board premises. Artis v. Greenspan, No. 01-CV-0400(ESG) (D.D.C., complaint filed February 22, 2001). Employment discrimination ac- Sedgwick v. United States, No. 02-1083 (ESH) (D.D.C., filed tion. On August 15, 2001, the district court consolidated the June 4, 2002). Complaint for declaratory judgment under action with Artis v. Greenspan, No. 99-CV-2073 (EGS) the Federal Tort Claims Act and the constitution. (D.D.C., filed August 3, 1999), also an employment dis- Caesar v. United States, No. 02-0612 (EGS) (D.D.C.), recrimination action. moved on April 1, 2002 from No. 02-1502 (D.C. Superior Trans Union LLC v. Federal Trade Commission, et al., Court, originally filed March 1, 2002). Action seeking dam- No. 01-5202 (D.C. Cir., filed June 4, 2001). Appeal of ages for personal injury. district court order entered April 30, 2001, upholding chal- Community Bank & Trust v. United States, No. 01-571C (Ct. lenged provisions of an interagency rule regarding Privacy Fed. CI., filed October 3, 2001). Action challenging on of Consumer Finance Information. constitutional grounds the failure to pay interest on reserve Albrecht v. Board of Governors, No. 00-CV-317 (CKK) accounts held at Federal Reserve Banks. (D.D.C., filed February 18, 2000). Action challenging the Laredo National Bancshares, Inc. v. Whalen v. Board of Govmethod of funding of the retirement plan for certain Board ernors, No. 01-CV-134 (S.D. Tex.), removed on Septememployees. On March 30, 2001, the district court granted in ber 5, 2001, from No. 99CVQ00940-D3 (District Court, part and denied in part the Board's motion to dismiss. 341st Judicial District, Webb County, Texas, originally filed Fraternal Order of Police v. Board of Governors, July 26, 2001). Third-party petition seeking indemnification No. 1:98CV03116 (WBB)(D.D.C., filed December 22, or contribution from the Board in connection with a claim 1998). Declaratory judgment action challenging Board laasserted against defendant Whalen alleging tortious interferbor practices. On February 26, 1999, the Board filed a ence with a contract. motion to dismiss the action. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A1 Financial and Business Statistics A3 GUIDE TO TABLES Federal Finance A25 Federal debt subject to statutory limitation DOMESTIC FINANCIAL STATISTICS A25 Gross public debt of U.S. Treasury— Types and ownership Money Stock and Bank Credit A26 U.S. government securities A4 Reserves and money stock measures dealers—Transactions A5 Reserves of depository institutions and Reserve Bank All U.S. government securities dealers— credit Positions and financing A6 Reserves and borrowings—Depository A28 Federal and federally sponsored credit institutions agencies—Debt outstanding Policy Instruments Securities Markets and Corporate Finance A7 Federal Reserve Bank interest rates A29 New security issues—Tax-exempt state and local A8 Reserve requirements of depository institutions governments and corporations A9 Federal Reserve open market transactions A30 Open-end investment companies—Net sales and assets Federal Reserve Banks A30 Domestic finance companies—Assets and liabilities A31 Domestic finance companies—Owned and managed A10 Condition and Federal Reserve note statements receivables A11 Maturity distribution of loan and security holding Real Estate Monetary and Credit Aggregates A32 Mortgage markets—New homes A3 3 Mortgage debt outstanding A12 Aggregate reserves of depository institutions and monetary base Consumer Credit A13 Money stock measures A34 Total outstanding Commercial Banking Institutions— A34 Terms Assets and Liabilities Flow of Funds A15 All commercial banks in the United States A16 Domestically chartered commercial banks A35 Funds raised in U.S. credit markets A17 Large domestically chartered commercial banks A37 Summary of financial transactions A19 Small domestically chartered commercial banks A3 8 Summary of credit market debt outstanding A20 Foreign-related institutions A39 Summary of financial assets and liabilities Financial Markets DOMESTIC NONFINANCIAL STATISTICS A22 Commercial paper outstanding A22 Prime rate charged by banks on short-term Selected Measures business loans A23 Interest rates—Money and capital markets A40 Output, capacity, and capacity utilization A24 Stock market—Selected statistics A42 Industrial production—Indexes and gross value Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

2 Federal Reserve Bulletin • August 2002 INTERNATIONAL STATISTICS Securities Holdings and Transactions A54 Foreign transactions in securities Summary Statistics A55 Marketable U.S. Treasury bonds and A44 U.S. international transactions notes—Foreign transactions A45 U.S. reserve assets A45 Foreign official assets held at Federal Reserve Interest and Exchange Rates Banks A56 Foreign exchange rates A46 Selected U.S. liabilities to foreign official institutions A57 GUIDE TO SPECIAL TABLES AND Reported by Banks in the United States STATISTICAL RELEASES A46 Liabilities to, and claims on, foreigners A47 Liabilities to foreigners SPECIAL TABLES A49 Banks' own claims on foreigners A58 Assets and liabilities of commercial A50 Banks' own and domestic customers' claims on banks, March 31, 2002 foreigners A60 Terms of lending at commercial banks, A50 Banks' own claims on unaffiliated foreigners May 2002 A51 Claims on foreign countries—Combined A66 Assets and liabilities of U.S. branches and domestic offices and foreign branches agencies of foreign banks, March 31, 2002 Reported by Nonbanking Business Enterprises in the United States A70 INDEX TO STATISTICAL TABLES A52 Liabilities to unaffiliated foreigners A53 Claims on unaffiliated foreigners Discontinuation of Certain Statistical Tables in the Federal Reserve Bulletin The following ten tables have been discontinued in the Financial and Business Statistics section of the Federal Reserve Bulletin. Information on the sources of data in these tables appears in the Announcements section of the June 2002 issue of the Bulletin, page 290. Discontinued tables: 1.38 1.39 1.48 2.10 2.11 2.14 2.15 2.16 2.17 3.11 Page numbers of the tables in the Financial and Business Statistics section have been revised. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A3 Guide to Tables SYMBOLS AND ABBREVIATIONS c Corrected G-10 Group of Ten e Estimated GDP Gross domestic product n.a. Not available GNMA Government National Mortgage Association n.e.c. Not elsewhere classified GSE Government-sponsored enterprise P Preliminary HUD Department of Housing and Urban r Revised (Notation appears in column heading Development when about half the figures in the column have IMF International Monetary Fund been revised from the most recently published IOs Interest only, stripped, mortgage-backed securities table.) IPCs Individuals, partnerships, and corporations * Amount insignificant in terms of the last decimal IRA Individual retirement account place shown in the table (for example, less than MMDA Money market deposit account 500,000 when the smallest unit given is in millions) MSA Metropolitan statistical area 0 Calculated to be zero NAICS North American Industry Classification System Cell not applicable NOW Negotiable order of withdrawal ABS Asset-backed security OCDs Other checkable deposits ATS Automatic transfer service OPEC Organization of Petroleum Exporting Countries BIF Bank insurance fund OTS Office of Thrift Supervision CD Certificate of deposit PMI Private mortgage insurance CMO Collateralized mortgage obligation POs Principal only, stripped, mortgage-backed securities CRA Community Reinvestment Act of 1977 REIT Real estate investment trust FAMC Federal Agriculture Mortgage Corporation REMICs Real estate mortgage investment conduits FFB Federal Financing Bank RHS Rural Housing Service FHA Federal Housing Administration RP Repurchase agreement FHLBB Federal Home Loan Bank Board RTC Resolution Trust Corporation FHLMC Federal Home Loan Mortgage Corporation SCO Securitized credit obligation FmHA Farmers Home Administration SDR Special drawing right FNMA Federal National Mortgage Association SIC Standard Industrial Classification FSA Farm Service Agency TIIS Treasury inflation-indexed securities FSLIC Federal Savings and Loan Insurance Corporation VA Department of Veterans Affairs G-7 Group of Seven 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 U.S. 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 • August 2002 1.10 RESERVES AND MONEY STOCK MEASURES Percent annual rate of change, seasonally adjusted1 2001 2002 2002 MMoonneettaarryy oorr ccrreeddiitt aaggggrreeggaattee Q2 Q3 Q4 QL Jan. Feb. Mar. Apr. May Resents of depositors institutions2 1 Total 4.0 76.3 -31.2 -9.7 15.3 -8.5 -12.7 -7.4 -48.3 2 Required 6.4 14.8 22.1 -9.3 23.8 -8.2 -14.5 -1.4 -51.5 i Nonborrowed 2.9 65.0 -21.4 -9.4 15.9 -8.0 -14.1 -7.2 -49.6 4 Monetary base3 6.2 14.8 6.4 9.1 12.2 10.0 6.4 7.9 7.2 Concepts of mone\A 5 Ml 6.0 16.0 2.1 5.8 3.3 1.9 2.9 -11.4 6.2 6 M2 9.6' 11.0' 9.4' 5.8' 2.6' 7.5' -.7' -3.8' 13.9 7 M3 13.8' 10.0r 12.2' 4.8' -1.2' 6.0r -.5' -2.5' 10.8 Nontransaction components 8 In M25 10.6' 9.6' 11.5r 5.8' 2.4' 9.0' -1.8' -1.7' 15.9 9 In M3 only6 23.1 8.1 18.2 2.7 -9.3 2.7 .0' .4' 4.1 Time and savings deposits Commercial banks 10 Savings, including MMDAs 20.1 19.7 23.2 20.4 19.0 22.1 5.2 6.9 25.4 11 Small time7 -7.6 -10.3 -12.1 -15.3 -16.2 -13.1 -11.4 -7.6 10.8 12 Large time8 9 -1.2 -7.4 -9.2 4.9 14.9 -2.5 2.3 16.6 4.2 Thrift institutions 13 Savings, including MMDAs 22.0 25.2 27.2 25.6 21.8 38.8 27.9 17.3 13.3 14 Small time7 4.1 -5.1 -11.2 -15.4 -20.8 -13.9 -9.6 -10.1 -29.7 15 Large time8 11.5 14.9 2.5 -.8 13.7 -7.3 -7.3 6.3 -31.5 Monev market mutual funds 16 Retail 6.3r 5.0' 7.9' -9.4' -17.8' -10.3' -24.1' -23.3' 18.4 17 Institution-only 49.7 27.5 49.2 -.5 -27.8 -1.8 -.2 -2.0 10.1 Repurchase agreements and eurodollars 18 Repurchase agreements10 19.0 -9.0 -1.4 8.0 -1.6 11.9 -8.0 -22.2 -3.3 19 Eurodollars10 7.0 -3.9 -3.6 6.3' -6.3 35.5 11.7r -1.7' 2.2 1. Unless otherwise noted, rates of change are calculated from average amounts outstand- time deposits, and retail money fund balances, each seasonally adjusted separately, and ing during preceding month or quarter. adding this result to seasonally adjusted Ml. 2. Figures incorporate adjustments for discontinuities, or "breaks," associated with regula- M3: M2 plus (1) large-denomination time deposits (in amounts of $100,000 or more), (2) tory changes in reserve requirements (See also table 1.20.) balances in institutional money funds, (3) RP liabilities (overnight and term) issued by all 3. The seasonally adjusted, break-adjusted monetary base consists of (1) seasonally depository institutions, and (4) eurodollars (overnight and term) held by U.S. residents at adjusted, break-adjusted total reserves (line 1), plus (2) the seasonally adjusted currency foreign branches of U.S. banks worldwide and at all banking offices in the United Kingdom component of the money stock, plus (3) (for all quarterly reporters on the "Report of and Canada. Excludes amounts held by depository institutions, the U.S. government, money Transaction Accounts, Other Deposits and Vault Cash" and for all weekly reporters whose market funds, and foreign banks and official institutions. Seasonally adjusted M3 is calculated vault cash exceeds their required reserves) the seasonally adjusted, break-adjusted difference by summing large time deposits, institutional money fund balances, RP liabilities, and between current vault cash and the amount applied to satisfy current reserve requirements. eurodollars, each seasonally adjusted separately, and adding this result to seasonally adjusted 4. Composition of the money stock measures is as follows: M2. Ml: (1) currency outside the U.S. Treasury, Federal Reserve Banks, and the vaults of 5. Sum of (1) savings deposits (including MMDAs), (2) small time deposits, and (3) retail depository institutions, (2) travelers checks of nonbank issuers, (3) demand deposits at all money fund balances, each seasonally adjusted separately. commercial banks other than those owed to depository institutions, the U.S. government, and 6. Sum of (1) large time deposits, (2) institutional money fund balances, (3) RP liabilities foreign banks and official institutions, less cash items in the process of collection and Federal (overnight and term) issued by depository institutions, and (4) eurodollars (overnight and Reserve float, and (4) other checkable deposits (OCDs), consisting of negotiable order of term) of U.S. addressees, each seasonally adjusted separately. withdrawal (NOW) and automatic transfer service (ATS) accounts at depository institutions, 7. Small time deposits—including retail RPs—are those issued in amounts of less than credit union share draft accounts, and demand deposits at thrift institutions. Seasonally $100,000. All IRA and Keogh account balances at commercial banks and thrift institutions adjusted Ml is computed by summing currency, travelers checks, demand deposits, and are subtracted from small time deposits. OCDs, each seasonally adjusted separately. 8. Large time deposits are those issued in amounts of $100,000 or more, excluding those M2: Ml plus (1) savings (including MMDAs), (2) small-denomination time deposits (time booked at international banking facilities. deposits—including retail RPs—in amounts of less than $100,000), and (3) balances in retail 9. Large time deposits at commercial banks less those held by money market funds, money market mutual funds. Excludes individual retirement accounts (IRAs) and Keogh depository institutions, the U.S. government, and foreign banks and official institutions. balances at depository institutions and money market funds. 10. Includes both overnight and term. Seasonally adjusted M2 is calculated by summing savings deposits, small-denomination 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 2002 2002 Mar. Apr. May Apr. 17 Apr. 24 May 1 May 8 May 15 May 22 May 29 SUPPLYING RESERVE FUNDS 1 Reserve Bank credit outstanding 636,572 642,176 647,403 644,014 640,393 647,387 641,549 645,894 643,811 655,846 U.S. government securities2 2 Bought outright—System account3 573,087 578,737 584,747 578,332 580,266 580,919 582,167 583,972 585,122 587,669 3 Held under repurchase agreements 0 0 0 0 0 0 0 0 0 0 Federal agency obligations 4 Bought outright 10 10 10 10 10 10 10 10 10 10 5 Held under repurchase agreements 0 0 0 0 0 0 0 0 0 0 6 Repurchase agreeements—triparty4 26,689 25,430 24,845 28,200 21,964 27,429 19,929 22,787 22,893 31,204 7 Acceptances 0 0 0 0 0 0 0 0 0 0 Loans to depository institutions 8 Adjustment credit 6 75 7 4 8 12 5 6 12 7 9 Seasonal credit 19 50 107 48 56 67 94 95 105 129 10 Special Liquidity Facility credit 0 0 0 0 0 0 0 0 0 0 11 Extended credit 0 0 0 0 0 0 0 0 0 0 12 Float -38 -397 -237 -698 -533 -200 80 -99 -753 -185 13 Other Federal Reserve assets 36,799 38,271 37,925 38,119 38,621 39,151 39,265 39,124 36,422 37,012 14 Gold stock 11,044 11,044 11,044 11,044 11,044 11,044 11,044 11,044 11,044 11,044 15 Special drawing rights certificate account . . . 2,200 2,200 2,200 2,200 2,200 2,200 2,200 2,200 2,200 2,200 16 Treasury currency outstanding 33,575 33,635 33,697 33,633 33,647 33,661 33,675 33,689 33,703 33,717 ABSORBING RESERVE FUNDS 17 Currency in circulation 640,031 643,813 649,450 643,798 643,464 644,218 646,424 647,695 648,751 653,948 18 Reverse repurchase agreements—triparty4 . . 0 0 0 0 0 0 0 0 0 0 19 Treasury cash holdings 421 400 407 403 399 393 396 408 411 412 Deposits, other than reserve balances, with Federal Reserve Banks 20 Treasury 5,551 6,127 5,056 5,957 6,994 6,946 5,145 5,134 4,914 5,012 21 Foreign 126 98 93 116 82 90 87 99 76 109 22 Service-related balances and adjustments . 9,549 10,049 10,098 10,053 10,130 10,012 10,128 10,042 10,159 10,159 23 Other 218 255 223 242 232 237 260 214 217 207 24 Other Federal Reserve liabilities and capital . 18,244 18,813 19,343 18,736 18,858 19,044 19,123 19,099 19,460 19,701 25 Reserve balances with Federal Reserve Banks 9,250 9,500 9,675 11,586 7,124 13,351 6,903 10,135 6,771 13,258 End-of-month figures Wednesday figures Mar. Apr. May Apr. 17 Apr. 24 May 1 May 8 May 15 May 22 May 29 SUPPLYING RESERVE FUNDS 1 Reserve Bank credit outstanding 642,186 651,320 651,330 645,066 641,475 654,341 643,099 649,265 644,369 673,629 U.S. government securities2 2 Bought outright—System account3 575,356 581,308 587,189 580,046 582,038 580,860 583,672 585,767 584,602 587,559 3 Held under repurchase agreements 0 0 0 0 0 0 0 0 0 0 Federal agency obligations 4 Bought outright 10 10 10 10 10 10 10 10 10 10 5 Held under repurchase agreements 0 0 0 0 0 0 0 0 0 0 6 Repurchase agreeements—triparty4 29,500 31,500 28,000 27,200 21,000 34,500 19,000 28,251 23,500 47,425 7 Acceptances 0 0 0 0 0 0 0 0 0 0 Loans to depository institutions 8 Adjustment credit 0 13 0 1 11 8 2 9 24 3 9 Seasonal credit 19 60 124 49 55 88 89 95 111 143 10 Special Liquidity Facility credit 0 0 0 0 0 0 0 0 0 0 11 Extended credit 0 0 0 0 0 0 0 0 0 0 12 Float -476 -402 -665 -560 -574 -144 954 -816 -688 1,174 13 Other Federal Reserve assets 37,776 38,832 36,673 38,320 38,935 39,018 39,371 35,948 36,810 37,314 14 Gold stock 11,044 11,044 11,044 11,044 11,044 11,044 11,044 11,044 11,044 11,044 15 Special drawing rights certificate account .... 2,200 2,200 2,200 2,200 2,200 2,200 2,200 2,200 2,200 2,200 16 Treasury currency outstanding 33,605 33,661 33,731 33,633 33,647 33,661 33,675 33,689 33,703 33,717 ABSORBING RESERVE FUNDS 17 Currency in circulation 641,848 645,445 653,655 644,684 644,691 646,309 648,573 649,083 651,172 656,219 18 Reverse repurchase agreements—triparty4 . . . 0 0 0 0 0 0 0 0 0 0 19 Treasury cash holdings 412 393 416 400 393 394 407 410 411 416 Deposits, other than reserve balances, with Federal Reserve Banks 20 Treasury 5,692 5,387 5,883 7,740 6,255 4,323 5,452 4,968 4,024 3,947 21 Foreign 256 111 128 76 76 92 82 108 72 208 22 Service-related balances and adjustments .. 9,869 10,012 9,799 10,053 10,130 10,012 10,128 10,042 10,159 10,159 23 Other 181 287 207 231 231 212 251 216 217 210 24 Other Federal Reserve liabilities and capital . . 18,163 19,202 19,504 18,558 18,688 18,868 18,754 18,978 19,406 19,306 25 Reserve balances with Federal Reserve Banks5 12,614 17,388 8,713 10,200 7,901 21,035 6,368 12,392 5,854 30,124 1. Amounts of cash held as reserves are shown in table 1.12, line 2. 4. Cash value of agreements arranged through third-party custodial banks. These agree- 2. Includes securities loaned—fully guaranteed by U.S. government securities pledged ments are collateralized by U.S. government and federal agency securities. with Federal Reserve Banks—and excludes securities sold and scheduled to be bought back 5. Excludes required clearing balances and adjustments to compensate for float, under matched sale-purchase transactions. 3. Includes compensation that adjusts for the effects of inflation on the principal of inflation-indexed securities. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A6 Domestic Nonfinancial Statistics • August 2002 1.12 RESERVES AND BORROWINGS Depository Institutions1 Millions of dollars Prorated monthly averages of biweekly averages RReesseerrvvee ccllaassssiiffiiccaattiioonn 1999 2000 2001 2001 2002 Dec. Dec. Dec.1" Nov.' Dec.' Jan.r Feb.r Mar.' Apr. May 1 Reserve balances with Reserve Banks2 5,262 7,022 9,054 8,833 9,054 9,995 9,273 9,146 9,740 9,211 2 Total vault cash3 60,620 45,245 43,935 43,104 43,935 45,730 45,696 42,633 42,016' 41,824 3 Applied vault cash4 36,392 31,451 32,024 31,291 32,024 33,730 33,218 31,151 31,156' 31,035 4 Surplus vault cash5 24,228 13,794 11,911 11,813 11,911 11,999 12,478 11,482 10,860' 10,789 5 Total reserves6 41,654 38,473 41,077 40,124 41,077 43,725 42,491 40,297 40,896' 40,246 6 Required reserves 40,357 37,046 39,433 38,672 39,433 42,339 41,124 38,883 39,688' 38,982 7 Excess reserve balances at Reserve Banks7 1,297 1,427 1,645 1,452 1,645 1,387 1,367 1,414 1,208 1,263 8 Total borrowing at Reserve Banks 320 210 67 84 67 50 30 79 71 112 9 Adjustment 179 99 34 51 34 33 12 59 21 7 10 Seasonal 67 111 33 33 33 17 17 20 50 105 11 Special Liquidity Facility8 74 0 12 Extended credit® 0 0 0 0 0 0 0 0 0 0 Biweekly averages of daily figures for two-week periods ending on dates indicated 2002 Feb. 6' Feb. 20' Mar. 6' Mar. 20' Apr. 3' Apr. 17' May 1' May 15 May 29 June 12 1 Reserve balances with Reserve Banks2 9,181 8,981 9,855 8,569 9,493 9,325 10,243 8,524 10,014 7,894 2 Total vault cash3 50,354 45,418 42,690 42,267 43,069 41,730 42,082 41,833 41,959 40,687 3 Applied vault cash4 36,383 32,623 31,885 30,565 31,497 30,301 31,999 30,368 31,860 29,442 4 Surplus vault cash5 13,971 12,795 10,805 11,702 11,572 11,429 10,084 11,464 10,098 11,245 5 Total reserves6 45,564 41,604 41,740 39,134 40,990 39,626 42,242 38,892 41,874 37,335 6 Required reserves 44,173 40,198 40,460 37,849 39,340 38,501 41,046 37,700 40,516 36,197 7 Excess reserve balances at Reserve Banks7 1,391 1,406 1,280 1,285 1,650 1,124 1,195 1,192 1,358 1,138 8 Total borrowing at Reserve Banks 26 37 22 24 180 47 71 100 127 116 9 Adjustment 8 17 9 4 157 2 10 6 10 3 10 Seasonal 18 20 13 20 23 45 62 95 117 113 11 Special Liquidity Facility8 12 Extended credit® 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 (line 3). 2. Excludes required clearing balances and adjustments to compensate for float and 7. Total reserves (line 5) less required reserves (line 6). includes other off-balance-sheet "as-of' adjustments. 8. Borrowing at the discount window under the terms and conditions established for the 3. Vault cash eligible to satisfy reserve requirements. It includes only vault cash held by Century Date Change Special Liquidity Facility in effect from October 1, 1999, through those banks and thrift institutions that are not exempt from reserve requirements. Dates refer April 7, 2000. to the maintenance periods in which the vault cash can be used to satisfy reserve require- 9. Consists of borrowing at the discount window under the terms and conditions estabments. lished for the extended credit program to help depository institutions deal with sustained 4. All vault cash held during the lagged computation period by "bound" institutions (that liquidity pressures. Because there is not the same need to repay such borrowing promptly as is, those whose required reserves exceed their vault cash) plus the amount of vault cash with traditional short-term adjustment credit, the money market effect of extended credit is applied during the maintenance period by "nonbound" institutions (that is, those whose vault similar to that of nonborrowed reserves. 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 credit' Seasonal credit2 Extended credit3 FFeeddeerraall RReesseerrvvee BBaannkk 7/1 O 2 n / 02 Effective date Previous rate 7/1 O 2 n /0 2 Effective date Previous rate 7/1 O 2 n / 02 Effective date Previous rate Boston 1.25 12/11/01 1.50 1.75 7/11/02 1.80 2.25 7/11/02 2.30 New York 12/11/01 Philadelphia 12/11/01 Cleveland 12/13/01 Richmond 12/13/01 Atlanta 12/13/01 Chicago 12/11/01 St. Louis 12/12/01 Minneapolis 12/13/01 Kansas City 12/13/01 Dallas 12/13/01 San Francisco 1.25 12/11/01 1.50 1.75 7/11/02 1.80 2.25 7/11/02 2.30 Range of rates for adjustment credit in recent years4 Range(or F.R. Bank Range(or F.R. Bank Range (or F.R. Bank Effective date level)—All of level)—All of Effective date level)—All of F.R. Banks N.Y. F.R. Banks N.Y. F.R. Banks N.Y. In effect Dec. 31, 1981 12 12 1991—Sept. 13 5-5.5 5 2001—May 15 3.50-4.00 3.50 17 5 5 17 3.50 3.50 1982—July 20 11.5-12 11.5 Nov. 6 4.5-5 4.5 June 27 3.25-3.50 3.25 23 11.5 11.5 7 4.5 4.5 29 3.25 3.25 Aug. 2 11-11.5 11 Dec. 20 3.5^1.5 3.5 Aug. 21 3.00-3.25 3.00 3 11 11 24 3.5 3.5 23 3.00 3.00 16 10.5 10.5 Sept. 17 2.50-3.00 2.50 27 10-10.5 10 1992—July 2 3-3.5 3 18 2.50 2.50 30 10 10 7 3 3 Oct. 2 2.00-2.50 2.00 Oct. 12 9.5-10 9.5 4 2.00 2.00 13 9.5 9.5 1994—May 17 3-3.5 3.5 Nov. 6 1.50-2.00 1.50 Nov. 22 9-9.5 9 18 3.5 3.5 8 1.50 1.50 26 9 9 Aug. 16 3.5-4 4 Dec. 11 1.25-1.50 1.25 Dec. 14 8.5-9 9 18 4 4 13 1.25 1.25 15 8.5-9 8.5 Nov. 15 4-4.75 4.75 17 8.5 8.5 17 4.75 4.75 In effect July 12, 2002 1.25 1.25 1984—Apr. 9 8.5-9 9 1995—Feb. 1 4.75-5.25 5.25 13 9 9 9 5.25 5.25 Nov. 21 8.5-9 8.5 26 8.5 8.5 1996—Jan. 31 5.00-5.25 5.00 Dec. 24 8 8 Feb. 3 5.00 5.00 1985—May 20 7.5-8 7.5 1998—Oct. 15 4.75-5.00 4.75 24 7.5 7.5 16 4.75 4.75 Nov. 17 4.50-4.75 4.50 1986—Mar. 7 7-7.5 7 19 4.50 4.50 10 7 7 Apr. 21 6.5-7 6.5 1999—Aug. 24 4.50^.75 4.75 23 6.5 6.5 26 4.75 4.75 July 11 6 6 Nov. 16 4.75-5.00 4.75 Aug. 21 5.5-6 5.5 18 5.00 5.00 22 5.5 5.5 2000—Feb. 2 5.00-5.25 5.25 1987—Sept. 4 5.5-6 6 4 5.25 5.25 11 6 6 Mar. 21 5.25-5.50 5.50 23 5.50 5.50 1988—Aug. 9 6-6.5 6.5 May 16 5.50-6.00 5.50 11 6.5 6.5 19 6.00 6.00 1989—Feb. 24 6.5-7 7 2001—Jan. 3 5.75-6.00 5.75 7 7 4 5.50-5.75 5.50 27 5 5.50 5.50 6.5 6.5 31 5.00-5.50 5.00 1990—Dec. 19 Feb. 1 5.00 5.00 6-6.5 6 Mar. 20 4.50-5.00 4.50 1991—Feb. 1 6 6 21 4.50 4.50 4 5.5-6 5.5 Apr. 18 4.00-4.50 4.00 Apr. 30 5.5 5.5 20 4.00 4.00 May 2 1. Available on a short-term basis to help depository institutions meet temporary needs for practices involve only a particular institution, or to meet the needs of institutions experiencing funds that cannot be met through reasonable alternative sources. The highest rate established difficulties adjusting to changing market conditions over a longer period (particularly at times for loans to depository institutions may be charged on adjustment credit loans of unusual size of deposit disintermediation). The discount rate applicable to adjustment credit ordinarily is that result from a major operating problem at the borrower's facility. charged on extended-credit loans outstanding less than thirty days; however, at the discretion 2. Available to help relatively small depository institutions meet regular seasonal needs for of the Federal Reserve Bank, this time period may be shortened. Beyond this initial period, a funds that arise from a clear pattern of intrayearly movements in their deposits and loans and flexible rate somewhat above rates charged on market sources of funds is charged. The rate that cannot be met through special industry lenders. The discount rate on seasonal credit takes ordinarily is reestablished on the first business day of each two-week reserve maintenance into account rates charged by market sources of funds and ordinarily is reestablished on the period, but it is never less than the discount rate applicable to adjustment credit plus 50 basis first business day of each two-week reserve maintenance period; however, it is never less than points. the discount rate applicable to adjustment credit. 4. For earlier data, see the following publications of the Board of Governors: Banking and 3. May be made available to depository institutions when similar assistance is not Monetary Statistics, 1914-1941, and 1941-1970; and the Annual Statistical Digest, 1970reasonably available from other sources, including special industry lenders. Such credit may 1979, and 1980-1989; and Statistical Digest, 1996-2000. See also the Board's Statistics: be provided when exceptional circumstances (including sustained deposit drains, impaired Releases and Historical Data web pages (http://www.federalreserve.gov/releases/H15/ access to money market funds, or sudden deterioration in loan repayment performance) or data.htm). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A8 DomesticN onfinancial Statistics • August 2002 1.15 RESERVE REQUIREMENTS OF DEPOSITORY INSTITUTIONS1 Requirement TTyyppee ooff ddeeppoossiitt Percentage of deposits Effective date Net transaction accounts2 1 $0million-$41.3 million3 33333 1111122222/////2222277777/////0000011111 2 More than $41.3 million4 1111100000 1111122222/////2222277777/////0000011111 00000 1111122222/////2222277777/////9999900000 00000 1111122222/////2222277777/////9999900000 1. Required reserves must be held in the form of deposits with Federal Reserve Banks or succeeding calendar year by 80 percent of the percentage increase in the total reservable vault cash. Nonmember institutions may maintain reserve balances with a Federal Reserve liabilities of all depository institutions, measured on an annual basis as of June 30. No Bank indirectly, on a pass-through basis, with certain approved institutions. For previous corresponding adjustment is made in the event of a decrease. The exemption applies only to reserve requirements, see earlier editions of the Annual Report or the Federal Reserve accounts that would be subject to a 3 percent reserve requirement. Effective with the reserve Bulletin. Under the Monetary Control Act of 1980, depository institutions include commercial maintenance period beginning December 27, 2001, for depository institutions that report banks, savings banks, savings and loan associations, credit unions, agencies and branches of weekly, and with the period beginning January 17, 2002, for institutions that report quarterly, foreign banks, and Edge Act corporations. the exemption was raised from $5.5 million to $5.7 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 April 2, 1992, to make withdrawals by negotiable or transferable instruments, payment orders of with- for institutions that report weekly, and on April 16, 1992, for institutions that report quarterly. drawal, or telephone or preauthorized transfers for the purpose of making payments to third 5. For institutions that report weekly, the reserve requirement on nonpersonal time deposits persons or others. However, accounts subject to the rules that permit no more than six with an original maturity of less than 1.5 years was reduced from 3 percent to 1.5 percent for preauthorized, automatic, or other transfers per month (of which no more than three may be the maintenance period that began December 13, 1990, and to zero for the maintenance by check, draft, debit card, or similar order payable directly to third parties) are savings period that began December 27, 1990. For institutions that report quarterly, the reserve deposits, not transaction accounts. requirement on nonpersonal time deposits with an original maturity of less than 1.5 years was 3. The Monetary Control Act of 1980 requires that the amount of transaction accounts reduced from 3 percent to zero on January 17, 1991. against which the 3 percent reserve requirement applies be modified annually by 80 percent of The reserve requirement on nonpersonal time deposits with an original maturity of 1.5 the percentage change in transaction accounts held by all depository institutions, determined years or more has been zero since October 6, 1983. as of June 30 of each year. Effective with the reserve maintenance period beginning 6. The reserve requirement on eurocurrency liabilities was reduced from 3 percent to zero December 27, 2001, for depository institutions that report weekly, and with the period in the same manner and on the same dates as the reserve requirement on nonpersonal time beginning January 17, 2002, for institutions that report quarterly, the amount was decreased deposits with an original maturity of less than 1.5 years (see note 5). from $42.8 million to $41.3 million. 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 2001 2002 TTyypp aa ee nn dd oo ff mm ttrr aa aa tt nn uu ss rr aa iitt cc yy tt iioonn 11999999 22000000 22000011 Oct. Nov. Dec. Jan. Feb. Mar. Apr. U.S. TREASURY SECURITIES2 Outright transactions (excluding matched transactions) Treasury bills 1 Gross purchases 0 8,676 15,503 772 3,075 812 2,772 1,042 3,013 1,047 2 Gross sales 0 0 0 0 0 0 0 0 0 0 3 Exchanges 464,218 477,904 542,736 44,132 59,292 43,771 55,521 54,619 48,483 45,376 4 For new bills 464,218 477,904 542,736 44,132 59,292 43,771 55,521 54,619 48,483 45,376 5 Redemptions 0 24,522 10,095 0 0 0 0 0 0 0 Others within one year 6 Gross purchases 11,895 8,809 15,663 1,411 1,408 2,942 0 2,894 1,455 2,709 7 Gross sales 0 0 0 0 0 0 0 0 0 0 8 Maturity shifts 50,590 62,025 70,336 6,535 5,873 5,235 5,850 7,537 0 14,515 9 Exchanges -53,315 -54,656 -72,004 -11,809 -9,559 -6,666 -5,766 -8,432 0 -15,522 10 Redemptions 1,429 3,779 16,802 473 0 0 0 0 0 0 One to five years 11 Gross purchases 19,731 14,482 22,814 22 1,920 634 2,872 1,101 2,181 1,142 12 Gross sales 0 0 0 0 0 0 0 0 0 0 13 Maturity shifts -44,032 -52,068 -45,211 -2,164 -3,073 -5,235 -5,850 -6,283 0 -14,515 14 Exchanges 42,604 46,177 64,519 11,809 7,967 6,666 5,766 7,679 0 15,522 Five to ten years 15 Gross purchases 4,303 5,871 6,003 422 459 101 0 334 637 1,670 16 Gross sales 0 0 0 0 0 0 0 0 0 0 17 Maturity shifts -5,841 -6,801 -21,063 -4,372 -1,824 0 0 -501 0 0 18 Exchanges 7,583 6,585 6,063 0 1,592 0 0 753 0 0 More than ten years 19 Gross purchases 9,428 5,833 8,531 1,184 0 448 582 1,054 291 210 20 Gross sales 0 0 0 0 0 0 0 0 0 0 21 Maturity shifts -717 -3,155 -4,062 0 -975 0 0 -753 0 0 22 Exchanges 3,139 1,894 1,423 0 0 0 0 0 0 0 All maturities 23 Gross purchases 45,357 43,670 68,513 3,811 6,862 4,937 6,226 6,425 7,577 6,777 24 Gross sales 0 0 0 0 0 0 0 0 0 0 25 Redemptions 1,429 28,301 26,897 473 0 0 0 0 0 0 Matched transactions 26 Gross purchases 4,413,430 4,415,905 4,722,667 431,887 377,247 387,033 407,791 367,906 393,273 436,936 27 Gross sales 4,431,685 4,397,835 4,724,743 425,110 378,129 390,617 404,296 368,060 393,151 437,881 Repurchase agreements 28 Gross purchases 281,599 0 0 0 0 0 0 0 0 0 29 Gross sales 301,273 0 0 0 0 0 0 0 0 0 30 Net change in U.S. Treasury securities 5,999 33,439 39,540 10,114 5,980 1,354 9,720 6,271 7,699 5,833 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 157 51 120 0 0 0 0 0 0 0 Repurchase agreements 34 Gross purchases 360,069 0 0 0 0 0 0 0 0 0 35 Gross sales 370,772 0 0 0 0 0 0 0 0 0 36 Net change in federal agency obligations -10,859 -51 -120 0 0 0 0 0 0 0 Reverse repurchase agreements 37 Gross purchases 0 0 0 0 0 0 0 0 0 0 38 Gross sales 0 0 0 0 0 0 0 0 0 0 Repurchase agreements 39 Gross purchases 304,989 890,236 1,497,713 110,885 121,530 117,650 118,550 101,749 70,850 102,200 40 Gross sales 164,349 987,501 1,490,838 113,715 130,080 103,900 131,300 104,750 75,849 100,200 41 Net change in triparty obligations 140,640 -97,265 6,875 -2,830 -8,550 13,750 -12,750 -3,001 -4,999 2,000 42 Total net change in System Open Market Account .. 135,780 -63,877 46,295 7,284 -2,570 15,104 -3,030 3,270 2,700 7,833 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 Account; all other figures increase such holdings. principal of inflation-indexed securities. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A10 Domestic Nonfinancial Statistics • August 2002 1.18 FEDERAL RESERVE BANKS Condition and Federal Reserve Note Statements1 Millions of dollars Wednesday End of month Account 2002 2002 May 1 May 8 May 15 May 22 May 29 Mar. Apr. May Consolidated condition statement ASSETS 1 Gold certificate account 11,044 11,044 11.044 11,044 11,044 11,044 11,044 11,044 2 Special drawing rights certificate account 2,200 2,200 2,200 2,200 2,200 2,200 2,200 2,200 3 Coin 982 973 962 937 928 1,094 989 947 Loans 4 To depository institutions 96 92 104 135 146 20 72 124 5 Other 0 0 0 0 0 0 0 0 6 Acceptances held under repurchase agreements 0 0 0 0 0 0 0 0 Triparty obligations / Repurchase agreements—triparty2 34,500 19.000 28,251 23,500 47,425 29,500 31,500 28,000 Federal agency obligations3 8 Bought outright 10 10 10 10 10 10 10 10 y Held under repurchase agreements 0 0 0 0 0 0 0 0 10 Total U.S. Treasury securities3 580,860 583,672 585,767 584,602 587,559 575,356 581,308 587,189 n Bought outright4 580,860 583,672 585,767 584,602 587,559 575,356 581,308 587,189 12 Bills 192,016 194,812 195,376 193,218 194,822 192,364 192,466 193,752 13 Notes 283,536 283,545 285,069 286,010 287,329 278,463 283,535 288,027 14 Bonds 105,308 105,315 105,322 105,374 105,408 104,530 105,307 105,410 15 Held under repurchase agreements 0 0 0 0 0 0 0 0 16 Total loans and securities 615,467 602,774 614,132 608,247 635,140 604,886 612,891 615,323 17 Items in process of collection 8,587 8,527 6,583 6,470 10,850 5,306 9,541 5,059 18 Bank premises 1,512 1,514 1,514 1,515 1,516 1,511 1,512 1,514 Other assets 19 Denominated in foreign currencies5 14,981 14,899 14,974 15,362 15,396 14,379 14,872 15,432 20 All other6 22,294 22,745 19,230 19,681 20,152 21,681 22,220 19,728 21 Total assets 677,066 664,674 670,639 665,456 697,225 662,100 675,268 671,247 LIABILITIES 22 Federal Reserve notes 614,024 616,279 616,766 618,818 623,847 609,749 613,166 621,288 23 Reverse repurchase agreements—triparty2 0 0 0 0 0 0 0 0 24 Total deposits 35,582 21,955 27,546 20,211 44,379 28,544 33,279 24,779 25 Depository institutions 30,954 16,169 22,254 15,897 40,014 22,415 27,495 18,561 26 U.S. Treasury—General account 4,323 5,452 4,968 4,024 3,947 5,692 5,387 5,883 27 Foreign—Official accounts 92 82 108 72 208 256 111 128 28 Other 212 251 216 217 210 181 287 207 29 Deferred credit items 8,592 7,686 7,348 7,022 9,693 5,645 9,621 5,677 30 Other liabilities and accrued dividends7 2,373 2,415 2,447 2,469 2,522 2,436 2,388 2,556 31 Total liabilities 660,571 648,335 654,108 648,519 680,441 646,373 658,455 654,299 CAPITAL ACCOUNTS 32 Capital paid in 8,056 8,101 8.080 8,096 8,267 7,648 8,056 8,268 33 Surplus 7,300 7,303 7.310 7,312 7,312 7,270 7,290 7,312 34 Other capital accounts 1,139 936 1,140 1,530 1,206 809 1,468 1,368 35 Total liabilities and capital accounts 677,066 664,674 670,639 665,456 697,225 662,100 675,268 671,247 MEMO 36 Marketable U.S. Treasury securities held in custody for foreign and international accounts n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Federal Reserve note statement 37 Federal Reserve notes outstanding (issued to Banks) 748,783 749,316 750,911 751,975 752,137 747,765 749,056 751,591 38 LESS: Held by Federal Reserve Banks 134,759 133,037 134,145 133,157 128,290 138,016 135,890 130,303 39 Federal Reserve notes, net 614,024 616,279 616,766 618,818 623,847 609,749 613,166 621,288 Collateral held against notes, net 40 Gold certificate account 11,044 11,044 11.044 11,044 11,044 11,044 11,044 11,044 41 Special drawing rights certificate account 2,200 2,200 2,200 2.200 2,200 2,200 2,200 2,200 42 Other eligible assets 0 353 0 0 0 0 0 0 43 U.S. Treasury and agency securities 600,780 602,682 603.523 605,574 610,603 596,505 599,923 608,044 44 Total collateral 614,024 616,279 616,766 618,818 623,847 609,749 613,166 621,288 1. Some of the data in this table also appear in the Board's H.4.1 (503) weekly statistical 5. Valued monthly at market exchange rates. release. For ordering address, see inside front cover. 6. Includes special investment account at the Federal Reserve Bank of Chicago in Treasury 2. Cash value of agreements arranged through third-party custodial banks. bills maturing within ninety days. 3. Face value of the securities. 7. Includes exchange-translation account reflecting the monthly revaluation at market 4. Includes securities loaned—fully guaranteed by U.S. Treasury securities pledged with exchange rates of foreign exchange commitments. Federal Reserve Banks—and includes compensation that adjusts for the effects of inflation on the principal of inflation-indexed securities. Excludes securities sold and scheduled to be bought back under matched sale-purchase transactions. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

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 2002 2002 May 1 May 8 May 15 May 22 May 29 Mar. Apr. May 1 Total loans 96 92 104 135 146 20 72 124 2 Within fifteen days' 19 14 19 130 140 18 66 101 3 Sixteen days to ninety days 77 78 85 6 7 1 6 23 4 91 days to 1 year 0 0 0 0 0 0 0 0 5 Total U.S. Treasury securities2 580,860 583,672 585,767 584,602 587,559 575,355 581,308 587,189 6 Within fifteen days' 22,521 27,663 23,438 26,794 26,248 9,609 16,152 3,941 7 Sixteen days to ninety days 122,738 125,948 127,337 126,403 128,379 139,985 129,556 143,242 8 Ninety-one days to one year 138,748 133,193 136,341 131,761 133,249 133,054 138,748 139,075 9 One year to five years 161,353 161,355 165,488 166,467 166,469 159,198 161,353 167,479 10 Five years to ten years 53,999 54,005 51,648 51,654 51,685 52,250 53,998 51,920 11 More than ten years 81,502 81,509 81,515 81,522 81,529 81,259 81,501 81,531 12 Total federal agency obligations 10 10 10 10 10 10 10 10 13 Within fifteen days1 0 0 0 0 0 0 0 0 14 Sixteen days to ninety days 0 0 0 0 0 0 0 0 15 Ninety-one days to one year 0 0 0 0 0 0 0 0 16 One year to five years 10 10 10 10 10 10 10 10 17 Five years to ten years 0 0 0 0 0 0 0 0 18 More than ten years 0 0 0 0 0 0 0 0 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 Nonfinancial Statistics • August 2002 1.20 AGGREGATE RESERVES OF DEPOSITORY INSTITUTIONS AND MONETARY BASE1 Billions of dollars, averages of daily figures 2001 2002 IItteemm D 19 e 9 c 8 . D 19 e 9 c 9 . 2 D 0 e 0 c 0 . D 20 e 0 c 1 .r Oct.r Nov/ Dec.r Jan.' Feb.1" Mar/ Apr/ May Seasonally adjusted ADJUSTED FOR CHANGES IN RESERVE REQUIREMENTS2 1 Total reserves3 45.14 41.82 38.54 41.22 45.22 40.87 41.22 41.75 41.45 41.01 40.76 39.12 2 Nonborrowed reserves4 45.02 41.50 38.33 41.15 45.10 40.78 41.15 41.70 41.42 40.94 40.69 39.01 3 Nonborrowed reserves plus extended credit5 45.02 41.50 38.33 41.15 45.10 40.78 41.15 41.70 41.42 40.94 40.69 39.01 4 Required reserves 43.62 40.53 37.11 39.58 43.90 39.42 39.58 40.36 40.08 39.60 39.55 37.86 5 Monetary base6 513.55 593.12 584.04 634.41 629.95 629.37 634.41 640.86 646.18 649.64 653.90 657.80 Not seasonally adjusted 6 Total reserves7 45.31 41.89 38.53 41.20 44.76 40.25 41.20 43.71 42.47 40.27 40.85 40.18 7 Nonborrowed reserves 45.19 41.57 38.32 41.13 44.63 40.17 41.13 43.66 42.44 40.19 40.78 40.07 8 Nonborrowed reserves plus extended credit5 45.19 41.57 38.32 41.13 44.63 40.17 41.13 43.66 42.44 40.19 40.78 40.07 9 Required reserves8 43.80 40.59 37.10 39.55 43.43 38.80 39.55 42.33 41.11 38.85 39.64 38.92 10 Monetary base9 518.27 600.72 590.06 639.91 627.79 629.68 639.91 644.27 645.71 649.22 653.25 657.91 NOT ADJUSTED FOR CHANGES IN RESERVE REQUIREMENTS10 11 Total reserves" 45.21 41.65 38.47 41.08 44.63 40.12 41.08 43.73 42.49 40.30 40.90 40.25 12 Nonborrowed reserves 45.09 41.33 38.26 41.01 44.51 40.04 41.01 43.68 42.46 40.22 40.83 40.13 13 Nonborrowed reserves plus extended credit5 45.09 41.33 38.26 41.01 44.51 40.04 41.01 43.68 42.46 40.22 40.83 40.13 14 Required reserves 43.70 40.36 37.05 39.43 43.31 38.67 39.43 42.34 41.12 38.88 39.69 38.98 15 Monetary base12 525.06 608.02 596.98 648.74 635.90 637.64 648.74 653.28 654.93 658.76 663.34 668.05 16 Excess reserves13 1.51 1.30 1.43 1.65 1.33 1.45 1.65 1.39 1.37 1.41 1.21 1.26 17 Borrowings from the Federal Reserve .12 .32 .21 .07 .13 .08 .07 .05 .03 .08 .07 .11 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 adjusted required reserves include required reserves against transactions deposits and nonper- Reserve 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 February 1984, currency and vault cash figures have been measured over requirements. the computation periods ending on Mondays. 7. Break-adjusted total reserves equal break-adjusted required reserves (line 9) plus excess 13. Unadjusted total reserves (line 11) less unadjusted required reserves (line 14). reserves (line 16). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary and Credit Aggregates A13 1.21 MONEY STOCK MEASURES1 Billions of dollars, averages of daily figures 2002 1998 1999 2000 2001 IItteemm Dec. Dec. Dec. Dec. Feb. Mar. Apr. May Seasonally adjusted Measures2 1 Ml 1,096.5 1,124.4 1,088.9 1,179.3 1,184.4 1,187.3 1,176.0 1,182.1 2 M2 4,380.5r 4,650.3' 4,936.0' 5,454.8' 5,500.6' 5,497.2' 5,479.8' 5,543.2 3 M3 6,041,0r 6,541.8r 7,115.5' 8,029.1' 8,060.9' 8,057.5' 8,040.9' 8,113.1 Ml components 4 Currency3 459.3 516.9 530.1 579.9 591.4 595.1 599.5 660055..22 Travelers checks4 8.2 8.3 8.0 7.8 7.8 7.7 7.7 7.8 6 Demand deposits5 378.4 354.5 309.9 330.4 324.7 324.0 309.4 305.8 7 Other checkable deposits6 250.5 244.7 240.9 261.1 260.4 260.5 259.4 263.3 Nontransaction components 8 In M27 3,284.0r 3,525.9' 3,847.1' 4,275.5' 4,316.3' 4,309.9' 4,303.9' 4,361.1 9 In M3 only8 1,660.5 1,891.6 2,179.5 2.574.4 2,560.2 2,560.3' 2,561.1' 2,569.9 Commercial banks 10 Savings deposits, including MMDAs 1,187.5 1,289.1 1,423.7 1,745.8 1,806.2 1,814.1 1,824.5 1,863.1 11 Small time deposits9 626.1 635.0 699.1 638.9 623.4 617.5 613.6 619.1 12 Large time deposits10 " 582.9 651.6 717.2 670.4 677.3 678.6 688.0 690.4 Thrift institutions 13 Savings deposits, including MMDAs 414.7 449.7 452.1 561.5 590.2 603.9 612.6 619.4 14 Small time deposits9 325.6 320.4 344.5 334.2 324.6 322.0 319.3 311.4 15 Large time deposits10 88.6 91.1 102.9 113.9 114.5 113.8 114.4 111.4 Money market mutual funds 16 Retail 730.2r 831.8' 927.6r 995. r 971.9' 952.4' 933.9' 948.2 17 Institution-only 543.1 639.0 799.1 1,207.2 1,177.4 1,177.2 1,175.2 1,185.1 Repurchase agreements and eurodollars 18 Repurchase agreements12 293.4 336.0 364.0 372.1 375.3 372.8 365.9 364.9 19 Eurodollars12 152.5 174.0 196.4 210.7 215.8 217.9' 217.6' 218.0 Not seasonally adjusted Measures2 70 Ml 1,120.4 1,148.3 1,112.3 1,203.5 1,171.7 1,189.3 1,188.3 1,177.4 21 M2 4,400.6' 4,671.1' 4,959.7' 5,479.7' 5,491.7' 5,542.8' 5,557.1' 5,526.4 22 M3 6,069.8r 6,573.5' 7,150.8' 8,067.4' 8,092.3' 8,139.6' 8,132.1' 8,107.6 Ml components 23 Currency3 463.3 521.5 535.2 584.9 591.0 596.1 599.7 605.3 24 Travelers checks4 8.4 8.4 8.1 7.9 8.0 7.9 7.9 7.9 25 Demand deposits5 395.9 371.8 326.5 348.2 316.9 322.7 309.9 300.1 26 Other checkable deposits6 252.8 246.6 242.5 262.5 255.8 262.7 270.9 264.1 Nontransaction components 27 In M27 3,280.2r 3.522.8' 3,847.4' 4,276.3' 4,320.0' 4,353.5' 4,368.8' 4,349.0 28 In M3 only8 1,669.2 1,902.4 2,191.1 2,587.7 2,600.6 2,596.9' 2,574.9' 2,581.2 Commercial banks 29 Savings deposits, including MMDAs 1,186.0 1,288.8 1,426.9 1,750.2 1,796.1 1,824.8 1,851.1 1,861.4 30 Small time deposits9 626.5 635.7 700.0 639.6 625.2 617.9 613.1 616.9 31 Large time deposits1011 583.2 652.0 717.6 670.5 675.7 681.0 689.3 696.4 Thrift institutions 32 Savings deposits, including MMDAs 414.2 449.6 453.1 562.9 586.9 607.4 621.5 618.8 33 Small time deposits9 325.8 320.8 345.0 334.5 325.6 322.3 319.0 310.3 34 Large time deposits10 88.6 91.2 103.0 114.0 114.2 114.2 114.6 112.4 Money market mutual funds 35 Retail 171.1' 828.1' 922.4' 989.0' 986.2' 981.0' 964.1' 941.6 36 Institution-only 552.6 648.6 808.1 1,218.5 1,215.6 1,208.0 1,185.1 1,182.2 Repurchase agreements and eurodollars 37 Repurchase agreements12 290.4 334.7 364.2 372.9 376.9 373.7 365.7 369.8 38 Eurodollars12 154.5 176.0 198.2 211.9 218.2 220.0' 220.2' 220.4 Footnotes appear on following page. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A14 Domestic Nonfinancial Statistics • August 2002 NOTES TO TABLE 1.21 1. Latest monthly and weekly figures are available from the Board's H.6 (508) weekly- ory institutions, the U.S. government, money market funds, and foreign banks and official statistical release. Historical data starting in 1959 are available from the Money and Reserves institutions. Seasonally adjusted M3 is calculated by summing large time deposits, institu- Projections Section, Division of Monetary Affairs, Board of Governors of the Federal tional money fund balances, RP liabilities, and eurodollars, each seasonally adjusted sepa- Reserve System, Washington, DC 20551. rately, and adding this result to seasonally adjusted M2. 2. Composition of the money stock measures is as follows: 3. Currency outside the U.S. Treasury, Federal Reserve Banks, and vaults of depository Ml: (1) currency outside the U.S. Treasury, Federal Reserve Banks, and the vaults of institutions. depository institutions, (2) travelers checks of nonbank issuers, (3) demand deposits at all 4. Outstanding amount of U.S. dollar-denominated travelers checks of nonbank issuers. commercial banks other than those owed to depository institutions, the U.S. government, and Travelers checks issued by depository institutions are included in demand deposits. foreign banks and official institutions, less cash items in the process of collection and Federal 5. Demand deposits at commercial banks and foreign-related institutions other than those Reserve float, and (4) other checkable deposits (OCDs), consisting of negotiable order of owed to depository institutions, the U.S. government, and foreign banks and official instituwithdrawal (NOW) and automatic transfer service (ATS) accounts at depository institutions, tions, less cash items in the process of collection and Federal Reserve float. credit union share draft accounts, and demand deposits at thrift institutions. Seasonally 6. Consists of NOW and ATS account balances at all depository institutions, credit union adjusted Ml is computed by summing currency, travelers checks, demand deposits, and share draft account balances, and demand deposits at thrift institutions. OCDs, each seasonally adjusted separately. 7. Sum of (1) savings deposits (including MMDAs), (2) small time deposits, and (3) retail M2: Ml plus (1) savings deposits (including MMDAs), (2) small-denomination time money fund balances. deposits (time deposits—including retail RPs—in amounts of less than $100,000), and (3) 8. Sum of (1) large time deposits, (2) institutional money fund balances, (3) RP liabilities balances in retail money market mutual funds. Excludes individual retirement accounts (overnight and term) issued by depository institutions, and (4) eurodollars (overnight and (IRAs) and Keogh balances at depository institutions and money market funds. Seasonally term) of U.S. addressees. adjusted M2 is calculated by summing savings deposits, small-denomination time deposits, 9. Small time deposits—including retail RPs—are those issued in amounts of less than and retail money fund balances, each seasonally adjusted separately, and adding this result to $100,000. All IRAs and Keogh accounts at commercial banks and thrift institutions are seasonally adjusted Ml. subtracted from small time deposits. M3: M2 plus (1) large-denomination time deposits (in amounts of $100,000 or more) 10. Large time deposits are those issued in amounts of $100,000 or more, excluding those issued by all depository institutions, (2) balances in institutional money funds, (3) RP booked at international banking facilities. liabilities (overnight and term) issued by all depository institutions, and (4) eurodollars 11. Large time deposits at commercial banks less those held by money market funds, (overnight and term) held by U.S. residents at foreign branches of U.S. banks worldwide and depository institutions, the U.S. government, and foreign banks and official institutions. at all banking offices in the United Kingdom and Canada. Excludes amounts held by deposit- 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 2001 2001 2002 2002 May' Nov.' Dec.' Jan.' Feb.' Mar.' Apr.' May May 8 May 15 May 22 May 29 Seasonally adjusted Assets 1 Bank credit 5,326.9 5,458.9 5,450.3 5,430.3 5,434.4 5,429.9 5,452.1 5,510.6 5,482.6 5,511.6 5,524.9 5,523.2 7 Securities in bank credit 1,371.4 1,488.5 1,490.6 1,484.9 1,478.2 1,477.0 1,497.9 1,532.3 1,508.9 1,527.0 1,546.6 1,543.6 U.S. government securities 758.7 812.0 830.1 817.4 809.1 825.5 848.0 870.2 857.8 869.6 874.3 875.3 4 Other securities 612.7 676.5 660.5 667.5 669.1 651.5 649.9 662.1 651.1 657.4 672.3 668.2 Loans and leases in bank credit2 .... 3,955.4 3,970.5 3,959.7 3,945.4 3,956.2 3,952.8 3,954.1 3,978.3 3,973.7 3,984.6 3,978.3 3,979.6 6 Commercial and industrial 1,095.9 1,043.1 1,034.3 1,026.3 1,033.8 1,030.7 1,017.5 1,015.7 1,010.5 1,013.5 1,020.2 1,019.0 7 Real estate 1,704.3 1,774.8 1,787.2 1,783.4 1,790.3 1,790.2 1,792.7 1,811.8 1,812.0 1,812.6 1,811.2 1,812.1 8 Revolving home equity 135.3 152.9 155.8 159.0 162.6 168.0 172.3 179.4 177.6 178.9 179.6 180.9 9 Other 1,569.0 1,621.9 1,631.3 1,624.4 1,627.7 1,622.1 1,620.4 1,632.5 1,634.4 1,633.7 1,631.6 1,631.2 10 Consumer 552.5 557.9 557.0 559.2 561.4 559.1 563.3 566.2 564.9 566.8 565.3 569.2 11 Security3 167.6 154.0 145.6 151.1 152.3 160.5 168.3 171.0 173.5 176.2 168.4 166.9 P Other loans and leases 435.2 440.7 435.6 425.3 418.5 412.3 412.4 413.5 412.9 415.5 413.2 412.4 n Interbank loans 281.4 286.2 293.1 292.6 276.4 267.6 268.4 285.9 279.9 299.4 283.1 281.9 14 Cash assets4 282.2 296.9 297.4 300.2 298.8 301.7 301.0 299.5 292.8 299.6 294.3 312.3 15 Other assets5 423.7 487.9 481.9 482.3 485.3 465.5 478.4 485.0 481.3 475.4 490.7 492.7 16 Total assets6 6,248.2 6,459.1 6,450.1 6,431.1 6,420.4 6,389.9 6,425.7 6,506.4 6,461.9 6,511.2 6,518.4 6,535.5 Liabilities 17 Deposits 4,015.9 4,201.0 4,243.7 4,257.3 4,274.4 4,314.2 4,334.1 4,367.1 4,357.0 4,392.4 4,357.6 4,363.2 18 Transaction 611.5 635.6 640.7 635.8 625.0 621.1 603.0 615.4 587.0 615.0 626.0 645.4 19 Nontransaction 3,404.4 3,565.4 3,603.0 3,621.6 3,649.4 3,693.0 3,731.0 3,751.7 3,770.0 3,777.4 3,731.5 3,717.8 70 Large time 964.7 984.8 983.7 998.3 1,012.3 1,027.2 1,042.5 1,049.7 1,054.3 1,057.4 1,046.1 1,046.1 ?1 Other 2,439.6 2,580.5 2,619.4 2,623.3 2,637.1 2,665.8 2,688.5 2,702.0 2,715.7 2,720.0 2,685.4 2,671.7 22 Borrowings 1,249.2 1,253.0 1,248.0 1,235.2 1,233.9 1,204.6 1,220.3 1,247.8 1,223.7 1,239.9 1,252.0 1,268.8 73 From banks in the U.S 391.8 413.1 415.5 412.5 406.2 393.5 393.0 393.6 386.9 397.6 395.1 391.1 ?4 From others 857.5 839.9 832.5 822.7 827.7 811.1 827.4 854.2 836.9 842.3 856.8 877.8 75 Net due to related foreign offices 202.2 160.0 144.2 115.9 97.9 102.0 104.7 93.0 90.6 77.3 100.4 106.2 26 Other liabilities 352.5 403.3 356.7 342.5 336.1 309.4 318.5 330.7 329.2 332.0 337.7 325.1 27 Total liabilities 5,819.8 6,017.3 5,992.6 5,950.8 5,942.2 5,930.2 5,977.6 6,038.6 6,000.6 6,041.6 6,047.6 6,063.4 28 Residual (assets less liabilities)7 428.3 441.8 457.5 480.3 478.2 459.7 448.1 467.8 461.3 469.6 470.7 472.1 Not seasonally adjusted Assets 79 Bank credit 5,320.3 5.474.4 5,483.1 5,447.7 5,439.5 5,423.9 5,449.0 5,504.4 5,481.2 5,506.3 5,512.8 5,514.1 30 Securities in bank credit 1,369.0 1,492.1 1,498.0 1,493.0 1,485.7 1,482.7 1,497.3 1,529.6 1,507.1 1,524.1 1,542.5 1,539.8 31 U.S. government securities 756.7 812.7 834.9 822.6 816.1 831.8 849.8 867.9 855.2 867.3 871.7 872.4 3? Other securities 612.3 679.4 663.0 670.4 669.6 650.9 647.5 661.7 651.9 656.9 670.9 667.4 33 Loans and leases in bank credit2 .... 3,951.3 3.982.3 3,985.1 3,954.7 3,953.8 3,941.2 3,951.7 3,974.9 3,974.1 3,982.2 3,970.3 3,974.3 34 Commercial and industrial 1,099.7 1.044.7 1,034.0 1,021.8 1,032.6 1,032.1 1,021.7 1,019.3 1,017.1 1,017.5 1,022.7 1,020.2 35 Real estate 1,707.0 1.779.2 1,791.5 1,782.6 1,785.2 1,782.6 1,789.4 1,814.4 1,814.4 1,816.5 1,813.7 1,814.2 36 Revolving home equity 135.5 153.4 155.9 158.8 162.5 166.5 171.7 179.7 178.0 179.4 180.0 181.1 37 Other 1,571.5 1.625.8 1,635.5 1,623.9 1.622.7 1,616.1 1,617.7 1,634.7 1,636.4 1,637.1 1,633.7 1,633.1 38 Consumer 550.9 560.3 566.5 567.0 563.7 556.4 559.9 564.4 562.8 565.5 564.0 567.2 39 Credit cards and related plans . . 219.2 225.7 232.4 228.3 223.8 220.1 223.8 223.3 222.0 224.3 222.5 225.7 40 Other 331.7 334.6 334.1 338.7 339.9 336.2 336.1 341.1 340.9 341.3 341.6 341.4 41 Security3 161.9 157.3 152.0 155.0 153.9 158.2 167.4 164.5 167.5 168.7 160.1 161.3 47 Other loans and leases 431.7 440.8 441.1 428.2 418.4 412.0 413.3 412.2 412.1 414.0 409.8 411.4 43 Interbank loans 276.7 289.8 299.4 290.8 275.1 272.5 278.1 282.4 279.0 295.2 273.5 278.4 44 Cash assets4 279.8 336.1 317.2 313.2 300.1 291.8 300.2 296.8 284.7 294.4 277.2 328.9 45 Other assets5 423.4 489.2 484.9 483.9 484.4 465.0 478.9 484.7 485.3 477.6 486.5 489.1 46 Total assets6 6,234.3 6,488.5 6,511.9 6,461.3 6,424.3 6,378.4 6,432.2 6,493.7 6,455.5 6,498.9 6,475.7 6,536.0 Liabilities 47 Deposits 4,008.2 4.220.2 4,294.5 4,283.2 4,290.4 4,319.5 4,358.2 4,360.0 4,357.7 4,384.5 4,327.5 4,362.6 48 Transaction 603.6 641.7 669.3 648.8 619.7 616.2 611.5 607.2 574.8 606.3 602.3 651.8 49 Nontransaction 3,404.6 3,578.5 3,625.1 3,634.5 3,670.6 3,703.3 3,746.7 3,752.7 3,783.0 3,778.2 3,725.2 3,710.8 50 Large time 967.1 951.6 998.1 1,011.1 1,019.5 1,028.0 1,045.1 1,053.3 1,058.7 1,059.1 1,049.2 1,051.1 51 Other 2,437.5 2,537.0 2,627.0 2,623.4 2,651.2 2,675.3 2,701.7 2,699.4 2,724.2 2,719.1 2,676.0 2,659.8 5? Borrowings 1,256.0 1,255.8 1,248.0 1,248.6 1,237.1 1,203.0 1,226.7 1,254.2 1,240.5 1,249.1 1,250.4 1,269.7 53 From banks in the U.S 393.2 410.3 417.1 417.7 411.4 397.9 398.2 394.9 391.9 400.0 393.8 389.9 54 From others 862.9 845.6 830.9 830.9 825.8 805.1 828.5 859.3 848.5 849.1 856.6 879.8 55 Net due to related foreign offices 201.6 153.4 150.8 123.2 104.3 103.6 96.0 92.6 86.6 76.9 100.5 109.6 56 Other liabilities 351.9 408.9 362.3 348.3 341.3 309.1 311.2 330.2 325.7 331.0 337.9 327.9 57 Total liabilities 5,817.9 6,048.3 6,055.6 6,003.4 5,973.1 5,935.4 5,992.2 6,036.9 6,010.4 6,041.4 6,016.3 6,069.9 58 Residual (assets less liabilities)7 416.4 440.2 456.4 457.9 451.2 443.0 440.0 456.8 445.1 457.5 459.4 466.1 Footnotes appear on p. A21. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A16 Domestic Financial Statistics • August 2002 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 2001 2001 2002 2002 May Nov.' Dec.' Jan.' Feb.' Mar.' Apr.' May May 8 May 15 May 22 May 29 Seasonally adjusted Assets 1 Bank credit 4,717.9r 4,859.7 4,855.7 4,845.4 4,847.4 4,836.1 4,853.4 4,911.4 4,887.9 4,916.8 4,917.3 4,924.3 2 Securities in bank credit 1,158.4 1,251.1 1,252.9 1,255.1 1,250.7 1,251.6 1,273.3 1,304.4 1,284.3 1,302.5 1,314.4 1,313.9 3 U.S. government securities 703.0 756.3 775.1 766.6 762.4 776.7 798.4 820.5 808.7 820.2 824.2 825.5 4 Other securities 455.4 494.9 477.8 488.5 488.3 474.9 474.9 483.y 475.7 482.3 490.2 488.4 5 Loans and leases in bank credit2 .... 3,559.5 3,608.6 3,602.8 3,590.4 3,596.7 3,584.5 3,580.1 3,607.1 3,603.6 3,614.3 3,602.9 3,610.4 6 Commercial and industrial 878.9 847.2 839.6 833.3 836.6 830.4 819.0 816.7 814.7 815.9 817.4 818.4 7 Real estate 1,686.1 1,755.9 1,768.2 1,764.6 1,771.9 1,771.3 1,773.5 1,792.6 1,792.9 1,793.4 1,791.8 1,792.9 8 Revolving home equity 135.3' 152.9 155.8 159.0 162.6 168.0 172.3 179.4 177.6 178.9 179.6 180.9 y Other 1,550.9 1,603.0 1,612.4 1,605.6 1,609.3 1,603.3 1,601.1 1,613.2 1,615.3 1,614.5 1,612.2 1,612.0 10 Consumer 552.5 557.9 557.0 559.2 561.4 559.1 563.3 566.2 564.9 566.8 565.3 569.2 11 Security3 74.3 77.1 71.4 76.3 78.3 82.1 83.7 89.8 89.0 94.1 88.1 89.3 12 Other loans and leases 367.7 370.5 366.6 356.y 348.5 341.6 340.6 341.8 342.1 344.0 340.3 340.5 13 Interbank loans 252.3r 261.2 272.7 267.4 256.5 247.1 246.3 262.2 252.8 277.8 261.8 257.3 14 Cash assets4 244.6 258.8 258.5 260.1 257.0 257.8 254.8 255.3 248.8 255.1 249.7 268.4 15 Other assets5 387.3 453.2 450.9 451.3 453.6 435.6 447.2 453.3 450.2 444.6 45y.3 459.0 16 Total assets6 5,536.6r 5,762.4 5,765.6 5,750.3 5,740.4 5,702.2 5,727.8 5,807.9 5,765.5 5,820.1 5,813.9 5,834.9 Liabilities 17 Deposits 3,608.7 3,767.2 3,798.8 3,789.2 3,797.9 3,823.6 3,826.8 3,858.6 3,845.2 3,880.4 3,852.5 3,857.5 18 Transaction 600.8 624.7 629.4 624.7 614.6 611.1 592.5 604.4 576.9 603.8 614.7 634.6 19 Nontransaction 3,007.9 3,142.5 3,169.3 3,164.5 3,183.2 3,212.5 3,234.3 3,254.1 3,268.3 3,276.7 3,237.8 3,223.0 20 Large time 570.5 565.2 553.8 544.9 552.6 552.0 548.5 554.1 554.6 558.7 554.4 553.2 21 Other 2,437.4 2,577.3 2,615.6 2,619.6 2,630.6 2,660.5 2,685.8 2,700.0 2,713.7 2,718.0 2,683.5 2,669.8 22 Borrowings 1,029.2 1,043.0 1,048.2 1,049.9 1,042.8 1,017.1 1,028.9 1,055.1 1,029.2 1,049.0 1,060.4 1,077.6 23 From banks in the U.S 371.4r 388.7 390.7 390.2 383.1 371.7 369.8 371.4 365.9 375.5 371.3 371.3 24 From others 657.8r 654.2 657.5 659.7 659.7 645.4 659.1 683.8 663.3 673.5 689.2 706.4 25 Net due to related foreign offices 214.6 189.1 192.9 181.2 171.0 173.6 178.3 180.6 180.4 169.4 180.5 194.2 26 Other liabilities 267. lr 322.9 278.1 262.4 258.7 240.3 251.2 259.9 261.8 264.7 264.3 250.5 27 Total liabilities 5,119.5r 5,322.2 5,318.0 5,282.7 5,270.3 5,254.6 5,285.2 5,354.2 5,316.6 5,363.5 5,357.8 5,379.8 28 Residual (assets less liabilities)7 417.0r 440.2 447.6 467.6 470.1 447.6 442.7 453.8 448.9 456.5 456.1 455.1 Not seasonally adjusted Assets 29 Bank credit 4,715.6 4,872.5 4,880.9 4.857.1 4,848.5 4,830.2 4,850.2 4,909.2 4,889.6 4,915.0 4,911.4 4,918.9 30 Securities in bank credit 1,156.0' 1,254.8 1,260.2 1,263.1 1,258.2 1,257.3 1,272.7 1,301.6 1,282.5 1,299.6 1,310.4 1,310.2 31 U.S. government securities 701.0 757.0 780.0 771.7 769.4 783.0 800.2 818.1 806.0 817.8 821.6 822.6 32 Other securities 455.0 497.8 480.3 491.4 488.8 474.3 472.5 483.4 476.5 481.7 488.7 487.6 33 Loans and leases in bank credit2 .... 3,559.7' 3,617.7 3,620.7 3,594.0 3,590.3 3,572.9 3,577.6 3,607.7 3,607.1 3,615.4 3,601.1 3,608.7 34 Commercial and industrial 885.2 847.2 837.7 828.1 833.9 830.5 824.4 822.6 823.4 822.0 822.6 822.4 35 Real estate 1,688.9' 1,760.3 1,772.5 1,763.9 1,766.8 1,763.8 1,770.2 1,795.2 1,795.3 1,797.3 1,794.3 1,795.0 36 Revolving home equity 135.5' 153.4 155.9 158.8 162.5 166.5 171.7 179.7 178.0 179.4 180.0 181.1 37 Other 1,553.3 1,606.9 1,616.6 1,605.1 1,604.2 1,597.3 1,598.5 1,615.5 1,617.3 1,617.9 1,614.3 1,613.9 38 Consumer 550.9 560.3 566.5 567.0 563.7 556.4 559.9 564.4 562.8 565.5 564.0 567.2 39 Credit cards and related plans .. 219.2 225.7 232.4 228.3 223.8 220.1 223.8 223.3 222.0 224.3 222.5 225.7 40 Other 331.7 334.6 334.1 338.7 339.9 336.2 336.1 341.1 340.9 341.3 341.6 341.4 41 Security3 70.0 79.3 73.8 76.1 77.6 82.0 82.2 84.5 83.8 87.7 82.1 84.3 42 Other loans and leases 364.7 370.6 370.2 359.0 348.3 340.3 340.9 340.9 341.8 342.9 338.1 339.9 43 Interbank loans 247.7' 264.8 279.0 265.5 255.2 252.0 256.1 258.7 251.9 273.7 252.3 253.8 44 Cash assets4 243.5 265.7 275.8 270.9 257.4 249.0 255.9 254.0 242.2 251.2 234.6 286.3 45 Other assets5 387.0 454.6 453.2 452.1 452.0 434.2 447.8 452.9 453.7 446.4 455.3 455.8 46 Total assets6 5,528.2r 5,787.0 5,816.7 5,771.8 5,738.8 5,691.0 5,736.4 5,800.6 5,763.2 5,812.0 5,779.5 5,840.6 Liabilities 47 Deposits 3,597.1 3,782.9 3,837.1 3,804.4 3,808.4 3,826.8 3,847.2 3,846.4 3,840.3 3,868.6 3,817.9 3,850.2 48 Transaction 593.4 630.6 657.3 637.4 609.3 606.3 601.5 596.7 565.1 595.5 591.5 641.1 49 Nontransaction 3,003.7 3,152.3 3,179.8 3,167.0 3,199.1 3,220.4 3,245.7 3,249.6 3,275.2 3,273.1 3,226.4 3,209.2 50 Large time 568.5 568.7 556.7 547.4 554.6 550.5 546.8 552.3 553.0 556.0 552.4 551.4 51 Other 2,435.2 2,583.7 2,623.1 2.619.6 2,644.6 2,669.9 2,698.9 2,697.4 2,722.2 2,717.2 2,674.0 2,657.8 52 Borrowings 1,036.0 1,045.7 1,048.1 1,063.4 1,046.0 1,015.5 1,035.3 1,061.5 1,045.9 1,058.2 1,058.9 1,078.5 53 From banks in the U.S 372.7' 385.8 392.3 395.5 388.3 376.1 375.0 372.6 371.0 377.9 369.9 370.1 54 From others 663.2' 659.9 655.8 667.9 657.7 639.4 660.3 688.9 674.9 680.3 688.9 708.4 55 Net due to related foreign offices 214.1 193.8 196.9 185.5 174.7 172.1 171.5 180.2 176.9 167.9 181.3 197.3 56 Other liabilities 266.5' 329.1 282.5 266.8 262.6 239.0 244.5 259.4 258.5 263.1 264.9 253.1 57 Total liabilities 5,113.7r 5,351.6 5,364.7 5,320.1 5,291.8 5,253.4 5,298.5 5,347.5 5,321.6 5,357.9 5,323.0 5,379.1 58 Residual (assets less liabilities)7 414.5' 435.4 452.0 451.7 447.0 437.7 437.9 453.2 441.6 454.2 456.5 461.5 Footnotes appear on p. A21. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Commercial Banking Institutions—Assets and Liabilities 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 2001 2001 2002 2002 May Nov.1" Dec.' Jan. Feb. Mar. Apr. May May 8 May 15 May 22 May 29 Seasonally adjusted Assets 1 Bank credit 2,633.0' 2.640.2 2,607.0 2,575.0r 2.573.1' 2,554. lr 2,558.8' 2,576.4 2,558.4 2,581.8 2,581.0 2,583.0 7 Securities in bank credit 610.6 652.6 636.8 634.4' 629.5' 627.6' 645.9' 665.0 646.3 664.1 674.5 672.7 3 U.S. government securities 357.0 370.8 379.4 366.1' 359.4' 367.2' 383.3 390.5 381.8 390.8 393.1 393.3 4 Trading account 35.3 40.5 33.9 32.6 33.6 32.7 38.1 43.0 37.2 47.2 45.4 43.2 Investment account 321.7 330.3 345.5 334. r 325.8' 334.4' 345.1 347.5 344.6 343.6 347.7 350.1 6 Other securities 253.5 281.8 257.5 261.T 270.1' 260.4' 262.7' 274.5 264.5 273.3 281.3 279.4 7 Trading account 136.4 165.4 130.0 128.4 130.0 122.5 128.2 140.5 131.3 138.5 146.5 146.3 8 Investment account 117.2 116.4 127.5 139.3r 140.1' 137.9' 134.5' 134.0 133.2 134.8 134.9 133.1 9 State and local government .. 28.0 27.1 27.3 27.3 27.8 27.7 27.2 26.9 26.7 26.8 27.0 27.2 in Other 89.2 89.3 100.2 112.0r 112.3' 110.2' 107.3' 107.0 106.5 108.0 107.9 105.9 11 Loans and leases in bank credit2 .... 2,022.4r 1.987.6 1,970.2 1,940.6 1,943.7 1,926.6 1,912.9 1,911.5 1,912.1 1,917.7 1,906.6 1,910.3 12 Commercial and industrial 583.0 545.8 535.6 528.6 529.9 524.7' 514.5 510.7 509.6 510.4 510.6 512.0 13 Bankers acceptances .8 .0 .0 .0 .0 .0 .0 .0 n.a. n.a. n.a. n.a. 14 Other 582.2 545.8 535.6 528.6 529.9 524.7' 514.5 510.7 509.6 510.4 510.6 512.0 15 Real estate 853.8' 858.0 860.2 847.9r 848.8' 842.1' 838.7' 837.0 838.5 837.4 835.0 836.0 16 Revolving home equity 86.8 96.5 98.0 99.8r 101.5' 105.3' 108.4' 111.8 110.5 111.6 111.8 112.7 17 Other 767.0 761.5 762.1 748.1 747.3 736.8 730.3 725.2 728.0 725.8 723.2 723.3 18 Consumer 252.3 244.7 244.7 238.1' 245.7' 243.0' 240.9' 240.9 240.5 241.1 241.4 241.7 19 Security3 66.1 69.1 63.3 68.3 70.3 74.3 76.3 82.2 81.6 86.3 80.5 81.6 20 Federal funds sold to and repurchase agreements with broker-dealers 48.9 54.5 48.4 54.9 57.4 61.1' 63.3 69.1 68.2 73.3 67.7 6688..44 71 Other 17.2 14.6 14.9 13.4 12.9 13.1 13.0 13.1 13.4 13.0 12.8 13.2 22 State and local government 13.0 15.7 15.0 14.6 14.6 14.6 14.6 14.6 14.6 14.5 14.5 14.6 23 Agricultural 10.6 9.8 9.7 9.6 9.7 9.6 9.6 9.6 9.5 9.5 9.7 9.6 24 Federal funds sold to and repurchase agreements with others 25.7 30.3 28.1 26.2 22.6 20.9 21.9 18.6 20.4 18.4 17.6 17.4 75 All other loans 84.9 78.2 79.6 75.3 70.3 65.9 65.3 67.0 66.3 68.8 67.0 66.3 26 Lease-financing receivables 133.0 135.9 134.1 132.1 131.9 131.4 131.0 131.0 131.1 131.4 130.4 131.0 27 Interbank loans 136.8 152.5 167.0 168.5 153.0 145.8' 154.1 163.5 158.9 175.5 163.7 157.0 28 Federal funds sold to and repurchase agreements with commercial banks 74.7 90.0 96.9 92.1 79.7 75.0 81.5 81.4 80.1 92.2 7788..66 74.8 79 Other 62.1 62.5 70.1 76.4 73.3 70.8 72.6 82.1 78.8 83.3 85.1 82.3 30 Cash assets4 141.3 149.6 147.3 146.2 143.3' 143.1 140.7' 141.4 136.8 140.2 135.7 153.7 31 Other assets5 283.0r 322.4 315.1 312.3r 306.9' 286.5' 293.4' 297.1 294.0 291.1 302.4 301.9 32 Total assets6 3,156.2r 3.224.9 3,195.1 3,158.7r 3,132.5r 3,085.7r 3,104.1r 3,135.4 3,105.0 3,145.6 3,139.8 3,152.8 Liabilities 33 Deposits 1,736.4 1,792.4 1,801.4 1,791.1 1,789.2 1,800.4 1,804.7 1,800.2 1,795.0 1,818.3 1,794.3 1,794.0 34 Transaction 304.2 320.4 323.2 316.1 308.2 303.6 286.9 288.5 273.3 289.1 293.4 304.9 35 Nontransaction 1,432.2 1,472.0 1,478.2 1,474.9' 1,481.0 1,496.8 1,517.8 1,511.7 1,521.7 1,529.2 1,501.0 1,489.1 36 Large time 270.7 253.5 248.3 242.1 249.8 248.9 245.3 246.7 245.7 251.8 247.5 245.6 37 Other 1,161.5 1,218.5 1,229.9 1,232.9 1,231.2 1,247.9 1,272.5 1,264.9 1,276.0 1,277.4 1,253.5 1,243.5 38 Borrowings 692.8 663.8 659.7 654.3 654.2 635.6 645.1 663.5 640.2 660.8 666.8 680.9 39 From banks in the U.S 221.4 219.7 218.8 212.9 207.9 201.7 203.0 204.0 201.3 208.9 202.0 201.0 40 From others 471.5 444.1 440.9 441.4 446.2 433.8 442.2 459.5 438.9 451.8 464.8 480.0 41 Net due to related foreign offices 198.0 178.8 182.9 172.3' 160.0' 164.6' 168.7' 169.1 168.7 159.2 170.0 180.9 42 Other liabilities 211.8r 257.8 213.3 193.8' 187.7' 168.7' 179.2' 185.6 188.5 190.1 189.6 176.0 43 Total liabilities 2,839.0r 2,892.9 2,857.3 2,811.5r 2,791.1r 2,769.3r 2,797.8r 2,818.4 2,792.4 2,828.3 2,820.7 2,831.8 44 Residual (assets less liabilities)7 317.2r 331.9 337.8 347.3' 341.5 316.4 306.3' 317.0 312.5 317.2 319.1 321.1 Footnotes appear on p. A21. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A18 Domestic Nonfinancial Statistics • August 2002 1.26 COMMERCIAL BANKS IN THE UNITED STATES Assets and Liabilities1—Continued C. Large domestically chartered commercial banks—Continued Billions of dollars Monthly averages Wednesday figures AAAccccccooouuunnnttt 2001 2001 2002 2002 May Nov. Dec.' Jan. Feb. Mar. Apr. May May 8 May 15 May 22 May 29 Not seasonally adjusted Assets 45 Bank credit 2,632.5' 2,647.8' 2,620.1 2,584.7' 2,578.0' 2,553.1' 2,558.4' 2,576.3 2,561.6 2,581.1 2,576.9 2,581.1 46 Securities in bank credit 608.8 656.4' 641.8 641.3' 635.2' 631.0' 644.0' 663.0 644.6 661.9 671.5 670.2 47 U.S. government securities 355.7 371.7' 381.8 370.7' 364.7' 371.2' 383.8 389.0 379.3 389.1 391.5 391.6 48 Trading account 35.2 40.6 34.1 32.9 34.1 33.1 38.2 42.8 36.9 47.0 45.2 43.0 49 Investment account 320.5 331.0' 347.6 337.8' 330.6' 338.1' 345.6 346.2 342.3 342.1 346.3 348.6 50 Mortgage-backed securities . 234.3 270.8 284.7 273.9 258.8 263.3 271.0 275.2 273.1 272.0 275.1 277.7 51 Other 86.2 60.3' 62.9 63.9' 71.8' 74.7' 74.6 71.0 69.3 70.1 71.2 70.9 52 One year or less 27.1 15.0' 14.7 13.7' 16.6' 19.6' 18.3 16.0 17.4 17.0 15.7 14.3 53 One to five years 31.4 30.4 35.3 36.8 43.1 42.9 43.5 42.3 39.3 41.1 42.4 43.9 54 More than five years .... 27.6 14.8 12.9 13.4 12.1 12.2 12.7 12.7 12.5 12.0 13.1 12.7 55 Other securities 253.1 284.8' 260.0 270.6' 270.5' 259.8' 260.2' 274.0 265.3 272.7 279.9 278.6 56 Trading account 136.2 167.1 131.2 129.8 130.2 122.2 127.0 140.2 131.7 138.2 145.7 145.9 57 Investment account 117.0 117.6' 128.7 140.8' 140.4' 137.6' 133.3' 133.8 133.6 134.5 134.2 132.7 58 State and local government . 28.0 27.4 27.6 27.6 27.8 27.6 27.0 26.9 26.8 26.8 26.8 27.1 59 Other 89.0 90.2' 101.2 113.2' 112.5' 110.0' 106.3' 106.9 106.8 107.8 107.4 105.6 60 Loans and leases in bank credit2 . . . 2,023.7' 1,991.4' 1,978.4 1,943.4 1,942.7 1,922.1 1,914.4 1,913.4 1,917.0 1,919.2 1,905.4 1,910.9 61 Commercial and industrial 586.9' 546.7' 533.6 524.4 528.7 525.2 518.0 514.2 515.4 513.9 513.4 513.9 62 Bankers acceptances .8 .0 .0 .0 .0 .0 .0 .0 n.a. n.a. n.a. n.a. 63 Other 586.2 546.7' 533.6 524.4 528.7 525.2 518.0 514.2 515.4 513.9 513.4 513.9 64 Real estate 857.3' 859.8' 861.9 847.4' 845.6' 837.5' 837.5' 840.4 842.3 841.9 837.7 838.9 65 Revolving home equity 87.2' 96.6' 97.7 99.4' 101.7' 104.3' 108.0' 112.3 111.0 112.1 112.4 113.2 66 Other 469.2 451.2' 453.5 440.2 436.3 426.0 421.6 419.4 422.8 421.1 416.9 416.4 67 Commercial 300.9 312.0' 310.7 307.8 307.7' 307.1 307.9 308.8 308.4 308.7 308.4 309.3 68 Consumer 253.0 243.5' 247.7 242^ 248.1' 243.2' 241.3' 241.5 241.2 241.7 241.9 242.4 69 Credit cards and related plans . 87.0 76.5 80.1 71.5 76.6 74.8 72.8 72.8 72.7 73.0 73.1 73.6 70 Other 166.0 167.0' 167.6 170.5' 171.5' 168.4' 168.5' 168.7 168.5 168.7 168.9 168.8 71 Security3 62.0 71.0 65.5 68.4 69.6 74.0 74.6 77.0 76.4 80.1 74.8 76.8 72 Federal funds sold to and repurchase agreements with broker-dealers 45.8 56.0 50.0 55.0 56.8 60.9 61.8 64.8 63.9 68.0 62.9 64.4 73 Other 16.2 15.1 15.4 13.4 12.8 13.1 12.8 12.3 12.6 12.1 11.9 12.4 74 State and local government 13.0 15.7 15.0 14.6 14.6 14.6 14.6 14.6 14.6 14.5 14.5 14.6 75 Agricultural 10.6 9.7' 9.6 9.6 9.5 9.5 9.5 9.6 9.5 9.5 9.7 9.7 76 Federal funds sold to and repurchase agreements with others 23.8 30.6 28.9 27.8 24.0 20.9 21.9 18.6 20.4 18.4 17.6 17.4 77 All other loans 84.1 78.7' 81.6 75.0 69.3 65.1 65.4 66.4 65.7 67.8 65.4 66.4 78 Lease-financing receivables 133.0 135.6 134.6 134.2 133.4 132.3 131.6 131.0 131.5 131.4 130.3 130.7 79 Interbank loans 137.7 154.1 170.8 167.9 151.2' 146.0 157.9 164.6 158.2 176.7 161.8 161.5 80 Federal funds sold to and repurchase agreements with commercial banks 75.2 90.9' 99.1 91.8 78.8 75.1 83.6 81.9 79.7 92.8 77.7 76.9 81 Other 62.5 63.1 71.7 76.1 72.5 70.9 74.3 82.7 78.5 83.9 84.1 84.6 82 Cash assets4 140.8 152.7 158.4 154.5 144.0 138.1 143.3 140.9 132.8 138.6 126.0 165.0 83 Other assets5 282.7' 323.8' 317.4 313.1' 305.3' 285.1' 294.1' 296.7 297.5 292.9 298.4 298.7 84 Total assets6 3,155.8r 3,238.5r 3,225.2 3,177.1r 3,134.6r 3,078.4r 3,111.0r 3,135.6 3,107.0 3,146.2 3,120.3 3,163.5 Liabilities 85 Deposits 1,731.1 1,801.4 1,819.1 1,796.0 1,795.7 1,799.0 1,812.2 1.794.7 1,789.2 1,813.4 1,776.0 1,795.1 86 Transaction 301.4 323.9 341.1 324.8 304.9 300.6 294.2 285.6 266.2 287.1 281.2 311.6 87 Nontransaction 1,429.7 1,477.5 1,478.0 1,471.2' 1,490.8' 1,498.4 1,518.0 1,509.1 1,522.9 1,526.3 1,494.7 1,483.5 88 Large time 268.7 256.9 251.3 244.5 251.7 247.4 243.6 244.9 244.1 249.1 245.5 243.8 89 Other 1,161.0 1,220.6 1,226.7 1.226.7' 1.239.1 1,251.0 1,274.3' 1,264.2 1,278.9 1,277.2 1,249.2 1,239.7 90 Borrowings 699.6 666.6 659.7 667.8 657.4 634.0 651.5 669.9 656.9 670.0 665.3 681.8 91 From banks in the U.S 222.8 216.9 220.4 218.2 213.2 206.2 208.2 205.3 206.4 211.4 200.7 199.8 92 From nonbanks in the U.S 476.9 449.7 439.2 449.6 444.3 427.8 443.3 464.6 450.5 458.6 464.6 482.0 93 Net due to related foreign offices 197.5 183.5 186.8 176.5' 163.8' 163.1' 161.9' 168.7 165.2 157.6 170.8 183.9 94 Other liabilities 211.2' 264.1' 217.8 198.3' 191.6' 167.4' 172.5' 185.1 185.2 188.6 190.2 178.6 95 Total liabilities 2,839.5r 2,915.6r 2,883.4 2,838.6r 2,808.5r 2,763.5r 2,798.2r 2,818.5 2,796.5 2,829.6 2,802.2 2,839.5 96 Residual (assets less liabilities)7 316.3' 322.9 341.8 338.5' 326.0' 314.9' 312.9 317.1 310.5 316.7 318.1 324.0 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 2001 2001 2002 2002 May Nov.' Dec.' Jan.' Feb.' Mar.' Apr.' May May 8 May 15 May 22 May 29 Seasonally adjusted Assets 1 Bank credit 2,085.0 2,219.5 2,248.7 2,270.5 2,274.3 2,281.9 2,294.6 2,335.0 2,329.6 2,335.0 2,336.3 2,341.3 ? Securities in bank credit 547.8 598.5 616.0 620.7 621.3 624.1 627.4 639.4 638.1 638.3 639.9 641.2 U.S. government securities 346.0 385.5 395.7 399.9 403.0 409.6 415.1 430.0 426.9 429.3 431.1 432.2 4 Other securities 201.8 213.1 220.3 220.8 218.3 214.5 212.3 209.4 211.2 209.0 208.8 209.0 5 Loans and leases in bank credit2 .... 1,537.2 1,621.0 1,632.6 1,649.8 1,653.0 1,657.9 1,667.2 1,695.6 1,691.5 1,696.6 1,696.3 1,700.1 6 Commercial and industrial 295.9 301.4 304.0 304.7 306.8 305.6 304.5 306.0 305.2 305.6 306.8 306.4 7 Real estate 832.3 897.9 908.0 916.8 923.1 929.2 934.7 955.6 954.4 956.0 956.8 956.9 8 Revolving home equity 48.4 56.4 57.8 59.2 61.0 62.7 63.9 67.6 67.1 67.4 67.8 68.2 <J Other 783.9 841.5 850.2 857.6 862.0 866.6 870.8 888.0 887.3 888.7 889.0 888.7 in Consumer 300. r 313.1 312.4 321.2 315.7 316.1 322.4 325.3 324.3 325.8 323.9 327.5 11 Security3 8.2 7.9 8.2 8.0 8.1 7.8 7.4 7.7 7.4 7.8 7.6 7.7 l? Other loans and leases 100.6' 100.6 100.1 99.2 99.4 99.1 98.2 101.1 100.3 101.5 101.1 101.6 n Interbank loans 115.5' 108.7 105.7 98.9 103.5 101.3 92.2 98.7 93.9 102.3 98.1 100.3 14 Cash assets4 103.3 109.2 111.2 113.9 113.7 114.7 114.2 113.8 112.1 115.0 114.0 114.7 15 Other assets5 104.3' 130.8 135.8 139.1 146.7 149.1 153.7 156.2 156.2 153.5 156.9 157.1 16 Total assets6 2,380.4 2,537.6 2,570.5 2,591.5 2,607.8 2,616.5 2,623.7 2,672.5 2,660.5 2,674.5 2,674.1 2,682.1 Liabilities 17 Deposits 1,872.3 1,974.8 1,997.4 1,998.1 2,008.7 2,023.2 2,022.1 2,058.4 2,050.2 2,062.2 2,058.2 2,063.5 18 Transaction 296.6 304.3 306.3 308.6 306.4 307.5 305.6 315.9 303.6 314.7 321.3 329.7 11 Nontransaction 1,575.7 1,670.5 1,691.1 1,689.6 1,702.3 1,715.7 1,716.5 1,742.4 1,746.6 1,747.5 1,736.9 1,733.8 70 Large time 299.9' 311.8 305.4 302.9 302.9 303.2 303.2 307.4 308.9 306.9 306.9 307.6 71 Other 1,275.9' 1,358.8 1,385.7 1,386.7 1,399.4 1,412.6 1,413.3 1,435.1 1,437.7 1,440.6 1,430.0 1,426.2 7? Borrowings 336.3 379.1 388.5 395.6 388.6 381.5 383.7 391.6 389.0 388.2 393.6 396.7 ?3 From banks in the U.S 150.0' 169.0 171.9 177.3 175.1 170.0 166.8 167.4 164.6 166.5 169.2 170.3 74 From others 186.3' 210.1 216.5 218.3 213.5 211.6 216.9 224.3 224.4 221.7 224.4 226.4 75 Net due to related foreign offices 16.6 10.3 10.0 9.0 10.9 9.0 9.6 11.5 11.7 10.3 10.6 13.3 26 Other liabilities 55.3 65.0 64.8 68.6 71.0 71.6 72.0 74.2 73.3 74.5 74.7 74.5 27 Total liabilities 2,280.5 2,429.3 2,460.7 2,471.2 2,479.2 2,485.3 2,487.4 2,535.7 2,524.2 2,535.2 2,537.1 2,548.0 28 Residual (assets less liabilities)7 99.9' 108.3 109.8 120.3 128.6 131.2 136.3 136.8 136.4 139.3 136.9 134.1 Not seasonally adjusted Assets 79 Bank credit 2,083.1 2,224.7 2,260.8 2,272.4 2,270.6 2,277.1 2,291.8 2,332.9 2,328.1 2,333.9 2,334.5 2,337.8 30 Securities in bank credit 547.2' 598.4 618.5 621.8 623.0 626.3 628.6 638.6 637.9 637.7 638.9 640.0 31 U.S. government securities 345.3 385.3 398.2 401.0 404.7 411.8 416.4 429.2 426.8 428.7 430.1 431.0 3? Other securities 201.8 213.1 220.3 220.8 218.3 214.5 212.3 209.4 211.2 209.0 208.8 209.0 33 Loans and leases in bank credit2 .... 1,536.0 1,626.3 1,642.3 1,650.7 1,647.6 1,650.8 1,663.2 1,694.3 1,690.1 1,696.2 1,695.7 1,697.8 34 Commercial and industrial 298.3 300.4 304.1 303.7 305.3 305.3 306.4 308.4 307.9 308.2 309.2 308.5 35 Real estate 831.6 900.6 910.6 916.4 921.2 926.3 932.6 954.8 953.0 955.4 956.6 956.1 36 Revolving home equity 48.3 56.8 58.2 59.4 60.9 62.1 63.7 67.4 67.0 67.3 67.6 67.9 37 Other 783.3 843.7 852.4 857.1 860.3 864.2 869.0 887.3 886.0 888.1 889.0 888.2 38 Consumer 297.9 316.8 318.8 325.0 315.6 313.2 318.6 322.9 321.6 323.8 322.1 324.8 39 Credit cards and related plans . . 132.2 149.2 152.3 156.8 147.2 145.3 150.9 150.5 149.3 151.3 149.4 152.1 40 Other 165.7' 167.6 166.5 168.2 168.5 167.8 167.6 172.4 172.4 172.6 172.7 172.7 41 Security3 8.0 8.3 8.3 7.8 8.0 8.0 7.6 7.5 7.4 7.6 7.3 7.4 4? Other loans and leases 100.2' 100.2 100.5 97.7 97.5 98.0 97.9 100.7 100.2 101.2 100.5 101.0 43 Interbank loans 110.0' 110.7 108.2 97.6 104.0 106.0 98.2 94.0 93.7 97.0 90.5 92.3 44 Cash assets4 102.7' 113.0 117.5 116.4 113.4 110.9 112.6 113.2 109.4 112.6 108.5 121.2 45 Other assets5 104.3' 130.8 135.8 139.1 146.7 149.1 153.7 156.2 156.2 153.5 156.9 157.1 46 Total assets6 2,372.4 2,548.5 2,591.5 2,594.7 2,604.3 2,612.6 2,625.3 2,665.1 2,656.2 2,665.8 2,659.2 2,677.1 Liabilities 47 Deposits 1,866.0 1,981.5 2,018.0 2,008.4 2,012.7 2,027.8 2,035.1 2,051.6 2,051.1 2,055.3 2,042.0 2,055.1 48 Transaction 292.0 306.7 316.2 312.7 304.4 305.7 307.3 311.1 298.9 308.4 310.3 329.5 49 Nontransaction 1,574.0 1,674.8 1,701.8 1,695.8 1,708.3 1,722.1 1,727.8 1,740.5 1,752.3 1,746.9 1,731.7 1,725.6 50 Large time 299.9' 311.8 305.4 302.9 302.9 303.2 303.2 307.4 308.9 306.9 306.9 307.6 51 Other 1,274.2' 1,363.1 1,396.4 1,392.9 1,405.4 1,418.9 1,424.5 1,433.2 1,443.4 1,440.0 1,424.8 1,418.1 5? Borrowings 336.3 379.1 388.5 395.6 388.6 381.5 383.7 391.6 389.0 388.2 393.6 396.7 53 From banks in the U.S 150.0' 169.0 171.9 177.3 175.1 170.0 166.8 167.4 164.6 166.5 169.2 170.3 54 From others 186.3' 210.1 216.5 218.3 213.5 211.6 216.9 224.3 224.4 221.7 224.4 226.4 55 Net due to related foreign offices 16.6 10.3 10.0 9.0 10.9 9.0 9.6 11.5 11.7 10.3 10.6 13.3 56 Other liabilities 55.3 65.0 64.8 68.6 71.0 71.6 72.0 74.2 73.3 74.5 74.7 74.5 57 Total liabilities 2,274.2 2,436.0 2,481.3 2,481.5 2,483.2 2,489.9 2,500.3 2,529.0 2,525.1 2,528.3 2,520.9 2,539.6 58 Residual (assets less liabilities)7 98.2 112.5 110.2 113.2 121.0 122.7 125.0 136.1 131.1 137.5 138.4 137.5 Footnotes appear on p. A21. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A20 Domestic Nonfinancial Statistics • August 2002 1.26 COMMERCIAL BANKS IN THE UNITED STATES Assets and Liabilities1—Continued E. Foreign-related institutions Billions of dollars Monthly averages Wednesday figures Account 2001 2001 2002 2002 May' Nov.' Dec.' Jan.' Feb.' Mar.' Apr.' May May 8 May 15 May 22 May 29 Seasonally adjusted Assets 1 Bank credit 609.0 599.3 594.6 584.9 587.0 593.8 598.7 599.2 594.6 594.8 607.6 598.8 2 Securities in bank credit 213.1 237.3 237.7 229.9 227.5 225.4 224.6 228.0 224.6 224.5 232.2 229.6 3 U.S. government securities 55.7 55.7 55.0 50.9 46.7 48.8 49.6 49.8 49.2 49.4 50.1 49.8 4 Other securities 157.4 181.6 182.8 179.0 180.8 176.6 175.0 178.2 175.4 175.1 182.1 179.8 5 Loans and leases in bank credit2 .... 395.9 361.9 356.9 355.0 359.5 368.4 374.0 371.2 370.1 370.2 375.4 369.2 6 Commercial and industrial 217.0 195.9 194.7 193.0 197.1 200.3 198.5 199.0 195.7 197.5 202.8 200.5 7 Real estate 18.1 18.9 19.0 18.8 18.4 18.8 19.2 19.2 19.1 19.2 19.4 19.2 8 Security3 93.3 76.9 74.2 74.8 73.9 78.5 84.5 81.2 84.5 82.0 80.3 77.6 9 Other loans and leases 67.4 70.2 69.0 68.4 70.0 70.8 71.8 71.8 70.8 71.5 72.9 71.8 10 Interbank loans 29.0 25.0 20.4 25.2 19.9 20.5 22.1 23.7 27.1 21.5 21.3 24.6 11 Cash assets4 37.6 38.1 39.0 40.2 41.8 43.9 46.2 44.2 44.0 44.4 44.7 43.8 12 Other assets5 36.4 34.8 30.9 31.0 31.7 29.9 31.3 31.8 31.1 30.8 31.3 33.7 13 Total assets6 711.6 696.7 684.5 680.8 680.0 687.7 697.8 698.5 696.4 691.1 704.5 700.6 Liabilities 14 Deposits 407.2 433.7 445.0 468.1 476.5 490.6 507.2 508.5 511.8 512.0 505.0 505.7 15 Transaction 10.7 10.9 11.2 11.1 10.3 10.1 10.5 10.9 10.1 11.3 11.3 10.8 16 Nontransaction 396.5 422.9 433.7 457.0 466.2 480.5 496.7 497.6 501.6 500.7 493.7 494.9 17 Borrowings 220.1 210.1 199.9 185.2 191.1 187.5 191.4 192.6 194.6 190.9 191.5 191.2 18 From banks in the U.S 20.4 24.4 24.8 22.3 23.1 21.8 23.2 22.2 21.0 22.1 23.9 19.8 19 From others 199.7 185.7 175.1 163.0 168.0 165.7 168.3 170.4 173.6 168.8 167.6 171.4 20 Net due to related foreign offices -12.4 -29.1 -48.7 -65.4 -73.1 -71.5 -73.6 -87.6 -89.8 -92.2 -80.1 -88.0 21 Other liabilities 85.4 80.4 78.5 80.1 77.5 69.0 67.4 70.9 67.4 67.4 73.4 74.7 22 Total liabilities 700.3 695.2 674.6 668.1 672.0 675.6 692.4 684.4 684.0 678.0 689.8 683.6 23 Residual (assets less liabilities)7 11.3 1.6 9.9 12.7 8.1 12.1 5.5 14.0 12.4 13.1 14.7 17.0 Not seasonally adjusted Assets 24 Bank credit 604.6 601.9 602.1 590.5 591.0 593.7 598.7 595.2 591.5 591.3 601.4 595.2 25 Securities in bank credt 213.1 237.3 237.7 229.9 227.5 225.4 224.6 228.0 224.6 224.5 232.2 229.6 26 U.S. government securities 55.7 55.7 55.0 50.9 46.7 48.8 49.6 49.8 49.2 49.4 50.1 49.8 27 Trading account 13.0 13.0 11.7 9.0 8.6 8.5 9.0 9.7 9.5 9.6 9.7 9.8 28 Investment account 42.7 42.7 43.2 41.9 38.1 40.2 40.6 40.1 39.7 39.8 40.3 40.0 29 Other securities 157.4 181.6 182.8 179.0 180.8 176.6 175.0 178.2 175.4 175.1 182.1 179.8 30 Trading account 101.0 108.2 107.9 102.9 101.4 97.4 96.9 99.1 96.2 96.3 102.5 101.0 31 Investment account 56.3 73.5 74.8 76.1 79.4 79.3 78.2 79.1 79.2 78.9 79.6 78.8 32 Loans and leases in bank credit2 .... 391.6 364.6 364.4 360.6 363.5 368.3 374.1 367.2 367.0 366.8 369.2 365.6 33 Commercial and industrial 214.5 197.5 196.4 193.8 198.7 201.7 197.2 196.7 193.8 195.4 200.1 197.9 34 Real estate 18.1 18.9 19.0 18.8 18.4 18.8 19.2 19.2 19.1 19.2 19.4 19.2 35 Security3 91.9 77.9 78.1 78.9 76.3 76.2 85.2 80.0 83.8 81.0 78.0 77.0 36 Other loans and leases 67.0 70.2 70.9 69.2 70.1 71.6 72.5 71.3 70.3 71.2 71.7 71.5 37 Interbank loans 29.0 25.0 20.4 25.2 19.9 20.5 22.1 23.7 27.1 21.5 21.3 24.6 38 Cash assets4 36.3 40.4 41.4 42.3 42.7 42.8 44.3 42.7 42.5 43.2 42.7 42.6 39 Other assets5 36.5 34.6 31.7 31.8 32.3 30.7 31.1 31.8 31.6 31.2 31.2 33.3 40 Total assets6 706.1 701.5 695.3 689.5 685.5 687.3 695.8 693.1 692.3 686.9 696.2 695.4 Liabilities 41 Deposits 411.2 437.3 457.3 478.8 482.0 492.8 511.0 513.6 517.4 515.9 509.6 512.4 42 Transaction 10.3 11.1 12.0 11.3 10.5 9.9 10.0 10.5 9.7 10.8 10.8 10.7 43 Nontransaction 400.9 426.2 445.3 467.5 471.5 482.9 501.0 503.1 507.8 505.1 498.8 501.7 44 Borrowings 220.1 210.1 199.9 185.2 191.1 187.5 191.4 192.6 194.6 190.9 191.5 191.2 45 From banks in the U.S 20.4 24.4 24.8 22.3 23.1 21.8 23.2 22.2 21.0 22.1 23.9 19.8 46 From others 199.7 185.7 175.1 163.0 168.0 165.7 168.3 170.4 173.6 168.8 167.6 171.4 47 Net due to related foreign offices -12.5 -30.5 -46.1 -62.3 -70.4 -68.5 -75.5 -87.7 -90.3 -91.0 -80.9 -87.6 48 Other liabilities 85.4 79.8 79.7 81.5 78.6 70.2 66.7 70.8 67.2 67.9 73.0 74.8 49 Total liabilities 704.2 696.7 690.9 683.3 681.3 682.0 693.7 689.4 688.9 683.6 693.2 690.8 50 Residual (assets less liabilities)7 1.9 4.7 4.4 6.2 4.2 5.4 2.1 3.6 3.5 3.3 2.9 4.5 Footnotes appear on p. A21. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Commercial Banking Institutions—Assets and Liabilities A21 1.26 COMMERCIAL BANKS IN THE UNITED STATES Assets and Liabilities1—Continued F. Memo items Billions of dollars Monthly averages Wednesday figures AAAccccccooouuunnnttt 2001 2001 2002 2002 May Nov.r Dec.' Jan.' Feb.' Mar.' Apr. May May 8 May 15 May 22 May 29 Not seasonally adjusted MEMO Large domestically chartered banks, adjusted for mergers 1 Revaluation gains on off-balance-sheet items8 83.9 106.0 80.6 86.3 81.7 73.2 73.3 80.8 72.5 77.4 86.1 87.6 2 Revaluation losses on off-balancesheet items8 74.7 86.5 68.4 66.5 59.4 52.5 57.5 61.7 56.6 57.7 67.3 65.4 3 Mortgage-backed securities9 256.6 296.2 317.4 314.6 298.2 300.2 306.7' 310.9 308.4 307.9 311.0 313.2 4 Pass-through 191.5 212.5 216.8 217.7 203.4 203.2 206.4' 213.8 209.8 211.5 215.1 217.3 5 CMO, REMIC, and other 65.1 83.7 100.6 96.9 94.9 97.0 100.3' 97.1 98.7 96.4 95.9 95.9 6 Net unrealized gains (losses) on available-for-sale securities10 2.1 9.7 4.6 2.3 3.5 3.3 2.3' 5.0 4.6 4.6 5.2 5.2 7 Off-shore credit to U.S. residents" .... 21.0 19.2 19.1 19.4 19.7 19.6 19.5 19.5 19.4 19.4 19.6 19.5 8 Securitized consumer loans12 80.7 99.3 99.4 94.7 92.8 94.2 94.6 94.7 94.2 94.2 94.2 95.2 9 Credit cards and related plans 71.8 88.3 88.7 84.3 82.6 82.4 82.7 83.2 82.6 82.7 82.7 83.8 10 Other 8.9 11.0 10.7 10.4 10.3 11.9 11.9 11.5 11.6 11.5 11.4 11.4 11 Securitized business loans12 12.7 20.6 19.7 19.4 19.4 17.7 17.1 16.7 17.0 17.0 16.8 16.1 Small domestically chartered commercial banks, adjusted for mergers 12 Mortgage-backed securities9 228.6 267.9 279.4 280.7 283.9 287.0 289.9' 303.1 302.5 303.6 303.9 302.7 13 Securitized consumer loans12 237.3R 246.1 251.2 258.3 252.5 249.3 248.7' 250.6 249.8 249.5 252.8 250.1 14 Credit cards and related plans 229.7' 237.4 242.9 250.5 244.9 241.9 241.6' 243.8 242.9 242.7 246.0 243.3 15 Other 7.6R 8.7 8.4 7.8 7.6 7.4 7.2 6.8 6.9 6.9 6.8 6.8 Foreign-related institutions 16 Revaluation gains on off-balancesheet items8 57.5R 61.1 60.2 54.8 52.2 46.8 46.2 49.6 46.6 47.4 52.0 51.8 17 Revaluation losses on off-balancesheet items8 52.8R 54.1 54.2 51.5 48.0 40.6 39.8' 42.4 39.4 40.1 44.3 45.2 18 Securitized business loans12 30.8 26.4 25.2 25.5 25.1 24.1 23.8 22.5 22.7 22.6 22.4 22.3 NOTE. Tables 1.26, 1.27, and 1.28 have been revised to reflect changes in the Board's H.8 acquiring bank. Balance sheet data for acquired banks are obtained from Call Reports, and a statistical release, "Assets and Liabilities of Commercial Banks in the United States." Table ratio procedure is used to adjust past levels. 1.27, "Assets and Liabilities of Large Weekly Reporting Commercial Banks," and table 1.28, 2. Excludes federal funds sold to, reverse RPs with, and loans made to commercial banks "Large Weekly Reporting U.S. Branches and Agencies of Foreign Banks," are no longer in the United States, all of which are included in "Interbank loans." being published in the Bulletin. Instead, abbreviated balance sheets for both large and small 3. Consists of reverse RPs with brokers and dealers and loans to purchase and carry domestically chartered banks have been included in table 1.26, parts C and D. Data are both securities. merger-adjusted and break-adjusted. In addition, data from large weekly reporting U.S. 4. Includes vault cash, cash items in process of collection, balances due from depository branches and agencies of foreign banks have been replaced by balance sheet estimates of all institutions, and balances due from Federal Reserve Banks. foreign-related institutions and are included in table 1.26, part E. These data are break- 5. Excludes the due-from position with related foreign offices, which is included in "Net adjusted. due to related foreign offices." The not-seasonally-adjusted data for all tables now contain additional balance sheet items, 6. Excludes unearned income, reserves for losses on loans and leases, and reserves for which were available as of October 2, 1996. transfer risk. Loans are reported gross of these items. 1. Covers the following types of institutions in the fifty states and the District of Columbia: 7. This balancing item is not intended as a measure of equity capital for use in capital domestically chartered commercial banks that submit a weekly report of condition (large adequacy analysis. On a seasonally adjusted basis, this item reflects any differences in the domestic); other domestically chartered commercial banks (small domestic); branches and seasonal patterns estimated for total assets and total liabilities. agencies of foreign banks, and Edge Act and agreement corporations (foreign-related institu- 8. Fair value of derivative contracts (interest rate, foreign exchange rate, other commodity tions). Excludes International Banking Facilities. Data are Wednesday values or pro rata and equity contracts) in a gain/loss position, as determined under FASB Interpretation No. 39. averages of Wednesday values. Large domestic banks constitute a universe; data for small 9. Includes mortgage-backed securities issued by U.S. government agencies, U.S. domestic banks and foreign-related institutions are estimates based on weekly samples and on government-sponsored enterprises, and private entities. quarter-end condition reports. Data are adjusted for breaks caused by reclassifications of 10. Difference between fair value and historical cost for securities classified as availableassets and liabilities. for-sale under FASB Statement No. 115. Data are reported net of tax effects. Data shown are The data for large and small domestic banks presented on pp. A17-19 are adjusted to restated to include an estimate of these tax effects. remove the estimated effects of mergers between these two groups. The adjustment for 11. Mainly commercial and industrial loans but also includes an unknown amount of credit mergers changes past levels to make them comparable with current levels. Estimated extended to other than nonfinancial businesses. quantities of balance sheet items acquired in mergers are removed from past data for the bank 12. Total amount outstanding. group that contained the acquired bank and put into past data for the group containing the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A22 DomesticN onfinancial Statistics • August 2002 1.32 COMMERCIAL PAPER OUTSTANDING Millions of dollars, seasonally adjusted, end of period Year ending December 2001 2002 IItteemm 1997 1998 1999 2000 2001 Nov. Dec. Jan. Feb. Mar. Apr. 1 All issuers 966,699 1,163,303 1,403,023 1,615,341 1,438,764 1,435,808 1,438,764 1,428,494 1,402,875 1,358,114 1,351,516 Financial companies1 2 Dealer-placed paper, total2 513,307 614,142 786,643 973,060 989,364 993,491 989,364 984,251 984,441 964,070 972,268 3 Directly placed paper, total3 252,536 322,030 337,240 298,848 224,553 227,422 224,553 224,595 218,266 205,292 196,056 4 Nonfinancial companies4 200,857 227,132 279,140 343,433 224,847 214,894 224,847 219,648 200,168 188,753 183,192 1. Institutions engaged primarily in commercial, savings, and mortgage banking; sales, 3. As reported by financial companies that place their paper directly with investors. personal and mortgage financing; factoring, finance leasing, and other business lending; 4. Includes public utilities and firms engaged primarily in such activities as communicainsurance underwriting; and other investment activities. tions, construction, manufacturing, mining, wholesale and retail trade, transportation, and 2. Includes all financial-company paper sold by dealers in the open market. services. 1.33 PRIME RATE CHARGED BY BANKS Short-Term Business Loans1 Percent per year Date of change Rate Av r e a r te a ge Av r e a r te a ge Av r e a r t a e ge 1999—Jan. 1 7.75 1999 .... 8.00 2000—Jan. 8.50 2001—Jan. 9.05 July 1 8.00 2000 .... 9.23 Feb. 8.73 Feb. 8.50 Aug. 25 8.25 2001 .... 6.91 Mar. 8.83 Mar. 8.32 Nov. 17 8.50 Apr. 9.00 Apr. 7.80 1999—Jan. 7.75 May 9.24 May 7.24 2000—Feb. 3 8.75 Feb. 7.75 June 9.50 June 6.98 Mar. 22 9.00 Mar. 7.75 July 9.50 July 6.75 May 17 9.50 Apr. 7.75 Aug. 9.50 Aug. 6.67 May 7.75 Sept. 9.50 Sept. 6.28 2001—Jan. 4 9.00 June 7.75 Oct. 9.50 Oct. 5.53 Feb. 1 8.50 July 8.00 Nov. 9.50 Nov. 5.10 Mar. 21 8.00 Aug. 8.06 Dec. 9.50 Dec. 4.84 Apr. 19 7.50 Sept. 8.25 May 16 7.00 Oct. 8.25 2002—Jan. 4.75 June 28 6.75 Nov. 8.37 Feb. 4.75 Aug. 22 6.50 Dec. 8.50 Mar. 4.75 Sept. 18 6.00 Apr. 4.75 Oct. 3 5.50 May 4.75 Nov. 7 5.00 June 4.75 Dec. 12 4.75 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 2002 2002, week ending IItteemm 11999999 22000000 22000011 Feb. Mar. Apr. May May 3 May 10 May 17 May 24 May 31 MONEY MARKET INSTRUMENTS 1 Federal funds1-2-3 4.97 6.24 3.88 1.74 1.73 1.75 1.75 1.81 1.74 1.75 1.71 1.78 2 Discount window borrowing2-4 4.62 5.73 3.40 1.25 1.25 1.25 1.25 1.25 1.25 1.25 1.25 1.25 Commercial paper-1-5-6 Nonfinancial 3 1 -month 5.09 6.27 3.78 1.76 1.78 1.76 1.75 1.73 1.75 1.75 1.74 1.75 4 2-month 5.14 6.29 3.68 1.76 1.82 1.77 1.76 1.74 1.75 1.77 1.76 1.74 5 3-month 5.18 6.31 3.65 1.79 1.86 1.81 1.78 1.77 1.79 1.80 1.77 1.75 Financial 1-month 5.11 6.28 3.80 1.77 1.80 1.76 1.76 1.76 1.75 1.76 1.76 1.76 7 2-month 5.16 6.30 3.71 1.78 1.82 1.79 1.77 1.77 1.76 1.77 1.77 1.78 8 3-month 5.22 6.33 3.65 1.80 1.87 1.83 1.80 1.80 1.79 1.80 1.80 1.79 Certificates of deposit, secondary marketi J 9 1-month 5.19 6.35 3.84 1.81 1.84 1.81 1.80 1.80 1.80 1.80 1.80 1.80 10 3-month 5.33 6.46 3.71 1.82 1.91 1.87 1.82 1.80 1.80 1.82 1.82 1.83 11 6-month 5.46 6.59 3.66 1.95 2.16 2.11 1.93 1.81 1.84 1.98 1.98 2.01 12 Eurodollar deposits, 3-month3-8 5.31 6.45 3.70 1.82 1.91 1.88 1.82 1.82 1.82 1.82 1.82 1.82 U.S. Treasury bills Secondary market3-5 13 4-week n.a. n.a. 2.43 1.71 1.76 1.69 1.71 1.72 1.72 1.73 1.69 11..7700 14 3-month 4.64 5.82 3.40 1.73 1.79 1.72 1.73 1.74 1.74 1.74 1.72 1.72 15 6-month 4.75 5.90 3.34 1.82 2.01 1.93 1.86 1.86 1.84 1.88 1.87 1.87 U.S. TREASURY NOTES AND BONDS Constant maturities9 16 1-year 5.08 6.11 3.49 2.23 2.57 2.48 2.35 2.33 2.31 2.40 2.38 2.35 17 2-year 5.43 6.26 3.83 3.02 3.56 3.42 3.26 3.23 3.22 3.35 3.28 3.23 18 3-year 5.49 6.22 4.09 3.55 4.14 4.01 3.80 3.81 3.76 3.88 3.81 3.75 19 5-year 5.55 6.16 4.56 4.30 4.74 4.65 4.49 4.52 4.50 4.58 4.48 4.40 20 7-year 5.79 6.20 4.88 4.71 5.14 5.02 4.90 4.88 4.91 5.00 4.89 4.80 21 10-year 5.65 6.03 5.02 4.91 5.28 5.21 5.16 5.11 5.16 5.26 5.17 5.10 22 20-year 6.20 6.23 5.63 5.61 5.93 5.85 5.81 5.73 5.77 5.91 5.84 5.78 Treasury long-term average1011 23 25 years and above n.ra. n.'a. n.ra. 5.56 5.88 5.82 5.79 5.72 5.75 5.87 5.81 5.77 STATE AND LOCAL NOTES AND BONDS Moody's series'2 ?4 Aaa 5.28 5.58 4.99 4.93 5.09 5.09 5.03 5.00 4.99 5.08 5.08 5.02 25 Baa 5.70 6.19 5.75 5.71 5.92 5.86 5.79 5.75 5.74 5.84 5.82 5.78 26 Bond Buye r series13 5.43 5.71 5.15 5.11 5.29 5.22 5.19 5.17 5.19 5.24 5.19 5.14 CORPORATE BONDS 27 Seasoned issues, all industries14 7.45 7.98 7.49 7.18 7.44 7.36 7.37 7.32 7.33 7.44 7.38 7.33 Rating group 78 Aaa15 7.05 7.62 7.08 6.51 6.81 6.76 6.75 6.71 6.71 6.82 6.77 66..7744 ?9 Aa 7.36 7.83 7.26 6.95 7.22 7.16 7.20 7.14 7.16 7.27 7.21 7.17 30 A 7.53 8.11 7.67 7.37 7.62 7.49 7.43 7.46 7.43 7.49 7.40 7.34 31 Baa 7.88 8.37 7.95 7.89 8.11 8.03 8.09 7.96 8.04 8.18 8.13 8.08 MEMO Dividend-price ratio*6 32 Common stocks 1.25 1.15 1.32 1.43 1.37 1.42 1.48 1.47 1.47 1.46 1.47 1.50 NOTE. Some of the data in this table also appear in the Board's H.15 (519) weekly SOURCE: U.S. Department of the Treasury. statistical release. For ordering address, see inside front cover. 10. Based on the unweighted average of the bid yields for all Treasury fixed-coupon 1. The daily effective federal funds rate is a weighted average of rates on trades through securities with remaining terms to maturity of 25 years and over. New York brokers. 11. A factor for adjusting the daily long-term average in order to estaimate a 30-year rate 2. Weekly figures are averages of seven calendar days, ending on Wednesday of the can be found at http://www.treas.gov/offices/domestic-finance/debt-management/interest-rate/ current week; monthly figures include each calendar day in the month. ltcompositeindex.html. 3. Annualized using a 360-day year or bank interest. 12. General obligation bonds based on Thursday figures; Moody's Investors Service. 4. Rate for the Federal Reserve Bank of New York. 13. State and local government general obligation bonds maturing in twenty years are used 5. Quoted on a discount basis. in compiling this index. The twenty-bond index has a rating roughly equivalent to Moodys' 6. Interest rates interpolated from data on certain commercial paper trades settled by the A1 rating. Based on Thursday figures. Depository Trust Company. The trades represent sales of commercial paper by dealers or 14. Daily figures are averages of Aaa, Aa, A, and Baa yields from Moody's Investors direct issuers to investors (that is, the offer side). See the Board's Commercial Paper web Service. Based on yields to maturity on selected long-term bonds. pages (http://www.federalreserve.gov/releases/cp) for more information. 15. Effective December 7, 2001, the Moody's Aaa yield includes yields only for industrial 7. An average of dealer offering rates on nationally traded certificates of deposit. firms. Prior to December 7, 2001, the Aaa yield represented both utilities and industrial. 8. Bid rates for eurodollar deposits collected around 9:30 a.m. Eastern time. Data are for 16. Standard & Poor's corporate series. Common stock ratio is based on the 500 stocks in indication purposes only. the price index. 9. Yields on actively traded issues adjusted to constant maturities. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A24 Domestic Nonfinancial Statistics • August 2002 1.36 STOCK MARKET Selected Statistics 2001 2002 IInnddiiccaattoorr 11999999 22000000 22000011 Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May Prices and trading volume (averages of daily figures) CCCCCCCooooooommmmmmmmmmmmmmooooooonnnnnnn ssssssstttttttoooooooccccccckkkkkkk ppppppprrrrrrriiiiiiiccccccceeeeeeesssssss (((((((iiiiiiinnnnnnndddddddeeeeeeexxxxxxxeeeeeeesssssss))))))) 1111111 NNNNNNNeeeeeeewwwwwww YYYYYYYooooooorrrrrrrkkkkkkk SSSSSSStttttttoooooooccccccckkkkkkk EEEEEEExxxxxxxccccccchhhhhhhaaaaaaannnnnnngggggggeeeeeee (((((((DDDDDDDeeeeeeeccccccc....... 33333331111111,,,,,,, 1111111999999966666665555555 ======= 55555550000000))))))) 619.52 643.71 606.03 544.39 556.04 575.31 582.82 581.74 569.55 600.74 587.58 575.75 2222222 IIIIIIInnnnnnnddddddduuuuuuussssssstttttttrrrrrrriiiiiiiaaaaaaalllllll 775.29 809.40 749.46 672.89 688.35 715.98 727.67 723.56 715.80 751.79 732.71 718.12 3333333 TTTTTTTrrrrrrraaaaaaannnnnnnssssssspppppppooooooorrrrrrrtttttttaaaaaaatttttttiiiiiiiooooooonnnnnnn 491.62 414.73 444.45 382.68 371.56 410.05 433.70 446.13 453.51 490.51 470.00 459.55 4444444 UUUUUUUtttttttiiiiiiillllllliiiiiiitttttttyyyyyyy 284.82 478.99 377.72 339.72 341.51 330.78 325.33 322.92 301.32 316.25 300.57 287.10 5555555 FFFFFFFiiiiiiinnnnnnnaaaaaaannnnnnnccccccceeeeeee 530.97 552.48 596.61 538.01 553.16 577.85 585.47 591.94 570.18 609.72 610.24 603.15 6666666 SSSSSSStttttttaaaaaaannnnnnndddddddaaaaaaarrrrrrrddddddd &&&&&&& PPPPPPPoooooooooooooorrrrrrr'''''''sssssss CCCCCCCooooooorrrrrrrpppppppooooooorrrrrrraaaaaaatttttttiiiiiiiooooooonnnnnnn {{{{{{{!!!!!!!999999944444441111111 44444443333333 ------- 11111110000000)))))))''''''' 1,327.33 1,427.22 1,194.18 1,044.64 1,076.59 1,129.68 1,144.93 1,140.21 1,100.67 1,153.79 1,112.03 1,079.27 7777777 AAAAAAAmmmmmmmeeeeeeerrrrrrriiiiiiicccccccaaaaaaannnnnnn SSSSSSStttttttoooooooccccccckkkkkkk EEEEEEExxxxxxxccccccchhhhhhhaaaaaaannnnnnngggggggeeeeeee (((((((AAAAAAAuuuuuuuggggggg....... 33333331111111,,,,,,, 1111111999999977777773333333 ------- 55555550000000)))))))2222222 770.90 922.22 879.08 823.78 825.91 814.78 828.19 835.02 845.81 891.08 915.09 935.10 VVVVVVVooooooollllllluuuuuuummmmmmmeeeeeee ooooooofffffff tttttttrrrrrrraaaaaaadddddddiiiiiiinnnnnnnggggggg (((((((ttttttthhhhhhhooooooouuuuuuusssssssaaaaaaannnnnnndddddddsssssss ooooooofffffff ssssssshhhhhhhaaaaaaarrrrrrreeeeeeesssssss))))))) 8888888 NNNNNNNeeeeeeewwwwwww YYYYYYYooooooorrrrrrrkkkkkkk SSSSSSStttttttoooooooccccccckkkkkkk EEEEEEExxxxxxxccccccchhhhhhhaaaaaaannnnnnngggggggeeeeeee 799,554 1,026,867 1,216,529 1,666,980 1.293,019 1,242,965 1,240,245 1,401,913 1,362,830 1,321,351 1,280,714 1,215,786 9999999 AAAAAAAmmmmmmmeeeeeeerrrrrrriiiiiiicccccccaaaaaaannnnnnn SSSSSSStttttttoooooooccccccckkkkkkk EEEEEEExxxxxxxccccccchhhhhhhaaaaaaannnnnnngggggggeeeeeee 32,629 51,437 68,074 72,319 66,765 88,694 53,337 55,151 55,657 56,375 n.a. n.a. Customer financing (millions of dollars, end-of-period balances) 11111110000000 MMMMMMMaaaaaaarrrrrrrgggggggiiiiiiinnnnnnn cccccccrrrrrrreeeeeeedddddddiiiiiiittttttt aaaaaaattttttt bbbbbbbrrrrrrroooooookkkkkkkeeeeeeerrrrrrr-------dddddddeeeeeeeaaaaaaallllllleeeeeeerrrrrrrsssssss3333333 228,530 198,790 150,450 144,670 144,010 148,650 150,450 150,390 147,030 149,370 150,940 150,860 FFFFFFFrrrrrrreeeeeeeeeeeeee cccccccrrrrrrreeeeeeedddddddiiiiiiittttttt bbbbbbbaaaaaaalllllllaaaaaaannnnnnnccccccceeeeeeesssssss aaaaaaattttttt bbbbbbbrrrrrrroooooookkkkkkkeeeeeeerrrrrrrsssssss4444444 11111111111111 MMMMMMMaaaaaaarrrrrrrgggggggiiiiiiinnnnnnn aaaaaaaccccccccccccccooooooouuuuuuunnnnnnntttttttsssssss5555555 55,130 100,680 101,640 115,450 101,850 98,330 101,640 97,330 99,350 93,700 92,140 92,950 11111112222222 CCCCCCCaaaaaaassssssshhhhhhh aaaaaaaccccccccccccccooooooouuuuuuunnnnnnntttttttsssssss 79,070 84,400 78,040 74.220 69,550 72,090 78,040 75,110 72,730 69,790 68,540 66,120 Margin requirements (percent of market value and effective date)6 Mar. 11, 1968 June 8, 1968 May 6, 1970 Dec. 6, 1971 Nov. 24, 1972 Jan. 3, 1974 11111113333333 MMMMMMMaaaaaaarrrrrrrgggggggiiiiiiinnnnnnn ssssssstttttttoooooooccccccckkkkkkksssssss 70 80 65 55 65 50 11111114444444 CCCCCCCooooooonnnnnnnvvvvvvveeeeeeerrrrrrrtttttttiiiiiiibbbbbbbllllllleeeeeee bbbbbbbooooooonnnnnnndddddddsssssss 50 60 50 50 50 50 11111115555555 SSSSSSShhhhhhhooooooorrrrrrrttttttt sssssssaaaaaaallllllleeeeeeesssssss 70 80 65 55 65 50 1. In July 1976 a financial group, composed of banks and insurance companies, was added 6. Margin requirements, stated in regulations adopted by the Board of Governors pursuant to the group of stocks on which the index is based. The index is now based on 400 industrial to the Securities Exchange Act of 1934, limit the amount of credit that can be used to stocks (formerly 425), 20 transportation (formerly 15 rail), 40 public utility (formerly 60), and purchase and carry "margin securities" (as defined in the regulations) when such credit is 40 financial. collateralized by securities. Margin requirements on securities are the difference between the 2. On July 5, 1983, the American Stock Exchange rebased its index, effectively cutting market value (100 percent) and the maximum loan value of collateral as prescribed by the previous readings in half. Board. Regulation T was adopted effective Oct. 15, 1934; Regulation U, effective May 1, 3. Since July 1983, under the revised Regulation T, margin credit at broker-dealers has 1936; Regulation G, effective Mar. 11, 1968; and Regulation X, effective Nov. 1, 1971. included credit extended against stocks, convertible bonds, stocks acquired through the On Jan. 1, 1977, the Board of Governors for the first time established in Regulation T the exercise of subscription rights, corporate bonds, and government securities. Separate report- initial margin required for writing options on securities, setting it at 30 percent of the current ing of data for margin stocks, convertible bonds, and subscription issues was discontinued in market value of the stock underlying the option. On Sept. 30, 1985, the Board changed the April 1984. required initial margin, allowing it to be the same as the option maintenance margin required 4. Free credit balances are amounts in accounts with no unfulfilled commitments to by the appropriate exchange or self-regulatory organization; such maintenance margin rules brokers and are subject to withdrawal by customers on demand. must be approved by the Securities and Exchange Commission. 5. Series initiated in June 1984. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Federal Finance A25 1.40 FEDERAL DEBT SUBJECT TO STATUTORY LIMITATION Billions of dollars, end of month 2000 2001 2002 IItteemm Mar. 31 June 30 Sept. 30 Dec. 31 Mar. 31 June 30r Sept. 30' Dec. 31r Mar. 31r 1 Federal debt outstanding 5,801.5 5,714.2 5,701.9 5,803.5r 5,800.6 5,753.9 5,834.5 5,970.3 6,032.4 2 Public debt securities 5,773.4 5,685.9 5,674.2 5,662.2 5,773.7 5,726.8 5,807.5 5,943.4 6,006.0 3 Held by public 3,688.0 3,495.7 3,438.5 3,527.4' 3,434.4 3,274.2 3,338.7 3,393.8 3,443.7 4 Held by agencies 2,085.4 2,190.2 2,235.7 2,248.7 2,339.4 2,452.6 2,468.8 2,549.7 2,562.4 5 Agency securities 28.1 28.3 27.7 27.4 26.8 27.1 27.0 26.8 26.4 6 Held by public 27.8 28.2 27.6 27.3 26.8 27.1 27.0 26.8 26.4 7 Held by agencies .4 .1 .1 .1 .1 .0 .0 .0 .0 8 Debt subject to statutory limit 5,686.5 5,600.6 5,591.6 5,580.5 5,692.5 5,645.0 5,732.6 5,871.4 5,935.1 9 Public debt securities 5,686.3 5,600.5 5,591.4 5,580.2 5,692.3 5,644.8 5,732.4 5,871.2 5,935.0 10 Other debt1 .2 .2 .2 .2 .2 .2 .2 .3 .2 MEMO 11 Statutory debt limit 5,950.0 5,950.0 5,950.0 5,950.0 5,950.0 5,950.0 5,950.0 5,950.0 5,950.0 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 Monthly Treasury Statement. bia stadium bonds. 1.41 GROSS PUBLIC DEBT OF U.S. TREASURY Types and Ownership Billions of dollars, end of period 2001 2002 TTyyppee aanndd hhoollddeerr 11999988 11999999 22000000 22000011 Q2 Q3 Q4 Qi 1 Total gross public debt 5,614.2 5,776.1 5,662.2 5,943.4 5,726.8 5,807.5 5,943.4 6,006.0 By type 2 Interest-bearing 5,605.4 5,766.1 5,618.1 5,930.8 5,682.8 5,763.6 5,930.8 5,962.2 3 Marketable 3,355.5 3,281.0 2,966.9 2,982.9 2,822.3 2,897.3 2,982.9 3,003.3 4 Bills 691.0 737.1 646.9 811.3 620.1 734.9 811.3 834.4 5 Notes 1,960.7 1,784.5 1,557.3 1,413.9 1,441.0 1,399.6 1,413.9 1,411.7 6 Bonds 621.2 643.7 626.5 602.7 616.9 612.9 602.7 596.7 7 Inflation-indexed notes and bonds' 67.6 100.7 121.2 140.1 129.3 134.9 140.1 145.6 8 Nonmarketable2 2,249.9 2,485.1 2,651.2 2,947.9 2,860.5 2,866.4 2,947.9 2,958.9 9 State and local government series 165.3 165.7 151.0 146.3 153.3 146.4 146.3 141.1 10 Foreign issues3 34.3 31.3 27.2 15.4 24.0 18.3 15.4 14.6 11 Government 34.3 31.3 27.2 15.4 24.0 18.3 15.4 14.6 12 Public .0 .0 .0 .0 .0 .0 .0 .0 13 Savings bonds and notes 180.3 179.4 176.9 181.5 178.4 179.6 181.5 183.6 14 Government account series4 1,840.0 2,078.7 2,266.1 2,574.8 2,474.7 2,492.1 2,574.8 2,589.7 15 Non-interest-bearing 8.8 10.0 44.2 12.7 44.0 43.8 12.7 43.8 By holder5 16 U.S. Treasury and other federal agencies and trust funds 1,828.1 2,064.2 2,270.1' 2,572.2 2,469.1 2,493.7 2,572.2 2,581.1 17 Federal Reserve Banks6 452.1 478.0 511.7 551.7 535.1 534.1 551.7 575.4 18 Private investors 3,334.0 3,233.9 2,880.4 2,819.5 2,722.6 2,779.7 2,819.5 2,849.5 19 Depository institutions 237.3 246.5 199.2 181.7' 190.1 189.5 181.7' 187.5 20 Mutual funds 253.9r 229.1' 221.8' 256.8' 218.5' 230.5' 256.8' 266.8 21 Insurance companies 141.7 123.4 110.2 82.4r 94.8 88.5 82.4' 82.4 22 State and local treasuries7 269.3 266.8 236.2 209.0' 224.0 208.9 209.0' 212.5 Individuals 23 Savings bonds 186.6 186.4 184.8 190.3 185.5 186.4 190.3 191.9 24 Pension funds 330.2' 321.6' 305.8' 289.3' 308.6' 289.4' 289.3' 299.6 25 Private 112.5' 110.4' 110.1' 103.3' 104.3' 101.7' 103.3' 104.0 26 State and Local 217.7 211.2 195.7 186.0 204.4 187.7 186.0 195.6 27 Foreign and international8 1,278.7 1,268.7 1,201.3 1,218.1 1,167.4 1,170.1 1,218.1 1,214.1 28 Other miscellaneous investors7-9 636.3' 589.8' 419.5' 390.8 333.2' 417.3' 390.8 n.a. 1. The U.S. Treasury first issued inflation-indexed securities during the first quarter of 8. Includes nonmarketable foreign series Treasury securities and Treasury deposit funds. 1997. Excludes Treasury securities held under repurchase agreements in custody accounts at the 2. Includes (not shown separately) securities issued to the Rural Electrification Administra- Federal Reserve Bank of New York. tion, depository bonds, retirement plan bonds, and individual retirement bonds. 9. Includes individuals, government-sponsored enterprises, brokers and dealers, bank 3. Nonmarketable series denominated in dollars, and series denominated in foreign cur- personal trusts and estates, corporate and noncorporate businesses, and other investors. rency held by foreigners. SOURCES. Data by type of security, U.S. Treasury Department, Monthly Statement of the 4. Held almost entirely by U.S. Treasury and other federal agencies and trust funds. Public Debt of the United States; data by holder, Federal Reserve Board of Governors, Flow 5. Data for Federal Reserve Banks and U.S. government agencies and trust funds are actual of Funds Accounts of the United States and U.S. Treasury Department, Treasury Bulletin, holdings; data for other groups are Treasury estimates. unless otherwise noted. 6. U.S. Treasury securities bought outright by Federal Reserve Banks, see Bulletin table 1.18. 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

A26 Domestic Nonfinancial Statistics • August 2002 1.42 U.S. GOVERNMENT SECURITIES DEALERS Transactions1 Millions of dollars, daily averages 2002 2002, week ending Feb. Mar. Apr. Apr. 3 Apr. 10 Apr. 17 Apr. 24 May 1 May 8 May 15 May 22 May 29 By type of security 1 U.S. Treasury bills 42,233 44,546 42,502 60,775 46,932 40,435 32,157 38,777 38,256 49,294 37,240 42,001 Treasury coupon securities by maturity 2 Three years or less 122,427 148,829 127,492 130,006 111,450 120,773 153,801 121,169 129,469 123,051 126,615 168,908 3 More than three but less than or equal to six years 82,210 90,406 76,341 72,526 76,103 72,674 68,053 94,441 114,072 109,148 85,416 85,066 4 More than six but less than or equal to eleven years 69,912 76,902 61,584 59,665 59,192 63,474 59,420 66,354 69,823 90,182 61,803 55,138 5 More than eleven 15,747 21,396 17,254 17,524 14,443 16,631 18,561 19,712 15,117 19,010 18,533 15,429 6 Inflation-indexed2 1,735 1,794 2,132 2,303 1,948 2,739 1,900 1,765 1,367 2,270 1,443 1,185 Federal agency and governmentsponsored enterprises 7 Discount notes 54,029 49,852 50,140 60,244 47,009 49,187 47,084 51,487 47,559 43,742 46,622 51,560 Coupon securities by maturity 8 Three years or less 10,672 11,871 12,209 9,713 11,640 11,261 15,775 11,522 11,681 10,687 9,275 8,795 9 More than three years but less than or equal to six years 10,590 12,763 7,071 7,014 6,767 6,321 7,245 8,214 9,225 10,763 9,744 9,738 10 More than six years but less than or equal to eleven years .... 6,019 7,350 7,456 4,978 8,947 8,699 7,027 6,431 7,799 10,476 11,250 4,885 11 More than eleven years 1,473 1,201 846 761 782 506 1,283 871 892 1,176 1,161 1,244 12 Mortgage-backed 136,655 138,204 125,503 133,050 177,968 116,019 92,334 107,578 213,612 152,057 80,467 90,260 Corporate securities 13 One year or less 102,218 110,024 101,705 112,243 98,667 106,891 99,259 94,173 98,847 103,795 108,781 92,933 14 More than one year 18,835 24,309 19,088 19,224 19,337 18,384 19,235 19,372 16,546 18,339 22,093 16,623 By type of counterparty With interdealer broker 15 U.S. Treasury 156,162 174,400 152,004 149,028 148,214 148,245 159,863 153,850 164,535 177,769 152,842 172,923 16 Federal agency and governmentsponsored enterprises 10,972 12,303 11,552 8,864 12,274 10,228 13,062 12,433 11,957 12,910 12,826 8,996 17 Mortgage-backed 34,770 36,404 37,570 42,528 48,421 36,459 29,504 31,759 48,053 45,979 23,763 27,646 18 Corporate 536 620 546 436 628 559 527 535 435 514 435 274 With other 19 U.S. Treasury 178,102 209,471 175,300 193,771 161,855 168,480 174,029 188,368 203,569 215,185 178,207 194,804 20 Federal agency and governmentsponsored enterprises 71,811 70,734 66,170 73,847 62,871 65,745 65,353 66,091 65,199 63,934 65,226 67,226 21 Mortgage-backed 101,885 101,799 87,933 90,521 129,547 79,560 62,830 75,820 165,559 106,078 56,705 62,614 22 Corporate 120,517 133,713 120,247 131,032 117,376 124,715 117,968 113,010 114,957 121,619 130,438 109,282 1. The figures represent purchases and sales in the market by the primary U.S. government 2. Outright Treasury inflation-indexed securities (TIIS) transactions are reported at princisecurities dealers reporting to the Federal Reserve Bank of New York. Outright transactions pal value, excluding accrued interest, where principal value reflects the original issuance par include all U.S. government, federal agency, government-sponsored enterprise, mortgage- amount (unadjusted for inflation) times the price times the index ratio. backed, and corporate securities scheduled for immediate and forward delivery, as well as all NOTE. Major changes in the report form filed by primary dealers induced a break in the U.S. government securities traded on a when-issued basis between the announcement and dealer data series as of the week ending July 4, 2001. Current weekly data may be found at the issue date. Data do not include transactions under repurchase and reverse repurchase (resale) Federal Reserve Bank of New York web site (http:www.newyorkfed.org/pihome/statistics) agreements. Averages are based on the number of trading days in the week. under the Primary Dealer heading. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Federal Finance All 1.43 U.S. GOVERNMENT SECURITIES DEALERS Positions and Financing1 Millions of dollars 2002 2002, week ending IItteemm,, bbyy ttyyppee ooff sseeccuurriittyy Feb. Mar. Apr. Apr. 3 Apr. 10 Apr. 17 Apr. 24 May 1 May 8 May 15 May 22 Net outright positions2 1 U.S. Treasury bills 28,170 27,972 34,802 49,095 50,904 35,473 23,817 20,901 19,177 21,262 20,575 Treasury coupon securities by maturity 2 Three years or less -28,348 -24,485 -24,310 -24,615 -25,689 -23,849 -20,695 -27,302 -24,186 -33,063 -21,420 3 More than three years but less than or equal to six years -23,482 -32,811 -32,608 -35,061 -34,418 -32,028 -32,090 -30,551 -24,022 -29,009 -28,934 4 More than six but less than or equal to eleven years -13,477 -16,734 -18,337 -17,398 -16,414 -19,356 -20,125 -17,774 -16,402 -15,370 -15,411 5 More than eleven 12,230 7,431 8,103 6,615 7,531 8,237 10,073 7,062 4,654 6,865 6,848 6 Inflation-indexed 3,450 3,654 3,663 2,761 2,516 3,633 4,653 4,332 3,964 2,627 1,927 Federal agency and governmentsponsored enterprises 7 Discount notes 49,069 44,291 45,988 43,709 41,901 41,761 45,261 57,674 54,878 48,240 41,845 Coupon securities, by maturity 8 Three years or less 11,856 8,783 10,878 10,368 13,112 10,950 9,243 10,350 8,625 9,790 8,500 9 More than three years but less than or equal to six years 1,318 -41 3,238 524 3,817 3,770 2,564 4,084 4,784 7,355 3,098 10 More than six but less than or equal to eleven years 1,111 2,503 2,620 4,107 2,879 4,170 2,325 111 -424 -193 3,179 11 More than eleven 3,479 2,421 2,122 1,679 2,028 1,895 2,291 2,519 2,568 2,624 2,569 12 Mortgage-backed 6,195 7,596 13,347 11,154 9,598 9,101 14,189 22,788 16,193 9,042 14,297 Corporate securities 13 One year or less 17,989 22,486 25,916 25,566 24,110 24,391 25,164 30,853 32,024 31,163 24,579 14 More than one year 36,235 42,634 44,266 44,704 48,692 44,164 43,139 40,316 38,310 39,973 40,599 Financing3 Securities in, U.S. Treasury 15 Overnight and continuing 547,472 561,103 550,742 563,375 542,945 556,094 540,981 558,667 573,605 613,728 580,438 16 Term 656,569 684,041 732,963 653,865 709,499 737,230 770,838 750,722 789,783 650,972 700,031 Federal agency and governmentsponsored enterprises 17 Overnight and continuing 140,693 143,017 154,574 146,552 158,010 156,175 157,378 149,438 148,576 152,285 149,387 18 Term 224,572 231,817 259,399 244,205 252,620 257,406 274,316 259,825 271,693 274,075 285,275 Mortgage-backed securities 19 Overnight and continuing 35,759 34,190 33,398 28,429 32,354 33,285 31,619 39,308 32,081 37,056 38,356 20 Term 217,733 217,741 226,728 218,400 227,691 222,742 228,483 232,372 240,183 254,438 267,220 Corporate securities 21 Overnight and continuing 41,282 44,546 46,910r 45,226 45,693 46,193 48,865 47,726 48,283 48,855 49,756 22 Term 22,076 22,000 22,627r 22,553 22,643 22,288 22,797 22,843 22,962 22,683 23,071 MEMO Reverse repurchase agreements 23 Overnight and continuing 381,084 396,888 380,722 382,713 372,588 383,924 375,185 391,942 390,599 435,873 399,061 24 Term 997,678 1,022,616 1,114,158 1,013,590 1,085,830 1,111,235 1,165,475 1,141,031 1,199,512 1,083,209 1,151,842 Securities out, U.S. Treasury 25 Overnight and continuing 551,187 541,747 526,507 528,676 532,861 529,215 520,082 522,347 520,235 563,187 521,975 26 Term 580,525 617,458 682,748 606,014 653,758 682,354 718,711 713,438 756,812 613,666 671,563 Federal agency and governmentsponsored enterprises 27 Overnight and continuing 248,413 236,666 259,604 246,218 259,862 266,751 263,871 252,681 259,256 258,873 258,580 28 Term 167,477 177,049 212,975 194,537 207,408 213,399 230,600 207,631 223,313 221,096 227,628 Mortgage-backed securities 29 Overnight and continuing 286,742 285,270 291,840 278,345 270,840 314,099 301,774 285,529 285,008 318,337 311,047 30 Term 127,225 131,364 147,574 129,977 146,433 139,321 157,989 155,183 163,094 154,796 178,158 Corporate securities 31 Overnight and continuing 100,801 109,269 119,914' 117,261 115,882 119,754 120,679 125,237 128,108 124,634 120,663 32 Term 17,993 17,912 18,440 17,780 17,528 18,975 19,080 18,462 18,921 19,945 19,681 MEMO Repurchase agreements 33 Overnight and continuing 1,044,255 1,024,379 1,038,639 1,014,688 1,023,015 1,071,491 1,046,821 1,020,972 1,026,568 1,100,316 1,053,374 34 Term 872,476 922,916 1,040,296 928,093 1,004,041 1,031,826 1,104,729 1,073,404 1,140,430 989,031 1,076,557 1. Data for positions and financing are obtained from reports submitted to the Federal 3. Figures cover financing U.S. government, federal agency, government-sponsored enter- Reserve Bank of New York by the U.S. government securities dealers on its published list of prise, mortgage-backed, and corporate securities. Financing transactions for Treasury primary dealers. Weekly figures are close-of-business Wednesday data. Positions for calendar inflation-indexed securities (TIIS) are reported in actual funds paid or received, except for days of the report week are assumed to be constant. Monthly averages are based on the pledged securities. TIIS that are issued as pledged securities are reported at par value, which number of calendar days in the month. is the value of the security at original issuance (unadjusted for inflation). 2. Net outright positions include all U.S. government, federal agency, government- NOTE. Major changes in the report form filed by primary dealers included a break in many sponsored enterprise, mortgage-backed, and corporate securities scheduled for immediate and series as of the week ending July 4, 2001. Current weekly data may be found at the Federal forward delivery, as well as U.S. government securities traded on a when-issued basis Reserve Bank of New York web site (http://www.newyorkfed.org/pihome/statistics) under the between the announcement and issue date. Primary Dealer heading. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A28 Domestic Nonfinancial Statistics • August 2002 1.44 FEDERAL AND FEDERALLY SPONSORED CREDIT AGENCIES Debt Outstanding Millions of dollars, end of period 2001 2002 AAggeennccyy 11999988 11999999 22000000 22000011 Nov. Dec. Jan. Feb. Mar. 1 Federal and federally sponsored agencies 1,296,477 1,616,492 1,851,632 n.a. n.a. n.a. n.a. n.a. n.a. 2 Federal agencies 26,502 26,376 25,666 276 275 276 290 169 172 3 Defense Department1 6 6 6 6 6 6 6 6 6 4 Export-Import Bank2-3 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 5 Federal Housing Administration4 205 126 255 26,828 26,655 26,828 26,741 26,431 26,379 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 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 8 Tennessee Valley Authority 26,496 26,370 25.660 270 269 270 284 163 166 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 1,269,975 1,590,116 1,825,966 2,120,781 2,071,168 2,120,781 n.a. n.a. n.a. 11 Federal Home Loan Banks 382,131 529,005 594,404 623,740 617,146 623,740 623,990 619,541 625,849 12 Federal Home Loan Mortgage Corporation 287,396 360,711 426,899 565,071 546,566 565,071 571,867 584,476 603,447 13 Federal National Mortgage Association 460,291 547,619 642,700 763,500 737,500 763,500 760,500 765,200 769,800 14 Farm Credit Banks8 63,488 68,883 74.181 76,673 75,815 76,673 76,494 76,929 79,002 15 Student Loan Marketing Association9 35,399 41.988 45,375 48,350 51,494 48,350 49,400 50.500 48,200 16 Financing Corporation1^ 8,170 8,170 8,170 8,170 8,170 8.170 8,170 8,170 8.170 17 Farm Credit Financial Assistance Corporation" 1,261 1,261 1,261 1,261 1,261 1,261 1,261 1.261 1,261 18 Resolution Funding Corporation12 29,996 29,996 29,996 29,996 29,996 29,996 29,996 29.996 29,996 MEMO 19 Federal Financing Bank debt13 44,129 42,152 40,575 39,096 40,485 39,096 38,140 39,144 38,027 Lending to federal and federally sponsored agencies 20 Export-Import Bank3 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 21 Postal Service6 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 22 Student Loan Marketing Association n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 23 Tennessee Valley Authority n.a. n.a. n.a. 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 25 Farmers Home Administration 9,500 6,665 5,275 n.a. n.a. n.a. n.a. n.a. n.a. 26 Rural Electrification Administration 14,091 14,085 13.126 13,876 13,822 13,876 13,982 14,015 14,055 27 Other 20,538 21.402 22.174 25,220 26,663 25,220 24,158 25,129 23,972 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 claims. Once issued, these securities may be sold privately on the securities market. Reform. Recovery, and Enforcement Act of 1989, undertook its first borrowing in October 5. Certificates of participation issued before fiscal year 1969 by the Government National 1989. Mortgage Association acting as trustee for the Farmers Home Administration; the Department 13. The FFB, which began operations in 1974, is authorized to purchase or sell obligations of Health, Education, and Welfare: the Department of Housing and Urban Development; the issued, sold, or guaranteed by other federal agencies. Because FFB incurs debt solely for the Small Business Administration; and the Veterans Administration. purpose of lending to other agencies, its debt is not included in the main portion of the table to 6. Off-budget. avoid double counting. 7. Includes outstanding noncontingent liabilities: notes, bonds, and debentures. Includes 14. Includes FFB purchases of agency assets and guaranteed loans; the latter are loans Federal Agriculture Mortgage Corporation; therefore, details do not sum to total. Some data guaranteed by numerous agencies, with the amounts guaranteed by any one agency generally are estimated. being small. The Farmers Home Administration entry consists exclusively of agency assets, 8. Excludes borrowing by the Farm Credit Financial Assistance Corporation, which is whereas the Rural Electrification Administration entry consists of both agency assets and shown on line 17. guaranteed loans. 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 A29 1.45 NEW SECURITY ISSUES Tax-Exempt State and Local Governments Millions of dollars 2001 2002 TTyyppee ooff iissssuuee oorr iissssuueerr,, oorr uussee 11999999 22000000 22000011 Oct. Nov. Dec. Jan. Feb. Mar. Apr. May 1 All issues, new and refunding1 215,427 180,403 270,566 30,446 30,105 28,363 20,523 20,175 23,842 23,261 32,858 Bx type of issue 2 General obligation 73,308 64,475 100,519 14,302 10,163 9,218 8,157 8,652 10,269 8,559 10,446 3 Revenue 142,120 115,928 170,047 16,144 19,942 19,146 12,366 11,523 13,574 14,702 22,413 Bx txpe of issuer 4 State 16,376 19,944 30,099 6,008 2,271 746 1,826 3,238 3,265 3,057 1,531 5 Special district or statutory authority2 152,418 111,695 281,427 17,382 21,601 22,525 14,369 11,950 15,479 15,520 23,866 6 Municipality, county, or township 46,634 39,273 61,040 7,056 6,233 5,093 4,329 4,987 5,098 4,683 7,461 7 Issues for new capital 161,065 154,257 192,161 21,249 21,009 21,389 14,631 13,248 16,856 17,115 20,663 Bx use of proceeds 8 Education 36,563 38,665 50,054 4,279 4,475 4,818 4,138 3,961 5,484 5,279 6.027 9 Transportation 17,394 19,730 21,411 1,587 2,882 1,349 1,079 613 1,633 773 1,795 10 Utilities and conservation 15,098 11,917 21,917 2,324 2,429 2,560 1,711 1.606 1,290 2,091 1,785 11 Social welfare n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 12 Industrial aid 9,099 7,122 6,607 688 359 1,642 539 125 515 344 614 13 Other purposes 47,896 47,309 55,733 9,158 5,281 6,319 4,639 4,897 4,894 6,784 6,962 1. Par amounts of long-term issues based on date of sale. SOURCE. Securities Data Company beginning January 1990; Investment Dealer's Digest 2. Includes school districts. before then. 1.46 NEW SECURITY ISSUES U.S. Corporations Millions of dollars 2001 2002 TTyyppee ooff iissssuuee,, ooffffeerriinngg,, oorr iissssuueerr 11999999 22000000 22000011 Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. 1 All issues' 1,072,866 942,198 1,382,003 89,855 139,181 123,517 96,576 102,688 86,090 158,904 103,575 2 Bonds2 941,298 807,281 1,253,449 84,509 123,346 110,888 81,339 88,241 79,515 145,984 93,039 Bx txpe of offering 3 Sold in the United States 818,683 684,484 1.197,060 80,223 120,162 106,563 79,636 79,472 73,474 128,026 88,051 4 Sold abroad 122,615 122,798 56,389 4,286 3,185 4,326 1,703 8,770 6,041 17,958 4,989 MEMO 5 Private placements, domestic 24,703 18,370 8,734 0 224 4,936 2,880 0 0 0 0 Bx industry group 6 Nonfinancial 293,963 242,207 445,930 31,920 43,830 42,189 21,647 18,894 30,770 43,231 34,803 7 Financial 647,335 565,074 807,519 52,589 79,517 68,699 59,692 69,348 48,746 102,753 58,237 8 Stocks3 244,308 320,357 228,554 13,679 24,168 20,962 23,570 14,447 6,575 12,920 10,536 By type of offering 9 Public 131,568 134,917 128,554 5,346 15,835 12,629 15,237 14,447 6,575 12,920 10,536 10 Private placement4 112,740 185,440 100,000 8,333 8,333 8,333 8,333 n.a. n.a. n.a. n.a. Bx industrx group 11 Nonfinancial 110,284 118,369 77,577 81 7,611 7,592 7,771 9,579 4,024 4,893 7,834 12 Financial 21,284 16,548 50,977 5,265 8,224 5,037 7,466 4,868 2,551 8,027 2,702 1. Figures represent gross proceeds of issues maturing in more than one year; they are the 2. Monthly data include 144(a) offerings. principal amount or number of units calculated by multiplying by the offering price. Figures 3. Monthly data cover only public offerings. exclude secondary offerings, employee stock plans, investment companies other than closed- 4. Data are not available. end, intracorporate transactions, and Yankee bonds. Stock data include ownership securities SOURCE. Securities Data Company and the Board of Governors of the Federal Reserve issued by limited partnerships. System. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A30 Domestic Nonfinancial Statistics • August 2002 1.47 OPEN-END INVESTMENT COMPANIES Net Sales and Assets1 Millions of dollars 2001 2002 IItteemm 22000000 22000011 Oct. Nov. Dec. Jan. Feb. Mar. Apr.' May 1 Sales of own shares2 2,279,315 1,806,474 153,827 147,192 151,779 171,499 141,463 170,326 164,504 154,866 2 Redemptions of own shares 2,057,277 1,677,266 137,837 124,060 149,705 138,773 123,013 130,661 140.524 137,990 3 Net sales3 222,038 129,208 15,990 23.132 2,074 32,726 18,450 39,665 23,980 16,876 4 Assets4 5,123,747 4,689,624 4,376,923 4,625,601 4,689,624 4,667,688 4,623,041 4,814,961 4,704,886 4,695,633 5 Cash5 277,386 219,620 229,576 239,671 219,620 240,141 234,510 241,078 249,078 243,942 6 Other 4,846,361 4,470,004 4,147,347 4,385,930 4,470,004 4,427,547 4,388,531 4,573,883 4,455,808 4,451,691 1. Data include stock, hybrid, and bond mutual funds and exclude money market mutual 4. Market value at end of period, less current liabilities. funds. 5. Includes all U.S. Treasury securities and other short-term debt securities. 2. Excludes reinvestment of net income dividends and capital gains distributions and share SOURCE. Investment Company Institute. Data based on reports of membership, which issue of conversions from one fund to another in the same group. comprises substantially all open-end investment companies registered with the Securities and 3. Excludes sales and redemptions resulting from transfers of shares into or out of money Exchange Commission. Data reflect underwritings of newly formed companies after their market mutual funds within the same fund family. initial offering of securities. 1.51 DOMESTIC FINANCE COMPANIES Assets and Liabilities1 Billions of dollars, end of period; not seasonally adjusted 2000 2001 2002 AAccccoouunntt 11999999 22000000 22000011 Q3 Q4 Qi Q2 Q3 Q4 Qir ASSETS 1 Accounts receivable, gross2 845.4 958.6 970.7 939.9 958.6 954.4 988.7 967.7 970.7 926.5 2 Consumer 304.4 327.9 340.0 331.5 327.9 319.2 324.5 329.2 340.0 329.8 3 Business 395.1 458.4 447.0 443.0 458.4 459.1 481.9 451.1 447.0 443.0 4 Real estate 145.8 172.3 183.7 165.4 172.3 176.1 182.3 187.4 183.7 153.8 5 LESS: Reserves for unearned income 61.4 69.7 60.4 68.3 69.7 69.9 61.5 60.8 60.4 59.1 6 Reserves for losses 14.7 16.7 20.9 15.6 16.7 17.2 17.4 18.0 20.9 21.3 7 Accounts receivable, net 769.3 872.2 889.4 856.1 872.2 867.3 909.7 888.9 889.4 846.1 8 All other 406.6 461.5 501.2 442.3 461.5 474.8 459.0 478.8 501.2 520.5 9 Total assets 1,175.9 1,333.7 1,390.6 1,298.4 1,333.7 1,342.1 1,368.7 1,367.7 1,390.6 1,366.6 LIABILITIES AND CAPITAL 10 Bank loans 35.4 35.9 50.8 35.7 35.9 41.6 45.3 44.5 50.8 49.4 11 Commercial paper 230.4 238.8 158.6 218.8 238.8 180.9 181.6 171.0 158.6 137.0 Debt 12 Owed to parent 87.8 102.5 99.3 100.0 102.5 97.2 93.4 91.7 99.3 82.6 13 Not elsewhere classified 429.9 502.2 567.6 507.3 502.2 533.8 542.1 555.8 567.6 572.8 14 All other liabilities 237.8 301.8 325.7 288.1 301.8 325.1 336.3 327.6 325.7 327.9 15 Capital, surplus, and undivided profits 154.5 152.5 188.7 148.5 152.5 163.5 170.0 177.2 188.7 197.0 16 Total liabilities and capital 1,175.9 1,333.7 1,390.6 1,298.4 1,333.7 1,342.1 1,368.7 1,367.7 1,390.6 1,366.6 1. Includes finance company subsidiaries of bank holding companies but not of retailers 2. Before deduction for unearned income and losses. Excludes pools of securitized assets, 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 Markets and Corporate Finance A31 1.52 DOMESTIC FINANCE COMPANIES Owned and Managed Receivables1 Billions of dollars, amounts outstanding 2001 2002 TTyyppee ooff ccrreeddiitt 11999999 22000000 22000011 Nov. Dec. Jan. Feb. Mar. Apr. Seasonally adjusted 1 Total 1,031.2 1,186.9 1,252.3 l,265.3r 1,252.3 l,236.4r l,243.1r l,236.2r 1,231.0 2 Consumer 410.2 465.2 514.6 511.0 514.6 512.1 519.3 518.5r 518.9 3 Real estate 174.0 198.9 211.6 215.0 211.6 202.3r 199. 7r 195.0 192.4 4 Business . 446.9 522.8 526.2 539.3r 526.2 522.0 524.1 522.7 519.7 Not seasonally adjusted 5 Total 1,036.4 1,192.1 1,257.6 l,259.5r 1,257.6 l,240.4r l,244.3r l,240.9r 1,236.5 6 Consumer 412.7 468.3 518.1 514.2 518.1 512.8 517.6 514.1' 514.9 7 Motor vehicle loans 129.2 141.6 173.9 177.2 173.9 168.9 172.5 171.9' 168.7 8 Motor vehicle leases 102.9 108.2 103.5 105.5 103.5 102.4 101.2 97.5 96.8 9 Revolving2 32.5 37.6 31.5 30.2 31.5 29.8 28.8 27.9 29.0 10 Other3 39.8 40.7 31.1 31.4 31.1 31.4 31.8 32.4 32.5 Securitized assets" 11 Motor vehicle loans 73.1 97.1 131.9 125.0 131.9 135.1 136.8 137.7' 142.2 12 Motor vehicle leases 9.7 6.6 6.8 7.0 6.8 6.7 6.6 6.5 6.4 13 Revolving 6.7 19.6 25.0 23.4 25.0 24.6 26.0 26.5' 26.2 14 Other 18.8 17.1 14.3 14.5 14.3 13.8 13.9 13.6 13.2 15 Real estate 174.0 198.9 211.6 215.0 211.6 202.3r 199.7' 195.0 192.4 16 One- to four-family 108.2 130.6 142.5 142.9 142.5 118.3 118.7 117.0 113.6 17 Other 37.6 41.7 41.2 44.9 41.2 39.4' 38.1' 36.8 36.5 Securitized real estate assets4 18 One- to four-family 28.0 24.7 22.2 22.4 22.2 40.3 40.1 39.8 40.9 19 Other .2 1.9 5.7 4.8 5.7 4.3 2.8 1.4 1.4 20 Business 449.6 525.0 527.9 530.3r 527.9 525.2 527.0 531.9 529.1 21 Motor vehicles 69.4 75.5 54.0 52.9 54.0 51.9 54.3 58.0 56.9 22 Retail loans 21.1 18.3 16.1 16.2 16.1 16.3 16.7 17.1 16.1 23 Wholesale loans5 34.8 39.7 20.3 19.5 20.3 18.0 20.1 22.8 23.0 24 Leases 13.6 17.6 17.6 17.2 17.6 17.6 17.5 18.0 17.8 25 Equipment 238.7 283.5 289.4 291.8 289.4 287.3 285.5 284.2 283.0 26 Loans 64.5 70.2 77.8 76.7 77.8 78.0 78.7 81.5 82.2 27 Leases 174.2 213.3 211.6 215.1 211.6 209.3 206.7 202.7 200.7 28 Other business receivables6 87.0 99.4 103.5 110.8 103.5 103.7 100.8 100.8 104.3 Securitized assets4 29 Motor vehicles 31.5 37.8 50.1 45.2r 50.1 48.4 45.4 44.0 44.5 30 Retail loans 2.9 3.2 5.1 4.4r 5.1 4.0 3.1 2.3 2.6 31 Wholesale loans 26.4 32.5 42.5 38.3 42.5 41.9 39.6 39.0 39.1 .32 Leases 2.1 2.2 2.5 2.6r 2.5 2.6 2.7 2.7 2.7 33 Equipment 14.6 23.1 23.2 23.4 23.2 22.3 25.5 25.4 20.8 34 Loans 7.9 15.5 16.4 15.5 16.4 15.5 18.6 18.5 14.2 35 Leases 6.7 7.6 6.8 7.9 6.8 6.8 6.8 6.9 6.7 36 Other business receivables6 8.4 5.6 7.7 6.2 7.7 11.6 15.6 19.5 19.6 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 subsidibreakdowns have been obtained for some components. In addition, previously unavailable aries 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

A106 Domestic Nonfinancial Statistics • August 2002 1.53 MORTGAGE MARKETS Mortgages on New Homes Millions of dollars except as noted 2001 2002 Nov. Dec. Jan. Feb. Mar. Apr. May Terms and yields in primary and secondary markets PRIMARY MARKETS Terms1 1 Purchase price (thousands of dollars) 210.7 234.5 245.0 252.2 253.0 245.8 250.6 255.6 262.9 265.0 2 Amount of loan (thousands of dollars) 161.7 177.0 184.2 189.1 190.0 186.7 190.1 193.3 198.9 199.1 3 Loan-to-price ratio (percent) 78.7 77.4 77.3 77.2 77.2 78.1 78.2 78.2 77.7 77.2 4 Maturity (years) 28.8 29.2 28.8 28.6 28.9 28.8 28.8 29.1 28.8 29.0 5 Fees and charges (percent of loan amount)2 .77 .70 .67 .63 .69 .66 .62 .62 .64 .59 Yield (percent per year) 6 Contract rate1 6.94 7.41 6.90 6.54 6.68 6.77 6.72 6.66 6.65 6.51 7 Effective rate1-3 7.06 7.52 7.00 6.63 6.79 6.87 6.82 6.76 6.74 6.59 8 Contract rate (HUD series)4 7.45 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. SECONDARY MARKETS Yield (percent per year) 9 FHA mortgages (section 203)5 7.74 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 10 GNMA securities6 7.03 7.57 6.36 5.96 6.43 6.32 6.13 6.50 6.33 6.21 Activity in secondary markets FEDERAL NATIONAL MORTGAGE ASSOCIATION Mortgage holdings (end of period) 11 Total 523,941 610,122 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 12 FHA/VA insured 55,318 61,539 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 13 Conventional 468,623 548,583 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 14 Mortgage transactions purchased (during period) 195,210 154,231 270,384 25,389 36,769 36,392 33,249 21,305 23,175 17,432 Mortgage commitments (during period) 15 Issued7 187,948 163,689 304,084 49,909 19,867 21,544 19,321 13,340 n.a. n.a. 16 To sell8 5,900 11,786 7.586 807 2,083 255 1,419 1,748 n.a. n.a. FEDERAL HOME LOAN MORTGAGE CORPORATION Mortgage holdings (end of period f IV Total 324,443 385,693 491,719 483,911 491,719 508,238 522,886 526,107 521,611 515,732 18 FHA/VA insured 1,836 3,332 3,506 3,562 3,506 3,447 3,387 3,332 3,267 3,248 19 Conventional 322,607 382,361 488,213 480,349 488,213 504,791 519,499 522,775 518,344 512,484 Mortgage transactions (during period) 20 Purchases 239,793 174,043 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 21 Sales 233,031 166,901 389,611 38,958 50,532 49,031 47,473 42,545 40,704 29,831 22 Mortgage commitments contracted (during period)9 228,432 169,231 417,434 42,619 51,456 47,076 41,442 41,561 36,368 n.a. 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 the Federal 5. Average gross yield on thirty-year, minimum-downpayment first mortgages insured by National Mortgage Association exclude swap activity. 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 A33 1.54 MORTGAGE DEBT OUTSTANDING1 Millions of dollars, end of period 2001 2002 TTyyppee ooff hhoollddeerr aanndd pprrooppeerrttyy 11999988 11999999 22000000 Ql Q2 Q3 Q4 Ql 1 All holders 5,718,488r 6325,012 6,887,458 7,011,255 7,217,523 7,410,814 7,596,130 7,752,769 By type of property 7 One- to four-family residences 4,367,367r 4,792,280 5,205,588 5,300,170 5,460,014 5,602,177 5,740,121 55,,887711,,880077 3 Multifamily residences 332,605 371,242 406,189 415,235 426,896 440,658 453,424 461,574 4 Nonfarm, nonresidential 922,009 1,058,528 1,166,846 1,185,977 1,217,562 1,253,314 1,286,358 1,301,486 5 96,506 102,962 108,836 109,873 113,050 114,665 116,227 117,902 By type of holder 6 Major financial institutions 2,195,869 2,396,265 2,620,886 2,664,837 2,716,269 2,737,607 2,792,907 2,789,210 7 Commercial banks2 1,338,273 1,496,844 1,661,411 1,688,673 1,727,463 1,740,321 1,793,061 1,802,265 8 One- to four-family 798,009 880,208 966,502 978,144 999,396 989,081 1,024,842 1,019,408 9 Multifamily 54,174 67,666 77,821 79,890 80,542 84,051 84,981 86,826 in Nonfarm, nonresidential 457,054 517,130 583,071 596,405 612,366 631,757 647,669 660,052 u Farm 29,035 31,839 34,016 34,234 35,159 35,432 35,569 35,978 l? Savings institutions3 643,957 668,634 723,534 741,114 751,660 758,343 758,109 745,915 13 One- to four-family 533,895 549,046 595,053 608,289 616,506 620,882 620,975 605,494 14 Multifamily 56,847 59,168 61,094 62,666 63,193 64,193 64,323 65,002 15 Nonfarm, nonresidential 52,798 59,945 66,852 69,589 71,378 72,695 72,275 74,863 16 Farm 417 475 535 569 583 574 536 557 17 Life insurance companies 213,640 230,787 235,941 235,050 237,146 238,943 241,737 241,030 18 One- to four-family 6,590 5,934 4,903 4,877 5,003 5,085 5,144 5,129 19 Multifamily 31,522 32,818 33,681 33,557 33,842 33,842 34,488 34,387 20 Nonfarm, nonresidential 164,004 179,048 183,757 183,078 184,634 186,235 188,165 187,615 21 Farm 11,524 12,987 13,600 13,538 13,667 13,781 13,940 13,899 22 Federal and related agencies 293,613' 322,132 343,962 347,463 356,817 363,001 376,969 385,027 23 Government National Mortgage Association 7 7 6 6 6 9 8 8 24 One- to four-family 7 7 6 6 6 9 8 8 25 Multifamily 0 0 0 0 0 0 0 0 26 Farmers Home Administration4 40,851 73,871 73,323 73,361 73,206 72,118 72,452 72,362 27 One- to four-family 16,895 16,506 16,372 16,297 16,153 15,916 15,824 15,665 28 Multifamily 11,739 11,741 11,733 11,725 11,720 11,710 11,712 11,707 29 Nonfarm, nonresidential 7,705 41,355 41,070 41,247 41,262 40,470 40,965 41,134 30 Farm 4,513 4,268 4,148 4,093 4,072 4,023 3,952 3,855 31 Federal Housing Admin, and Dept. of Veterans Affairs 3,674 3,712 3,507 2,873 2,918 3,155 3,290 3,361 32 One- to four-family 1,849 1,851 1,308 1,276 1,267 1,251 1,260 1,255 33 Multifamily 1,825 1,861 2,199 1,597 1,651 1,904 2,031 2,105 34 Resolution Trust Corporation 0 0 0 0 0 0 0 0 35 One- to four-family 0 0 0 0 0 0 0 0 36 Multifamily 0 0 0 0 0 0 0 0 37 Nonfarm, nonresidential 0 0 0 0 0 0 0 0 38 Farm 0 0 0 0 0 0 0 0 39 Federal Deposit Insurance Corporation 361 152 45 50 24 26 13 7 40 One- to four-family 58 25 7 8 4 4 2 1 41 Multifamily 70 29 9 10 5 5 3 1 42 Nonfarm, nonresidential 233 98 29 32 15 17 8 4 43 Farm 0 0 0 0 0 0 0 0 44 Federal National Mortgage Association 157,675 151,500 155,363 157,481 160,820 165,687 169,908 176,051 45 One- to four-family 147,594 141,195 144,150 145,014 147,730 151,786 155,060 160,300 46 Multifamily 10,081 10,305 11,213 12,467 13,090 13,901 14,848 15,751 47 Federal Land Banks 32,983 34,187 36,326 37,072 38,686 39,722 40,855 41,981 48 One- to four-family 1,941 2,012 2,137 2,181 2,276 2,337 2,404 2,470 49 Farm 31,042' 32,175' 34,189' 34,891' 36,410' 37,385' 38,451' 39,511 50 Federal Home Loan Mortgage Corporation 57,085 56,676 59,240 60,110 61,542 59,638 62,792 59,624 51 One- to four-family 49,106 44,321 42,871 42,771 42,537 39,217 40,309 35,955 52 Multifamily 7,979 12,355 16,369 17,339 19,005 20,421 22,483 23,669 53 Mortgage pools or trusts5 2,581,297 2,948,245 3,231,415 3,300,561 3,432,654 3,583,079 3,697,560 3,871,461 54 Government National Mortgage Association 537,446 582,263 611,553 601,523 598,019 603,186 591,368 587,631 55 One- to four-family 522,498 565,189 592,624 581,743 577,228 581,796 569,460 564,535 56 Multifamily 14,948 17,074 18,929 19,780 20,792 21,391 21,908 23,096 57 Federal Home Loan Mortgage Corporation 646,459 749,081 822,310 833,616 873,750 927,490 948,409 1,012,478 58 One- to four-family 643,465 744,619 816,602 827,769 867,924 921,709 940,933 1,005,136 59 Multifamily 2,994 4,462 5,708 5,847 5,826 5,781 7,476 7,342 60 Federal National Mortgage Association 834,517 960,883 1,057,750 1,099,049 1,163,978 1,228,131 1,290,351 1,355,404 61 One- to four-family 804,204 924,941 1,016,398 1,055,412 1,116,534 1,177,995 1,238,125 1,301,374 62 Multifamily 30,313 35,942 41,352 43,637 47,444 50,136 52,226 54,030 63 Farmers Home Administration4 1 0 0 0 0 0 0 0 64 One- to four-family 0 0 0 0 0 0 0 0 65 Multifamily 0 0 0 0 0 0 0 0 66 Nonfarm, nonresidential 0 0 0 0 0 0 0 0 67 Farm 1 0 0 0 0 0 0 0 68 Private mortgage conduits 562,874 656,018 739,802 766,373 796,907 824,272 867,432 915,948 69 One- to four-family6 405,153 455,021 499,834 523,300 539,200 550,039 574,500 618,400 70 Multifamily 33,784 42,293 48,786 49,007 50,836 53,627 56,910 57,808 71 Nonfarm, nonresidential 123,937 158,704 191,182 194,066 206,871 220,606 236,022 239,740 72 Farm 0 0 0 0 0 0 0 0 73 Individuals and others7 647,709 658,371 691,196 698,394 711,784 727,126 728,693 707,071 74 One- to four-family 435,138 459,609 490,890 496,778 508,826 522,597 523,781 505,183 75 Multifamily 76,320 75,297 77,074 77,509 78,764 79,524 79,880 79,709 76 Nonfarm, nonresidential 116,277 102,248 100,884 101,559 101,035 101,534 101,254 98,078 77 19,974 21,217 22,348 22,547 23,160 23,471 23,779 24,102 1. Multifamily debt refers to loans on structures of five or more units. 6. Includes securitized home equity loans. 2. Includes loans held by nondeposit trust companies but not loans held by bank trust 7. Other holders include mortgage companies, real estate investment trusts, state and local departments. credit agencies, state and local retirement funds, noninsured pension funds, credit unions, and 3. Includes savings banks and savings and loan associations. finance companies. 4. FmHA-guaranteed securities sold to the Federal Financing Bank were reallocated from SOURCE. Based on data from various institutional and government sources. Separation of FmHA mortgage pools to FmHA mortgage holdings in 1986:Q4 because of accounting nonfarm mortgage debt by type of property, if not reported directly, and interpolations and changes by the Farmers Home Administration. extrapolations, when required for some quarters, are estimated in part by the Federal Reserve. 5. Outstanding principal balances of mortgage-backed securities insured or guaranteed by Line 69 from Inside Mortgage Securities and other sources. the agency indicated. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A34 Domestic Nonfinancial Statistics • August 2002 1.55 CONSUMER CREDIT1 Millions of dollars, amounts outstanding, end of period 2001 2002 HHoollddeerr aanndd ttyyppee ooff ccrreeddiitt 11999999 22000000 22000011 Nov. Dec. Jan. Feb. Mar. Apr. Seasonally adjusted 1 Total 1,416,316.0 1,560,571.0 1,669,283.0 1,665,354.0 1,669,283.0 1,675,493.0 l,681,659.0r 1,689,252.0 1,698,134.0 2 Revolving 597,669.0 666,544.0 702,073.0 707,332.0 702,073.0 703,639.0 704,210.0' 707,336.0 711,457.0 3 Nonrevolving2 818,647.0 894,027.0 967,210.0 958,022.0 967,210.0 971,854.0 977,450.0r 981,916.0 986,676.0 Not seasonally adjusted 4 Total 1,446,127.0 1,593,051.0 1,703,291.0 1,672,897.0 1,703,291.0 1,688,710.0 1,678,896.0' 1,678,071.0 1,685,469.0 By major holder 5 Commercial banks 499,758.0 541,470.0 558,023.0 550,083.0 558,023.0 557,190.0 551,273.0r 550,809.0 556,098.0 6 Finance companies 201,549.0 219,783.0 236,511.0 238.850.0 236,511.0 230,055.0 233,166.0 232,264.0 230,154.0 7 Credit unions 167,921.0 184,434.0 189,570.0 188,730.0 189,570.0 188,126.0 186,509.0 186,476.0 187,306.0 8 Savings institutions 61,527.0 64,557.0 69,070.0 68,890.0 69,070.0 68,906.0 68,758.0 68,595.0 69,424.0 9 Nonfinancial business 80,311.0 82,662.0 67,939.0 60,384.0 67,939.0 63,183.0 59,043.0' 58,102.0 56,924.0 10 Pools of securitized assets3 435,061.0 500,145.0 582,178.0 565,961.0 582,178.0 581,250.0 580,147.0 581,825.0 585,562.0 By major type of credit* 11 Revolving 621,914.0 692,955.0 729,581.0 706,955.0 729,581.0 715,205.0 705,071.0' 701,107.0 706,767.0 12 Commercial banks 189,352.0 218,063.0 224,486.0 219,566.0 224,486.0 218,979.0 216,771.0' 216,291.0 221,326.0 13 Finance companies 32,483.0 37,561.0 31.484.0 30,245.0 31,484.0 29,762.0 28,844.0 27,918.0 28,982.0 14 Credit unions 20,641.0 22,226.0 22,265.0 21,597.0 22,265.0 21,516.0 21,250.0 20,813.0 20,887.0 15 Savings institutions 15,838.0 16,560.0 17,767.0 17,480.0 17,767.0 17,498.0 17,256.0 16,988.0 17,495.0 16 Nonfinancial business 42,783.0 42,430.0 29,790.0 24,463.0 29,790.0 26,280.0 23,041.0 22,402.0 21,357.0 17 Pools of securitized assets3 320,817.0 356,114.0 403,789.0 393,605.0 403,789.0 401,170.0 397,909.0 396,695.0 396,720.0 18 Nonrevolving 824,213.0 900,095.0 973,710.0 965,942.0 973,710.0 973,506.0 973,825.0' 976,964.0 978,702.0 19 Commercial banks 310,406.0 323,407.0 333.537.0 330,517.0 333,537.0 338,212.0 334,502.0' 334,518.0 334,772.0 20 Finance companies 169,066.0 182,221.0 205,027.0 208.605.0 205,027.0 200,294.0 204,322.0 204,346.0 201,172.0 21 Credit unions 147,280.0 162,208.0 167,305.0 167.133.0 167,305.0 166,610.0 165,259.0 165,663.0 166,419.0 22 Savings institutions 45,689.0 47,997.0 51,303.0 51,410.0 51,303.0 51,408.0 51,502.0 51,607.0 51,929.0 23 Nonfinancial business 37,528.0 40,232.0 38,149.0 35.921.0 38,149.0 36,903.0 36,002.0' 35,699.0 35,568.0 24 Pools of securitized assets3 114,244.0 144,031.0 178,389.0 172,356.0 178,389.0 180,080.0 182,238.0 185,131.0 188,843.0 1. The Board's series on amounts of credit covers most short- and intermediate-term credit 3. Outstanding balances of pools upon which securities have been issued; these balances extended to individuals, excluding loans secured by real estate. Data in this table also appear are no longer carried on the balance sheets of the loan originator. in the Board's G.19 (421) monthly statistical release. For ordering address, see inside front 4. Totals include estimates for certain holders for which only consumer credit totals are cover. available. 2. Comprises motor vehicle loans, mobile home loans, and all other loans that are not included in revolving credit, such as loans for education, boats, trailers, or vacations. These loans may be secured or unsecured. 1.56 TERMS OF CONSUMER CREDIT1 Percent per year except as noted 2001 2002 IItteemm 11999999 22000000 22000011 Oct. Nov. Dec. Jan. Feb. Mar. Apr. INTEREST RATES Commercial banks2 1 48-month new car 8.44 9.34 8.50 n.a. 7.86 n.a. n.a. 7.50 n.a. n.a. 2 24-month personal 13.39 13.90 13.22 n.a. 12.62 n.a. n.a. 11.72 n.a. n.a. Credit card plan 3 All accounts 15.21 15.71 14.89 n.a. 14.22 n.a. n.a. 13.65 n.a. n.a. 4 Accounts assessed interest 14.81 14.91 14.44 n.a. 13.88 n.a. n.a. 12.98 n.a. n.a. Auto finance companies 5 New car 6.66 6.61 5.65 2.71 2.89 3.31 4.02 n.a. n.a. n.a. 6 Used car 12.60 13.55 12.18 11.41 10.96 10.89 10.84 n.a. n.a. n.a. OTHER TERMS3 Maturity (months) 7 New car 52.7 54.9 55.1 53.7 51.0 48.6 48.8 56.4 56.4 55.9 8 Used car 55.9 57.0 57.5 57.2 56.7 56.5 57.3 57.8 57.7 57.7 Loan-to-value ratio 9 New car 92 92 91 94 92 91 90 89 90 93 10 Used car 99 99 100 100 100 100 100 100 100 101 Amount financed (dollars) 11 New car 19,880 20,923 22,822 24,443 24,934 24,812 24,137 22,741 23,065 23,535 12 Used car 13.642 14,058 14,416 14,627 14,669 14,653 14,355 14,049 14,149 14,363 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 A3 5 1.57 FUNDS RAISED IN U.S. CREDIT MARKETS1 Billions of dollars; quarterly data at seasonally adjusted annual rates 2000 2001 2002 TTrraannssaaccttiioonn ccaatteeggoorryy oorr sseeccttoorr Q3 Q4 Ql Q2 Q3 Q4 Ql Nonfinancial sectors 1 Total net borrowing by domestic nonfinancial sectors . . 733.6 804.7 1,042.9 1,069.4 861.8 810.8 758.0 974.1 985.4 1,328.5 1,127.0 999.4 By sector and instrument 2 Federal government 144.9 23.1 -52.6 -71.2 -295.9 -226.2 -331.3 -4.3 -256.0 255.7 -17.6 112.0 Treasury securities 146.6 23.2 -54.6 -71.0 -294.9 -223.8 -330.2 -2.1 -257.1 256.0 -16.9 113.8 4 Budget agency securities and mortgages -1.6 -.1 2.0 -.2 -1.0 -2.4 -1.2 -2.2 1.1 -.4 -.7 -1.8 5 Nonfederal 588.6 781.6 1,095.5 1,140.6 1,157.6 1,037.0 1,089.3 978.4 1,241.4 1,072.8 1,144.6 887.4 By instrument Commercial paper -.9 13.7 24.4 37.4 48.1 56.1 -4.0 -199.2 -133.4 -66.1 45.5 -155.7 7 Municipal securities and loans 2.6 71.4 96.8 68.2 35.3 31.0 60.1 110.7 112.4 56.0 191.1 78.7 8 Corporate bonds 116.3 150.5 218.7 229.9 171.1 168.8 175.6 399.5 419.5 187.9 323.5 233.8 9 Bank loans n.e.c 70.4 106.4 108.1 82.6 103.1 47.0 59.3 -16.0 -144.1 -5.4 -183.8 -15.4 10 Other loans and advances 28.7 59.5 82.1 57.1 101.5 16.5 125.2 -12.6 118.2 81.9 -108.9 -25.6 11 Mortgages 280.4 322.5 490.4 565.9 559.6 563.8 542.4 551.5 792.8 747.8 727.2 691.7 12 Home 245.7 258.3 387.2 424.8 416.5 438.0 390.5 429.9 623.1 538.9 541.5 593.6 13 Multifamily residential 9.4 7.5 22.2 36.4 34.5 27.0 39.8 34.3 45.3 56.3 51.9 30.3 14 Commercial 22.6 53.5 74.5 98.9 102.1 92.3 110.1 83.0 112.0 146.0 127.8 61.2 15 Farm 2.7 3.1 6.5 5.8 6.5 6.5 2.0 4.3 12.3 6.7 6.1 6.6 16 Consumer credit 91.3 57.5 75.0 99.5 139.0 153.8 130.7 144.5 76.0 70.6 149.9 79.9 By borrowing sector 17 Household 343.8 332.7 454.4 501.6 545.9 573.2 500.7 520.4 667.6 648.6 622.0 695.8 18 Nonfinancial business 251.6 392.8 560.8 586.6 584.6 440.0 534.9 354.2 465.2 381.2 365.2 127.4 19 Corporate 179.4 291.9 393.1 398.7 403.0 278.8 362.9 186.6 284.4 223.9 214.2 12.6 20 Nonfarm noncorporate 67.3 94.7 159.7 182.4 170.7 154.1 159.2 161.6 170.9 153.9 140.8 109.6 71 Farm 4.9 6.2 8.0 5.5 10.9 7.2 12.8 5.9 9.9 3.4 10.2 5.2 22 State and local government -6.8 56.1 80.3 52.3 27.2 23.8 53.7 103.9 108.7 43.0 157.5 64.2 23 Foreign net borrowing in United States 88.4 71.8 43.4 27.9 67.0 88.6 66.8 8.7 -53.4 -102.8 12.1 49.4 24 Commercial paper 11.3 3.7 7.8 16.3 31.7 7.0 50.1 -26.5 -6.7 -27.6 3.9 66.6 25 Bonds 67.0 61.4 34.9 16.8 25.2 71.4 9.0 33.3 -15.9 -78.8 27.4 -16.1 26 Bank loans n.e.c 9.1 8.5 6.7 .5 11.3 11.9 12.2 13.6 -31.6 4.4 -16.3 14.1 27 Other loans and advances 1.0 -1.8 -6.0 -5.7 -1.3 -1.7 -4.6 -11.6 .7 -.8 -2.9 -15.2 28 Total domestic plus foreign 822.0 876.5 1,086.3 1,097.3 928.7 899.4 824.8 982.8 932.0 1,225.7 1,139.1 1,048.8 Financial sectors 29 Total net borrowing by financial sectors 550.1 662.2 1,087.2 1,084.4 815.6 794.0 963.1 862.7 796.9 1,108.5 949.4 933.3 By instrument 30 Federal government-related 231.4 212.9 470.9 592.0 433.5 514.8 613.6 432.6 674.6 818.4 591.8 692.8 31 Government-sponsored enterprise securities 90.4 98.4 278.3 318.2 234.1 278.1 304.5 262.3 268.3 326.2 306.5 191.3 32 Mortgage pool securities 141.0 114.6 192.6 273.8 199.4 236.7 309.1 170.3 406.2 492.2 285.3 501.5 33 Loans from U.S. government .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 34 Private 318.7 449.3 616.3 492.5 382.1 279.2 349.5 430.1 122.3 290.1 357.6 240.5 35 Open market paper 92.2 166.7 161.0 176.2 127.7 106.5 153.2 -134.6 -85.4 -85.6 58.2 -244.4 36 Corporate bonds 178.1 218.9 310.1 218.2 205.9 205.0 203.7 437.4 188.3 326.7 295.3 457.9 37 Bank loans n.e.c 12.6 13.3 30.1 -14.2 -.3 -6.7 -4.4 27.0 14.2 -7.1 21.0 3.1 38 Other loans and advances 27.9 35.6 90.2 107.1 42.5 -31.6 -4.8 107.8 -11.0 58.0 -15.3 17.3 39 Mortgages 7.9 14.9 24.8 5.1 6.2 6.0 1.8 -7.5 16.2 -1.9 -1.6 6.6 By borrowing sector 40 Commercial banking 13.0 46.1 72.9 67.2 60.0 43.4 18.8 148.3 -15.8 59.0 19.9 39.1 41 Savings institutions 25.5 19.7 52.2 48.0 27.3 -37.9 20.4 62.4 16.0 19.4 -68.1 -25.7 47 Credit unions .1 .1 .6 2.2 .0 1.1 1.0 -.6 .8 1.5 4.4 2.4 43 Life insurance companies 1.1 .2 .7 .7 -.7 -.3 -.7 -2.4 .1 3.5 1.4 2.4 44 Government-sponsored enterprises 90.4 98.4 278.3 318.2 234.1 278.1 304.5 262.3 268.3 326.2 306.5 191.3 45 Federally related mortgage pools 141.0 114.6 192.6 273.8 199.4 236.7 309.1 170.3 406.2 492.2 285.3 501.5 46 Issuers of asset-backed securities (ABSs) 150.8 202.2 321.4 223.4 196.3 156.2 307.9 295.8 172.3 324.3 360.1 370.0 47 Finance companies 50.6 57.8 57.1 70.3 81.2 98.1 26.1 -72.8 64.1 21.5 -12.6 -61.3 48 Mortgage companies 4.1 -4.6 1.6 .2 .1 -.3 1.0 .7 .6 .8 .6 .8 49 Real estate investment trusts (REITs) 11.9 39.6 62.7 6.3 2.7 -2.4 -8.1 -6.1 10.5 -2.4 7.8 7.4 50 Brokers and dealers -2.0 8.1 7.2 -17.2 15.6 25.4 -6.6 -23.7 35.6 12.6 -19.0 -10.4 51 Funding corporations 63.8 79.9 40.0 91.5 -.4 -4.2 -10.4 28.6 -162.0 -150.2 62.9 -84.1 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A36 Domestic Nonfinancial Statistics • August 2002 1.57 FUNDS RAISED IN U.S. CREDIT MARKETS'—Continued Billions of dollars; quarterly data at seasonally adjusted annual rates 2000 2001 2002 TTrraannssaaccttiioonn ccaatteeggoorryy oorr sseeccttoorr 11999966 11999977 11999988 11999999 22000000 Q3 Q4 Ql Q2 Q3 Q4 Ql All sectors 55552222 TTTToooottttaaaallll nnnneeeetttt bbbboooorrrrrrrroooowwwwiiiinnnngggg,,,, aaaallllllll sssseeeeccccttttoooorrrrssss 1,372.0 1,538.7 2,173.4 2,181.7 1,744.3 1,693.4 1,787.8 1,845.5 1,728.8 2,334.2 2,088.5 1,982.1 55553333 OOOOppppeeeennnn mmmmaaaarrrrkkkkeeeetttt ppppaaaappppeeeerrrr 102.6 184.1 193.1 229.9 207.5 169.7 199.3 -360.2 -225.5 -179.3 107.6 -333.5 55554444 UUUU....SSSS.... ggggoooovvvveeeerrrrnnnnmmmmeeeennnntttt sssseeeeccccuuuurrrriiiittttiiiieeeessss 376.3 236.0 418.3 520.7 137.6 288.6 282.2 428.2 418.5 1,074.1 574.2 804.8 55555555 MMMMuuuunnnniiiicccciiiippppaaaallll sssseeeeccccuuuurrrriiiittttiiiieeeessss 2.6 71.4 96.8 68.2 35.3 31.0 60.1 110.7 112.4 56.0 191.1 78.7 55556666 CCCCoooorrrrppppoooorrrraaaatttteeee aaaannnndddd ffffoooorrrreeeeiiiiggggnnnn bbbboooonnnnddddssss 361.3 430.8 563.7 465.0 402.2 445.2 388.3 870.2 591.9 435.8 646.2 675.6 55557777 BBBBaaaannnnkkkk llllooooaaaannnnssss nnnn....eeee....cccc 92.1 128.2 145.0 68.9 114.1 52.2 67.1 24.6 -161.5 -8.0 -179.0 1.7 55558888 OOOOtttthhhheeeerrrr llllooooaaaannnnssss aaaannnndddd aaaaddddvvvvaaaannnncccceeeessss 57.7 93.2 166.3 158.5 142.7 -16.8 115.8 83.6 107.9 139.2 -127.1 -23.4 55559999 MMMMoooorrrrttttggggaaaaggggeeeessss 288.2 337.4 515.2 571.0 565.8 569.8 544.2 544.0 809.0 745.9 725.6 698.3 66660000 CCCCoooonnnnssssuuuummmmeeeerrrr ccccrrrreeeeddddiiiitttt 91.3 57.5 75.0 99.5 139.0 153.8 130.7 144.5 76.0 70.6 149.9 79.9 Funds raised through mutual funds and corporate equities 66661111 TTTToooottttaaaallll nnnneeeetttt iiiissssssssuuuueeeessss 232.9 185.3 113.7 156.6 193.3 224.7 -35.1 240.0 411.7 94.6 395.2 389.8 66662222 CCCCoooorrrrppppoooorrrraaaatttteeee eeeeqqqquuuuiiiittttiiiieeeessss -4.1 -79.9 -165.8 -34.6 —41.7 -50.4 -184.6 143.2 128.7 -67.9 131.7 31.5 66663333 NNNNoooonnnnffffiiiinnnnaaaannnncccciiiiaaaallll ccccoooorrrrppppoooorrrraaaattttiiiioooonnnnssss -69.5 -114.4 -267.0 -143.5 -159.7 -87.8 -367.5 -25.2 -70.9 -126.4 -7.3 20.2 66664444 FFFFoooorrrreeeeiiiiggggnnnn sssshhhhaaaarrrreeeessss ppppuuuurrrrcccchhhhaaaasssseeeedddd bbbbyyyy UUUU....SSSS.... rrrreeeessssiiiiddddeeeennnnttttssss 82.8 57.6 101.3 114.4 99.7 61.1 89.4 109.2 220.3 36.6 74.7 -26.6 66665555 FFFFiiiinnnnaaaannnncccciiiiaaaallll ccccoooorrrrppppoooorrrraaaattttiiiioooonnnnssss -18.1 -23.0 -.1 -5.5 18.3 -23.7 93.4 59.1 -20.7 22.0 64.3 37.9 66666666 MMMMuuuuttttuuuuaaaallll ffffuuuunnnndddd sssshhhhaaaarrrreeeessss 237.6 265.1 279.5 191.2 235.0 275.1 149.5 96.8 283.0 162.5 263.6 358.3 ]. Data in this table also appear in the Board's Z. 1 (780) quarterly statistical release, tables F.2 through F4. For ordering address, see inside front cover. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Flow of Funds A3 5 1.58 SUMMARY OF FINANCIAL TRANSACTIONS1 Billions of dollars except as noted; quarterly data at seasonally adjusted annual rates 2000 2001 2002 TTrraannssaaccttiioonn ccaatteeggoorryy oorr sseeccttoorr 11999966 11999977 11999988 11999999 22000000 Q3 Q4 Ql Q2 Q3 Q4 Ql NET LENDING IN CREDIT MARKETS2 1 Total net lending in credit markets 1,372.0 1,538.7 2,173.4 2,181.7 1,744.3 1,693.4 1,787.8 1,845.5 1,728.8 2,334.2 2,088.5 1,982.1 ? Domestic nonfederal nonfinancial sectors 73.9 -22.2 173.2 208.6 -160.2 -240.8 -251.4 -193.3 -268.6 -85.7 -255.0 304.8 113.9 -12.2 41.4 198.8 -175.7 -211.2 -176.2 -269.6 -261.5 -53.3 -257.3 227.6 4 Nonfinancial corporate business -10.2 -12.7 -16.0 -15.6 17.5 -5.4 -77.1 31.6 17.4 -25.3 -50.7 32.4 Nonfarm noncorporate business 4.0 2.6 13.3 -3.0 -1.2 2.2 -.2 3.2 .3 3.3 2.0 3.3 6 State and local governments -33.7 .1 134.5 28.4 -.8 -26.4 2.1 41.5 -24.8 -10.4 51.0 41.4 7 Federal government -7.2 5.1 13.5 5.8 7.3 4.5 10.6 4.6 9.4 3.6 6.9 -7.5 8 414.4 311.3 254.2 208.8 279.3 216.2 387.8 410.6 349.2 389.0 563.2 271.4 9 Financial sectors 890.9 1,244.5 1,732.5 1,758.5 1,617.8 1,713.5 1,640.8 1,623.6 1,638.9 2,027.3 1,773.4 1,413.5 10 Monetary authority 12.3 38.3 21.1 25.7 33.7 39.1 -.9 53.7 26.4 8.7 70.5 98.7 11 Commercial banking 187.5 324.3 305.2 308.2 358.4 363.2 157.0 138.4 148.8 253.3 282.8 182.9 1? U.S.-chartered banks 119.6 274.9 312.0 317.6 339.8 324.8 75.3 93.5 194.5 233.9 246.2 163.4 n Foreign banking offices in United States 63.3 40.2 -11.9 -20.1 24.0 32.8 81.1 41.3 —48.6 16.5 3.4 1.2 14 Bank holding companies 3.9 5.4 -.9 6.2 -12.2 -6.7 -3.2 7.3 -2.8 -1.4 13.6 12.0 15 Banks in U.S.-affiliated areas .7 3.7 6.0 4.4 6.7 12.3 3.8 -3.6 5.6 4.2 19.6 6.3 16 Savings institutions 19.9 -4.7 36.1 68.6 56.5 62.7 42.5 52.5 57.3 -8.3 66.3 17.6 17 Credit unions 25.5 16.8 19.0 27.5 30.5 21.2 33.6 23.2 7.6 61.7 61.8 54.7 18 Bank personal trusts and estates -7.7 -25.0 -12.8 27.8 17.1 17.6 18.1 10.7 13.4 8.8 8.6 66..11 19 Life insurance companies 69.6 104.8 76.9 53.5 57.9 74.8 38.8 95.3 124.9 179.3 107.1 115522..44 70 Other insurance companies 22.5 25.2 5.8 -3.0 -8.7 6.2 -11.7 2.1 .1 5.1 32.8 36.3 71 Private pension funds -4.1 47.6 -22.8 10.8 39.2 56.1 26.0 24.5 50.8 30.2 18.7 -40.8 77 State and local government retirement funds 35.8 67.1 72.1 46.9 54.6 37.6 86.1 -70.7 77.0 -74.2 7.3 76.8 73 Money market mutual funds 88.8 87.5 244.0 182.0 143.0 256.1 272.7 328.2 164.7 379.1 112.2 -294.3 74 Mutual funds 48.9 80.9 127.3 48.4 21.0 50.2 57.8 78.1 165.7 103.7 156.6 262.2 75 Closed-end funds 4.6 -2.5 5.5 7.4 -4.1 -4.7 -4.1 -1.7 -1.7 -1.7 -1.7 -1.7 26 Government-sponsored enterprises 97.4 106.6 314.6 291.7 250.9 228.6 318.8 311.8 321.3 264.6 314.5 283.7 77 Federally related mortgage pools 141.0 114.6 192.6 273.8 199.4 236.7 309.1 170.3 406.2 492.2 285.3 501.5 78 Asset-backed securities issuers (ABSs) 120.5 163.8 281.7 205.2 166.4 120.9 278.9 269.8 150.0 297.6 337.8 345.2 79 Finance companies 18.9 23.1 77.3 97.0 108.0 102.8 36.2 -.9 126.7 -42.0 -17.0 -143.2 30 Mortgage companies 8.2 -9.1 3.2 .3 .2 -.5 2.0 1.4 1.1 1.7 1.2 1.6 31 Real estate investment trusts (REITs) 4.4 20.2 -5.1 -2.6 -6.3 -3.6 -2.8 4.0 1.1 7.8 14.0 16.5 37 Brokers and dealers -15.7 14.9 6.8 -34.7 68.9 152.1 -69.0 310.9 14.0 236.0 -94.9 -248.7 33 Funding corporations 12.6 50.4 -15.8 124.1 31.8 -103.5 52.3 -178.1 -216.6 -176.2 9.6 105.9 RELATION OF LIABILITIES TO FINANCIAL ASSETS 34 Net flows through credit markets 1,372.0 1,538.7 2,173.4 2,181.7 1,744.3 1,693.4 1,787.8 1,845.5 1,728.8 2,334.2 2,088.5 1,982.1 Other financial sources 35 Official foreign exchange -6.3 .7 6.6 -8.7 -.4 .7 4.9 --11..55 44..77 1133..77 ..22 -1.8 36 Special drawing rights certificates -.5 -.5 .0 -3.0 -4.0 -4.0 -4.0 .0 .0 .0 .0 .0 .37 Treasury currency .5 .5 .6 1.0 2.4 4.2 .0 -1.1 11..11 .0 .0 .0 38 Foreign deposits 85.9 107.7 6.5 61.0 120.8 ^0.8 207.4 235.5 --117700..22 140.1 132.2 -25.0 39 Net interbank transactions -51.6 -19.7 -32.3 18.4 13.6 24.4 18.0 -162.9 -4.9 56.6 87.4 -18.9 40 Checkable deposits and currency 15.7 41.2 47.4 151.4 -71.5 5.0 -50.2 184.2 82.8 244.9 228888..66 28.6 41 Small time and savings deposits 97.2 97.1 152.4 44.7 190.7 224.5 310.8 280.2 202.6 231.4 333388..00 277.8 47 Large time deposits 114.0 122.5 92.1 130.6 118.4 152.9 65.2 128.1 53.9 29.4 46.0 274.1 43 Money market fund shares 145.4 155.9 287.2 249.1 233.3 250.9 371.0 621.6 322.3 367.7 402.7 -260.8 44 Security repurchase agreements 41.4 120.9 91.3 169.7 110.7 277.1 -265.4 -86.6 168.7 240.7 -156.8 -127.8 45 Corporate equities -4.7 -79.9 -165.8 -34.6 -41.7 -50.4 -184.6 143.2 128.7 -67.9 131.7 31.5 46 Mutual fund shares 237.6 265.1 279.5 191.2 235.0 275.1 149.5 96.8 283.0 162.5 263.6 358.3 47 Trade payables 123.3 139.7 107.8 270.5 169.1 137.1 116.5 74.7 -89.4 -16.9 -111.2 87.2 48 Security credit 52.4 111.0 103.3 104.3 146.1 97.5 74.4 -85.4 -83.3 546.9 -388.3 -234.8 49 Life insurance reserves 44.5 59.3 48.0 50.8 50.2 53.0 47.3 52.7 53.2 80.2 72.6 57.4 50 Pension fund reserves 148.3 201.4 217.1 181.4 215.6 219.9 147.9 244.8 169.0 235.2 176.2 169.6 51 Taxes payable 19.5 22.3 19.6 23.2 21.7 4.1 25.4 .5 16.2 106.4 -66.1 26.1 57 Investment in bank personal trusts -5.3 -49.9 -41.8 -6.5 -29.7 -29.2 -28.0 -26.1 -22.7 -28.2 -28.2 -31.0 53 Noncorporate proprietors' equity 5.5 -40.7 -57.8 -38.1 -2.5 26.6 -6.7 -20.8 -3.5 -26.3 4.4 --..11 54 Miscellaneous 526.1 493.6 978.7 997.0 1,139.1 1,507.0 832.2 1,069.2 1,048.9 908.8 -102.4 552200..00 55 Total financial sources 2,961.1 3,287.1 4,313.7 4,735.1 4,361.1 4,829.1 3,619.5 4,592.5 3,889.9 5,559.4 3,178.9 3,112.4 Liabilities not identified as assets (-) 56 Treasury currency -.4 -.2 -.1 -.7 -1.2 .9 -3.3 -3.6 --..55 -1.4 ..00 --..77 57 Foreign deposits 59.4 106.2 -8.5 42.6 56.3 -100.2 194.6 169.5 -154.3 143.2 70.5 18.2 58 Net interbank liabilities -3.3 -19.9 3.4 3.5 17.4 -12.1 51.1 25.9 4.5 7.1 33.3 24.1 59 Security repurchase agreements 2.4 63.2 57.7 35.6 117.1 170.4 -295.7 -262.7 171.6 18.9 -125.2 -40.3 60 Taxes payable 23.1 28.0 19.7 6.5 14.1 -1.8 44.1 -2.4 -16.8 4.1 11.9 25.1 61 Miscellaneous -173.7 -244.7 -161.6 -355.4 -332.5 -65.4 -427.4 -102.5 -416.4 266.8 -315.2 -138.0 Floats not included in assets (-) 62 Federal government checkable deposits .5 -2.7 2.6 -7.4 9.0 3.0 -2.1 63.1 3.5 5.7 -56.6 193.3 63 Other checkable deposits -4.0 -3.9 -3.1 -.8 1.7 1.9 2.4 3.8 3.9 5.1 5.5 6.4 64 Trade credit -25.4 -29.2 -40.9 7.2 14.0 -26.6 73.3 -9.9 -38.0 -34.6 -23.2 -39.2 65 Total identified to sectors as assets 3,082.7 3,390.1 4,444.6 5,004.0 4,465.2 4,859.0 3,982.6 4,711.3 4,332.4 5,144.6 3,577.8 3,063.7 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

A38 Domestic Nonfinancial Statistics • August 2002 1.59 SUMMARY OF CREDIT MARKET DEBT OUTSTANDING1 Billions of dollars, end of period 2000 2001 2002 Q3 Q4 Ql Q2 Q3 Q4 Ql Nonfinancial sectors 1 Total credit market debt owed by domestic nonfinancial sectors 15,244.2 16,287.1 17,391.1 18,272.0 17,991.7 18,272.0 18,509.5 18,680.6 18,995.3 19,376.3 19,606.1 By sector and instrument 2 Federal government 3,804.8 3,752.2 3,681.0 3,385.1 3,410.1 3,385.1 3,408.8 3,251.4 3,320.0 3,379.5 3,430.3 J Treasury securities 3.778.3 3,723.7 3.652.7 3,357.8 3,382.5 3,357.8 3,382.0 3,224.3 3,293.0 3,352.7 3,404.0 4 Budget agency securities and mortgages 26.5 28.5 28.3 27.3 27.6 27.3 26.8 27.0 27.0 26.8 26.3 5 Nonfederal 11,439.4 12,534.9 13,710.2 14,886.9 14,581.6 14,886.9 15,100.7 15,429.3 15,675.3 15,996.8 16.175.8 By instrument 6 Commercial paper 168.6 193.0 230.3 278.4 307.0 278.4 253.2 223.3 201.3 190.1 167.5 7 Municipal securities and loans 1.367.5 1,464.3 1,532.5 1,567.8 1,550.3 1,567.8 1,597.5 1,629.8 1,635.3 1,685.4 1,707.5 8 Corporate bonds 1,610.9 1,829.6 2,059.5 2,230.6 2,186.7 2,230.6 2,330.4 2,435.3 2,482.3 2,563.2 2,621.6 y Bank loans n.e.c 1.040.4 1,148.5 1,231.2 1,334.2 1,311.3 1,334.2 1,321.3 1,292.7 1,283.8 1,247.5 1.233.6 10 Other loans and advances 825.1 907.2 964.5 1,077.1 1,039.5 1,077.1 1,083.2 1,110.6 1,116.8 1,096.8 1,099.9 n Mortgages 5.155.4 5,645.8 6,246.0 6,805.7 6,667.3 6,805.7 6,929.7 7,129.4 7,325.3 7,510.5 7,667.6 12 Home 3.978.3 4,365.5 4,790.2 5,206.8 5,106.4 5,206.8 5,299.2 5,457.7 5,601.4 5,740.1 5,872.7 13 Multifamily residential 285.7 307.9 344.5 379.0 369.0 379.0 388.7 398.9 412.9 425.9 433.5 14 Commercial 801.4 875.9 1,009.0 1,111.1 1,083.6 1,111.1 1,131.8 1,159.8 1,196.3 1,228.3 1,243.6 15 Farm 90.0 96.6 102.3 108.8 108.3 108.8 110.0 113.1 114.7 116.2 117.9 16 Consumer credit 1,271.6 1,346.6 1,446.1 1,593.1 1,519.6 1,593.1 1,585.3 1,608.1 1,630.5 1,703.3 1,678.1 By borrowing sector 17 Households 5,556.9 6,011.4 6,513.3 7,078.3 6,903.8 7,078.3 7,144.5 7,319.5 7,491.8 7,692.9 7,800.1 18 Nonfinancial business 4,763.0 5,323.7 5,944.7 6,529.3 6,414.7 6,529.3 6,648.8 6,771.9 6,842.9 6,921.3 6,974.4 19 Corporate 3,383.1 3,776.1 4,209.3 4,612.3 4,540.8 4,612.3 4,691.6 4,766.7 4,799.6 4,840.1 4,866.2 20 Nonfarm noncorporate 1,224.0 1,383.7 1.566.1 1,736.8 1,696.0 1,736.8 1,777.5 1,820.1 1,857.4 1,893.6 1,921.4 21 Farm 155.9 163.9 169.4 180.2 177.9 180.2 179.7 185.2 185.9 187.6 186.9 22 State and local government 1,119.5 1,199.8 1,252.1 1,279.3 1,263.1 1,279.3 1,307.5 1,337.8 1,340.6 1,382.5 1,401.2 23 Foreign credit market debt held in United States 608.0 651.5 679.6 746.7 731.0 746.7 747.5 733.2 710.2 712.9 725.6 24 Commercial paper 65.1 72.9 89.2 120.9 109.8 120.9 112.8 110.1 106.3 106.7 123.6 25 Bonds 427.7 462.6 479.4 504.6 502.4 504.6 512.9 509.0 489.3 496.1 492.1 26 Bank loans n.e.c 52.1 58.9 59.4 70.7 67.7 70.7 74.1 66.2 67.3 63.2 66.8 27 Other loans and advances 63.0 57.2 51.7 50.5 51.2 50.5 47.7 47.9 47.3 46.8 43.2 28 Total credit market debt owed by nonfinancial sectors, domestic and foreign 15,852.2 16,938.6 18,070.8 19,018.7 18,722.7 19,018.7 19,257.0 19,413.9 19,705.4 20,089.1 20,331.7 Financial sectors 29 Total credit market debt owed by financial sectors 5,458.0 6,545.2 7,629.6 8,457.1 8,190.8 8,457.1 8,657.0 8,856.1 9,126.5 9,383.8 9,603.3 By instrument 30 Federal government-related 2,821.1 3,292.0 3,884.0 4,317.4 4,164.0 4,317.4 4,422.9 4,591.6 4,796.2 4,944.1 5,117.3 31 Government-sponsored enterprise securities . . . 995.3 1,273.6 1,591.7 1,825.8 1,749.7 1,825.8 1,888.7 1,955.8 2,037.4 2,114.0 2,161.8 32 Mortgage pool securities 1,825.8 2,018.4 2,292.2 2,491.6 2,414.3 2,491.6 2,534.2 2,635.7 2,758.8 2,830.1 2,955.5 33 Loans from U.S. government .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 34 Private 2.636.9 3,253.2 3,745.6 4,139.7 4,026.7 4,139.7 4,234.1 4,264.6 4,330.3 4,439.7 4,485.9 35 Open market paper 745.7 906.7 1,082.9 1.210.7 1,151.6 1,210.7 1,180.8 1,144.5 1,110.2 1,148.8 1,090.9 36 Corporate bonds 1.568.6 1,878.7 2,096.9 2,314.8 2,269.7 2,314.8 2,424.0 2,483.9 2,568.1 2,626.7 2,741.8 37 Bank loans n.e.c 77.3 107.5 93.2 93.0 92.8 93.0 97.3 100.4 100.2 106.8 105.0 38 Other loans and advances 198.5 288.7 395.8 438.3 430.2 438.3 450.9 450.7 467.2 473.2 462.4 39 Mortgages 46.8 71.6 76.7 82.9 82.5 82.9 81.1 85.1 84.6 84.2 85.9 By borrowing sector 40 Commercial banks 140.6 188.6 230.0 266.7 265.2 266.7 273.8 274.7 281.4 296.0 295.8 41 Bank holding companies 168.6 193.5 219.3 242.5 236.9 242.5 266.5 269.0 272.7 266.1 269.4 42 Savings institutions 160.3 212.4 260.4 287.7 276.0 287.7 295.1 294.4 305.6 295.1 280.4 43 Credit unions .6 1.1 3.4 3.4 3.1 3.4 3.2 3.5 3.8 4.9 5.5 44 Life insurance companies 1.8 2.5 3.2 2.5 2.7 2.5 1.9 1.9 2.8 3.1 3.7 45 Government-sponsored enterprises 995.3 1,273.6 1,591.7 1,825.8 1,749.7 1,825.8 1,888.7 1,955.8 2,037.4 2,114.0 2,161.8 46 Federally related mortgage pools 1,825.8 2,018.4 2,292.2 2,491.6 2,414.3 2,491.6 2,534.2 2,635.7 2,758.8 2,830.1 2,955.5 4/ Issuers of asset-backed securities (ABSs) 1,076.6 1,398.0 1,621.4 1,829.6 1,742.3 1,829.6 1,893.7 1,942.4 2,025.5 2,117.8 2,200.1 48 Brokers and dealers 35.3 42.5 25.3 40.9 42.6 40.9 35.0 43.9 47.1 42.3 39.7 49 Finance companies 568.3 625.5 695.7 776.9 761.8 776.9 756.2 769.0 771.2 777.0 759.1 50 Mortgage companies 16.0 17.7 17.8 17.9 17.7 17.9 18.1 18.2 18.5 18.6 18.8 51 Real estate investment trusts (REITs) 96.1 158.8 165.1 167.8 169.8 167.8 166.2 168.9 168.3 170.2 172.1 52 Funding corporations 372.6 412.6 504.0 503.7 508.7 503.7 524.3 478.6 433.6 448.5 441.3 All sectors 53 Total credit market debt, domestic and foreign . 21310.2 23,483.8 25,700.4 27,475.8 26,913.5 27,475.8 27,914.0 28,270.0 28,831.9 29,472.9 29,934.9 54 Open market paper 979.4 1,172.6 1,402.4 1.610.0 1,568.3 1,610.0 1,546.8 1.477.9 1,417.8 1,445.6 1,382.0 55 U.S. government securities 6,625.9 7,044.2 7,564.9 7,702.5 7,574.2 7,702.5 7,831.7 7,842.9 8,116.2 8,323.6 8,547.6 56 Municipal securities 1.367.5 1,464.3 1,532.5 1,567.8 1,550.3 1,567.8 1,597.5 1,629.8 1,635.3 1,685.4 1,707.5 57 Corporate and foreign bonds 3,607.2 4,170.8 4,635.8 5,050.0 4,958.7 5,050.0 5,267.4 5,428.2 5,539.6 5,686.0 5,855.5 58 Bank loans n.e.c 1,169.8 1,314.9 1,383.8 1,497.9 1,471.7 1,497.9 1,492.7 1,459.2 1,451.3 1,417.5 1,405.3 59 Other loans and advances 1,086.6 1,253.0 1,412.0 1,565.9 1,520.9 1,565.9 1,581.8 1,609.2 1,631.3 1,616.8 1,605.5 60 Mortgages 5,202.2 5,717.4 6,322.8 6,888.6 6,749.8 6,888.6 7,010.8 7,214.5 7,410.0 7,594.7 7,753.5 61 Consumer credit 1,271.6 1,346.6 1,446.1 1,593.1 1,519.6 1,593.1 1,585.3 1,608.1 1,630.5 1,703.3 1,678.1 1. Data in this table 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 A3 5 1.60 SUMMARY OF FINANCIAL ASSETS AND LIABILITIES1 Billions of dollars except as noted, end of period 2000 2001 2002 TTrraannssaaccttiioonn ccaatteeggoorryy oorr sseeccttoorr 11999977 11999988 11999999 22000000 Q3 Q4 Q1 Q2 Q3 Q4 QL CREDIT MARKET DEBT OUTSTANDING2 1 Total credit market assets 21,310.2 23,483.8 25,700.4 27,475.8 26,913.5 27,475.8 27,914.0 28,270.0 28,831.9 29,472.9 29,934.9 ? Domestic nonfederal nonfinancial sectors 2,945.6 3,090.5 3,369.1 3,171.9 3,227.0 3,171.9 3,097.7 3,011.3 2,979.6 2,970.3 3,016.6 Household 2,028.9 2,042.0 2,310.9 2,098.1 2,152.1 2,098.1 2,024.9 1,936.2 1,915.6 1,886.8 1,935.2 4 Nonfinancial corporate business 257.5 241.5 226.0 243.5 245.4 243.5 231.4 236.9 230.8 236.7 223.3 Nonfarm noncorporate business 54.2 67.5 64.4 63.2 63.3 63.2 64.0 64.1 64.9 65.4 66.2 6 State and local governments 605.0 739.4 767.8 767.0 766.2 767.0 777.4 774.1 768.3 781.4 791.9 7 Federal government 205.4 219.1 258.0 265.4 262.7 265.4 266.6 268.9 269.8 271.6 269.7 8 Rest of the world 2,257.3 2,539.8 2,676.2 3,004.6 2,861.7 3,004.6 3,112.9 3,200.1 3,294.7 3,432.6 3,506.1 9 Financial sectors 15,901.9 17,634.4 19,397.0 21,033.9 20,562.1 21,033.9 21,436.8 21,789.7 22,287.8 22,798.5 23,142.6 10 Monetary authority 431.4 452.5 478.1 511.8 511.5 511.8 523.9 535.1 534.1 551.7 575.4 11 Commercial banking 4,031.9 4,335.7 4,643.9 5,002.3 4,931.0 5,002.3 5,012.1 5,044.6 5,101.2 5,207.1 5,227.8 1? U.S.-chartered banks 3,450.7 3,761.2 4,078.9 4,418.7 4,368.2 4,418.7 4,420.8 4,463.3 4,513.5 4,609.8 4,629.3 N Foreign banking offices in United States 516.1 504.2 484.1 508.1 487.5 508.1 515.0 504.2 509.9 511.3 507.8 14 Bank holding companies 27.4 26.5 32.7 20.5 21.3 20.5 22.3 21.6 21.3 24.7 27.7 15 Banks in U.S.-affiliated areas 37.8 43.8 48.3 55.0 54.0 55.0 54.1 55.5 56.5 61.4 63.0 16 Savings institutions 928.5 964.6 1,033.2 1,089.7 1,082.2 1,089.7 1,101.6 1,116.4 1,118.4 1,131.7 1,134.9 17 Credit unions 305.3 324.2 351.7 382.2 376.0 382.2 386.5 391.8 407.8 420.8 433.1 18 Bank personal trusts and estates 207.0 194.1 222.0 239.1 234.6 239.1 241.8 245.1 247.3 249.5 251.0 19 Life insurance companies 1,751.1 1,828.0 1,886.0 1,943.9 1,935.1 1,943.9 1,967.2 1,996.9 2,044.2 2,070.5 2,107.6 20 Other insurance companies 515.3 521.1 518.2 509.4 512.4 509.4 510.0 510.0 511.3 519.5 528.6 71 Private pension funds 674.6 651.8 662.5 701.7 695.2 701.7 707.9 720.6 728.1 732.8 722.6 7? State and local government retirement funds 632.5 704.6 751.4 806.0 784.5 806.0 788.3 807.6 789.0 790.9 810.1 73 Money market mutual funds 721.9 965.9 1,147.8 1,290.9 1,212.5 1,290.9 1,404.2 1,414.6 1,498.0 1,536.9 1,496.4 ?4 Mutual funds 901.1 1,028.4 1,076.8 1,097.8 1,087.1 1,097.8 1,113.9 1,160.3 1,188.2 1,223.8 1,285.4 25 Closed-end funds 98.3 103.8 111.2 106.4 107.6 106.4 106.0 105.6 105.2 104.7 104.3 26 Government-sponsored enterprises 939.4 1,253.9 1,545.6 1,803.7 1,714.3 1,803.7 1,866.9 1,948.4 2,016.0 2,104.9 2,161.0 77 Federally related mortgage pools 1,825.8 2,018.4 2,292.2 2,491.6 2,414.3 2,491.6 2,534.2 2,635.7 2,758.8 2,830.1 2,955.5 78 Asset-backed securities (ABSs) issuers 937.7 1,219.4 1,424.6 1,602.9 1,522.9 1,602.9 1,660.5 1,703.7 1,780.0 1,866.7 1,942.8 29 Finance companies 568.2 645.5 742.5 850.5 830.0 850.5 848.0 878.5 859.4 867.2 829.0 30 Mortgage companies 32.1 35.3 35.6 35.9 35.4 35.9 36.2 36.5 36.9 37.2 37.6 31 Real estate investment trusts (REITs) 50.6 45.5 42.9 36.6 37.3 36.6 37.6 37.9 39.8 43.3 47.5 32 Brokers and dealers 182.6 189.4 154.7 223.6 243.3 223.6 317.7 288.4 366.4 340.1 296.4 33 Funding corporations 166.7 152.3 276.1 307.9 294.9 307.9 272.4 212.1 157.6 169.1 195.7 RELATION OF LIABILITIES TO FINANCIAL ASSETS 34 Total credit market debt 21,310.2 23,483.8 25,700.4 27,475.8 26,913.5 27,475.8 27,914.0 28,270.0 28,831.9 29,472.9 29,934.9 Other liabilities 35 Official foreign exchange 48.9 60.1 50.1 46.1 44.9 46.1 42.8 43.4 49.0 46.8 45.7 36 Special drawing rights certificates 9.2 9.2 6.2 2.2 3.2 2.2 2.2 2.2 2.2 2.2 2.2 37 Treasury currency 19.3 19.9 20.9 23.2 23.2 23.2 22.9 23.2 23.2 23.2 23.2 38 Foreign deposits 618.5 642.3 703.6 824.5 772.6 824.5 883.4 840.8 875.9 908.9 902.7 39 Net interbank liabilities 219.4 189.0 205.3 222.6 206.0 222.6 160.5 162.5 185.4 214.9 188.8 40 Checkable deposits and currency 1,286.1 1,333.4 1,484.8 1.413.3 1,385.7 1,413.3 1,405.0 1,449.4 1,485.5 1,599.2 1,565.6 41 Small time and savings deposits 2,474.1 2,626.5 2,671.2 2,861.9 2,790.9 2,861.9 2,963.3 2,992.4 3,047.7 3,125.0 3,226.0 42 Large time deposits 713.4 805.5 936.1 1,054.5 1,025.9 1,054.5 1,077.4 1,086.9 1,093.9 1,118.9 1,177.6 43 Money market fund shares 1,042.5 1,329.7 1,578.8 1,812.1 1,697.8 1,812.1 1,994.7 2,014.8 2,116.1 2,240.7 2,202.6 44 Security repurchase agreements 822.4 913.7 1,083.4 1,194.1 1,238.6 1,194.1 1,185.0 1,206.1 1,253.6 1,248.3 1,215.9 45 Mutual fund shares 2,989.4 3,613.1 4,538.5 4,434.6 4,781.6 4,434.6 3,990.4 4,259.5 3,753.1 4,135.5 4,245.8 46 Security credit 469.1 572.3 676.6 822.7 805.8 822.7 799.3 781.6 920.1 820.2 759.6 47 Life insurance reserves 665.0 718.3 783.9 819.1 818.7 819.1 823.0 840.3 847.0 871.7 886.6 48 Pension fund reserves 7,323.4 8,209.0 9,065.6 9,075.1 9,340.2 9,075.1 8,596.9 8,861.9 8,298.5 8,682.3 8,763.9 49 Trade payables 1,967.3 2,075.1 2,345.6 2,514.6 2,468.7 2,514.6 2,508.8 2,482.0 2,491.4 2,478.9 2,477.2 50 Taxes payable 151.1 170.7 193.9 215.6 214.1 215.6 223.3 222.5 251.4 229.8 243.9 51 Investment in bank personal trusts 942.5 1,001.0 1,130.4 1,019.4 1,106.7 1,019.4 929.1 964.4 859.6 912.0 907.8 52 Miscellaneous 6,731.6 7,643.8 8,457.3 9,413.2 9,504.7 9,413.2 9,911.2 10,213.0 10,611.1 10,579.8 10,647.5 53 Total liabilities 49,803.2 55,416.3 61,632.7 65,244.7 65,142.8 65,244.7 65,433.3 66,716.8 66,996.5 68,711.2 69,417.4 Financial assets not included in liabilities (+) 54 Gold and special drawing rights 21.1 21.6 21.4 21.6 21.4 21.6 21.4 21.5 22.0 21.8 21.9 55 Corporate equities 13,301.7 15,577.3 19,581.2 17,566.4 19,244.2 17,566.4 15,311.0 16,240.7 13,628.2 15,200.7 15,222.6 56 Household equity in noncorporate business 4,052.7 4,286.9 4,537.6 4,814.9 4,736.3 4,814.9 4,853.5 4,876.4 4,918.6 4,866.6 4,885.8 Liabilities not identified as assets (-) 57 Treasury currency -6.3 -6.4 -7.1 -8.5 -7.6 -8.5 -9.4 -9.5 -9.8 -9.8 -10.0 58 Foreign deposits 535.0 542.8 585.7 642.1 593.4 642.1 684.5 645.9 681.7 699.4 703.9 59 Net interbank transactions -32.2 -27.0 -25.5 -4.3 -17.6 -4.3 3.9 5.5 6.0 11.5 20.3 60 Security repurchase agreements 172.9 230.6 266.2 383.3 453.2 383.3 340.8 365.9 364.9 347.5 348.2 61 Taxes payable 104.2 121.2 121.9 127.7 123.8 127.7 111.9 131.7 148.6 99.9 94.9 62 Miscellaneous -1,548.1 -2,248.0 -2,837.8 -3,299.8 -2,788.8 -3,299.8 -3,260.2 -3,208.4 -3,046.6 -3,233.3 -3,208.4 Floats not included in assets (—) 63 Federal government checkable deposits -8.1 -3.9 -9.9 -2.3 -7.8 -2.3 -2.8 -4.8 -5.9 -14.1 32.4 64 Other checkable deposits 26.2 23.1 22.3 24.0 15.5 24.0 21.1 25.5 19.2 28.6 26.3 65 Trade credit 126.8 87.0 95.5 114.3 15.2 114.3 62.0 27.2 16.4 87.8 27.2 66 Totals identified to sectors as assets 67,808.2 76,582.6 87,561.4 89,671.1 90,765.4 89,671.1 87,667.3 89,876.3 87,390.9 90,782.7 91,512.8 1. Data in this table also appear in the Board's Z. 1 (780) quarterly statistical release, tables 2. Excludes corporate equities and mutual fund shares. 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

A40 Selected Measures • August 2002 2.12 OUTPUT, CAPACITY, AND CAPACITY UTILIZATION1 Seasonally adjusted 2001 2002 2001 2002 2001 2002 Q2 Q3 Q4 Ql' Q2 Q3 Q4 Ql' Q2 Q3 Q4 Ql' Output (1992=100) Capacity (percent of 1992 output) Capacity utilization rate (percent)2 1 Total industry 141.3 139.6 137.2 138.1 182.6 183.2 183.6 184.1 77.4 76.2 74.7 75.1 2 Manufacturing 146.0 144.2 141.9 143.0 193.2 193.6 194.0 194.4 75.6 74.5 73.1 73.5 3 Primary processing3 168.9 167.1 164.5 168.0 223.0 223.8 224.5 225.3 75.8 74.7 73.3 74.6 4 Advanced processing4 133.3 131.5 129.3 129.2 176.6 176.9 177.2 177.4 75.5 74.3 73.0 72.8 5 Durable goods 181.9 178.3 174.1 176.1 246.3 247.5 248.5 249.4 73.8 72.0 70.1 70.6 6 Lumber and products 113.2 115.5 112.7 112.1 148.5 148.8 149.1 149.3 76.2 77.6 75.6 75.1 7 Primary metals 120.5 117.8 109.1 111.9 150.8 150.6 150.4 149.4 79.9 78.2 72.6 74.9 8 Iron and steel 117.3 115.7 104.0 109.0 147.4 146.8 146.2 144.4 79.6 78.8 71.2 75.5 9 Nonferrous 124.6 120.6 115.3 115.5 155.3 155.6 155.8 155.9 80.2 77.5 74.0 74.1 10 Industrial machinery and equipment 217.0 208.8 202.2 205.6 297.3 298.8 299.8 300.4 73.0 69.9 67.5 68.4 11 Electrical machinery 509.2 485.3 485.7 500.1 735.6 745.4 752.5 762.1 69.2 65.1 64.6 65.6 12 Motor vehicles and parts 166.8 169.5 165.1 173.8 220.1 221.5 222.9 224.2 75.8 76.5 74.1 77.5 13 Aerospace and miscellaneous transportation equipment 99.0 95.9 91.2 86.2 135.3 135.2 135.1 135.1 73.2 71.0 67.5 63.8 14 Nondurable goods 111.5 111.0 110.2 110.6 143.0 142.9 142.9 142.9 77.9 77.7 77.1 77.4 15 Textile mill products 88.0 85.3 82.4 84.9 117.4 116.4 115.4 114.4 74.9 73.3 71.5 74.3 16 Paper and products 108.9 108.5 105.8 104.3 138.7 138.8 139.0 139.0 78.5 78.1 76.1 75.0 17 Chemicals and products 119.6 121.1 122.4 123.1 158.3 158.5 158.6 158.9 75.6 76.4 77.2 77.5 18 Plastics materials 116.4 117.4 115.6 119.9 152.5 153.0 153.4 153.8 76.3 76.7 75.4 77.9 19 Petroleum products 115.5 113.2 113.7 116.3 122.2 122.4 122.7 122.9 94.5 92.5 92.7 94.7 20 Mining 102.9 101.8 98.6 96.3 112.0 112.2 112.6 112.9 91.8 90.7 87.6 85.3 21 Utilities 120.0 119.1 116.9 119.3 136.2 138.1 139.9 141.6 88.1 86.3 83.6 84.3 22 Electric 123.6 122.2 121.1 122.1 135.1 137.4 139.8 141.9 91.5 88.9 86.7 86.0 Footnotes appear on page A41. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Selected Measures A41 2.12 OUTPUT, CAPACITY, AND CAPACITY UTILIZATION1—Continued Seasonally adjusted 1973 1975 Previous cycle5 Latest cycle6 2001 2001 2002 SSeerriieess High Low High Low High Low May Dec. Jan. Feb.r Mar.r Apr.r Mayp Capacity utilization rate (percent)2 1 Total industry 89.2 72.6 87.3 71.1 85.4 78.1 77.5 74.4 74.8 75.0 75.3 75.4 75.5 2 Manufacturing 88.5 70.5 86.9 69.0 85.7 76.6 75.8 72.9 73.4 73.5 73.8 73.8 73.9 3 Primary processing3 91.8 67.3 88.6 65.7 88.3 76.7 75.9 72.7 74.0 74.6 75.1 75.4 75.6 4 Advanced processing4 86.5 72.5 86.3 71.0 84.2 76.6 75.6 73.0 72.9 72.7 72.9 72.8 72.8 Durable goods 89.2 68.9 87.7 63.9 84.6 73.1 74.2 70.0 70.5 70.6 70.8 70.9 71.0 6 Lumber and products 88.7 61.2 87.9 60.8 93.6 75.5 76.5 75.7 75.6 74.4 75.2 75.0 75.3 7 Primary metals 100.2 65.9 94.2 45.1 92.7 73.7 80.1 68.9 74.2 74.8 75.6 75.8 76.2 8 Iron and steel 105.8 66.6 95.8 37.0 95.2 71.8 80.3 64.8 73.7 76.6 76.2 77.5 77.8 9 Nonferrous 90.8 59.8 91.1 60.1 89.3 74.2 79.8 73.3 74.7 72.8 74.7 73.9 74.3 10 Industrial machinery and equipment 96.0 74.3 93.2 64.0 85.4 72.3 73.0 66.8 68.1 68.4 68.9 68.9 69.9 11 Electrical machinery 89.2 64.7 89.4 71.6 84.0 75.0 69.5 64.5 65.1 65.7 66.0 66.0 66.5 12 Motor vehicles and parts 93.4 51.3 95.0 45.5 89.1 55.9 77.1 77.0 76.8 77.8 78.0 79.6 78.7 13 Aerospace and miscellaneous transportation equipment . .. 78.4 67.6 81.9 66.6 87.3 79.2 73.1 65.8 64.7 63.9 62.8 61.9 60.6 14 Nondurable goods 87.8 71.7 87.5 76.4 87.3 80.7 77.9 76.8 77.2 77.3 77.7 77.6 77.8 15 Textile mill products 91.4 60.0 91.2 72.3 90.4 77.7 73.9 71.7 72.0 74.4 76.4 76.4 76.9 16 Paper and products 97.1 69.2 96.1 80.6 93.5 85.0 78.4 74.1 75.6 74.4 75.0 75.7 76.1 17 Chemicals and products 87.6 69.7 84.6 69.9 86.2 79.3 75.7 76.6 77.5 77.4 77.5 77.2 77.3 18 Plastics materials 102.0 50.6 90.9 63.4 97.0 74.8 76.5 72.9 75.3 78.2 80.3 79.0 78.6 19 Petroleum products 96.7 81.1 90.0 66.8 88.5 85.1 94.5 91.4 93.5 95.4 95.1 94.9 94.4 20 Mining 94.3 88.2 96.0 80.3 88.0 87.0 91.9 86.4 85.9 85.6 84.5 85.3 86.0 7.1 Utilities 96.2 82.9 89.1 75.9 92.6 83.4 87.9 82.0 82.1 84.9 85.9 86.4 85.3 22 Electric 99.0 82.7 88.2 78.9 95.0 87.1 90.9 84.8 84.8 85.9 87.4 88.4 86.6 1. Data in this table also appear in the Board's G.17 (419) monthly statistical release. The 3. Primary processing includes textiles; lumber; paper; industrial chemicals; synthetic data are also available on the Board's web site, http://www.federalreserve.gov/releases/gl7. materials; fertilizer materials; petroleum products; rubber and plastics; stone, clay, and glass; The latest historical revision of the industrial production index and the capacity utilization primary metals; fabricated metals; semiconductors and related electronic components; and rates was released in November 2001. The recent annual revision is described in the March motor vehicle parts. 2002 issue of the Bulletin. For a description of the methods of estimating industrial 4. Advanced processing includes foods, tobacco, apparel, furniture and fixtures, printing production and capacity utilization, see "Industrial Production and Capacity Utilization: and publishing, chemical products such as drugs and toiletries, agricultural chemicals, leather Historical Revision and Recent Developments," Federal Reserve Bulletin, vol. 83 (February and products, machinery except semiconductors and related electronic components, transpor- 1997), pp. 67-92, and the references cited therein. For details about the construction of tation equipment except motor vehicle parts, instruments, and miscellaneous manufacturing. individual industrial production series, see "Industrial Production: 1989 Developments and 5. Monthly highs, 1978-80; monthly lows, 1982. Historical Revision," Federal Reserve Bulletin, vol. 76 (April 1990), pp. 187-204. 6. Monthly highs, 1988-89; monthly lows, 1990-91. 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

A42 Domestic Nonfinancial Statistics • August 2002 2.13 INDUSTRIAL PRODUCTION Indexes and Gross Value1 Monthly data seasonally adjusted 1992 2001 2002 pro- 2001 Group por- avg. tion May June July Aug. Sept. Oct. Nov. Dec. Jan. Feb.' Mar.' Apr.' MayP Index (1992= 100) MAJOR MARKETS 1 Total index 100.0 140.1 141.6 140.3 140.4 140.0 138.5 137.7 137.2 136.7 137.6 138.1 138.7 139.1 139.3 2 Products 60.8 129.4 130.9 130.0 130.3 129.4 127.7 126.8 126.7 126.5 126.7 126.9 127.6 127.4 127.5 3 Final products 46.3 132.0 133.9 132.9 133.2 132.0 130.0 129.2 129.4 129.1 129.3 129.4 129.7 129.6 129.6 4 Consumer goods, total 29.0 120.7 121.4 121.1 122.2 121.4 119.9 119.6 120.0 120.6 120.6 121.2 121.8 121.9 121.9 5 Durable consumer goods 5.8 151.3 154.2 153.2 157.0 154.1 151.8 146.2 152.1 156.2 154.5 155.4 156.9 158.7 159.4 6 Automotive products 2.5 149.9 152.8 152.3 161.1 155.6 152.5 145.4 155.4 160.7 158.3 158.1 159.6 163.1 162.8 7 Autos and trucks 1.6 160.5 165.7 163.4 178.3 169.1 163.9 154.5 170.7 177.8 175.0 173.4 173.7 179.6 178.4 8 Autos, consumer 0.9 94.0 97.9 97.2 97.5 90.6 92.7 86.9 94.8 101.1 101.2 110.5 102.5 104.1 102.3 9 Trucks, consumer 0.7 231.4 237.9 234.0 264.3 252.6 239.8 226.5 251.5 259.5 253.6 240.6 249.7 260.1 259.4 10 Auto parts and allied goods 0.9 133.5 132.5 135.1 133.9 134.5 134.8 131.3 131.3 133.6 132.0 134.0 137.4 137.1 138.2 11 Other 3.3 151.5 154.5 152.9 151.0 151.0 149.8 145.9 146.9 149.7 148.7 151.1 152.4 152.2 154.2 12 Appliances, televisions, and air conditioners 0.9 283.2 292.1 285.0 271.7 289.5 288.2 271.9 280.1 297.9 295.1 304.8 308.6 304.7 317.5 13 Carpeting and furniture 0.8 119.1 117.7 118.6 116.2 117.6 118.5 116.4 119.2 118.8 117.2 118.8 118.9 120.4 119.7 14 Miscellaneous home goods 1.6 114.2 117.7 116.2 117.7 112.7 110.5 109.2 107.5 108.0 108.0 108.7 110.0 109.8 110.4 15 Nondurable consumer goods 23.2 113.3 113.6 113.4 113.9 113.6 112.3 113.1 112.3 112.2 112.6 113.1 113.5 113.2 113.1 16 Foods and tobacco 10.4 108.8 108.6 108.9 109.3 108.7 107.7 108.2 108.6 109.0 109.2 109.7 110.3 110.1 109.9 17 Clothing 2.4 78.3 80.6 78.2 79.0 76.4 74.8 74.4 73.2 74.7 75.4 74.9 75.7 74.7 74.7 18 Chemical products 4.6 145.0 145.2 145.7 147.5 146.7 145.9 148.5 148.0 148.5 149.4 147.6 147.9 147.5 147.5 19 Paper products 2.9 105.5 106.7 106.6 106.0 105.7 105.1 103.9 102.1 100.2 98.8 98.1 98.6 96.8 97.1 20 Energy 3.0 117.4 116.9 115.8 116.0 117.8 114.8 116.9 113.4 111.6 113.5 118.3 118.7 119.5 119.1 21 Fuels 0.8 114.2 115.6 115.2 114.3 112.2 113.9 116.1 115.2 112.6 117.4 116.5 115.4 117.1 116.2 22 Residential utilities 2.1 119.2 117.2 115.8 116.5 120.5 115.0 117.0 112.0 110.7 111.1 118.9 120.0 120.4 120.2 23 Equipment 17.3 152.3 156.5 154.1 152.7 150.5 147.1 145.4 145.0 142.7 143.3 142.2 141.7 141.3 141.4 24 Business equipment 13.2 175.9 181.3 177.8 176.1 173.3 168.4 166.9 167.2 164.3 165.3 164.0 163.5 162.6 162.8 25 Information processing 5.4 279.5 286.8 279.6 275.2 271.9 266.0 267.9 269.1 265.5 268.2 267.9 268.7 266.9 267.1 26 Computer and office equipment 1.1 948.2 950.6 948.7 934.2 925.5 903.0 913.2 927.8 941.2 969.2 998.7 1,020.6 1,035.5 1,041.4 27 Industrial 4.0 125.1 129.0 125.2 123.1 122.2 119.6 119.4 118.3 114.5 116.1 113.5 113.5 113.0 115.7 28 Transit 2.5 127.6 134.5 133.1 133.8 128.7 124.6 119.2 118.6 118.7 116.4 116.8 114.4 112.4 108.9 29 Autos and trucks 1.2 145.8 152.5 150.5 157.1 149.6 143.6 136.2 143.6 151.4 150.5 155.7 155.3 156.7 155.7 30 Other 1.3 139.1 139.1 140.7 140.8 139.8 131.7 129.2 134.2 130.2 133.1 130.5 131.3 134.2 134.6 31 Defense and space equipment 3.4 74.0 73.5 73.4 73.6 73.5 73.8 74.2 74.3 74.7 74.9 74.9 75.1 76.1 76.0 32 Oil and gas well drilling 0.6 140.2 151.9 150.4 147.1 143.1 140.4 127.2 114.4 107.8 107.3 105.3 104.5 102.0 102.6 33 Manufactured homes 0.2 93.7 91.7 96.0 95.4 97.9 102.9 100.2 99.5 97.7 93.1 89.1 81.5 81.2 82.0 34 Intermediate products, total 14.5 121.4 122.2 121.4 121.4 121.6 120.7 119.6 118.9 118.6 118.9 119.4 121.1 120.8 121.1 35 Construction supplies 5.4 137.6 138.7 138.0 137.3 138.8 138.1 134.6 134.0 135.6 136.3 136.8 139.6 138.5 139.1 36 Business supplies 9.1 111.9 112.4 111.6 112.0 111.3 110.4 110.7 109.8 108.6 108.5 109.1 110.1 110.2 110.4 37 Materials 39.2 158.0 159.4 157.4 157.2 157.6 156.5 155.9 154.8 153.6 155.8 157.1 157.5 159.0 159.5 .38 Durable goods materials 20.7 212.7 216.2 212.9 212.6 212.0 209.4 207.9 206.5 206.0 209.4 211.6 212.3 214.3 215.3 39 Durable consumer parts 4.0 155.8 159.6 157.7 160.2 160.8 155.3 152.3 155.0 157.5 161.4 162.9 163.8 166.4 164.9 40 Equipment parts 7.5 441.8 446.5 436.1 429.9 429.6 430.4 431.7 427.9 426.7 434.0 439.7 442.3 445.2 450.4 41 Other 9.2 125.2 127.5 126.2 126.4 125.4 123.8 122.5 120.5 119.0 120.5 121.5 121.6 122.6 123.3 42 Basic metal materials 3.1 113.7 116.7 115.5 115.7 113.6 113.3 111.0 106.7 101.9 106.9 107.9 108.2 108.9 109.0 43 Nondurable goods materials 8.9 104.2 103.0 102.2 102.7 104.0 104.2 104.7 103.1 101.1 103.3 103.4 104.1 104.5 104.7 44 Textile materials 1.1 90.8 90.9 90.8 87.6 90.1 89.0 87.2 84.7 84.5 84.9 87.4 90.2 89.3 89.9 45 Paper materials 1.8 108.6 108.3 104.8 107.7 109.5 110.5 112.4 106.9 103.1 106.9 103.3 102.7 105.1 105.6 46 Chemical materials 4.0 102.8 100.5 100.3 100.9 102.2 102.1 103.5 102.2 99.3 102.8 104.1 105.4 105.1 105.1 47 Other 2.1 109.8 109.4 109.3 109.7 109.8 110.2 108.8 110.4 111.2 110.4 110.0 109.5 110.3 110.4 48 Energy materials 9.6 103.3 103.8 103.1 102.3 103.0 103.1 102.6 102.6 101.6 101.6 102.6 102.2 103.5 103.7 49 Primary energy 6.2 98.8 99.0 99.5 98.5 98.4 99.4 98.2 98.8 97.9 97.6 97.7 96.9 98.5 98.6 50 Converted fuel materials 3.4 111.7 113.1 109.1 109.0 111.4 109.3 110.9 109.1 107.9 108.6 111.6 112.0 112.9 113.1 SPECIAL AGGREGATES 51 Total excluding autos and trucks 97.3 139.8 141.1 139.9 139.5 139.4 138.0 137.5 136.6 135.8 136.7 137.3 137.9 138.2 138.4 52 Total excluding motor vehicles and parts 95.3 139.0 140.2 139.0 138.7 138.5 137.2 136.8 135.8 134.9 135.8 136.3 136.9 137.0 137.4 53 Total excluding computer and office equipment 98.4 134.2 135.7 134.4 134.6 134.1 132.8 132.0 131.5 130.9 131.7 132.2 132.7 133.1 133.3 54 Consumer goods excluding autos and trucks . . 27.5 118.5 119.0 118.8 119.1 118.8 117.6 117.8 117.2 117.4 117.6 118.3 119.0 118.7 118.7 55 Consumer goods excluding energy 26.1 121.1 122.0 121.8 122.9 121.8 120.6 119.9 120.8 121.7 121.5 121.5 122.2 122.2 122.2 56 Business equipment excluding autos and trucks 12.0 179.7 184.9 181.3 178.4 176.2 171.5 170.8 170.1 165.7 167.0 164.7 164.2 163.0 163.3 57 Business equipment excluding computer and office equipment 12.0 146.8 151.7 148.5 147.2 144.7 140.6 139.0 139.1 136.3 136.8 135.2 134.4 133.5 133.5 58 Materials excluding energy 29.6 175.7 177.4 175.0 175,0 175.2 173.7 173.0 171.5 170.3 173.4 174.7 175.4 176.9 177.6 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Selected Measures A43 2.13 INDUSTRIAL PRODUCTION Indexes and Gross Value1—Continued Monthly data seasonally adjusted 1992 2001 2002 Group c S o I d C e 2 p p r o o r - - 2 aa 0 vv 0 gg 1 .. tion May June July Aug. Sept. Oct. Nov. Dec. Jan. Feb.' Mar.' Apr.' Mayp Index (1992= 100) MAJOR INDUSTRIES 59 Total index 100.0 140.1 141.6 140.3 140.4 140.0 138.5 137.7 137.2 136.7 137.6 138.1 138.7 139.1 139.3 60 Manufacturing 85.4 144.8 146.4 145.0 145.2 144.5 142.9 142.1 142.0 141.6 142.6 142.9 143.5 143.8 144.1 61 Primary processing 31.0 167.9 169.4 167.3 167.4 167.3 166.6 165.6 164.4 163.5 166.6 168.0 169.4 170.4 171.1 62 Advanced processing 54.4 132.0 133.6 132.5 132.9 131.7 129.8 129.1 129.5 129.3 129.3 129.0 129.3 129.2 129.3 63 Durable goods 44.8 179.3 182.7 180.1 180.0 178.9 176.1 173.9 174.3 174.1 175.7 176.0 176.7 177.4 177.8 64 Lumber and products 24 2.1 113.0 113.7 114.2 114.0 116.2 116.4 112.8 112.4 113.0 112.9 111.0 112.4 112.1 112.7 65 Furniture and fixtures 25 1.4 138.7 140.4 138.3 138.4 138.7 135.1 133.5 134.8 135.4 133.6 135.0 135.2 137.0 137.2 66 Stone, clay, and glass products 32 2.1 130.8 133.0 130.0 130.0 130.8 129.9 130.3 128.8 126.3 127.7 127.8 127.7 128.1 128.0 67 Primary metals 33 3.1 116.9 120.8 119.5 119.5 117.5 116.4 113.6 110.2 103.6 111.3 111.8 112.6 112.5 112.6 68 Iron and steel 331,2 1.8 112.6 118.4 117.7 118.8 115.7 112.7 110.4 107.1 94.6 107.1 110.6 109.4 110.4 110.1 69 Raw steel 331PT 0.1 102.8 106.2 107.8 108.3 106.2 105.8 99.5 95.1 85.5 100.0 101.3 101.2 101.2 101.2 70 Nonferrous 333-6,9 1.4 122.3 124.0 122.0 120.8 119.9 121.2 117.6 114.1 114.2 116.5 113.5 116.5 115.3 115.8 71 Fabricated metal products . . 34 5.0 130.4 131.0 129.5 131.1 131.0 128.7 127.5 127.2 129.1 128.7 127.7 128.3 129.0 129.5 72 Industrial machinery and equipment 35 7.8 213.3 217.0 213.8 210.2 211.0 205.1 202.8 203.4 200.4 204.5 205.3 207.0 207.4 210.6 73 Computer and office equipment 357 1.6 1,088.0 1,095.1 1,095.4 1,074.6 1,064.8 1,035.7 1,049.1 1,067.2 1,087.0 1,118.5 1,155.8 1,182.0 1,200.1 1,207.1 74 Electrical machinery 36 7.1 504.2 511.4 497.6 485.9 485.5 484.6 484.8 485.1 487.3 494.0 500.8 505.6 507.9 514.8 75 Transportation equipment . . 37 9.4 128.5 133.2 131.9 134.6 131.6 128.5 124.6 127.2 129.1 128.2 128.9 128.4 129.7 127.9 76 Motor vehicles and parts . 371 4.7 162.9 169.7 167.7 174.6 169.9 164.2 157.3 165.9 172.1 171.8 174.5 175.1 179.2 177.5 77 Autos and light trucks . 371PT 2.5 154.1 159.5 157.2 170.2 160.9 156.6 147.4 162.7 169.6 167.1 166.9 166.2 171.7 170.4 78 Aerospace and miscellaneous transportation equipment 372-6,9 4.7 96.3 98.9 98.3 97.1 95.7 95.0 93.8 91.0 88.9 87.4 86.4 84.8 83.5 81.7 79 Instruments 38 5.4 115.3 116.8 114.5 115.0 113.9 112.8 113.6 113.7 112.8 113.8 112.4 112.4 111.9 111.9 80 Miscellaneous 39 1.3 117.5 119.0 119.8 120.7 116.7 114.5 113.6 110.7 114.1 114.6 114.6 116.4 115.8 116.5 81 Nondurable goods 40.6 111.4 111.5 111.1 111.5 111.1 110.5 110.8 110.2 109.7 110.3 110.5 111.1 111.0 111.2 82 Foods ' ' 20 9.6 112.9 112.8 112.9 113.1 113.0 111.7 112.2 113.0 114.0 113.5 113.7 114.2 114.3 113.9 83 Tobacco products 21 1.6 93.8 92.9 93.8 95.0 93.2 92.7 92.8 92.7 90.8 93.1 95.0 95.3 94.3 94.9 84 Textile mill products 22 1.8 86.7 86.7 86.8 84.3 85.8 85.9 83.0 81.9 82.5 82.5 85.1 87.1 86.9 87.2 85 Apparel products 23 2.2 93.1 96.5 94.0 95.1 91.2 89.4 87.8 87.3 88.8 89.4 88.4 89.5 88.4 88.6 86 Paper and products 26 3.5 108.1 108.8 107.1 108.1 107.7 109.7 108.1 106.2 103.1 105.1 103.5 104.3 105.2 105.7 87 Printing and publishing .... 27 6.8 101.6 102.3 101.3 101.1 100.7 99.7 99.8 98.9 97.3 96.6 96.0 96.1 95.6 95.9 88 Chemicals and products .... 28 10.0 121.1 119.9 119.5 121.2 121.2 121.0 123.2 122.4 121.4 123.0 122.9 123.3 123.1 123.5 89 Petroleum products 29 1.4 114.3 115.6 115.5 114.6 112.9 112.1 114.9 114.0 112.2 114.8 117.2 116.9 116.8 116.2 90 Rubber and plastics 30 3.5 136.8 137.1 137.7 138.0 137.3 136.5 134.4 133.4 134.8 134.7 136.6 139.0 139.8 141.1 91 Leather and products 31 0.3 63.1 63.6 62.2 62.1 62.8 61.4 60.0 59.2 58.4 60.3 60.1 60.0 59.7 59.6 92 Mining 6.8 101.3 103.0 102.5 101.9 101.4 102.1 99.5 99.0 97.4 97.0 96.6 95.4 96.4 97.1 93 Metal 10 0.4 88.4 91.3 88.6 88.8 87.9 91.2 85.6 80.0 80.1 75.2 78.2 80.0 80.8 81.6 94 Coal 12 1.0 111.7 113.9 115.9 111.9 111.7 111.7 106.5 106.6 105.8 104.5 107.0 99.0 101.8 101.7 95 Oil and gas extraction 13 4.8 96.1 97.4 97.0 97.0 96.3 97.0 94.8 94.5 92.6 92.0 91.2 90.7 91.4 92.3 96 Stone and earth minerals 14 0.6 132.6 137.1 133.7 130.6 132.2 131.2 129.6 129.5 129.8 133.7 132.5 132.2 133.0 133.5 97 Utilities 7.8 119.8 119.7 119.1 118.2 121.1 118.1 119.4 116.2 115.2 115.7 120.3 122.0 123.1 122.0 98 Electric 491.3PT 6.2 123.1 122.8 122.9 121.0 124.5 121.0 122.3 121.8 119.3 119.8 121.9 124.6 126.6 124.4 99 Gas 492,3PT 1.6 109.1 107.8 105.2 107.4 108.1 106.9 108.0 96.2 100.5 101.0 113.7 112.1 110.0 112.9 SPECIAL AGGREGATES 100 Manufacturing excluding motor vehicles and parts 80.7 143.9 145.1 143.7 143.5 143.0 141.7 141.3 140.6 139.7 140.8 140.9 141.6 141.6 142.0 101 Manufacturing excluding computers and office equipment 83.8 138.0 139.5 138.1 138.4 137.7 136.2 135.4 135.3 134.8 135.8 135.9 136.5 136.7 137.0 102 Computers, communications equipment, and semiconductors 5.6 1,048.5 1,065.4 1,036.7 1,006.7 999.5 994.8 1,002.4 1,002.5 1,006.0 1,032.2 1,065.5 1,082.5 1,091.2 1,104.6 103 Manufacturing excluding computers and semiconductors 81.3 121.2 122.6 121.5 122.0 121.3 119.9 119.1 118.9 118.4 119.1 119.0 119.4 119.5 119.7 104 Manufacturing excluding computers, communications equipment, and semiconductors 79.8 118.2 119.4 118.5 119.0 118.4 117.0 116.3 116.1 115.7 116.4 116.4 116.8 116.9 117.1 Gross value (billions of 1996 dollars, annual rates) MAJOR MARKETS 105 Products, total 100.0 2,720.1 2,759.1 2,741.6 2,753.0 2,732.0 2,694.5 2,669.6 2,679.2 2,683.2 2,686.4 2,694.3 2,709.9 2,710.1 2,711.5 106 Final 77.2 2,101.5 2,133.0 2,118.1 2,129.7 2,107.0 2,075.1 2,056.7 2,070.6 2,075.1 2,076.9 2,080.4 2,085.7 2,088.6 2,088.3 107 Consumer goods 51.9 1,303.7 1,312.4 1,307.9 1,322.5 1,312.1 1,298.5 1,291.1 1,301.9 1,313.7 1,312.6 1,318.7 1,325.2 1,329.0 1,328.3 108 Equipment 25.3 797.4 823.3 811.6 806.5 793.3 773.1 761.0 763.5 753.5 757.1 753.3 751.1 749.4 750.0 109 Intermediate 22.B 618.9 626.3 623.7 623.5 625.0 619.4 612.9 608.8 608.3 609.7 614.0 624.2 621.6 623.2 1. Data in this table appear in the Board's G.17 (419) monthly statistical release. The data Revision and Recent Developments," Federal Reserve Bulletin, vol. 83 (February 1997), pp. are also available on the Board's web site, http://www.federalreserve.gov/releases/gl7. The 67-92, and the references cited therein. For details about the construction of individual latest historical revision of the industrial production index and the capacity utilization rates industrial production series, see "Industrial Production: 1989 Developments and Historical was released in November 2001. The recent annual revision is described in the March 2002 Revision," Federal Reserve Bulletin, vol. 76 (April 1990), pp. 187-204. issue of the Bulletin. For a description of the methods of estimating industrial production and 2. Standard Industrial Classification. capacity utilization, see "Industrial Production and Capacity Utilization: Historical Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A44 International Statistics • August 2002 3.10 U.S. INTERNATIONAL TRANSACTIONS Summary Millions of dollars; quarterly data seasonally adjusted except as noted1 2001 2002 IItteemm ccrreeddiittss oorr ddeebbiittss 11999999 22000000 22000011 Ql' Q2' Q3' Q4' Q1P 1 Balance on current account -292,856' -410,341' -393,371' -107,722 -99,234 -91,331 -95,086 -112,487 2 Balance on goods and services -261,838 -375,739 -347,810 -97.160 -93,324 -79,778 -88,028 -94,858 3 Exports 957,146' 1.064,239' 998,022' 266.004 256,766 242,325 232,930 233,609 4 Imports -1,219,383' -1.442,920' -1,356,312' -363,164 -350,090 -322,103 -320,958 -328,467 5 Income, net -13.613 -14,792 -19,118 1,046 6,006 807 6,521 -1,779 6 Investment, net 23.877' 27,651' 20,539' 2,563 7,526 2,345 8,102 -151 7 Direct 75,009' 88,862' 102,595' 22,249 27,832 23,908 28,602 20,904 8 Portfolio -51,132' -61,211' -82,056' -19,686 -20,306 -21,563 -20,500 -21,055 9 Compensation of employees -5,739' -5,869' -6,157' -1,517 -1,520 -1,538 -1,581 -1,628 10 Unilateral current transfers, net ^t8,757' -53,442' -49,463' -11,608 -11,916 -12,360 -13,579 -15,850 11 Change in U.S. government assets other than official reserve assets, net (increase, -) 2,750' -941' -486' 77 -783 77 143 239 12 Change in U.S. official reserve assets (increase, -) 8,747 -290 -4,911 190 -1,343 -3,559 -199 390 13 Gold 0 0 0 0 0 0 0 0 14 Special drawing rights (SDRs) 10 -722 -630 -189 -156 -145 -140 -109 15 Reserve position in International Monetary Fund 5,484 2,308 -3,600 574 -1,015 -3,242 83 652 16 Foreign currencies 3,253 -1,876 -681 -195 -172 -172 -142 -153 17 Change in U.S. private assets abroad (increase, -) -489,066' -605,258' -365,565' -216.082 -77,910 28,460 -100,032 -14,510 18 Bank reported claims2 -76,263 -148,657' -128,705' -113,914 -685 69,576 -83.682 10,006 19 Nonbank-reported claims -95,466' -150,805' -14,358' -51,759 9,670 -9,479 37,210 -4,030 20 U.S. purchase of foreign securities, net -128,436' -127,502' -94,662' -26,895 -51,764 10,087 -26,090 2,047 21 U.S. direct investments abroad, net -188,901' -178,294' -127,840' -23,514 -35,131 -41,724 -27,470 -22.533 27 Change in foreign official assets in United States (increase, +) 43,551 37,619 6,092 4.087 -20,831 16,882 5,086 9,034 23 U.S. Treasury securities 12.177 -10,233 10,760 -1,027 -20,798 15,810 16,760 -582 24 Other U.S. government obligations 20,350 40,909 20,920 3,574 9,932 -216 7,630 7,296 25 Other U.S. government liabilities2 -2.855 -1,987 -2,482 -676 -791 89 -504 -790 26 Other U.S. liabilities reported by US. banks2 12,964 5,803 -28,825 1,213 -10,202 -782 -20,507 2,384 27 Other foreign official assets3 915 3,127 5,719 1,003 1,028 1,981 1,707 726 28 Change in foreign private assets in United States (increase, +) 770,193 986,599 889,367 298,423 202,441 1,007 245,711 104,281 29 U.S. bank-reported liabilities4 54,232 87,953 95,214 15,633 55.003 -45,567 85,598 -25,299 30 U.S. nonbank-reported liabilities 69,075 177,010 98,222 111,644 -5,307 -25,154 1,170 34,704 31 Foreign private purchases of U.S. Treasury securities, net -20,490 -52,792 15,779 -4,744 -14,685 -15,470 27,229 -5,682 37 U.S. currency flows 22.407 1,129 23,783 2,311 2,772 8,203 10,497 4,525 33 Foreign purchases of other US. securities, net 343,963 485,644 498,433 129,990 113,556 64,787 99,320 70,329 34 Foreign direct investments in United States, net 301,006 287,655 157,936 43,589 51.102 14.208 21,897 25,704 35 Capital account transactions, net5 -3,340' 837' 826' 208 207 206 205 201 36 Discrepancy ^8.822 696 -39,193 20,819 -2,547 48,258 -55,828 12,852 37 Due to seasonal adjustment 7,691 875 -10,286 1,721 9,956 38 Before seasonal adjustment 31,286' 7' 10,701' 13,128 -3,422 58,544 -57,549 2,896 MEMO Changes in official assets 39 U.S. official reserve assets (increase, -) 8,747 -290 —4,911 190 -1,343 -3,559 --119999 339900 40 Foreign official assets in United States, excluding line 25 (increase, +) 46.406 39,606 8,574 4,763 -20,040 16,793 5,590 9,824 41 Change in Organization of Petroleum Exporting Countries official assets in United States (part of line 22) 1,621 12,000' -1,725' 673 -1,699 -4,081 3,382 -8,471 1. Seasonal factors are not calculated for lines 11-16, 18-20, 22-35, and 38^tl. 5. Consists of capital transfers (such as those of accompanying migrants entering or 2. Associated primarily with military sales contracts and other transactions arranged with leaving the country and debt forgiveness) and the acquisition and disposal of nonproduced or through foreign official agencies. nonfinancial assets. 3. Consists of investments in U.S. corporate stocks and in debt securities of private SOURCE. U.S. Department of Commerce, Bureau of Economic Analysis, Survey of Current corporations and state and local governments. Business. 4. Reporting banks included all types of depository institutions as well as some brokers and dealers. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Summary Statistics A45 3.12 U.S. RESERVE ASSETS Millions of dollars, end of period 2001 2002 AAsssseett 11999988 11999999 22000000 Nov. Dec. Jan. Feb. Mar. Apr. May June" 1 Total 81,761 71,516 67,647 69,158 68,654 67,532 67,357 67,574 67,844 69,579 74,696 2 Gold stock1 11,046 11,048 11,046 11,045 11,045 11,044 11,044 11,044 11,044 11,044 11,044 3 Special drawing rights2-3 10,603 10,336 10,539 10,864 10,774 10,657 10,763 10,809 10,988 11,297 11,645 4 Reserve position in International Monetary Fund2 24,111 17,950 14,824 17,293 17,854 17,602 17,169 17,078 16,184 16,498 19,841 5 Foreign currencies4 36,001 32,182 31,238 29,956 28,981 28,229 28,381 28,643 29,628 30,740 32,166 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. I 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 2001 2002 AAsssseett 11999988 11999999 22000000 Nov/ Dec. Jan. Feb. Mar. Apr. May Junep 1 Deposits 167 71 215 75 61 162 89 256 Ill 127 90 Held in custody 2 U.S. Treasury securities2 607,574 632,482 594,094 599,043 592,630 592,031 591,202 593,865 89,531 605,501 619,226 3 Earmarked gold3 10,343 9,933 9,451 9,099 9,099 9,098 9,098 9,098 9,091 9,084 9,077 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

A46 International Statistics • August 2002 3.15 SELECTED U.S. LIABILITIES TO FOREIGN OFFICIAL INSTITUTIONS Millions of dollars, end of period 2001 2002 IItteemm 11999999 22000000 Oct. Nov. Dec. Jan. Feb. Mar. Apr.P 1 Total1 806,318 845,869 860,445 867,512 857,786 861,508 868,753 867,618 871,201 BY tvpe 2 Liabilities reported by banks in the United States2 138,847 144,593 140,003 130,661 123,125 122,181 133,554 125,517 134,522 3 U.S. Treasury bills and certificates3 156.177 153,010 161,081 167,562 161,719 166,640 164,076 161,312 155,770 U.S. Treasury bonds and notes 4 Marketable 422,266 415,964 412,111 418,377 419,438 416,438 414,261 419,515 417,909 Nonmarketable4 6,111 5,348 3,520 3,398 3,411 3,433 3,138 3,159 3,179 6 U.S. securities other than U.S. Treasury securities5 82,917 126,954 143,730 147,514 150,093 152,816 153,724 158,115 159,821 By area 7 244,805 253,592 263,750 262,119 256,404 262,573 256,438 255,772 258,330 8 Canada 12,503 12,394 11,780 12,589 12,107 12,421 13,126 12,975 11,008 9 Latin America and Caribbean 73,518 76,753 77,555 77,244 77,374 74,931 74,017 72,737 72,346 10 463,703 488,170 490.897 498,815 497,333 495,025 509,774 509,721 514,758 11 Africa 7,523 9,165 10,337 9,560 9,646 10,901 10,049 9,510 9,577 12 Other countries 4,266 5,795 6,126 7,185 4,922 5,657 5,349 6,903 5,182 1. Includes the Bank for International Settlements. 5. Debt securities of U.S. government corporations and federally sponsored agencies, and 2. Principally demand deposits, time deposits, bankers acceptances, commercial paper, U.S. corporate stocks and bonds. negotiable time certificates of deposit, and borrowings under repurchase agreements. SOURCE. Based on U.S. Department of the Treasury data and on data reported to the 3. Includes nonmarketable certificates of indebtedness and Treasury bills issued to official department by banks (including Federal Reserve Banks) and securities dealers in the United institutions of foreign countries. States, and on the 1994 benchmark survey of foreign portfolio investment in the United 4. Excludes notes issued to foreign official nonreserve agencies. Includes current value of States. zero-coupon Treasury bond issues to foreign governments as follows: Mexico, beginning March 1990, 30-year maturity issue; Venezuela, beginning December 1990, 30-year maturity issue; Argentina, beginning April 1993, 30-year maturity issue. 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 2001 2002 IItteemm 11999988 11999999 22000000 June1" Sept.r Dec/ Mar. 1 Banks' liabilities 101,125 88.537 77,779 107,806 92,557 89,627 90,254 2 Banks' claims 78,162 67,365 56,912 77,439 69,116 75,872 80,025 3 Deposits 45,985 34,426 23,315 32,713 36,364 45,382 50,293 4 Other claims 32,177 32,939 33,597 44,726 32,752 30,490 29,732 5 Claims of banks' domestic customers2 20,718 20,826 24,411 21,144 20,885 17,631 16,454 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 A47 3.17 LIABILITIES TO FOREIGNERS Reported by Banks in the United States1 Payable in U.S. dollars Millions of dollars, end of period 2001 2002 IItteemm 11999999 22000000 22000011 Oct. Nov. Dec. Jan. Feb. Mar.' Apr." BY HOLDER AND TYPE OF LIABILITY 1 Total, all foreigners 1,408,740 1,511,410 l,619,624r l,585,431r 1,655,781r l,619,624r l,567,147r l,600,953r 1,650,469 1,681,844 2 Banks' own liabilities 971,536 1,077,636 l,172,962r 1,132,862' 1,195,440' 1,172,962' 1,108,839' 1,132,535' 1,168,443 1,211,022 3 Demand deposits 42,884 33,365 33,600 29,735 34,725 33,600 31,704 32,736 38,272 33,269 4 Time deposits2 163,620 187,883 154,160 167,943 155,530 154,160 153,242' 147,929' 145,421 143,339 5 Other3 155,853 171,401 199,736r 207,428' 219,596' 199,736' 208,435' 215,680' 210,633 225,906 6 Own foreign offices4 609,179 684,987 785,466r 727,756' 785,589' 785,466' 715,458' 736,190' 774,117 808,508 7 Banks' custodial liabilities5 437,204 433,774 446,662' 452,569' 460,341' 446,662' 458,308' 468,418' 482,026 470,822 8 U.S. Treasury bills and certificates6 185,676 177,846 186,092' 183,077' 191,186' 186,092' 190,144' 187,851' 189,640 182,983 9 Short-term agency securities7 n.a. n.a. 59,781 65,652 59,723 59,781 52,515 66,056 68,670 69,550 10 Other negotiable and readily transferable instruments8 132,617 145,840 80,026 77,465 79,074 80,026 80,270 81,730 93,771 95,487 11 Other 118,911 110,088 120,763 126,375 130,358 120,763 135,379 132,781 129,945 122,802 12 Nonmonetary international and regional organizations9 15,276 12,542 10,804 10,336 11,168 10,804 17,155 15,453 12,106 14,440 13 Banks' own liabilities 14,357 12,140 10,166 9,773 10,332 10,166 16,227 14,553 10,914 13,426 14 Demand deposits 98 41 34 40 21 34 35 31 22 19 15 Time deposits2 10,349 6,246 3,755 2,827 3,133 3,755 7,581 5,482 7,023 6,193 16 Other3 3,910 5,853 6,377 6,906 7,178 6,377 8,611 9,040 3,869 7,214 17 Banks' custodial liabilities5 919 402 638 563 836 638 928 900 1,192 1,014 18 U.S. Treasury bills and certificates6 680 252 577 521 779 577 883 859 1,105 970 19 Short-term agency securities7 n.a. n.a. 40 18 36 40 24 24 21 21 20 Other negotiable and readily transferable instruments8 233 149 21 13 17 21 21 17 21 21 21 Other 6 1 0 11 4 0 0 0 45 2 22 Official institutions10 295,024 297,603 284,844 301,084 298,223 284,844 288,821 297,630 286,829 290,292 23 Banks' own liabilities 97,615 96,989 83,524 96,143 92,346 83,524 87,346 85,142 80,693 85,313 24 Demand deposits 3,341 3,952 2,988 2,496 3,336 2,988 2,877 2,150 3,285 2,496 25 Time deposits2 28,942 35,573 19,471 24,275 18,348 19,471 15,191' 16,350' 13,975 15,499 26 Other3 65,332 57,464 61,065 69,372 70,662 61,065 69,278' 66,642' 63,433 67,318 27 Banks' custodial liabilities5 197,409 200,614 201,320 204,941 205,877 201,320 201,475 212,488 206,136 204,979 28 U.S. Treasury bills and certificates6 156,177 153,010 161,719 161,081 167,562 161,719 166,640 164,076 161,312 155,770 29 Short-term agency securities7 n.a. n.a. 36,351 41,078 35,037 36,351 31,445 45,085 40,826 45,910 30 Other negotiable and readily transferable instruments8 41,182 47,366 2,180 1,946 1,715 2,180 2,191 2,307 2,785 2,702 31 Other 50 238 1,070 836 1,563 1,070 1,199 1,020 1,213 597 32 Banks" 900,379 972,932 1,047,307' 1,011,339' 1,070,899' 1,047,307' 989,499' 1,014,020' 1,079,082 1,101,347 3.3 Banks' own liabilities 728,492 821,306 907,979' 863,983' 921,874' 907,979' 836,273' 864,115' 904,291 934,525 34 Unaffiliated foreign banks 119,313 136,319 122,513' 136,227' 136,285' 122,513' 120,815' 127,925' 130,174 126,017 35 Demand deposits 17,583 15,522 13,089 11,166 13,149 13,089 10,376 12,786 16,340 12,181 36 Time deposits2 48,140 66,904 52,910 61,244 56,132 52,910 52,274' 48,241' 47,633 46,031 37 Other3 53,590 53,893 56,514' 63,817' 67,004' 56,514' 58,165' 66,898' 66,201 67,805 38 Own foreign offices4 609,179 684,987 785,466' 727,756' 785,589' 785,466' 715,458' 736,190' 774,117 808,508 39 Banks' custodial liabilities5 171,887 151,626 139,328' 147,356' 149,025' 139,328' 153,226' 149,905' 174,791 166,822 40 U.S. Treasury bills and certificates6 16,796 16,023 11,541' 10,343' 10,960' 11,541' 10,222' 10,323' 11,374 13,016 41 Short-term agency securities7 n.a. n.a. 2,078 2,868 2,470 2,078 2,525 1,916 7,399 3,456 42 Other negotiable and readily transferable instruments8 45,695 36,036 21,981 23,900 23,384 21,981 22,959 23,694 36,832 37,267 43 Other 109,396 99,567 103,728 110,245 112,211 103,728 117,520 113,972 119,186 113,083 44 Other foreigners 198,061 228,333 276,669' 262,672' 275,491' 276,669' 271,672' 273,850' 272,452 275,765 45 Banks' own liabilities 131,072 147,201 171,293' 162,963' 170,888' 171,293' 168,993' 168,725' 172,545 177,758 46 Demand deposits 21,862 13,850 17,489 16,033 18,219 17,489 18,416 17,769 18,625 18,573 47 Time deposits2 76,189 79,160 78,024 79,597 77,917 78,024 78,196' 77,856' 76,790 75,616 48 Other3 33,021 54,191 75,780' 67,333' 74,752' 75,780' 72,381' 73,100' 77,130 83,569 49 Banks' custodial liabilities5 66,989 81,132 105,376' 99,709' 104,603' 105,376' 102,679' 105,125' 99,907 98,007 50 U.S. Treasury bills and certificates6 12,023 8,561 12,255' 11,132' 11,885' 12,255' 12,399' 12,593' 15,849 13,227 51 Short-term agency securities7 n.a. n.a. 21,312 21,688 22,180 21,312 18,521 19,031 20,424 20,163 52 Other negotiable and readily transferable instruments8 45,507 62,289 55,844 51,606 53,958 55,844 55,099 55,712 54,133 55,497 53 Other 9,459 10,282 15,965 15,283 16,580 15,965 16,660 17,789 9,501 9,120 MEMO 54 Negotiable time certificates of deposits in custody for foreigners 30,345 34,217 20,440 22,646 22,778 20,440 22,095 22,831 21,498 24,061 55 Repurchase agreements7 n.a. n.a. 150,737 127,386 134,672 150,737 127,852 131,331 127,160 140,545 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 deposit, which are included in "Other negotiable 7. Data available beginning January 2001. and readily transferable instruments." 8. Principally bankers acceptances, commercial paper, and negotiable time certificates of 3. Includes borrowing under repurchase agreements. deposit. 4. For U.S. banks, includes amounts owed to own foreign branches and foreign subsidi- 9. Principally the International Bank for Reconstruction and Development, the Interaries consolidated in quarterly Consolidated Reports of Condition filed with bank regulatory American Development Bank, and the Asian Development Bank. Excludes "holdings of agencies. For agencies, branches, and majority-owned subsidiaries of foreign banks, consists dollars" of the International Monetary Fund. principally of amounts owed to the head office or parent foreign bank, and to foreign 10. Foreign central banks, foreign central governments, and the Bank for International branches, agencies, or wholly owned subsidiaries of the head office or parent foreign bank. Settlements. 5. Financial claims on residents of the United States, other than long-term securities, held 11. Excludes central banks, which are included in "Official institutions." by or through reporting banks for foreign customers. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A48 International Statistics • August 2002 3.17 LIABILITIES TO FOREIGNERS Reported by Banks in the United States1—Continued Payable in U.S. dollars Millions of dollars, end of period 2001 2002 IItteemm 11999999 22000000 22000011 Oct. Nov. Dec. Jan. Feb. Mar. Apr/ AREA OR COUNTRY 56 Total, all foreigners 1,408,740 1,511,410 l,619,624r l,585,431r l,655,781r l,619,624r l,567,147r l,600,953r l,650,469r 1,681,844 57 Foreign countries 1,393,464 1,498,867 l,608,820r l,575,094r l,644,613r l,608,820r l,549,992r l,585,500r l,638,363r 1,667,404 58 Europe 441,810 446,788 520,970R 455,924' 520,447' 520,970' 503,908' 517,903' 520,204' 541,215 59 Austria 2,789 2,692 2,919 2,117 2,944 2,919 2,999 3,050 3,146 3,343 60 Belgium12 44,692 33,399 6,548 6,960 6,640 6,548 6,573 6,567 7,930 6,617 61 Denmark 2,196 3.000 3,625 3,752 4,248 3,625 3,149 2,970 2,878 2,827 62 Finland 1,658 1,411 1,445 1,223 1,135 1,445 1,372 1,159 1,682 1,239 63 France 49,790 37,833 49,034 49,059 49,692 49,034 45,102 41,172 35,113 36,349 64 Germany 24,753 35,519 22,342 23,707 23,111 22,342 23,794 23,740 26,106 26,020 65 Greece 3,748 2,011 2,303 2,409 2,081 2,303 2,706 2,856 2,560 2,285 66 Italy 6,775 5,072 6,342 5,445 5,913 6,342 5,597 5,109 5,548 5,140 6/ Luxembourg12 n.a. n.a. 16,894' 14,627' 16,553' 16,894' 15,121' 14,748' 14,299' 14,205 68 Netherlands 8,143 7,047 12,404 12,286 13,079 12,404 13,355' 13,880' 13,820' 11,134 69 Norway 1,327 2,305 3,725 3,145 3,056 3,725 4,976 4,871 7,703 6,470 70 Portugal 2,228 2,403 4,029 3,787 3,924 4,029 4,369 4,799 5,416 5,050 /I Russia 5,475 19,018 20,782 23,431 21.243 20,782 19,776 20,841 21,423 22,113 /2 Spain 10,426 7,787 8,791 9,785 10,595 8,791 12,618 10,233 9,406 10,737 73 Sweden 4,652 6,497 3,371 3,461 3.705 3,371 3,104 3,700 3,412 2,495 74 Switzerland 63,485 74,635 66,390R 39,706 81,128 66,390' 80,813 94,679 107,650 129,023 75 Turkey 7,842 7,548 7,472 6,749 6,822 7,472 8,696' 11,518' 11,515' 11,675 76 United Kingdom 172,687 167,757 204,208R 163,726' 184,100' 204,208' 169,466' 170,192' 161,502' 163,313 77 Channel Islands and Isle of Man13 n.a. n.a. 36,057 36,392 36,161 36,057 36,474 37,226 38,012 38,102 78 Yugoslavia14 286 276 309 313 310 309 298 317 296 265 19 Other Europe and other former U.S.S.R.15 28,858 30,578 41,980' 43,844' 44,007' 41,980' 43,550' 44,276' 40,787' 42,813 80 Canada 34,214 30,982 27,228' 25,583' 28,021' 27,228' 28,076' 27,434' 28,402' 26,275 81 Latin America 117,495 120,041 117,528 122,542' 120,293 117,528 115,703' 115,000' 112,933' 111,766 82 Argentina 18,633 19,451 10,655 13,407 10,783 10,655 9,904 10,360 11,622 11,875 83 Brazil 12,865 10,852 14,135 16,402' 14,290 14,135 13,133' 12,875' 14,628' 14,092 84 Chile 7,008 5,892 4,929 5,417 5,298 4,929 5,275 5,143 5,299' 6,326 85 Colombia 5,669 4,542 4,668 4,589 4,643 4,668 4,506 4,587 4,159 4,226 8B Ecuador 1,956 2,112 2,377 2,105 2,010 2,377 2,231 2,363 2,269 2,342 8/ Guatemala 1,626 1,601 1,876 1,851 1,934 1,876 1,861 1,821 1,812 1,782 88 Mexico 30,717 32,166 39,630 40,368 40,245 39,630 40,355 40,797 35,700 34,888 89 Panama 4,415 4,240 3,588 3,741 3,524 3,588 3,514 3,604 3,350 3,336 90 Peru 1,142 1,427 1,350 1,509 1,585 1,350 1,341 1,347 1,548 1,225 91 Uruguay 2,386 3,003 3,160 3,133 3,300 3,160 2,646 2,536 2,913' 2,648 92 Venezuela 20,192 24,730 24,920 23,590 26,105 24.920 24,258 22,952 22,937' 22,380 93 Other Latin America16 10,886 10,025 6.240 6,430 6,576 6,240 6,679 6,615 6,696 6,646 94 Caribbean 461,200 573,337 631,243' 649,962' 656,790' 631,243' 600,910' 606,583' 648,015' 659,754 95 Bahamas 135,811 189,298 179,198' 212,417' 201,677' 179,198' 156,255' 147,831' 171,403' 164,535 96 Bermuda 7,874 9,636 10,477' 9,743' 9,268' 10,477' 9,623' 11,231' 10,296' 11,689 97 British West Indies17 312,278 367,197 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 98 Cayman Islands17 n.a. n.a. 423,792' 406,489' 426,047' 423,792' 441188,,119988'' 443311,,660044'' 444499,,336688'' 464,224 99 Cuba 75 90 88 86 85 88 8888 8899 8899 90 100 Jamaica 520 794 1,179 880 930 1,179 1,106 1,103 1,115 1,047 101 Netherlands Antilles 4,047 5,428 3,259' 6,210' 4,179' 3,259' 3,513' 3,181' 3,821' 5,767 102 Trinidad and Tobago 595 894 1,266 1,509 1,768 1,266 1,979 1,547 1,406 1,791 103 Other Caribbean16 n.a. n.a. 11,984' 12,628' 12,836 11,984' 10,148' 9,997' 10,517 10,611 104 Asia 319,489 305,554 294,263' 301,453' 229999,,441188'' 229944,,226633'' 228800,,885577'' 229999,,339944'' 330077,,557766'' 310,187 China 105 Mainland 12,325 16,531 10,472 17,891 12,378 10,472 8,501 21,167 16,725' 22,338 106 Taiwan 13,603 17,352 17,562 19,194 21,116 17,562 16,997 21,533 20,462 24,482 107 Hong Kong 27,701 26,462 26,494 23,163' 26,305 26,494 25,272' 23,698 22,844' 25,201 108 India 7,367 4,530 3,703 3,891 3,916 3,703 3,766 4,167 4,512 4,079 109 Indonesia 6,567 8,514 12,381 12,351 11,758 12,381 11,893 11,441 11,220 11,875 110 Israel 7,488 8,053 7,826 7,343 7,742 7,826 10,727 9,433 9,600 9,541 HI Japan 159,075 150,415 155,293' 160,058' 157,807' 155,293' 146,955' 151,730' 166,692' 158,156 112 Korea (South) 12,988 7,955 9,015' 7,725 8,098 9,015' 6,718' 6,527' 5,595' 5,999 113 Philippines 3,268 2,316 1,764 1,756 2,109 1,764 1,910 1,429 1,530 1,671 114 Thailand 6,050 3,117 4,742 3,666 4,792 4,742 4,651 5,035 5,432 4,940 115 Middle Eastern oil-exporting countries18 21,314 23,763 20,022 18,443 18,620 20,022 17,850 16,931 18,684 17,442 116 Other 41,743 36,546 24,989' 25,972' 24,777' 24,989' 25,617' 26,303' 24,280' 24,463 117 9,468 10,824 11,343 12,088 11,222 11,343 12,988 11,983 12,023 11,904 118 Egypt 2,022 2,621 2,774 2,910 3,110 2,774 4,271 3,961 3,857 3,605 119 Morocco 179 139 273 331 344 273 243 197 127 234 120 South Africa 1,495 1,010 833 886 1,018 833 1,137 928 11,,006600 895 121 Congo (formerly Zaire) 14 4 4 4 1 4 6 2 11 6 122 Oil-exporting countries19 2,914 4,052 4,372 4,980 3,967 4,372 4,165 3,763 3,911 3,829 123 Other 2,844 2,998 3,087 2,977 2,782 3,087 3,166 3,132 3,067 3,335 124 Other countries 9,788 11,341 6,245' 7,542' 8,422' 6,245' 7,550' 7,203' 9,210' 6,303 125 Australia 8,377 10,070 5,593' 6,586' 7,802' 5,593' 6,762' 6,376' 8,199' 5,359 126 New Zealand20 n.a. n.a. 240' 507' 219' 240' 373' 420' 456 546 127 All other 1,411 1,271 412 449 401 412 415 407' 555 398 128 Nonmonetary international and regional organizations 15,276 12,543 10,804 10,337 11,168 10,804 17,155 15,453 12,106 14,440 129 International21 12,876 11,270 9,305 8,784 9,410 9,305 15,521 13,714 9,853 12,261 130 Latin American regional22 1,150 740 480 680 462 480 443 520 731 954 131 Other regional23 1,250 533 935 822 1,234 935 1,113 1,140 1,441 1,158 12. Before January 2001, data for Belgium-Luxembourg were combined. 18. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and United Arab 13. Before January 2001, these data were included in data reported for the United Emirates (Trucial States). Kingdom. 19. Comprises Algeria, Gabon, Libya, and Nigeria. 14. Since December 1992, has excluded Bosnia, Croatia, and Slovenia. 20. Before January 2001, these data were included in "All other." 15. Includes the Bank for International Settlements and the European Central Bank. Since 21. Principally the International Bank for Reconstruction and Development. Excludes December 1992, has included all parts of the former U.S.S.R. (except Russia), and Bosnia, "holdings of dollars" of the International Monetary Fund. Croatia, and Slovenia. 22. Principally the Inter-American Development Bank. 16. Before January 2001, data for "Other Latin America" and "Other Caribbean" were 23. Asian, African, Middle Eastern, and European regional organizations, except the Bank combined in "Other Latin America and Caribbean." for International Settlements, which is included in "Other Europe." 17. Beginning January 2001, data for the Cayman Islands replaced data for the British West Indies. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Nonbank-Reported Data A49 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 2001 2002 AArreeaa oorr ccoouunnttrryy 11999999 22000000 22000011 Oct. Nov. Dec. Jan. Feb. Mar. Apr.p 1 Total, all foreigners 793,139 904,642 1,051,613 1,016,715 1,051,715 1,051,613 l,003,832r l,006,174r l,053,331r 1,094,615 2 Foreign countries 788,576 899,956 1,046,667 1,011,820 1,046,457 1,046,667 999,963r l,002,347r l,047,818r 1,090,358 3 Europe 311,686 378,115 460,970 433,898 497,651 460,970 464,082r 467,053' 487,148' 525,422 4 Austria 2,643 2,926 5,006 3,848 3,412 5,006 4,063 3,604 3,895 3,127 5 Belgium2 10,193 5,399 6,339 6,424 7,994 6,339 6,426 5,603 4,750 4,288 6 Denmark 1,669 3,272 1,105 933 2,507 1,105 1,649 1,024 1,544 1,201 7 Finland 2,020 7,382 10,350 12,065 11,010 10,350 14,431 14,410 14,469 13,092 8 France 29,142 40,035 60,670 60,732 58,769 60,670 56,285 54,467 54,933 57,857 9 Germany 29,205 36,834 29,902 39,605 36,295 29,902 31,189 29,134 33,254 34,163 10 Greece 806 646 330 333 327 330 327 348 320 327 11 Italy 8,496 7,629 4,205 7,750 6,321 4,205 4,453 4,329 5,101 5,085 12 Luxembourg2 n.a. n.a. 1,267 1,088 1,392 1,267 1,601 2,884 3,366 3,407 13 Netherlands 11,810 17,043 15,927 17,256 17,173 15,927 13,880 15,151 15,349 16,760 14 Norway 1,000 5,012 6,249 3,617 4,603 6,249 4,779 4,435 7,026 6,572 15 Portugal 1,571 1,382 1,603 1,164 1,709 1,603 1,969 1,998 1,795 2,083 16 Russia 713 517 594 863 680 594 687 612 1,659 951 17 Spain 3,796 2,603 3,231 3,713 5,398 3,231 5,363 4,987 4,847 3,524 18 Sweden 3,264 9,226 12,544 11,800 12,897 12,544 11,924 13,260 11,793' 11,373 19 Switzerland 79,158 82,085 87,363 71,968 121,798 87,363 95,331 114,379 115,370 150,021 70 Turkey 2,617 3,059 2,124 2,324 2,243 2,124 2,757r 3,163r 3,154' 3,012 21 United Kingdom 115,971 144,938 200,921 178,428 193,737 200,921 195,629 181,818 193,824' 197,434 22 Channel Islands and Isle of Man3 n.a. n.a. 4,478 3,783 3,819 4,478 3,747 3,986 3,848 3,775 23 Yugoslavia4 50 50 n.a. 4 n.a. n.a. n.a. n.a. n.a. 2 24 Other Europe and other former U.S.S.R.5 7,562 8,077 6,762 6,200 5,567 6,762 7,592 7,461 6,851 7,368 25 Canada 37,206 39,837 54,421 48,773 50,792 54,421 49,967 52,755 56,637' 56,633 76 Latin America 74,040 76,561 69,762 74,177 72,924 69,762 69,427 68,791 69,514r 69,549 77 Argentina 10,894 11,519 10,763 11,603 11,350 10,763 10,444 10,334 9,892' 9,722 78 Brazil 16,987 20,567 19,434 21,427 20,453 19,434 19,700 19,353 19,838' 20,139 7.9 Chile 6,607 5,815 5,317 5,423 5,522 5,317 5,200 5,166 5,399 5,220 30 Colombia 4,524 4,370 3,602 3,564 3,598 3,602 3,563 3,547 3,711' 3,663 31 Ecuador 760 635 495 507 504 495 465 491 478' 495 37 Guatemala 1,135 1,244 1,495 1,568 1,522 1,495 1,417 1,651 1,413' 1,329 33 Mexico 17,899 17,415 16,522 17,272 16,996 16,522 17,035 16,561 17,081' 17,354 34 Panama 3,387 2,933 3,066 3,426 3,415 3,066 2,765 2,788 2,804 2,768 35 Peru 2,529 2,807 2,185 2,435 2,369 2,185 2,125 2,090 2,048' 2,019 36 Uruguay 801 673 447 492 540 447 437 444 503' 477 37 Venezuela 3,494 3,518 3,077 3,221 3,306 3,077 3,181 3,315 3,463 3,472 38 Other Latin America6 5,023 5,065 3,359 3,239 3,349 3,359 3,095 3,051 2,884 2,891 39 Caribbean 281,128 319,403 367,655 360,024 326,271 367,655 327,814 326,948 344,308' 339,836 40 Bahamas 99,066 114,090 101,034 124,546 97,916 101,034 87,606r 87,301r 98,078' 94,472 41 Bermuda 8,007 9,260 7,900 11,440 6,015 7,900 7,018 5,633 7,773 9,430 42 British West Indies7 167,189 189,289 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 43 Cayman Islands7 n.a. n.a. 247,086 211,484 208,198 247,086 221,145r 223,578' 226,743' 226,196 44 Cuba 0 0 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 45 Jamaica 295 355 418 380 406 418 383 384 418 413 46 Netherlands Antilles 5,982 5,801 6,729 7,647 9,583 6,729 7,599 6,046 7,137 5,367 47 Trinidad and Tobago 589 608 931 858 880 931 940 955 971' 935 48 Other Caribbean6 n.a. n.a. 3,557 3,669 3,273 3,557 3,123 3,051 3,188 3,023 49 75,143 77,829 85,882 87,331 91,337 85,882 80,650 78,905 82,613' 90,976 China 50 Mainland 2,110 1,606 2,073 4,118 4,427 2,073 3,526 2,418 4,161 6,130 51 Taiwan 1,390 2,247 4,407 4,244 3,897 4,407 3,422 4,101 4,504 2,818 52 Hong Kong 5,903 6,669 9,995 5,161 7,984 9,995 7,670 7,319 6,459 6,628 53 India 1,738 2,178 1,348 1,561 1,609 1,348 1,167 1,217 1,224 1,276 54 Indonesia 1,776 1,914 1,752 1,965 1,935 1,752 1,768 1,644 1,701 1,677 55 Israel 1,875 2,729 4,396 3,980 4,592 4,396 4,211 4,195 2,875 4,413 56 Japan 28,641 34,974 34,125 39,940 34,665 34,125 30,973 30,722 31,288 37,775 57 Korea (South) 9,426 7,776 10,622 11,137 14,742 10,622 12,689 12,745 13,829' 13,872 58 Philippines 1,410 1,784 2,587 1,505 2,021 2,587 1,951 1,681 2,065 1,718 59 Thailand 1,515 1,381 2,499 1,470 1,283 2,499 1,743 745 1,467 1,465 60 Middle Eastern oil-exporting countries8 14,267 9,346 7,882 8,290 10,088 7,882 7,559 7,341 9,224 9,151 61 Other 5,092 5,225 4,196 3,960 4,094 4,196 3,971 4,777 3,816 4,053 6? 2,268 2,094 2,135 1,878 2,108 2,135 2,043 1,937 2,080' 1,916 63 Egypt 258 201 416 381 477 416 324 331 358 333 64 Morocco 352 204 106 148 116 106 100 97 88' 85 65 South Africa 622 309 710 443 571 710 700 640 735 621 66 Congo (formerly Zaire) 24 0 n.a. n.a. 1 n.a. n.a. n.a. n.a. n.a. 67 Oil-exporting countries9 276 471 167 169 179 167 195 201 211 234 68 Other 736 909 736 737 764 736 724 668 688 643 69 Other countries 7,105 6,117 5,842 5,739 5,374 5,842 5,980 5,958 5,518 6,026 70 Australia 6,824 5,868 5,455 5,402 4,964 5,455 5,336 5,207 4,746 5,399 71 New Zealand10 n.a. n.a. 349 275 330 349 603 732 762 586 72 All other 281 249 38 62 80 38 41 19 10 41 73 Nonmonetary international and regional organizations'1 .. 4,563 4,686 4,946 4,904 5,258 4,946 3,869 3,827 5,513 4,257 1. Reporting banks include all types of depository institutions as well as some brokers and 6. Before January 2001, "Other Latin America" and "Other Caribbean" were reported as dealers. combined "Other Latin America and Caribbean." 2. Before January 2001, combined data reported for Belgium-Luxembourg. 7. Beginning 2001, Cayman Islands replaced British West Indies in the data series. 3. Before January 2001, data included in United Kingdom. 8. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and United Arab 4. Since December 1992, has excluded Bosnia, Croatia, and Slovenia. Emirates (Trucial States). 5. Includes the Bank for International Settlements and European Central Bank. Since 9. Comprises Algeria, Gabon, Libya, and Nigeria. December 1992, has included all parts of the former U.S.S.R. (except Russia) and Bosnia, 10. Before January 2001, included in "All other." Croatia, and Slovenia. 11. Excludes the Bank for International Settlements, which is included in "Other Europe." Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A50 International Statistics • August 2002 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 2001 2002 TTyyppee ooff ccllaaiimm Oct. Nov. Dec. Jan. Feb.' Mar.' Apr.P 1 Total 944,937 1,095,869 1,253,992 1,253,992 1,253,686 2 Banks' claims 793,139 904,642 1,051,613 1,016.715 1,051,715 1,051,613 1,003,832' 1,006,174 1,053,331 1,094,615 3 Foreign public borrowers 35,090 37,907 49,018 49,592 56,820 49,018 53,208' 48,827 54,331 50,045 4 Own foreign offices2 529,682 630,137 745,834 699,281 721,650 745,834 697,236 716,045 749,418 787,627 5 Unaffiliated foreign banks 97,186 95,243 100,575 95,647 100,608 100,575 98,388' 92,103 94,896 95,552 6 Deposits 34,538 23,886 26.189 25,663 29,998 26,189 27,076' 25,981 26,269 22,778 7 Other 62,648 71,357 74,386 69.984 70,610 74,386 71,312' 66,122 68,627 72,774 8 All other foreigners 131,181 141,355 156,186 172,195 172,637 156,186 155,000' 149,199 154,686 161,391 9 Claims of banks' domestic customers3 151,798 191,227 202,379 202,379 200,355 10 Deposits 88,006 100,352 92,546 92,546 87,634 11 Negotiable and readily transferable instruments4 51,161 78,147 94,016 94,016 98,050 12 Outstanding collections and other claims 12,631 12,728 15,817 15,817 14,671 MEMO 13 Customer liability on acceptances 4,553 4,257 2,588 2,588 2,139 14 Banks' loans under resale agreements5 n.a. n.a. 137,349 144,250 144,266 137,349 118,878 123,049 114,917 129,144 15 Dollar deposits in banks abroad, reported by nonbanking business enterprises in the United States6 31,125 53,153 60,711 57,698 66,930 60,711 54,563 55,177 61,417 57,884 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 and bankers acceptances, and commer- 2. For U.S. banks, includes amounts due from own foreign branches and foreign subsidi- cial paper. aries consolidated in quarterly Consolidated Reports of Condition filed with bank regulatory 5. Data available beginning January 2001. agencies. For agencies, branches, and majority-owned subsidiaries of foreign banks, consists 6. Includes demand and time deposits and negotiable and nonnegotiable certificates of 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 2001 2002 MMaattuurriittyy,, bbyy bboorrrroowweerr aanndd aarreeaa22 11999988 11999999 22000000 June Sept. Dec.' Mar.p 1 Total 250,418 267,082 274,009 302,304r 298,924r 305,172 304,297 By borrower 2 Maturity of one year or less 186,526 187,894 186,103 191,979' 178,458' 200,222 188,785 3 Foreign public borrowers 13,671 22,811 21,399 26,621 19,994 27,293 26,914 4 All other foreigners 172,855 165,083 164,704 165,358' 158,464' 172,929 161,871 5 Maturity of more than one year 63,892 79,188 87,906 110,325' 120,466' 104,950 115,512 6 Foreign public borrowers 9,839 12,013 15,838 25,018 25,844' 21,324 26,748 7 All other foreigners 54,053 67,175 72.068 85,307' 94,622' 83,626 88,764 By area Maturity of one year or less 8 Europe 68,679 80,842 142,464 80,682 70,700 83,091 79,694 9 Canada 10.968 7,859 8,323 8,624 7,897 10,174 7,763 10 Latin America and Caribbean 81,766 69,498 151,840 73,029' 75,562' 70,657 69,178 11 Asia 18,007 21,802 43,371 24,181' 19,381 29,666 24,554 12 Africa 1,835 1,122 2,263 971 707 1,144 1,147 13 All other3 5,271 6,771 11,717 4,492' 4,211 5,490 6,449 Maturity of more than one year 14 Europe 14,923 22,951 57,770 39,947' 41,597' 34,074 39,813 15 Canada 3,140 3,192 3,174 3,995 4,292 3,633 .3,362 16 Latin America and Caribbean 33,442 39,051 82,684 47,068 52,651' 47,402 48,744 17 Asia 10,018 11,257 19,536 15,240 17,491 15,190 19,444 18 Africa 1,232 1,065 1,567 774 798 769 669 19 All other3 1,137 1,672 5,954 3,301 3,637 3,882 3,480 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

Nonbank-Reported Data A51 3.21 CLAIMS ON FOREIGN COUNTRIES Held by U.S. and Foreign Offices of U.S. Banks1 Billions of dollars, end of period 2000 2001 2002 Area or country IVVo iyyy Mar. June Sept. Dec. Mar. June Sept. Dec. Mar.p 1 Total 1,051.6 945.5 955.0 991.0 954.4 1,027.3 l,144.5r l,140.5r l,284.7r 929.3r 801.1 2 G-10 countries and Switzerland 217.7 243.4 272.4 313.6 280.3 300.7 336.5r 338.9r 294.4' 423.1' 325.0 3 Belgium and Luxembourg 10.7 14.3 14.2 13.9 13.0 14.2 15.3 13.0r 14.4' 19.1' 16.3 4 France 18.4 29.0 27.1 32.6 29.0 29.6 30.0r 35.9' 34.6' 39.3' 34.1 5 Germany 30.9 38.7 37.3 31.5 37.6 45.1 45.2' 51.6' 41.0' 43.2' 49.2 6 Italy 11.5 18.1 19.9 20.5 18.6 21.3 20.4 23.7 22.8 21.0 19.1 7 Netherlands 7.8 12.3 17.0 16.0 17.5 18.4 22.3 18.7 20.8' 19.5 23.7 8 Sweden 2.3 3.0 3.9 3.5 4.3 3.6 4.7 4.7 5.2 5.4 5.3 9 Switzerland 8.5 10.3 10.1 13.8 10.9 13.2 13.9 13.5 13.0 12.6 13.6 10 United Kingdom 85.4 79.3 101.9 138.2 112.8 115.6 141.5' 128.1' 95.6' 210.8' 111.8 11 Canada 16.8 16.3 17.3 18.2 18.5 16.7 15.4 21.3' 20.3r 19.1' 16.6 12 Japan 25.4 22.1 23.5 25.4 18.1 23.0 28.0 28.3' 26.8' 33.1' 35.3 13 Other industrialized countries 69.0 68.4 62.7 75.3 73.7 74.5 75.7r 70.2' 70.7' 70.6' 69.4 14 Austria 1.4 3.5 2.6 2.8 3.5 4.1 3.8' 3.6 4.4' 4.8 4.8 15 Denmark 2.2 2.6 1.5 1.2 1.8 1.9 3.1 2.7 2.7 2.6 3.5 16 Finland 1.4 .9 .8 1.2 2.8 1.5 1.4 1.2 1.3 1.1 2.1 17 Greece 5.9 6.0 5.7 6.7 6.4 8.3 4.1 3.6 3.6 3.2 3.2 18 Norway 3.2 3.3 3.0 4.6 8.5 8.3 10.2 7.9 6.2 8.1 9.0 19 Portugal 1.4 1.0 1.0 2.0 1.5 2.0 1.9 1.4 1.4 1.6 1.8 20 Spain 13.7 12.1 11.3 12.2 10.5 10.3 12.6' 12.4' 13.8 12.1' 12.1 21 Turkey 4.8 4.8 5.1 5.6 5.6 5.9 5.1 4.5 4.1 3.9 5.3 22 Other Western Europe 10.4 6.8 8.4 7.9 8.3 6.5 7.3 6.9 7.3 8.4 8.6 23 South Africa 4.4 3.8 4.8 4.6 4.2 3.6 4.1 3.8 4.4 4.1 3.3 24 Australia 20.3 23.5 18.6 26.3 20.5 22.1 21.9 22.1 21.6' 20.6 15.7 25 OPEC2 27.1 31.4 28.9 32.1 31.4 28.9 28.3 27.1' 27.6' 27.3' 27.4 26 Ecuador 1.3 .8 .7 .7 .6 .6 .6 .6 .6 .6 .6 27 Venezuela 3.2 2.8 3.0 2.9 2.9 2.5 2.7 2.6' 2.6' 2.4' 2.4 28 Indonesia 4.7 4.2 3.9 4.1 4.4 4.6 4.4 4.2 4.0 3.7' 3.6 29 Middle East countries 17.0 23.1 21.1 23.8 22.4 20.3 20.1 19.3 20.1 20.3 20.5 30 African countries 1.0 .5 .2 .7 1.2 .8 .5 .4 .4 .3 .3 31 Non-OPEC developing countries 143.4 149.4 154.6 158.1 149.5 145.5 150.1r 157.6' 201.6' 191.1' 195.8 Latin America 32 Argentina 23.1 23.2 22.4 21.6 21.4 21.4 20.9 19.8' 19.2' 19.2' 12.8 3 3 4 3 C B h ra i z le i l 24 8 . . 7 3 27 7 . . 7 4 28 8 . . 1 2 28 8. . 1 3 28 7 . . 5 3 28 7. . 6 8 2 7 9 . . 3 4 3 7 0 . . 0 9 ' ' 3 6 0 . . 4 9 ' ' 2 I 8. f 0 f ' 26 7. . 1 6 35 Colombia 3.2 2.5 2.5 2.4 2.4 2.4 2.4 2.4' 2.5' 2.5' 2.4 36 Mexico 18.9 18.7 18.3 20.4 17.5 15.7 16.7 16.3' 60.0 56.0 67.1 37 Peru 2.2 1.7 1.9 2.1 2.1 2.0 2.0 2.0 1.9 1.8' 1.5 38 Other 5.4 5.9 6.5 6.7 6.2 6.3 8.6r 8.3 8.1' 8.9' 7.9 Asia China 39 Mainland 3.0 3.6 4.6 3.8 3.4 2.9 3.2 6.7 5.9 5.0 7.0 40 Taiwan 13.3 12.0 12.6 12.6 12.8 10.8 11.2 10.7 10.8' 12.2' 12.6 41 India 5.5 7.7 7.9 8.2 5.8 9.1 6.5 11.8 14.1 6.9 6.3 42 Israel 1.1 1.8 3.3 1.5 1.1 2.7 2.2r 2.0' 3.2' 3.7' 2.4 43 Korea (South) 13.7 15.2 17.7 21.7 21.4 15.5 19.9 19.3 19.3' 18.5' 22.4 44 Malaysia 5.6 6.1 6.5 6.8 6.9 7.1 6.5 6.8 6.1 6.7 6.4 45 Philippines 5.1 6.2 5.3 5.3 4.7 5.1 5.2 5.4 5.2 5.6 5.4 46 Thailand 4.7 4.1 4.3 4.0 3.9 4.0 4.2 4.2 3.9 5.1 4.0 47 Other Asia 2.9 2.9 2.0 1.9 1.7 1.9 1.7 1.8 1.6 1.9 1.9 Africa 48 Egypt 1.3 1.4 1.4 1.3 1.1 I.I 1.2 1.2 1.4 1.2 1.3 49 Morocco .5 .4 .3 .3 .4 .3 .3 .3 .3 .1 .1 50 Zaire .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 51 Other Africa3 1.0 1.0 .9 .9 .8 .7 .7 .7 .8 .7 .7 52 Eastern Europe 5.5 5.2 6.3 9.4 9.0 10.1 9.5 9.5 10.2 10.1 10.6 53 Russia4 2.2 1.6 1.7 1.5 1.4 1.0 1.5 1.5 1.6 1.6 2.8 54 Other 3.3 3.6 4.7 7.9 7.6 9.1 8.0 8.0 8.5 8.5 7.9 55 Offshore banking centers 93.9 59.9 53.9 60.6 59.4 76.3 72.0 58.8' 72.2' 72.5' 59.3 56 Bahamas 35.4 13.7 14.4 8.8 9.3 13.5 7.0 .0 1.1 7.5 7.5 57 Bermuda 4.6 8.0 7.3 6.3 6.3 9.0 7.9 5.7' 7.6 7.7 8.2 58 Cayman Islands and other British West Indies 12.8 1.3 .0 5.1 5.9 14.6 14.3 12.6 21.0' 16.9 7.7 59 Netherlands Antilles 2.6 1.7 2.5 2.6 1.9 1.9 2.9 1.7 5.8 2.8' 3.3 60 Panama5 3.9 3.9 3.4 3.3 2.5 3.2 3.8 3.4' 3.5' 3.2' 3.3 61 Lebanon 62 Hong Kong, China 23.3 21D 22.2 20.7 20.6 18^7 21.5 223' 17.9 18.9 15J 63 Singapore 11.1 10.1 4.1 13.6 12.6 15.2 14.6 12.9 15.2' 15.5 13.5 64 Other" .2 .1 .1 .1 .1 .2 .1 .1 .0 .1 .0 65 Miscellaneous and unallocated7 495.1 387.9 376.1 342.1 351.1 391.2 472.4 478.6 608.1 134.6 113.4 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

A52 International Statistics • August 2002 3.22 LIABILITIES TO UNAFFILIATED FOREIGNERS Reported by Nonbanking Business Enterprises in the United States Millions of dollars, end of period 2000 2001 TTyyppee ooff lliiaabbiilliittyy,, aanndd aarreeaa oorr ccoouunnttrryy 11999988 11999999 22000000 Sept. Dec. Mar. June Sept. Dec. 1 Total 46,570 53,044 73,904 76,644 73,904 73,655 68,028r 53,526 66,718 2 Payable in dollars 36,668 37,605 48,931 51,451 48,931 46,526 41,734r 35,347 42,957 3 Payable in foreign currencies 9,902 15,415 24,973 25,193 24,973 27,129 26,294 18,179 23,761 By type 4 Financial liabilities 19,255 27,980 47,419 49,895 47,419 47,808 41,908 27,502 41,034 Payable in dollars 10,371 13,883 25,246 26,159 25,246 23,201 17,655 11,415 18,763 6 Payable in foreign currencies 8,884 14,097 22,173 23,736 22,173 24,607 24,253 16,087 22,271 7 Commercial liabilities 27,315 25,064 26,485 26,749 26,485 25,847 26,120' 26,024 25,684 8 Trade payables 10,978 12,857 14,293 13,918 14,293 12,481 13,127' 11,740 11,820 y Advance receipts and other liabilities 16,337 12,207 12,192 12,831 12,192 13,366 12,993' 14,284 13,864 10 Payable in dollars 26,297 23,722 23,685 25,292 23,685 23,325 24,079' 23,932 24,194 n Payable in foreign currencies 1,018 1,318 2,800 1,457 2,800 2,522 2,041 2,092 1,490 By area or country Financial liabilities 12 Europe 12,589 23,241 34,172 36,175 34,172 37,422 32,785 22,083 31,806 13 Belgium and Luxembourg 79 31 147 169 147 112 98 76 154 14 France 1,097 1,659 1,480 1,299 1,480 1,553 1,222 1,538 2,841 15 Germany 2,063 1,974 2,168 2,132 2,168 2,624 2,463 1,994 2,344 16 Netherlands 1,406 1,996 2,016 2,040 2,016 2,169 1,763 1,998 1,954 17 Switzerland 155 147 104 178 104 103 93 92 94 18 United Kingdom 5,980 16,521 26,362 28,601 26,362 28,812 25,363 14,819 .22,852 19 Canada 693 284 411 249 411 718 628 436 955 20 Latin America and Caribbean 1,495 892 4,125 3,447 4,125 3,632 2,100 414 2,858 21 Bahamas 7 1 6 105 6 18 40 5 157 22 Bermuda 101 5 1,739 1,182 1,739 1,837 461 47 960 23 Brazil 152 126 148 132 148 26 21 22 35 24 British West Indies 957 492 406 501 406 1,657 1,508 243 1,627 25 Mexico 59 25 26 35 26 31 20 24 36 26 Venezuela 2 0 2 0 2 1 1 3 2 27 Asia 3,785 3,437 7,965 9,320 7,965 5,324 5,639 3,869 5,042 28 Japan 3,612 3,142 6,216 4,782 6,216 4,757 3,297 3,442 3,269 29 Middle Eastern oil-exporting countries' 0 4 11 7 11 15 8 9 10 30 Africa 28 28 52 48 52 38 61 59 53 31 Oil-exporting countries2 0 0 0 0 0 0 0 5 5 32 All other1 665 98 694 656 694 674 695 672 320 Commercial liabilities 33 Europe 10,030 9,262 9,629 9,411 9,629 8,792 8,723 8,855 9,230 34 Belgium and Luxembourg 278 140 293 201 293 251 297 160 99 35 France 920 672 979 716 979 689 665 892 735 36 Germany 1,392 1.131 1,047 1,023 1,047 982 1,017 966 908 37 Netherlands 429 507 300 424 300 349 343 343 1,163 38 Switzerland 499 626 502 647 502 623 697 683 790 39 United Kingdom 3,697 3,071 2,847 2,951 2,847 2,542 2,706 2,296 2,280 40 Canada 1,390 1.775 1,933 1,889 1,933 1,625 1,957' 1,569 1,633 41 Latin America and Caribbean 1,618 2.310 2,381 2,443 2,381 2,166 2,293' 2,879 2,729 42 Bahamas 14 22 31 15 31 5 31 44 52 43 Bermuda 198 152 281 377 281 280 367 570 591 44 Brazil 152 145 114 167 114 239 279 312 290 45 British West Indies 10 48 76 19 76 64 21 28 45 46 Mexico 347 887 841 1,079 841 792 762 884 901 47 Venezuela 202 305 284 124 284 243 218 242 166 48 Asia 12,342 9,886 10,983 11,133 10,983 11,542 11,384 11,114 10,532 49 Japan 3,827 2,609 2,757 1,998 2,757 2,431 2,377 2,421 2,592 50 Middle Eastern oil-exporting countries' 2,852 2,551 2,832 3,706 2,832 3,359 3,087 3,053 2,642 51 Africa 794 950 948 1,220 948 1,072 1,115 938 836 52 Oil-exporting countries2 393 499 483 663 483 566 539 471 436 53 Other' 1,141 881 614 653 614 650 648 669 724 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 A53 3.23 CLAIMS ON UNAFFILIATED FOREIGNERS Reported by Nonbanking Business Enterprises in the United States Millions of dollars, end of period 2000 2001 TTyyppee ooff ccllaaiimm,, aanndd aarreeaa oorr ccoouunnttrryy 11999988 11999999 22000000 Sept. Dec. Mar. June Sept. Dec. 1 Total 77,462 76,669 90,157 94,803 90,157 107,705 97,470r 94,076 113,155 2 Payable in dollars 72,171 69,170 79,558 82,872 79,558 94,932 87,690' 83,292 103,937 3 Payable in foreign currencies 5,291 7,472 10,599 11,931 10,599 12,773 9,780 10,784 9,218 By type 4 Financial claims 46,260 40,231 53,031 58,303 53,031 74,255 61,891 6600,,001155 81,287 Deposits 30,199 18,566 23,374 30,928 23,374 25,419 25,381 22,391 29,801 6 Payable in dollars 28,549 16,373 21,015 27,974 21,015 23,244 23,174 19,888 27,850 7 Payable in foreign currencies 1,650 2,193 2,359 2,954 2,359 2,175 2,207 2,503 1,951 8 Other financial claims 16,061 21,665 29,657 27,375 29,657 48,836 36,510 37,624 51,486 9 Payable in dollars 14,049 18,593 25,142 20,541 25,142 41,417 32,038 32,076 46,621 10 Payable in foreign currencies 2,012 3,072 4,515 6,834 4,515 7,419 4,472 5,548 4,865 11 Commercial claims 31,202 36,438 37,126 36,500 37,126 33,450 35,579' 34,061 31,868 12 Trade receivables 27,202 32,629 33,104 31,530 33,104 28,958 30,631' 29,328 27,586 13 Advance payments and other claims 4,000 3,809 4,022 4,970 4,022 4,492 4,948 4,733 4,282 14 Payable in dollars 29,573 34,204 33,401 34,357 33,401 30,271 32,478' 31,328 29,466 15 Payable in foreign currencies 1,629 2,207 3,725 2,143 3,725 3,179 3,101 2,733 2,402 By area or country Financial claims 16 Europe 12,294 13,023 23,136 23,706 23,136 31,855 23,975 23,069 26,118 17 Belgium and Luxembourg 661 529 296 304 296 430 262 372 625 18 France 864 967 1,206 1,477 1,206 3,142 1,376 1,682 1,450 19 Germany 304 504 848 696 848 1,401 1,163 1,112 1,068 20 Netherlands 875 1,229 1,396 2,486 1,396 2,313 1,072 954 2,138 21 Switzerland 414 643 699 626 699 613 653 665 589 22 United Kingdom 7,766 7,561 15,900 16,191 15,900 20,938 15,913 15,670 16,510 23 Canada 2,503 2,553 4,576 7,517 4,576 4,847 4,787 4,254 6,193 24 Latin America and Caribbean 27,714 18,206 19,317 21,691 19,317 28,791 24,403 26,099 41,201 25 Bahamas 403 1,593 1,353 1,358 1,353 561 818 649 976 26 Bermuda 39 11 19 22 19 1,729 426 80 918 27 Brazil 835 1,476 1,827 1,568 1,827 1,648 1,877 2,065 2,127 28 British West Indies 24,388 12,099 12,596 15,722 12,596 21,227 17,505 19,234 32,965 29 Mexico 1,245 1,798 2,448 2,280 2,448 2,461 2,633 2,910 3,075 30 Venezuela 55 48 87 101 87 38 66 80 83 31 Asia 3,027 5,457 4,697 4,002 4,697 7,215 6,829 5,274 6,430 32 Japan 1,194 3,262 1,631 1,726 1,631 3,867 1,698 1,761 1,604 33 Middle Eastern oil-exporting countries' 9 23 80 85 80 86 76 100 135 34 Africa 159 286 411 284 411 430 476 456 414 35 Oil-exporting countries2 16 15 57 3 57 42 35 83 49 36 Allother3 563 706 894 1,103 894 1,117 1,421 891 931 Commercial claims 37 Europe 13,246 16,389 15,938 16,486 15,938 13,775 14,469' 14,381 14,036 38 Belgium and Luxembourg 238 316 452 393 452 395 403' 354 268 39 France 2,171 2,236 3,095 2,921 3,095 3,479 3,190' 3,062 2,922 40 Germany 1,822 1,960 1,982 2,159 1,982 1,586 1,993 1,977 1,662 41 Netherlands 467 1,429 1,729 1,310 1,729 757 863 844 529 42 Switzerland 483 610 763 684 763 634 473' 514 611 43 United Kingdom 4,769 5,827 4,502 5,193 4,502 3,562 3,724' 3,571 3,839 44 Canada 2,617 2,757 3,502 2,953 3,502 3,392 3,470' 3,116 2,855 45 Latin America and Caribbean 6,296 5,959 5,851 5,788 5,851 5,144 6,033' 5,590 4,874 46 Bahamas 24 20 37 75 37 20 39 35 42 47 Bermuda 536 390 376 387 376 407 650 526 369 48 Brazil 1,024 905 957 981 957 975 1,363' 1,183 958 49 British West Indies 104 181 137 55 137 130 135 124 95 50 Mexico 1,545 1,678 1,507 1,612 1,507 1,350 1,375' 1,442 1,401 51 Venezuela 401 439 328 379 328 292 321 301 288 5? Asia 7,192 9,165 9,630 8,986 9,630 8,985 9,499' 8,704 7,855 53 Japan 1,681 2,074 2,796 2,074 2,796 2,560 3,148' 2,438 2,007 54 Middle Eastern oil-exporting countries' 1,135 1,625 1,024 1,199 1,024 966 1,040' 919 851 55 Africa 711 631 672 895 672 773 601' 838 645 56 Oil-exporting countries2 165 171 180 392 180 165 102' 170 88 57 Other3 1,140 1,537 1,572 1,392 1,572 1,381 1,507' 1,432 1,603 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

A54 International Statistics • August 2002 3.24 FOREIGN TRANSACTIONS IN SECURITIES Millions of dollars 2002 2001 2002 TTrraannssaaccttiioonn,, aanndd aarreeaa oorr ccoouunnttrryy 22000000 22000011 Jan.- Apr. Oct. Nov. Dec. Jan. Feb. Mar. Apr.P U.S. corporate securities STOCKS 1 Foreign purchases 3,605,196 3,051,355 1,075,267 255.682 241,318 239,289 255,725 259,951 286,550 273,041 2 Foreign sales 3,430,306 2,934,969 1,049,722 248,425 228,147 226,004 247,109 257,850 279,633 265,130 3 Net purchases, or sales (-) 174,890 116,386 25,545 7,257 13,171 13,285 8,616 2,101 6,917 7,911 4 Foreign countries 174,903 116,183 25,691 7,234 13,162 13,266 8,737 2,104 6,932 7,918 5 Europe 164,656 88,098 22,988 7,478 8,492 6,740 8,730 4,442 6,810 3,006 6 France 5,727 5,914 3,268 1,969 -845 101 1,302 304 405 1,257 7 Germany .... 31,752 8,415 1,330 825 698 688 479 429 332 90 8 Netherlands 4,915 10,919 -64 552 1,096 1,271 406 100 192 -762 y Switzerland 11,960 3,456 2,581 352 326 854 470 566 569 976 10 United Kingdom 58,736 38,492 8,398 3,313 3,248 2,033 3,972 1,323 3,110 -7 n Channel Islands and Isle of Man1 n.a. -698 -354 -23 -198 20 -81 -103 -113 -57 12 Canada 5,956 10,984 2,889 197 938 1,250 591 457 598 1,243 13 Latin America and Caribbean -17,812 -5,157 -3,500 -1,508 1,833 3,931 -1,447 ^t,495 302 2,140 14 Middle East2 .... 9,189 1,789 -1,243 -514 -105 249 96 -165 -901 -273 15 Other Asia 12,494 20,727 4,117 1,551 1,811 600 572 1,636 245 1,664 16 Japan 2,070 6,788 1,980 1,148 414 65 -209 194 1,002 993 17 Africa 415 -366 -35 -31 -9 -7 32 5 -26 -46 18 Other countries 5 108 475 61 202 503 163 224 -96 184 19 Nonmonetary international and regional organizations -11 203 -145 23 9 19 -121 -2 -15 -7 BONDS3 20 Foreign purchases 1,208,386 1,943,158 786,623 192,442 187,115 177,721 181,519 168,724 219,228 217,152 21 Foreign sales 871,416 1,556,217 665,896 151,612 156,019 155,238 161,985 155,237 173,530 175,144 22 Net purchases, or sales (-) 336,970 386,941 120,727 40,830 31,096 22,483 19,534 13,487 45,698 42,008 23 Foreign countries 337,074 386,376 120,732 41,002 30,853 22,452 19,624 13,217 45,877 42,014 24 Europe 180,917 195,798 53,433 15,513 16,172 8,077 77,,889900 4,619 20,329 20,595 23 France 2,216 5,028 980 601 270 330 6688 14 578 320 26 Germany 4,067 12,362 1,927 1,666 2,001 -12 93 -253 1,545 542 27 Netherlands 1,130 1,538 -346 83 -154 -637 -1,495 550 -173 772 28 Switzerland 3,973 5,721 1,011 292 417 75 143 826 -102 144 29 United Kingdom 141,223 153,158 40,438 10,422 12,928 5,985 7.619 1,740 15,640 15,439 30 Channel Islands and Isle of Man1 n.a. 2,000 455 355 69 404 130 14 309 2 31 Canada 13,287 4,595 1,389 1,335 25 892 338 -243 869 425 32 Latin America and Caribbean 59,444 77,217 32,454 2,270 7,838 5,765 4,655 6,077 13,531 8,191 33 Middle East1 2,076 2,338 1,216 307 432 455 420 342 377 77 34 Other Asia 78,794 106,812 31,908 21,044 6,593 7,721 6,802 2,094 10,321 12,691 35 Japan 39,356 34,099 6,433 15,243 1,104 -810 -717 -957 -466 3,573 36 Africa 938 760 91 272 71 -45 -30 22 34 65 37 Other countries 1,618 -1,144 241 261 -278 -413 -451 306 416 -30 38 Nonmonetary international and regional organizations -70 566 -5 -172 243 31 -90 270 -179 -6 Foreign securities 39 Stocks, net purchases, or sales (-) -13,088 -50,113 3,252 -3,097 2,795 -8,955 3,822 -2,723 5,553 -3,400 40 Foreign purchases 1,802,185 1,397,664 430,079 105,799 108,043 88,033 103,389 95,364 116,460 114,866 41 Foreign sales 1,815,273 1,447,777 426,827 108,896 105,248 96,988 99,567 98,087 110,907 118,266 42 Bonds, net purchases, or sales (-) -4,054 30,393 4,609 -754 -1,214 -945 -5,558 2,245 7,333 589 43 Foreign purchases 958,932 1,159,155 391,698 94,591 95,672 69,504 93,550 89,172 109,465 99,511 44 Foreign sales 962,986 1,128,762 387,089 95,345 96,886 70,449 99,108 86,927 102,132 98,922 45 Net purchases, or sales (-), of stocks and bonds -17,142 -19,720 7,861 -3,851 1,581 -9,900 -1,736 -478 12,886 -2,811 46 Foreign countries -17,278 -19,132 7,879 -3,657 1,587 -9,832 -1,720 -467 12,981 -2,915 47 Europe -25,386 -12,117 7,015 -4,904 2,206 -9,831 -2,417 588 13,670 —1,826 48 Canada -3,888 2,943 1,940 -676 -470 1,010 1,381 -289 -764 1,612 49 Latin America and Caribbean -15,688 4,245 1,687 -571 1,973 118 2,644 -1,469 1,353 -841 50 24,488 -11,869 -1,625 3,070 -2,138 -1,494 -3,478 614 -949 2,188 51 Japan 20,970 -20,116 -2,057 1,441 -3,575 -1,924 400 -660 -2,789 992 52 Africa 943 -557 -1,076 -565 191 134 72 62 -72 -1,138 53 Other countries 2,253 -1,777 -60 -11 -175 231 78 29 -257 90 54 Nonmonetary international and regional organizations 150 -587 -20 -194 -6 -68 -16 -13 -95 104 1. Before January 2001, data included in United Kingdom. 3. Includes state and local government securities and securities of U.S. government 2. Comprises oil-exporting countries as follows: Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, agencies and corporations. Also includes issues of new debt securities sold abroad by U.S. Saudi Arabia, and United Arab Emirates (Trucial States). corporations organized to finance direct investments abroad. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Securities Holdings and Transactions A55 3.25 MARKETABLE U.S. TREASURY BONDS AND NOTES Foreign Transactions1 Millions of dollars; net purchases, or sales (-) during period 2002 2001 2002 Area or country 2000 2001 JJ AA aa pp nn rr .. .. -- Oct. Nov. Dec. Jan. Feb. Mar. Apr.P 1 Total estimated -54,032 18,472 -14,860 14,969 12,676 10,497 -16,762 -169 13,916 -11,845 2 Foreign countries -53,571 19,158 -15,908 14,884 12,902 10,531 -17,027 -493 13,767 -12,155 3 Europe -50,704 -20,510 -6,176 2,339 -5,850 278 -6,688 -79 7,068 -6,477 4 Belgium2 73 -598 -138 -146 -9 202 -108 -263 410 -177 5 Germany -7,304 -1,668 -1,870 -392 54 1,075 -3,466 -277 1,759 114 6 Luxembourg2 n.a. 462 -886 285 -5 -34 -514 -126 79 -325 7 Netherlands 2,140 -6,728 -7,997 -1,336 -701 -948 -2,098 812 -3,891 -2,820 8 Sweden 1,082 -1,190 -210 -109 268 -197 -337 -230 269 88 9 Switzerland -10,326 1,412 -18 -339 215 335 313 -115 973 -1,189 10 United Kingdom -33,669 -7,185 4,803 7,359 -7,374 2,007 -86 1,938 7,110 —4,159 11 Channel Islands and Isle of Man3 n.a. -179 -242 -34 7 -136 -3 47 -251 -35 12 Other Europe and former U.S.S.R -2,700 -4,836 382 -2,949 1,695 -2,026 -389 -1,865 610 2,026 13 Canada -550 ^,136 -2,045 -3,091 -430 2,978 -3,473 1,204 1,695 -1,471 14 Latin America and Caribbean -4,914 5,046 -7,859 3,998 6,266 -6,368 2,603 -6,194 -424 -3,844 15 Venezuela 1,288 290 -4 -129 103 3 33 -12 -7 -18 16 Other Latin America and Caribbean -11,581 15,500 5,855 4,065 8,393 -3,984 1,635 -3,072 8,838 -1,546 17 Netherlands Antilles 5,379 -10,744 -13,710 62 -2,230 -2,387 935 -3,110 -9,255 -2,280 18 Asia 1,639 37,992 -409 11,755 11,820 14,423 -9,221 3,862 5,653 -703 19 Japan 10,580 17,774 -3,162 16,640 1,737 4,379 -6,649 2,456 -2,309 3,340 20 Africa -414 -880 -19 -396 53 -293 -65 134 70 -158 21 Other 1,372 1,646 600 279 1,043 ^187 -183 580 -295 498 22 Nonmonetary international and regional organizations -461 -686 1,048 85 -226 -34 265 324 149 310 23 International —483 -290 787 8 63 43 138 52 199 398 24 Latin American Caribbean regional 76 41 -38 1 43 -25 -1 15 -5 -47 MEMO 25 Foreign countries -53,571 19,158 -15,908 14,884 12,902 10,531 -17,027 ^193 13,767 -12,155 26 Official institutions -6,302 3,474 -1,529 2,239 6,266 1,061 -3,000 -2,177 5,254 -1,606 27 Other foreign -47,269 15,684 -14,379 12,645 6,636 9,470 -14,027 1,684 8,513 -10,549 Oil-exporting countries 28 Middle East4 3,483 865 2,233 12 2,442 2,217 784 50 137 1,262 29 Africa5 0 _2 -24 0 0 0 0 -1 2 -25 1. Official and private transactions in marketable U.S. Treasury securities having an 3. Before January 2001, these data were included in the data reported for the United original maturity of more than one year. Data are based on monthly transactions reports. Kingdom. Excludes nonmarketable U.S. Treasury bonds and notes held by official institutions of foreign 4. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and United Arab countries. Emirates (Trucial States). 2. Before January 2001, combined data reported for Belgium and Luxembourg. 5. Comprises Algeria, Gabon, Libya, and Nigeria. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A56 International Statistics • August 2002 3.28 FOREIGN EXCHANGE RATES AND INDEXES OF THE FOREIGN EXCHANGE VALUE OF THE U.S. DOLLAR1 Currency units per U.S. dollar except as noted 2002 Jan. Feb. Mar. Apr. May June Exchange rates COUNTRY/CURRENCY UNIT 1 Australia/dollar2 64.54 58.15 51.69 51.70 51.28 52.56 53.52 54.98 56.82 2 Brazil/real 1.8207 1.8301 2.3527 2.3799 2.4242 2.3450 2.3227 2.4753 2.7144 3 Canada/dollar 1.4858 1.4855 1.5487 1.5997 1.5964 1.5877 1.5815 1.5502 1.5318 4 China, P.R./yuan 8.2783 8.2784 8.2770 8.2771 8.2767 8.2773 8.2772 8.2770 8.2767 5 Denmark/krone 6.9900 8.0953 8.3323 8.4183 8.5343 8.4795 8.3942 8.1098 7.7775 6 European Monetary Union/euro3 1.0653 0.9232 0.8952 0.8832 0.8707 0.8766 0.8860 0.9170 0.9561 7 Greece/drachma 306.30 365.92 n.a. n.a. n.a. n.a. n.a. n.a. n.a. 8 Hong Kong/dollar 7.7594 7.7924 7.7997 7.7989 7.7996 7.7997 7.8000 7.7994 7.8000 9 India/rupee 43.13 45.00 47.22 48.35 48.72 48.77 48.94 49.02 48.98 10 Japan/yen 113.73 107.80 121.57 132.68 133.64 131.06 130.77 126.38 123.29 11 Malaysia/ringgit 3.8000 3.8000 3.8000 3.8000 3.8002 3.8000 3.8000 3.8000 3.8000 12 Mexico/peso 9.553 9.459 9.337 9.164 9.105 9.064 9.165 9.510 9.767 13 New Zealand/dollar2 52.94 45.68 42.02 42.45 41.87 43.33 44.28 46.10 48.86 14 Norway/krone 7.8071 8.8131 8.9964 8.9684 8.9492 8.8072 8.6102 8.2050 7.7533 15 Singapore/dollar 1.6951 1.7250 1.7930 1.8394 1.8312 1.8295 1.8285 1.8004 1.7831 16 South Africa/rand 6.1191 6.9468 8.6093 11.6258 11.4923 11.4863 11.0832 10.1615 10.1841 17 South Korea/won 1,189.84 1,130.90 1,292.01 1,316.34 1,320.55 1,322.90 1,318.09 1,262.20 1,219.70 18 Sri Lanka/rupee 70.868 76.964 89.602 93.473 93.650 94.903 96.030 96.318 96.408 19 Sweden/krona 8.2740 9.1735 10.3425 10.4561 10.5501 10.3324 10.3070 10.0642 9.5376 20 Switzerland/franc 1.5045 1.6904 1.6891 1.6709 1.6970 1.6743 1.6542 1.5889 1.5399 21 Taiwan/dollar 32.322 31.260 33.824 35.027 35.073 35.020 34.917 34.454 33.889 21 Thailand/baht 37.887 40.210 44.532 44.036 43.854 43.415 43.442 42.817 42.160 23 United Kingdom/pound2 161.72 151.56 143.96 143.22 142.27 142.30 144.29 145.98 148.37 24 Venezuela/bolivar 606.82 680.52 724.10 762.40 898.51 922.66 871.38 985.80 1,212.07 Indexes4 NOMINAL 25 Broad (January 1997=100)' 116.87 119.67 126.09 129.26 130.03 129.27 128.95 127.35 125.96 26 Major currencies (March 1973=100)6 94.07 98.32 104.32 108.10 108.82 107.76 107.03 104.09 101.42 27 Other important trading partners (January 1997=100)7 129.94 130.33 136.34 137.95 138.64 138.49 138.86 139.71 140.70 REAL 28 Broad (March 1973=100)' 100.78r 104.32' 110.42' 112.52' 113.10' 112.79' 112.72' 111.20' 110.52 29 Major currencies (March 1973=100)6 97.06' 103.17 110.73' 114.67' 115.66' 114.60' 113.96' 110.64' 108.55 30 Other important trading partners (March 1973=100)7 114.25 114.53 119.20 119.13' 119.25' 119.85' 120.50' 121.19' 122.32 1. Averages of certified noon buying rates in New York for cable transfers. Data in this 4. Starting with the February 2002 Bulletin, revised index values resulting from the table also appear in the Board's G.5 (405) monthly statistical release. For ordering address, periodic revision of data that underlie the calculated trade weights are reported. For more see inside front cover. information on the indexes of the foreign exchange value of the dollar, see Federal Reserve 2. U.S. cents per currency unit. Bulletin, vol. 84 (October 1998), pp. 811-818. 3. The euro is reported in place of the individual euro area currencies. By convention, the 5. Weighted average of the foreign exchange value of the US. dollar against the currencies rate is reported in U.S. dollars per euro. The bilateral currency rates can be derived from the of a broad group of U.S. trading partners. The weight for each currency is computed as an euro rate by using the fixed conversion rates (in currencies per euro) as shown below: average of U.S. bilateral import shares from and export shares to the issuing country and of a measure of the importance to U.S. exporters of that country's trade in third country markets. Euro equals 6. Weighted average of the foreign exchange value of the U.S. dollar against a subset of 13.7603 Austrian schillings 1,936.27 Italian lire broad index currencies that circulate widely outside the country of issue. The weight for each 40.3399 Belgian francs 40.3399 Luxembourg francs currency is its broad index weight scaled so that the weights of the subset of currencies in the 5.94573 Finnish markkas 2.20371 Netherlands guilders index sum to one. 6.55957 French francs 200.482 Portuguese escudos 7. Weighted average of the foreign exchange value of the U.S. dollar against a subset of 1.95583 German marks 166.386 Spanish pesetas broad index currencies that do not circulate widely outside the country of issue. The weight .787564 Irish pounds 340.750 Greek drachmas for each currency is its broad index weight scaled so that the weights of the subset of currencies in the index sum to one. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A57 Guide to Special Tables and Statistical Releases SPECIAL TABLES—Data Published Irregularly, with Latest Bulletin Reference Title and Date Issue Page Assets and liabilities of commercial banks June 30, 2001 November 2001 A64 September 30, 2001 February 2002 A64 December 31, 2001 May 2002 A64 March 31, 2002 August 2002 A58 Terms of lending at commercial banks August 2001 November 2001 A66 November 2001 February 2002 A66 February 2002 May 2002 A66 May 2002 August 2002 A60 Assets and liabilities of U.S. branches and agencies of foreign banks June 30, 2001 February 2002 A72 September 30, 2001 March 2002 A65 December 31,2001 May 2002 A72 March 31, 2002 August 2002 A66 Pro forma financial statements for Federal Reserve priced services * March 31, 2001 August 2001 A76 June 30,2001 October 2001 A64 September 30, 2001 January 2002 A64 Residential lending reported under the Home Mortgage Disclosure Act 1999 September 2000 A64 2000 September 2001 A64 Disposition of applications for private mortgage insurance 1999 September 2000 A73 2000 September 2001 A73 Small loans to businesses and farms 1999 September 2000 A76 2000 September 2001 A76 Community development lending reported under the Community Reinvestment Act 1999 September 2000 A79 2000 September 2001 A79 STATISTICAL RELEASES—A List of Statistical Releases Published by the Federal Reserve is Printed Semiannually in the Bulletin Issue Page Schedule of anticipated release dates for periodic releases June 2002 A72 NOTE. The pro forma financial statements for Federal Reserve priced services were discontinued in the Bulletin after the January 2002 issue. Year-end figures for 2001 are available in the Board's 88th Annual Report, 2001 (http://www.federalreserve.gov/boarddocs/rptcongress). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A58 Special Tables • August 2002 4.20 DOMESTIC AND FOREIGN OFFICES Insured Commercial Bank Assets and Liabilities Consolidated Report of Condition, March 31, 2002 Millions of dollars except as noted Banks with Banks with foreign offices' domestic Domestic offices only2 IItteemm TToottaall Total Domestic Total 1 Total assets 6,393,830 5,683,534 4,216,131 3,505,836 2,177,699 2 Cash and balances due from depository institutions 336,539 245,426 244,923 153,810 91,616 3 Cash items in process of collection, unposted debits, and currency and coin n.a. n.a. 105,697 103,404 n.a. 4 Cash items in process of collection and unposted debits n.a. n.a. n.a. 83,835 n.a. 5 Currency and coin n.a. n.a. n.a. 19,569 n.a. 6 Balances due from depository institutions in the United States n.a. n.a. 33,806 28,192 n.a. 7 Balances due from banks in foreign countries and foreign central banks n.a. n.a. 90,718 7,610 n.a. 8 Balances due from Federal Reserve Banks n.a. n.a. 14,701 14,605 n.a. 9 Total securities, held-to maturity (amortized cost) and available-for-sale (fair value) 1,161,522 n.a. 644,171 n.a. 517,351 10 U.S. Treasury securities 49,193 n.a. 26,477 n.a. 22,716 11 U.S. government agency and corporation obligations (excludes mortgage-backed securities) 193,821 n.a. 7711,,220055 n.a. 112222,,661166 12 Issued by U.S. government agencies 5,492 n.a. 2,628 n.a. 2,864 13 Issued by U.S. government-sponsored agencies 188,329 n.a. 68,577 n.a. 119,752 14 Securities issued by states and political subdivisions in the United States 96,286 n.a. 32,492 n.a. 63,793 15 Mortgage-backed securities (MBS) 604,848 n.a. 389,343 n.a. 215,505 16 Pass-through securities 375,349 n.a. 258,328 n.a. 117,021 17 Guaranteed by GNMA 97,322 n.a. 61,082 n.a. 36,240 18 Issued by FNMA and FHLMC 262,820 n.a. 183,389 n.a. 79,431 19 Other pass-through securities 15,207 n.a. 13,857 n.a. 1,350 20 Other mortgage-backed securities (includes CMOs, REMICs, and stripped MBS) 229,499 n.a. 131,015 n.a. 98,484 21 Issued or guaranteed by FNMA, FHLMC or GNMA 163,170 n.a. 98,194 n.a. 64,976 22 Collateralized by MBS issued or guaranteed by FNMA, FHLMC, or GNMA 7,317 n.a. 5,878 n.a. 1,439 23 All other mortgage-backed securities 59,011 n.a. 26,943 n.a. 32,069 74 Asset-backed securities 99,273 n.a. 42.821 n.a. 56,452 ?5 Credit card receivables 34,779 n.a. 12,976 n.a. 21,803 26 Home equity lines 30,041 n.a. 16,949 n.a. 13,092 77 Automobile loans 14,406 n.a. 4,229 n.a. 10,178 28 Other consumer loans 1,168 n.a. 637 n.a. 531 29 Commercial and industrial loans 6,436 n.a. 2,773 n.a. 3,663 30 12,443 n.a. 5,258 n.a. 7,185 31 Other debt securities 96,531 n.a. 68,246 n.a. 28,286 32 Other domestic debt securities 36,774 n.a. 13,127 n.a. 2,3,647 33 Foreign debt securities 59,757 n.a. 55,119 n.a. 4,638 34 Investments in mutual funds and other equity securities with readily determinable fair value 21,570 n.a. 13,588 n.a. 7,982 35 Federal funds sold and securities purchased under agreements to resell 307,471 253,785 219,127 165,441 88,344 36 Federal funds sold in domestic offices 152,530 152,530 75,903 75,903 76,627 37 Securities purchased under agreements to resell 154,942 101,255 143,225 89,538 11,717 38 Total loans and leases (gross) and lease-financing receivables (net) 3,822,983 3,531,693 2,456,090 2,164,800 1,366,893 39 LESS: Unearned income on loans 3,814 2,873 2,694 1,753 1,120 40 LESS: Loans and leases held for sale 152,361 n.a. 121,844 n.a. 30,518 41 Total loans and leases (net of unearned income) 3,666,807 n.a. 2,331,552 n.a. 1,335,255 42 LESS: Allowance for loan and lease losses 72,645 n.a. 49,786 n.a. 22,858 43 Loans and leases, net of unearned income and allowance 3,594,162 n.a. 2,281,765 n.a. 1,312,397 Total loans and leases, gross, by category 44 Loans secured by real estate 1,794,144 1,762,619 990,969 959,444 880033,,117755 45 Construction and land development n.a. 192,429 n.a. 95,922 96,508 46 n.a. 35,978 n.a. 6,746 29,232 47 One- to four-family residential properties n.a. 953,494 n.a. 591,143 362,350 48 Revolving, open-end loans, extended under lines of credit n.a. 166,460 n.a. 116,477 49,983 Closed-end loans secured by one- to four-family residential properties 49 Secured by first liens n.a. 684,775 n.a. 414,385 227700,,339900 50 n.a. 102,258 n.a. 60,281 41,977 51 Multifamily (five or more) residential properties n.a. 65,657 n.a. 33,940 31,717 52 Nonfarm nonresidential properties n.a. 515,061 n.a. 231,692 283,368 53 Loans to depository institutions and acceptances of other banks 114,165 89,555 101,915 77,305 12,250 54 Commercial banks in the United States n.a. n.a. 71,412 62,119 n.a. 55 Other depository institutions in the United States n.a. n.a. 9,454 9,435 n.a. 56 Banks in foreign countries n.a. n.a. 21,049 5,751 n.a. 57 Loans to finance agricultural production and other loans to farmers 44,787 44,176 10,723 10,111 34,065 58 959,426 815,271 711,610 567,455 247,816 59 U.S. addressees (domicile) n.a. n.a. 574,435 557,115 n.a. 60 Non-U.S. addressees (domicile) n.a. n.a. 137,175 10,340 n.a. 61 Loans to individuals for household, family, and other personal expenditures (includes purchased paper) 604,831 550,795 367,435 313,399 237,396 6? 208,129 190,675 132,832 115,377 75,297 63 Other revolving credit plans 34,834 25,589 28,410 19,165 6,423 64 Other consumer loans (including single-payment, installment, and all student loans) 361,868 334,531 206,193 178,856 155,675 65 Obligations (other than securities) of states and political subdivisions in the United States (includes nonrated industrial development obligations) 22,083 22,083 13,778 13,778 88,,330055 66 All other loans 118,065 89,170 107,103 78,208 10,962 67 Loans to foreign governments and official institutions 6,407 2,071 6,395 2,059 13 68 Other loans 111,657 87,099 100,709 76,150 10,949 69 Loans for purchasing and carrying securities n.a. n.a. n.a. 14,805 n.a. 70 All other loans (excludes consumer loans) n.a. n.a. n.a. 61,344 n.a. 71 Lease-financing receivables 165,481 158,025 152,556 145,100 12,925 77, Trading assets 313,960 n.a. 305,834 n.a. 8,126 73 Premises and fixed assets (including capitalized leases) 76,132 n.a. 44,666 n.a. 31,466 74 Other real estate owned 4,021 n.a. 1,761 n.a. 2,260 75 Investments in unconsolidated subsidiaries and associated companies 8,491 n.a. 7,525 n.a. 967 76 Customers' liability on acceptances outstanding 5,539 n.a. 5,329 n.a. 211 77 Net due form own foreign offices, Edge Act and agreement subsidiaries, and IBFs n.a. n.a. n.a. 28,539 n.a. 78 128,285 n.a. 104,089 n.a. 24,195 79 Goodwill 80,133 n.a. 63,081 n.a. 17,052 80 Other intangible assets 48,151 n.a. 41,008 n.a. 7,143 81 All other assets 305,340 n.a. 235,097 n.a. 70,243 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A59 4.20 DOMESTIC AND FOREIGN OFFICES Insured Commercial Bank Assets and Liabilities—Continued Consolidated Report of Condition, March 31, 2002 Millions of dollars except as noted Banks with Banks with foreign offices' domestic DDoommeessttiicc offices only2 IItteemm TToottaall ttoottaall Total Domestic Total 82 Total liabilities, minority interest, and equity capital 6,393,830 n.a. 4,216,131 n.a. 2,177,699 83 Total liabilities 5,792,878 5,082,794 3,828,170 3,118,087 1,964,707 84 Total deposits 4,316,411 3,713,128 2,688,501 2,085,219 1,627,910 85 Individuals, partnerships, and corporations (include all certified and official checks) 3,906,462 3,453,134 2,401,268 1,947,940 1,505,195 86 U.S. government n.a. 16,342 n.a. 14,972 1,370 87 States and political subdivisions in the United States n.a. 186,565 n.a. 85,642 100,923 88 Commercial banks and other depository institutions in the United States 96,664 47,370 76,946 27,652 19,717 89 Banks in foreign countries 83,531 8,862 82,893 8,224 638 90 Foreign governments and official institutions (including foreign central banks) 26,435 855 2266,,336699 788 6666 91 Total transaction accounts n.a. 641,653 n.a. 333,429 308,224 92 Individuals, partnerships, and corporations (include all certified and official checks) n.a. 548,560 n.a. 279,426 269,134 93 U.S. government n.a. 1,106 n.a. 602 505 94 States and political subdivisions in the United States n.a. 52,383 n.a. 23,651 28,732 95 Commercial banks and other depository institutions in the United States n.a. 31,967 n.a. 22,511 9,456 96 Banks in foreign countries n.a. 7,180 n.a. 6,796 384 97 Foreign governments and official institutions (including foreign central banks) n.a. 456 n.a. 443 13 98 Total demand deposits n.a. 490,545 n.a. 294,648 195,897 99 Total nontransaction accounts n.a. 3,071,475 n.a. 1,751,790 1,319,686 100 Individuals, partnerships, and corporations (include all certified and official checks) n.a. 2,904,574 n.a. 1,668,513 1,236,061 101 US. government n.a. 15,236 n.a. 14,370 866 102 States and political subdivisions in the United States n.a. 134,182 n.a. 61,991 72,191 103 Commercial banks and other depository institutions in the United States n.a. 15,403 n.a. 5,141 10,262 104 Banks in foreign countries n.a. 1,682 n.a. 1,428 254 105 Foreign governments and official institutions (including foreign central banks) n.a. 399 n.a. 346 53 106 Federal funds purchased and securities sold under agreements to repurchase 505,582 459,990 397,986 352,394 107,596 107 Federal funds purchased in domestic offices 209,985 209,985 152,510 152,510 57,475 108 Securities sold under agreements to repurchase 295,597 250,005 245,475 199,883 50,121 109 Trading liabilities 177,693 n.a. 176,980 n.a. 712 110 Other borrowed money (includes mortgage indebtedness and obligations under capitalized leases) 496,934 460,096 315,597 278,759 181,337 111 Banks' liability on acceptances executed and outstanding 5,549 3,511 5,338 3,300 211 112 Subordinated notes and debentures to deposits 92,330 n.a. 83,324 n.a. 9,007 113 Net due to own foreign offices, Edge Act and agreement subsidiaries, and IBFs n.a. n.a. n.a. 120,095 n.a. 114 All other liabilities 198,380 n.a. 160,444 n.a. 37,936 115 Minority interest in consolidated subsidiaries 10,870 n.a. 9,476 n.a. 1,394 116 Total equity capital 590,082 n.a. 378,484 n.a. 211,597 MEMO 117 Trading assets at large banks2 313,845 160,748 305,741 152,643 8,105 118 U.S. Treasury securities (domestic offices) n.a. 20,951 n.a. 20,780 171 119 U.S. government agency obligations (excluding MBS) n.a. 10,469 n.a. 9,823 646 120 Securities issued by states and political subdivisions in the United States n.a. 1,223 n.a. 931 291 121 Mortgage-backed securities n.a. 9,393 n.a. 5,724 3,668 122 Other debt securities n.a. 32,776 n.a. 31,661 1,115 123 Other trading assets n.a. 23,182 n.a. 21,355 1,827 124 Trading assets in foreign offices 90,499 0 90,499 0 0 125 Revaluation gains on interest rate, foreign exchange rate, and other commodity and equity contracts 125,353 62,754 124,968 62,369 385 126 Total individual retirement (IRA) and Keogh plan accounts n.a. 160,026 n.a. 72,919 87,107 127 Total brokered deposits n.a. 228,462 n.a. 96,741 131,721 128 Fully insured brokered deposits n.a. 162,855 n.a. 63,006 99,849 129 Issued in denominations of less than $ 100,000 n.a. 87,035 n.a. 28,455 58,581 1.30 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. 75,820 n.a. 34,551 41,269 131 Money market deposit accounts (MMDAs) n.a. 1,300,148 n.a. 845,160 454,988 132 Other savings deposits (excluding MMDAs) n.a. 511,469 n.a. 301,194 210,275 133 Total time deposits of less than $100,000 n.a. 720,259 n.a. 313,230 407,029 134 Total time deposits of $100,000 or more n.a. 539,599 n.a. 292,206 247,393 135 Number of banks 7,982 7,982 131 n.a. 7,851 NOTE. The notation "n.a." indicates the lesser detail available from banks that do not have Foreign offices include branches in foreign countries, Puerto Rico, and US.-affiliated foreign offices, the inapplicability of certain items to banks that have only domestic offices, or insular areas; subsidiaries in foreign countries; all offices of Edge Act and agreement the absence of detail on a fully consolidated basis for banks that have foreign offices. corporations wherever located; and international banking facility (IBF). 1. All transactions between domestic and foreign offices of a bank are reported in "net due 2. Components of "Trading Assets at Large Banks" are reported only by banks that from" and "net due to" lines. All other lines represent transactions with parties other than the reported trading assets of $2 million or more any quarter of the preceding calendar year. domestic and foreign offices of each bank. Because these intra-office transactions are nullified by consolidation, total assets and total liabilities for the entire bank may not equal the sum of assets and liabilities respectively of the domestic and foreign offices. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A60 Special Tables • August 2002 4.23 TERMS OF LENDING AT COMMERCIAL BANKS Survey of Loans Made, May 6-10, 2002 A. Commercial and industrial loans made by all commercial banks' Weighted- Weighted- Amount of loans (percent) average loans size m av at e u r r a i g ty e 3 common ( 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 uanaDie p SS re uu p p bb e a n jjee y a cc m l tt t y e tt oo n t c M o a m d m e i u tm nd e e n r t base r a p t r e i 4 c ing LOAN RISK5 1 All commercial and industrial loans 3.60 72,959 474 383 33.3 9.5 36.6 77.1 Foreign 2 Minimal risk 2.61 1,864 435 203 26.2 14.7 55.3 84.8 Foreign 3 Low risk 2.86 16,294 1.304 296 28.0 9.6 36.3 81.4 Fed funds 4 Moderate risk 3.84 23,534 451 676 34.9 11.4 36.1 86.5 Foreign 5 Other 4.00 23,197 393 234 37.4 7.2 33.8 76.1 Foreign By maturity/repricing interval6 6 Zero interval 4.55 12,812 238 525 53.0 15.8 11.5 78.6 Prime 7 Minimal risk 3.73 241 162 478 61.6 28.9 12.5 73.8 Prime 8 Low risk 3.34 3,977 742 302 22.3 6.8 17.7 62.6 Fed funds 9 Moderate risk 5.08 3,856 192 865 66.0 20.5 11.7 87.6 Prime 10 Other 5.51 3,874 158 532 64.2 21.9 7.3 82.6 Prime 11 Daily 3.12 30,489 636 178 28.5 7.3 43.4 70.8 Fed funds 12 Minimal risk 2.17 865 1.834 13 8.9 1.6 93.5 98.8 Foreign 13 Low risk 2.34 6,558 3.738 195 32.5 11.2 56.1 89.0 Fed funds 14 Moderate risk 3.47 6,902 524 359 32.0 12.8 32.4 85.6 Fed funds 15 Other 3.40 11,324 611 99 29.7 3.1 32.6 67.7 Fed funds 16 2 to 30 days 3.46 10,444 660 318 24.2 16.4 32.9 77.9 Foreign 17 Minimal risk 2.43 475 864 35 13.6 35.9 7.5 64.8 Domestic 18 Low risk 2.74 1,406 1,027 257 12.8 23.9 25.3 88.5 Fed funds 19 Moderate risk 3.55 4,187 1,001 542 24.1 17.1 29.4 78.9 Foreign 20 Other 4.03 3,104 397 185 37.4 8.5 45.0 86.2 Foreign 21 31 to 365 days 3.44 16,523 701 429 25.3 3.6 49.9 87.8 Foreign 22 Minimal risk 3.05 237 190 785 70.6 7.9 64.9 91.6 Foreign 23 Low risk 2.88 3,810 1,363 312 24.2 4.2 30.3 84.0 Foreign 24 Moderate risk 3.36 7,417 777 635 20.8 2.1 57.7 93.7 Foreign 25 Other 3.88 4,202 895 196 27.1 1.3 58.4 86.0 Foreign Months 26 More than 365 days 6.01 2,422 218 70 76.0 6.2 13.9 70.4 Prime 27 Minimal risk . . . 4.58 45 90 41 66.5 3.1 3.9 49.9 Other 28 Low risk 5.92 536 458 48 80.4 10.2 3.1 91.2 Prime 28 Moderate risk . . 6.24 1,047 241 92 79.6 3.3 28.9 66.2 Prime 30 Other 5.81 567 189 56 74.0 6.6 1.6 67.2 Other Weighted- Weighted- average average risk maturity/ rating5 repricing interval® Days SIZE OF LOAN (thousands of dollars) 31 1-99 5.88 2.835 3.4 145 80.6 26.3 3.2 83.5 Prime 32 100-999 5.09 9.753 3.4 132 67.8 17.9 7.5 88.6 Prime 33 1,000-9,999 3.76 21,555 3.2 91 33.2 9.6 35.6 80.1 Foreign 34 10,000 or more 2.96 38,815 3.0 32 21.1 6.1 47.0 72.1 Foreign Average size (thousands of dollars) BASE RATE OF LOAN4 35 Prime7 5.33 17,589 3.4 98 65.5 21.3 4.8 84.1 162 36 Fed funds 2.50 15,820 3.1 10 18.9 2.2 35.9 71.9 5,792 37 Other domestic 2.73 7,959 2.4 10 4.4 21.4 68.0 43.1 3,120 38 Foreign 3.15 20,370 3.1 36 19.8 2.4 66.5 93.1 2,256 39 Other 3.84 11,221 3.3 198 47.8 5.7 11.0 68.6 362 Footnotes appear at end of table. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Financial Markets A61 4.23 TERMS OF LENDING AT COMMERCIAL BANKS Survey of Loans Made, May 6-10, 2002—Continued B. Commercial and industrial loans made by all domestic banks' W ( e l p a o f e e v a f i r e e n g c r c h e a t r n t i g a e v t t e d ) e e 2 - A o ( f m m l d o o i o l a u l l i n n l o a s t n r o s s ) f ( A th v o d e u o r s a s l i g l a z a e n e r d s l ) s o a o n f W m a e v a D i t e g u a r h y r a i t s g t e y e d 3 - S c e o c l u la re te d r a b l y Amount of loan p s S re ( p u p p e b e a n j r e y a c c m l e t t y n e t t n o ) t c M om ad m e it u m nd e e n r t LOAN RISK5 1 All commercial and industrial loans 4.07 41,956 284 628 47.9 14.2 17.9 80.0 2 Minimal risk 3.07 851 202 452 46.9 32.3 18.4 66.7 3 Low risk 2.89 11,287 964 343 36.3 12.7 34.0 75.1 4 Moderate risk 4.31 15,794 313 973 47.0 13.5 17.2 82.7 5 Other 5.10 10,029 179 518 65.3 14.1 7.6 87.3 By maturity/repricing interval6 6 Zero interval 4.66 10,723 203 519 52.5 17.5 13.0 74.7 7 Minimal risk 3.73 241 162 478 61.9 29.0 12.6 73.7 8 Low risk 2.97 2,841 548 126 15.8 4.8 24.7 47.7 9 Moderate risk 5.11 3,687 187 866 67.6 21.3 11.2 87.2 10 Other 5.51 3.679 153 512 65.4 22.7 6.9 82.2 11 Daily 3.60 15,128 326 368 48.7 14.7 25.9 84.2 12 Minimal risk 3.37 54 120 204 42.3 26.1 1.2 80.2 13 Low risk 2.38 4.680 3,046 272 45.5 15.7 57.3 89.0 14 Moderate risk 3.80 5,189 404 483 42.6 17.0 20.8 84.3 15 Other 4.99 3,176 178 376 67.6 11.0 4.3 89.1 16 2 to 30 days 3.56 5,434 376 581 33.8 18.4 8.6 74.0 17 Minimal risk 2.24 324 624 47 8.9 52.6 48.4 18 Low risk 3.08 838 661 474 21.5 40.1 24.3 82.0 19 Moderate risk 3.62 2,246 592 885 35.1 7.8 6.7 65.6 20 Other 4.52 1,242 174 415 58.5 8.1 9.0 96.9 21 31 to 365 days 3.90 8,056 377 799 40.8 7.3 17.5 85.8 22 Minimal risk 3.19 187 152 977 89.7 10.1 66.3 89.3 23 Low risk 3.05 2,385 950 447 37.8 6.7 9.9 74.5 24 Moderate risk 4.07 3,500 395 1,279 28.7 4.5 21.8 90.8 25 Other 4.49 1,313 367 426 61.1 4.2 19.1 96.7 26 More than 365 days 6.01 2,422 218 76.1 6.2 13.9 70.4 27 Minimal risk 4.58 45 90 66.5 3.1 3.9 49.9 28 Low risk 5.92 535 462 80.4 10.1 3.1 91.2 28 Moderate risk . . 6.24 1,047 241 79.6 3.3 28.9 66.2 30 Other 5.81 567 189 74.0 6.6 1.6 67.2 Weighted- Weighted- average average risk maturity/ rating5 repricing interval® Days SIZE OF LOAN (thousands of dollars) 31 1-99 5.89 2,798 3.4 146 81.2 26.5 3.0 83.5 32 100-999 5.20 8,814 3.4 143 72.4 19.1 3.4 88.5 33 1,000-9,999 4.22 12,579 3.1 143 47.8 14.1 17.2 87.8 34 10,000 or more 3.11 17,765 2.6 53 30.7 10.0 28.0 69.7 BASE RATE OF LOAN4 35 Prime7 5.33 16,114 3.4 106 67.8 18.2 4.8 82.8 36 Fed funds 2.34 5,611 2.4 16 46.0 6.2 30.3 65.8 37 Other domestic 2.69 4,548 2.4 12 6.4 37.4 44.1 73.1 38 Foreign 3.49 6,640 2.9 50 38.3 5.3 28.3 90.5 39 Other 4.01 9,043 3.0 245 41.8 7.1 12.9 79.7 Footnotes appear at end of table. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A62 Special Tables • August 2002 4.23 TERMS OF LENDING AT COMMERCIAL BANKS Survey of Loans Made, May 6-10, 2002—Continued C. Commercial and industrial loans made by large domestic banks' Weighted- WWeeiigghhtteedd-- Amount of loans (percent) average AAAmmmooouuunnnttt ooofff AAAvvveeerrraaagggeee llloooaaannn aavveerraaggee effective llloooaaannnsss sssiiizzzeee mmaattuurriittyy'' ( l p o e a r n c e r n a t t ) e 2 ooo ((( fff mmm ddd iii ooo llllll lll iii lll ooo aaa nnn rrr sss sss ))) (((ttthhhooo ddd uuu ooo sss llllll aaa aaa nnn rrr ddd sss))) sss ooofff Days S c e o c l u la re te d r a b l y CCaallllaabbllee pp SS rree uu pp pp ee bb aa nn jjee yy aa cc mm ll tt tt yy ee tt nn oo tt c M om ad m e i u tm nd e e n r t LOAN RISK5 1 All commercial and industrial loans 3.69 34,284 459 544 41.2 12.4 20.6 79.3 2 Minimal risk 2.47 532 843 386 49.4 39.9 25.1 61.2 3 Low risk 2.52 10,067 3,512 272 30.9 12.0 37.9 74.7 4 Moderate risk 3.88 12,643 554 849 36.8 11.8 18.9 81.8 5 Other 4.95 8,105 242 473 63.5 11.4 8.7 87.7 By maturity/repricing interval6 6 Zero interval 4.29 7,541 385 417 42.6 12.7 16.4 70.0 7 Minimal risk 3.07 130 553 198 73.1 22.7 7.2 78.9 8 Low risk 2.61 2,494 4,174 79 7.1 2.4 27.8 43.6 9 Moderate risk 4.86 2,302 280 672 54.6 17.9 14.7 86.5 10 Other 5.46 2,608 250 570 64.5 17.4 7.5 80.2 11 Daily 3.44 14,002 347 361 45.2 14.9 27.9 83.5 12 Minimal risk 3.09 48 199 210 36.0 25.1 1.1 79.2 13 Low risk 2.32 4,584 5,272 256 44.6 15.3 58.5 89.2 14 Moderate risk 3.52 4,567 420 497 36.0 17.8 23.7 82.6 15 Other 4.98 2,852 183 379 64.5 11.2 4.8 89.0 16 2 to 30 days 3.46 4,719 553 597 30.7 18.4 9.9 71.6 17 Minimal risk 2.00 199 3,412 26 6.3 85.1 * 17.1 18 Low risk 2.94 767 1,088 430 17.9 39.8 26.5 83.7 19 Moderate risk 3.54 2,063 1,089 920 32.0 6.8 7.3 63.7 20 Other 4.38 1,038 225 327 55.0 7.2 10.7 96.4 21 31 to 365 days 3.45 6,625 2,147 868 34.0 3.1 20.5 88.0 22 Minimal risk 2.27 134 2,234 1,097 98.6 .5 92.1 98.2 23 Low risk 2.69 2,107 4,654 455 33.5 6.0 11.1 75.5 24 Moderate risk 3.66 3,033 3,672 1,340 21.2 1.3 24.8 92.0 25 Other 4.35 1,190 805 440 62.2 3.3 20.9 97.5 Months 26 More than 365 days 4.84 1,229 639 42 62.8 1.2 6.2 68.0 27 Minimal risk * * * * * * * * 28 Low risk 2.81 107 547 33 34.5 4.7 2.9 99.7 28 Moderate risk . . , 5.25 574 1,206 43 66.1 1.2 10.6 64.6 30 Other 4.71 367 401 35 75.0 .8 2.1 72.6 Weighted- Weighted- average average risk maturity/ rating5 repricing interval6 Days SIZE OF LOAN (thousands of dollars) 31 1-99 5.25 1,425 3.7 46 79.7 24.8 1.7 90.1 32 100-999 4.80 5,709 3.6 49 69.5 15.7 3.2 93.4 33 1,000-9,999 3.88 9,729 3.2 88 39.2 13.0 19.2 87.6 34 10.000 or more 3.09 17,421 2.6 53 30.0 9.9 28.6 69.1 BASE RATE OF LOAN4 35 Prime7 5.10 11,265 3.5 49 61.5 14.1 3.5 80.9 36 Fed funds 2.30 5,472 2.3 4 45.2 5.4 31.1 66.0 37 Other domestic 2.64 4,464 2.4 7 5.7 37.8 45.0 72.9 38 Foreign 3.49 6,063 3.0 47 39.4 4.6 30.8 90.6 39 Other 3.33 7,020 3.1 177 29.8 5.6 15.4 81.5 Footnotes appear at end of table. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Financial Markets A63 4.23 TERMS OF LENDING AT COMMERCIAL BANKS Survey of Loans Made, May 6-10, 2002—Continued D. Commercial and industrial loans made by small domestic banks' W ( l e p a o f e e v a f i r e e n g c r c h e a r t t n i a g e v t t e d ) e e 2 - A o ( f m m l d o i o l o a u l l i n n l o a s t n r s s o ) f ( A th v o d e u r o s a s l i g l a z a e n e r d s l ) s o a o n f W m a e v a D i t e g u a r h y r a i t s g t e y e d 3 - S c e o c l u la re te d r a b l y Amount of loan p s S re ( p u p p e b e a n j r e y a c c m l e t t y n e t t n o ) t c M om ad m e i u tm nd e e n r t LOAN RISK5 1 All commercial and industrial loans 5.77 7,672 1,003 77.9 22.6 6.2 83.3 2 Minimal risk 4.07 319 572 42.8 19.7 7.2 75.7 3 Low risk 5.93 1,220 138 81.3 18.6 2.1 78.4 4 Moderate risk 6.01 3,150 114 1,486 87.9 20.5 10.4 86.2 5 Other 5.73 1,924 85 700 72.7 25.4 3.2 85.9 By maturity/repricing interval6 6 Zero interval 5.52 3,182 762 76.1 29.1 5.0 85.7 7 Minimal risk 4.51 110 950 48.6 36.5 18.8 67.7 8 Low risk 5.50 347 76 527 78.9 22.3 2.7 77.3 9 Moderate risk 5.52 1,386 121 1,200 89.1 27.0 5.2 88.3 10 Other 5.61 1,071 79 67.7 35.7 5.3 87.1 11 Daily 5.61 1,126 187 454 92.2 12.4 .0 92.4 12 Minimal risk 5.89 5 26 160 100.0 34.7 1.6 89.0 13 Low risk 5.39 96 144 87.4 35.2 76.8 14 Moderate risk 5.91 621 319 385 91.7 11.6 97.6 15 Other 5.07 324 140 352 95.2 9.7 89.6 16 2 to 30 days 4.23 715 121 482 54.3 18.0 89.8 17 Minimal risk 2.61 125 271 81 13.1 .9 98.2 18 Low risk 4.61 71 126 60.5 44.0 .4 63.1 19 Moderate risk 4.54 183 96 430 70.3 18.4 .0 87.2 20 Other 5.22 203 835 76.0 12.9 .3 99.4 21 31 to 365 days 5.98 1,430 78 464 72.2 26.8 3.7 76.0 22 Minimal risk 5.56 53 45 674 67.1 34.5 .4 66.5 23 Low risk 5.81 278 135 71.0 12.7 .9 67.5 24 Moderate risk 6.75 467 58 835 77.7 25.2 2.8 82.8 25 Other 5.89 123 58 282 51.3 12.6 1.6 89.1 26 More than 365 days 7.21 1,193 130 99 89.7 11.2 21.8 72.9 27 Minimal risk 5.83 26 53 54 100.0 5.3 6.8 17.6 28 Low risk 6.70 428 444 52 91.9 11.5 3.2 89.1 28 Moderate risk . . . 7.46 473 122 151 96.0 5.9 51.1 68.0 30 Other 7.83 200 96 94 72.2 17.3 .7 57.5 Weighted- Weighted- average average risk maturity/ rating5 repricing interval® Days SIZE OF LOAN (thousands of dollars) 31 1-99 6.56 1,373 3.2 249 82.8 28.3 4.4 76.6 32 100-999 5.94 3,105 3.1 313 77.6 25.4 3.9 79.5 33 1,000-9,999 5.41 2,850 2.9 327 77.1 17.9 10.2 88.6 34 10,000 or more BASE RATE OF LOAN4 35 Prime7 5.85 4,849 3.2 238 82.3 27.8 87.3 36 Fed funds 4.28 139 3.0 475 75.8 39.1 61.5 37 Other domestic 5.19 85 3.4 254 45.3 16.9 .3 83.7 38 Foreign 3.41 577 2.5 75 27.0 12.3 1.2 89.1 39 Other 6.35 2,023 2.8 478 83.4 12.1 3.9 73.4 Footnotes appear at end of table. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A64 Special Tables • August 2002 4.23 TERMS OF LENDING AT COMMERCIAL BANKS Survey of Loans Made, May 6-10, 2002—Continued E. Commercial and industrial loans made by U.S. branches and agencies of foreign banks1 Weighted- WWeeiigghhtteedd-- Amount of loans (percent) e a f v f e e r c a ti g v e e AAAmmm lllooo ooo aaa uuu nnn nnn sss ttt ooofff AAAvvveeerrr sss aaa iii ggg zzz eee eee llloooaaannn mm aa aa vv tt ee uu rr rr aa ii gg ttyy ee 33 ( l p o e a r n c e r n a t t ) e 2 ooo ((( fff mmm ddd iiilll ooo lll lll iii lll ooo aaa nnn rrr sss sss ))) (((ttthhhooo ddd uuu ooo sss llllll aaa aaa nnn rrr ddd sss))) sss ooofff Days S c e o c l u la re te d r a b l y CCaallllaabbllee pp SS rree pp uu pp ee bb aa nn jjee yy aa cc mm lltt tt yy ee tt oo nn tt c M om ad m e i u tm nd e e n r t LOAN RISK5 1 All commercial and industrial loans 2.96 31,003 4,948 62 13.4 3.0 62.0 73.2 2 Minimal risk 2.23 1,013 12,596 7 8.8 * 86.2 100.0 3 Low risk 2.80 5,007 6,344 192 9.1 2.6 41.4 95.6 4 Moderate risk 2.89 7,740 4,245 54 10.5 7.1 74.8 94.3 5 Other 3.15 13,168 4,412 35 16.2 1.9 53.7 67.6 By maturity/repricing interval6 6 Zero interval 4.02 2,088 1,760 557 55.6 7.2 3.6 98.8 7 Minimal risk * * * * * * * * 8 Low risk 4.27 1,136 6,457 741 38.6 11.6 .2 99.9 9 Moderate risk 4.39 168 424 840 31.0 3.7 24.4 96.3 10 Other 5.49 195 370 960 42.1 6.4 15.8 90.4 11 Daily 2.65 15,361 10,174 2 8.6 * 60.7 57.6 12 Minimal risk * * * * * * * * 13 Low risk 2.25 1,878 8,620 3 * * 53.2 89.1 14 Moderate risk 2.48 1,714 4,989 5 * * 67.5 89.3 15 Other 2.79 8,149 12,311 2 14.9 * 43.6 59.3 16 2 to 30 days 3.34 5,010 3,696 21 13.8 14.3 59.3 82.1 17 Minimal risk * * * * * * * * 18 Low risk 2.23 568 5,648 14 * * 26.7 98.2 19 Moderate risk 3.46 1,941 4,993 20 11.4 28.0 55.6 94.3 20 Other 3.70 1,863 2,800 27 23.3 8.8 69.1 79.1 21 31 to 365 days 3.00 8,467 3,869 77 10.6 .0 80.8 89.7 22 Minimal risk * * * * * * * * 23 Low risk 2.59 1,425 5,003 78 1.3 * 64.4 99.8 24 Moderate risk 2.72 3,917 5,646 67 13.7 * 89.7 96.4 25 Other 3.60 2,890 2,581 91 11.6 .0 76.3 81.1 Months 26 More than 365 days * * * * * * * * 27 Minimal risk * * * * * * * * 28 Low risk * * * * * * * * 28 Moderate risk . . , * * * * * * * * 30 Other * * * * * * * * Weighted- Weighted- average average risk maturity/ rating5 repricing interval Days SIZE OF LOAN (thousands of dollars) 31 1-99 4.62 37 3.8 41 32.0 10.6 17.9 83.9 32 100-999 4.00 939 3.6 26 24.8 6.0 46.1 89.3 33 1,000-9,999 3.12 8,976 3.4 18 12.8 3.3 61.5 69.2 34 10,000 or more 2.84 21,050 3.4 15 13.1 2.8 63.0 74.2 BASE RATE OF LOAN4 35 Prime7 5.32 1,474 3.2 7 40.9 54.8 4.6 98.1 36 Fed funds 2.59 10,210 3.6 6 4.0 * 39.0 75.3 37 Other domestic 2.80 3,411 2.1 7 1.8 .0 99.9 3.2 38 Foreign 2.98 13,730 3.2 29 10.8 1.0 85.1 94.4 39 Other 3.14 2,178 4.6 5 72.9 * 3.6 22.5 Footnotes appear at end of table. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Financial Markets A65 NOTES TO TABLE 4.23 NOTE. The Survey of Terms of Business Lending collects data on gross loan extensions 5. A complete description of these risk categories is available from the Banking Analysis made during the first full business week in the mid-month of each quarter. The authorized Section, Mail Stop 81, Board of Governors of the Federal Reserve System, Washington, DC panel size for the survey is 348 domestically chartered commercial banks and 50 U.S. 20551. The category "Moderate risk" includes the average loan, under average economic branches and agencies of foreign banks. The sample data are used to estimate the terms of conditions, at the typical lender. The category "Other" includes loans rated "acceptable" as loans extended during that week at all domestic commercial banks and all U.S. branches and well as special mention or classified loans. The weighted-average risk rating published for agencies of foreign banks. Note that the terms on loans extended during the survey week may loans in rows 31-39 are calculated by assigning a value of "1" to minimal risk loans; "2" to differ from those extended during other weeks of the quarter. The estimates reported here are low risk loans; "3" to moderate risk loans, "4" to acceptable risk loans; and "5" to special not intended to measure the average terms on all business loans in bank portfolios. mention and classified loans. These values are weighted by loan amount and exclude loans 1. As of March 31, 2001, assets of the large banks were at least $4 billion. Median total with no risk rating. Some of the loans in lines 1, 6, 11, 16, 21, 26, and 31-39 are not rated for assets for all insured banks were roughly $80 million. Assets at all U.S. branches and agencies risk. averaged $2.7 billion. 6. The maturity/repricing interval measures the period from the date the loan is made until 2. Effective (compounded) annual interest rates are calculated from the stated rate and it first may reprice or it matures. For floating-rate loans that are subject to repricing at any other terms of the loans and weighted by loan amount. The standard error of the loan rate for time—such as many prime-based loans—the maturity/repricing interval is zero. For floatingall commercial and industrial loans in the current survey (line 1, column 1) is 0.10 percentage rate loans that have a scheduled repricing interval, the maturity/repricing interval measures point. The chances are about two out of three that the average rate shown would differ by less the number of days between the date the loan is made and the date on which it is next than this amount from the average rate that would be found by a complete survey of the scheduled to reprice. For loans having rates that remain fixed until the loan matures universe of all banks. (fixed-rate loans), the matuirty/repricing interval measures the number of days between the 3. Average maturities are weighted by loan amount and exclude loans with no stated date the loan is made and the date on which it matures. Loans that reprice daily mature or maturities. reprice on the business day after they are made. Owing to weekends and holidays, such loans 4. The most common base pricing rate is that used to price the largest dollar volume of may have maturity/repricing intervals in excess of one day; such loans are not included in the loans. Base pricing rates include the prime rate (sometimes referred to as a bank's "base" or "2 to 30 day" category. "reference" rate); the federal funds rate; domestic money market rates other than the prime 7. For the current survey, the average reported prime rate, weighted by the amount of loans rate and the federal funds rate; foreign money market rates; and other base rates not included priced relative to a prime base rate, was 4.84 percent for all banks, 4.75 percent for large in the foregoing classifications. domestic banks, 5.09 percent for small domestic banks, and 4.75 percent for U.S. branches and agencies of foreign banks. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A66 Special Tables • August 2002 4.30 ASSETS AND LIABILITIES of U.S. Branches and Agencies of Foreign Banks, March 31, 20021 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 t F d a s i l n g I o B n F ly s inc T I l B o u t F d a s i l n g I o B n F ly s inc T I l B o u t F d a s i l n g I o B n F ly s 1 Total assets4 1,033,407 140,724 854,345 112,140 19,524 5,358 38,134 3,307 2 Claims on nonrelated parties 744,755 62,559 629,813 53,686 18,498 1,769 37,167 999 3 Cash and balances due from depository institutions 72,177 26,787 62,242 24,277 1,155 646 1,486 953 4 Cash items in process of collection and unposted debits 2,488 0 2,152 0 7 0 21 0 5 Currency and coin (U.S. and foreign) 12 n.a. 9 n.a. 1 n.a. 0 n.a. 6 Balances with depository institutions in United States 49,999 13,744 44,268 12,450 881 412 992 528 7 U.S. branches and agencies of other foreign banks (including their IBFs) 44,946 12,949 39,827 11,719 658 361 914 528 8 Other depository institutions in United States (including their IBFs) 5,053 795 4,441 731 223 51 78 0 9 Balances with banks in foreign countries and with foreign central banks 19,239 13,043 15,495 11,827 236 234 464 425 10 Foreign branches of U.S. banks 275 202 254 182 20 20 0 0 11 Banks in home country and home-country central banks 7,364 3,904 4,902 3,904 0 0 0 0 12 All other banks in foreign countries and foreign central banks 11,600 8,936 10,339 7,740 216 214 464 425 13 Balances with Federal Reserve Banks 439 n.a. 318 n.a. 30 n.a. 9 n.a. 14 Total securities and loans 449,537 29,317 366,155 23,073 16,920 1,097 26,805 43 15 Total securities, book value 120,512 4,400 104,047 3,960 1,391 399 3,640 13 16 U.S. Treasury 14,295 n.a. 13,058 n.a. 66 n.a. 296 n.a. 17 Obligations of U.S. government agencies and corporations 25,507 n.a. 22,717 n.a. 33 n.a. 1,342 n.a. 18 Other bonds, notes, debentures, and corporate stock (including state and local securities) 80,710 4,400 68,273 3,960 1,292 399 2,002 13 19 Securities of foreign governmental units 10,485 2,680 10,222 2,571 200 86 13 13 20 Mortgage-backed securities 21,794 0 18,430 0 178 0 0 0 21 Other asset-backed securities 15,740 18 10,293 18 6 0 0 0 22 All other 32,691 1,701 29,327 1,372 908 313 1,989 0 23 Federal funds sold and securities purchased under agreements to resell 87,559 4,987 84,848 4,944 106 17 1,202 0 24 Depository institutions in the United States 21,749 3,552 20,066 3,509 106 17 250 0 25 Other 65,810 1,434 64,782 1,434 0 0 952 0 26 Total loans, gross 329,378 24,939 262,389 19,130 15,562 699 23,173 30 27 LESS: Unearned income on loans 353 22 281 17 32 1 8 0 28 EQUALS: Loans, net 329,025 24,917 262,108 19,113 15,529 698 23,165 30 Total loans, gross, by category 29 Real estate loans 18,403 59 14,576 59 2,672 0 126 0 30 Loans to depository institutions and acceptances of other banks 76,624 11,543 61,647 7,711 2,389 530 4,995 29 31 Commercial banks in United States (including their IBFs) 4,661 1,824 3,479 1,294 752 305 16 0 32 U.S. branches and agencies of other foreign banks 3,698 1,820 2,545 1,290 746 305 1 0 33 Other commercial banks in United States 962 4 934 4 5 0 15 0 34 Other depository institutions in United States (including their IBFs) . . . 14 0 0 0 0 0 0 0 35 Banks in foreign countries 15,012 9,006 9,974 5,791 281 225 679 29 36 Foreign branches of U.S. banks 348 207 303 163 1 0 0 0 37 Other banks in foreign countries 14,664 8,799 9,671 5,628 280 225 679 29 38 Loans to other financial institutions 56,938 713 48,194 626 1,356 0 4,300 0 39 Commercial and industrial loans 209,614 11,452 164,193 9,737 9,844 147 17,170 0 40 U.S. addressees (domicile) 170,932 24 133,688 23 9,251 0 14,760 0 41 Non-U.S. addressees (domicile) 38,683 11,428 30,505 9,714 594 147 2,410 0 42 Loans to foreign governments and official institutions (including foreign central banks) 3,888 1,798 2,898 1,558 341 22 195 0 43 Loans for purchasing or carrying securities (secured and unsecured) .... 13,482 0 12,981 0 0 0 170 0 44 All other loans 6,815 87 5,890 65 315 0 173 0 45 Lease financing receivables (net of unearned income) 550 0 205 0 0 0 345 0 46 U.S. addressees (domicile) 496 0 205 0 0 0 292 0 47 Non-U.S. addressees (domicile) 54 0 0 0 0 0 54 0 48 Trading assets 105,426 808 92,011 808 80 0 6,154 0 49 All other assets 30,056 660 24,557 584 237 9 1,520 3 50 Customers' liabilities on acceptances outstanding 903 n.a. 564 n.a. 89 n.a. 218 n.a. 51 U.S. addressees (domicile) 379 n.a. 281 n.a. 83 n.a. 15 n.a. 52 Non-U.S. addressees (domicile) 524 n.a. 283 n.a. 6 n.a. 204 n.a. 53 Other assets including other claims on nonrelated parties 29,152 660 23,993 584 148 9 1,301 3 54 Net due from related depository institutions5 288,652 78,166 224,532 58,454 1,026 3,589 967 2,308 55 Net due from head office and other related depository institutions5 288,652 n.a. 224,532 n.a. 1,026 n.a. 967 n.a. 56 Net due from establishing entity, head office, and other related depository institutions5 n.a. 78,166 n.a. 58,454 n.a. 3,589 n.a. 2,308 57 Total liabilities4 1,033,407 140,724 854,345 112,140 19,524 5,358 38,134 3,307 58 Liabilities to nonrelated parties 872,962 124,729 724,623 97,920 9,918 5,252 33,383 3,270 Footnotes appear at end of table. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

U.S. Branches and Agencies A67 4.30 ASSETS AND LIABILITIES of U.S. Branches and Agencies of Foreign Banks, March 31, 2002'—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 t F 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 59 Total deposits and credit balances 500,420 92,124 406,113 74,030 3,437 1,568 17,443 2,834 60 Individuals, partnerships, and corporations (including certified and official checks) 396,282 9,182 311,019 44,,335500 22,,997711 112244 1166,,550088 4 61 U.S. addressees (domicile) 379,447 262 300,097 201 1,313 0 16,412 0 67 Non-U.S. addressees (domicile) 16,835 8,920 10,922 4,149 1,658 124 96 4 63 Commercial banks in United States (including their IBFs) 67,834 12,951 60,598 12,232 446 25 935 55 64 U.S. branches and agencies of other foreign banks 19,057 11,959 17,510 11,595 0 25 13 55 65 Other commercial banks in United States 48,777 992 43,088 637 446 0 922 0 66 Banks in foreign countries 9,930 43,375 9,370 36,584 12 647 0 1,184 67 Foreign branches of U.S. banks 1,354 2,680 1,354 1,994 0 20 0 56 68 Other banks in foreign countries 8,576 40,695 8,016 34,590 12 627 0 1,128 69 Foreign governments and official institutions (including foreign central banks) 7,077 26,616 6,748 2200,,886644 88 777733 00 11,,559911 70 All other deposits and credit balances 19,296 0 18,378 0 00 0 0 0 71 Transaction accounts and credit balances (excluding IBFs) 8,842 n.a. 6,673 n.a. 311 n.a. 190 n.a. 72 Individuals, partnerships, and corporations (including certified and official checks) 7,421 n.a. 5,449 n.a. 229977 n.a. 119900 n.a. 73 U.S. addressees (domicile) 5,001 n.a. 4,103 n.a. 134 n.a. 184 n.a. 74 Non-U.S. addressees (domicile) 2,420 n.a. 1,346 n.a. 163 n.a. 6 n.a. 75 Commercial banks in United States (including their IBFs) 168 n.a. 165 n.a. 0 n.a. 0 n.a. 76 U.S. branches and agencies of other foreign banks 4 n.a. 4 n.a. 0 n.a. 0 n.a. 77 Other commercial banks in United States 164 n.a. 162 n.a. 0 n.a. 0 n.a. 78 Banks in foreign countries 891 n.a. 745 n.a. 12 n.a. 0 n.a. 79 Foreign branches of U.S. banks 25 n.a. 25 n.a. 0 n.a. 0 n.a. 80 Other banks in foreign countries 866 n.a. 720 n.a. 12 n.a. 0 n.a. 81 Foreign governments and official institutions (including foreign central banks) 224422 n.a. 220088 n.a. 2 n.a. 00 n.a. 82 All other deposits and credit balances 119 n.a. 106 n.a. 0 n.a. 0 n.a. 83 Nontransaction accounts (including MMDAs, excluding IBFs) 491,578 n.a. 399,440 n.a. 3,127 n.a. 17,253 n.a. 84 Individuals, partnerships, and corporations (including certified and official checks) 388,861 n.a. 305,570 n.a. 22,,667744 n.a. 1166,,331188 n.a. 85 U.S. addressees (domicile) 374.446 n.a. 295,994 n.a. 1,179 n.a. 16,228 n.a. 86 Non-U.S. addressees (domicile) 14,415 n.a. 9,576 n.a. 1,496 n.a. 90 n.a. 87 Commercial banks in United States (including their IBFs) 67,666 n.a. 60,433 n.a. 446 n.a. 935 n.a. 88 U.S. branches and agencies of other foreign banks 19,053 n.a. 17,507 n.a. 0 n.a. 13 n.a. 89 Other commercial banks in United States 48,613 n.a. 42,926 n.a. 446 n.a. 922 n.a. 90 Banks in foreign countries 9.039 n.a. 8,625 n.a. 0 n.a. 0 n.a. 91 Foreign branches of U.S. banks 1,329 n.a. 1,329 n.a. 0 n.a. 0 n.a. 92 Other banks in foreign countries 7,711 n.a. 7,296 n.a. 0 n.a. 0 n.a. 93 Foreign governments and official institutions (including foreign central banks) 6,835 n.a. 66,,554400 n.a. 6 n.a. 00 n.a. 94 All other deposits and credit balances 19,177 n.a. 18,272 n.a. 0 n.a. 0 n.a. 95 IBF deposit liabilities n.a. 92,124 n.a. 74,030 n.a. 1,568 n.a. 2,834 96 Individuals, partnerships, and corporations (including certified and official checks) n.a. 99,,118822 n.a. 44,,335500 n.a. 112244 n.a. 4 97 U.S. addressees (domicile) n.a. 262 n.a. 201 n.a. 0 n.a. 0 98 Non-U.S. addressees (domicile) n.a. 8,920 n.a. 4,149 n.a. 124 n.a. 4 99 Commercial banks in United States (including their IBFs) n.a. 12,951 n.a. 12,232 n.a. 25 n.a. 55 100 U.S. branches and agencies of other foreign banks n.a. 11,959 n.a. 11,595 n.a. 25 n.a. 55 101 Other commercial banks in United States n.a. 992 n.a. 637 n.a. 0 n.a. 0 102 Banks in foreign countries n.a. 43,375 n.a. 36,584 n.a. 647 n.a. 1,184 103 Foreign branches of U.S. banks n.a. 2,680 n.a. 1,994 n.a. 20 n.a. 56 104 Other banks in foreign countries n.a. 40,695 n.a. 34,590 n.a. 627 n.a. 1,128 105 Foreign governments and official institutions (including foreign central banks) n.a. 26,616 n.a. 20,864 n.a. 777733 n.a. 11,,559911 106 All other deposits and credit balances n.a. 0 n.a. 0 n.a. 0 n.a. 0 Footnotes appear at end of table. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A68 Special Tables • August 2002 4.30 ASSETS AND LIABILITIES of U.S. Branches and Agencies of Foreign Banks, March 31, 20021—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 t F d a s i l n g I o B n F ly s inc T I l B o u t F d a s i l n g I o B n F ly s inc T I l B o u t F d a s i l n g I o B n F ly s 107 Federal funds purchased and securities sold under agreements to repurchase 132,805 15,406 118,108 10,482 984 303 2,679 252 108 Depository institutions in the United States 24,256 3,002 19,649 2,781 679 211 787 10 109 Other 108,548 12,404 98,459 7,702 306 92 1,892 242 110 Other borrowed money 77,942 16,098 66,341 12,371 3,727 3,365 4,505 180 111 Owed to nonrelated commercial banks in United States (including their IBFs) 11,751 3,228 10,413 2,760 638 398 254 18 112 Owed to U.S. offices of nonrelated U.S. banks 6,149 666 5,744 597 277 68 95 0 113 Owed to U.S. branches and agencies of nonrelated foreign banks 5,602 2,562 4,669 2,163 361 331 160 18 114 Owed to nonrelated banks in foreign countries 12,778 10,105 10,147 7,596 2,239 2,217 163 163 115 Owed to foreign branches of nonrelated U.S. banks 1,036 858 875 739 139 119 0 0 116 Owed to foreign offices of nonrelated foreign banks 11,742 9,247 9,272 6,857 2,100 2,098 163 163 117 Owed to others 53,413 2,765 45,781 2,016 850 750 4,088 0 118 All other liabilities 69,671 1,102 60,031 1,037 201 16 5,922 3 119 Branch or agency liability on acceptances executed and outstanding 906 n.a. 548 n.a. 89 n.a. 229 n.a. 120 Trading liabilities 44,034 76 38,281 75 12 0 4,280 1 121 Other liabilities to nonrelated parties 24,730 1,026 21,202 963 100 16 1,412 2 122 Net due to related depository institutions5 160,445 15,995 129,722 14,220 9,606 106 4,751 37 123 Net due to head office and other related depository institutions5 160,445 n.a. 129,722 n.a. 9,606 n.a. 4,751 n.a. 124 Net due to establishing entity, head office, and other related depository institutions5 n.a. 15,995 n.a. 14,220 n.a. 106 n.a. 37 MEMO 125 Holdings of own acceptances included in commercial and industrial loans 758 n.a. 521 n.a. 1 n.a. 127 n.a. 126 Commercial and industrial loans with remaining maturity of one year or less (excluding those in nonaccrual status) 102,238 n.a. 72,531 n.a. 5,462 n.a. 12,117 n.a. 127 Predetermined interest rates 41,346 n.a. 22,726 n.a. 3,021 n.a. 9,328 n.a. 128 Floating interest rates 60,892 n.a. 49,805 n.a. 2,441 n.a. 2,789 n.a. 129 Commercial and industrial loans with remaining maturity of more than one year (excluding those in nonaccrual status) 100,227 n.a. 86,122 n.a. 4,236 n.a. 4,477 n.a. 130 Predetermined interest rates 19,421 n.a. 17,044 n.a. 560 n.a. 612 n.a. 131 Floating interest rates 80,806 n.a. 69,078 n.a. 3,676 n.a. 3,865 n.a. Footnotes appear at end of table. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

U.S. Branches and Agencies A69 4.30 ASSETS AND LIABILITIES of U.S. Branches and Agencies of Foreign Banks, March 31, 2002'—Continued Millions of dollars except as noted All states2 New York California Illinois IItteemm ex I c T B l o u F t d a s i l 3 n g o IB nl F y s 3 exc T I l B o u t F d a s i l n g I o B n F ly s exc T IB l o u t F d a s i l ng I o B n F ly s exc T I l B o u t F d a s i l n g I o B n F ly s 111133332222 CCCCoooommmmppppoooonnnneeeennnnttttssss ooooffff ttttoooottttaaaallll nnnnoooonnnnttttrrrraaaannnnssssaaaaccccttttiiiioooonnnn aaaaccccccccoooouuuunnnnttttssss,,,, iiiinnnncccclllluuuuddddeeeedddd iiiinnnn ttttoooottttaaaallll ddddeeeeppppoooossssiiiittttssss aaaannnndddd ccccrrrreeeeddddiiiitttt bbbbaaaallllaaaannnncccceeeessss 503,354 n.a. 408,877 n.a. 2,944 n.a. 18,000 n.a. 111133333333 TTTTiiiimmmmeeee ddddeeeeppppoooossssiiiittttssss ooooffff $$$$ 111100000000,,,,000000000000 oooorrrr mmmmoooorrrreeee 485,471 n.a. 394,591 n.a. 2,936 n.a. 17,183 n.a. 111133334444 TTTTiiiimmmmeeee CCCCDDDDssss iiiinnnn ddddeeeennnnoooommmmiiiinnnnaaaattttiiiioooonnnnssss ooooffff $$$$111100000000,,,,000000000000 oooorrrr mmmmoooorrrreeee wwwwiiiitttthhhh rrrreeeemmmmaaaaiiiinnnniiiinnnngggg mmmmaaaattttuuuurrrriiiittttyyyy ooooffff mmmmoooorrrreeee tttthhhhaaaannnn 11112222 mmmmoooonnnntttthhhhssss 17,883 n.a. 14,286 n.a. 8 n.a. 817 n.a. All states2 New York California Illinois Total Total Total Total including IBFs including IBFs including IBFs including IBFs IBFs3 only3 IBFs only IBFs only IBFs only 111133335555 IIIImmmmmmmmeeeeddddiiiiaaaatttteeeellllyyyy aaaavvvvaaaaiiiillllaaaabbbblllleeee ffffuuuunnnnddddssss wwwwiiiitttthhhh aaaa mmmmaaaattttuuuurrrriiiittttyyyy ggggrrrreeeeaaaatttteeeerrrr tttthhhhaaaannnn oooonnnneeee ddddaaaayyyy iiiinnnncccclllluuuuddddeeeedddd iiiinnnn ooootttthhhheeeerrrr bbbboooorrrrrrrroooowwwweeeedddd mmmmoooonnnneeeeyyyy 31,582 n.a. 28,669 n.a. 2,013 n.a. 266 n.a. 111133336666 NNNNuuuummmmbbbbeeeerrrr ooooffff rrrreeeeppppoooorrrrttttssss ffffiiiilllleeeedddd6666 308 0 160 0 61 0 22 0 1. Data are aggregates of categories reported on the quarterly form FFIEC 002, "Report of either because the item is not an eligible IBF asset or liability or because that level of detail is Assets and Liabilities of U.S. Branches and Agencies of Foreign Banks." The form was first not reported for IBFs. From December 1981 through September 1985, IBF data were used for reporting data as of June 30, 1980, and was revised as of December 31, 1985. From included in all applicable items reported. November 1972 through May 1980, U.S. branches and agencies of foreign banks had filed a 4. Total assets and total liabilities include net balances, if any, due from or owed to related monthly FR 886a report. Aggregate data from that report were available through the Federal banking institutions in the United States and in foreign countries (see note 5). On the former Reserve monthly statistical release G.l 1, last issued on July 10, 1980. Data in this table and in monthly branch and agency report, available through the G. 11 monthly statistical release, the G. 11 tables are not strictly comparable because of differences in reporting panels and in gross balances were included in total assets and total liabilities. Therefore, total asset and total definitions of balance sheet items. liability figures in this table are not comparable to those in the G.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

70 Federal Reserve Bulletin • August 2002 Index to Statistical Tables References are to pages A3-A69, although the prefix 'A" is omitted in this index. ACCEPTANCES, bankers (See Bankers acceptances) Federal Housing Administration, 28, 32, 33 Assets and liabilities (See also Foreigners) Federal Land Banks, 33 Commercial banks, 15-21, 58-59 Federal National Mortgage Association, 28, 32, 33 Domestic finance companies, 30, 31 Federal Reserve Banks Federal Reserve Banks, 10 Condition statement, 10 Foreign banks, U.S. branches and agencies, 66-9 Discount rates (See Interest rates) Foreign-related institutions, 20 U.S. government securities held, 5, 10, 11, 25 Automobiles Federal Reserve credit, 5, 6, 10, 12 Consumer credit, 34 Federal Reserve notes, 10 Production, 42, 43 Federally sponsored credit agencies, 28 Finance companies Assets and liabilities, 30 BANKERS acceptances, 5, 10 Business credit, 31 Bankers balances, 15-21, 66-9 (See also Foreigners) Loans, 34 Bonds (See also U.S. government securities) Paper, 22, 23 New issues, 29 Float, 5 Rates, 23 Flow of funds, 35-9 Business loans (See Commercial and industrial loans) Foreign banks, U.S. branches and agencies, 66-9 Foreign currency operations, 10 CAPACITY utilization, 40, 41 Foreign deposits in U.S. banks, 5 Capital accounts Foreign exchange rates, 56 Commercial banks, 15-21, 58-59 Foreign-related institutions, 20 Federal Reserve Banks, 10 Foreigners Certificates of deposit, 23 Claims on, 46, 49-51, 53 Commercial and industrial loans Liabilities to, 45-8, 52, 54, 55 Commercial banks, 15-21, 58-59, 66-9 Weekly reporting banks, 17, 18 Commercial banks GOLD Assets and liabilities, 15-21, 58-59 Certificate account, 10 Commercial and industrial loans, 15-21, 58-59, 60-5 Stock, 5, 45 Consumer loans held, by type and terms, 34, 60-5 Government National Mortgage Association, 28, 32, 33 Real estate mortgages held, by holder and property, 33 Terms of lending, 58-59 Time and savings deposits, 4 INDUSTRIAL production, 42, 43 Commercial paper, 22, 23, 30 Insurance companies, 25, 33 Condition statements (See Assets and liabilities) Interest rates Consumer credit, 34 Bonds, 23 Corporations Commercial banks, 60-5 Security issues, 29, 55 Consumer credit, 34 Credit unions, 34 Federal Reserve Banks, 7 Currency in circulation, 5, 13 Money and capital markets, 23 Customer credit, stock market, 24 Mortgages, 32 Prime rate, 22, 60-5 International capital transactions of United States, 44-55 DEBT (See specific types of debt or securities) International organizations, 46, 47, 49, 52, 53 Demand deposits, 15—21 Investment companies, issues and assets, 30 Depository institutions Investments (See also specific types) Reserve requirements, 8 Commercial banks, 4, 15-21, 60-5 Reserves and related items, 4-6, 12, 58-59 Federal Reserve Banks, 10, 11 Deposits (See also specific types) Financial institutions, 33 Commercial banks, 4, 15-21, 58-59 Federal Reserve Banks, 5, 10 Discount rates at Reserve Banks and at foreign central banks and LIFE insurance companies (See Insurance companies) foreign countries (See Interest rates) Loans (See also specific types) Discounts and advances by Reserve Banks (See Loans) Commercial banks, 15-21, 58-59, 60-5 Federal Reserve Banks, 5-7, 10, 11 Financial institutions, 33 EURO, 56 Foreign banks, U.S. branches and agencies, 66-9 Insured or guaranteed by United States, 32, 33 FARM mortgage loans, 33 Federal agency obligations, 5, 9-11, 26, 27 Federal credit agencies, 28 MANUFACTURING Federal finance Capacity utilization, 40, 41 Debt subject to statutory limitation, and types and ownership Production, 42, 43 of gross debt, 25 Margin requirements, 24 Federal Financing Bank, 28 Member banks, reserve requirements, 8 Federal funds, 23 Mining production, 43 Federal Home Loan Banks, 28 Monetary and credit aggregates, 4, 12 Federal Home Loan Mortgage Corporation, 28, 32, 33 Money and capital market rates, 23 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A71 Money stock measures and components, 4, 13 State and local governments Mortgages (See Real estate loans) Holdings of U.S. government securities, 25 Mutual funds, 13, 30 New security issues, 29 Mutual savings banks (See Thrift institutions) Rates on securities, 23 Stock market, selected statistics, 24 OPEN market transactions, 9 Stocks (See also Securities) New issues, 29 PRICES Prices, 24 Stock market, 24 Student Loan Marketing Association, 28 Prime rate, 22, 60-5 Production, 42, 43 THRIFT institutions, 4 (See also Credit unions and Savings institutions) REAL estate loans Time and savings deposits, 4, 13, 15-21, 58-59 Banks, 15-21, 33 Treasury cash, Treasury currency, 5 Terms, yields, and activity, 32 Treasury deposits, 5, 10 Type and holder and property mortgaged, 33 Reserve requirements, 8 U.S. GOVERNMENT balances Reserves Commercial bank holdings, 15-21 Commercial banks, 15-21 Treasury deposits at Reserve Banks, 5, 10 Depository institutions, 4-6 U.S. government securities Federal Reserve Banks, 10 Bank holdings, 15-21, 25 U.S. reserve assets, 45 Dealer transactions, positions, and financing, 27 Residential mortgage loans, 32, 33 Federal Reserve Bank holdings, 5, 10, 11, 25 Retail credit and retail sales, 34 Foreign and international holdings and transactions, 10, 25, 55 Open market transactions, 9 SAVING Outstanding, by type and holder, 25, 26 Flow of funds, 33, 34, 35-9 Rates, 23 Saving deposits (See Time and savings deposits) U.S. international transactions, 44-55 Savings institutions, 33, 34, 35-9 Utilities, production, 43 Securities (See also specific types) Federal and federally sponsored credit agencies, 28 VETERANS Affairs, Department of, 32, 33 Foreign transactions, 54 New issues, 29 WEEKLY reporting banks, 17, 18 Prices, 24 Special drawing rights, 5, 10, 44, 45 YIELDS (See Interest rates) Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

72 Federal Reserve Bulletin • August 2002 Federal Reserve Board of Governors and Official Staff ALAN GREENSPAN, Chairman EDWARD M. GRAMLICH ROGER W. FERGUSON, JR., Vice Chairman SUSAN SCHMIDT BIES OFFICE OF BOARD MEMBERS DIVISION OF BANKING SUPERVISION AND REGULATION—Continued DONALD J. WINN, Assistant to the Board and Director LYNN S. FOX, Assistant to the Board DAVID M. WRIGHT, Assistant Director MICHELLE A. SMITH, Assistant to the Board WILLIAM C. SCHNEIDER, JR., Project Director, DONALD L. KOHN, Adviser to the Board National Information Center WINTHROP P. HAMBLEY, Deputy Congressional Liaison NORMAND R.V. BERNARD, Special Assistant to the Board DIVISION OF INTERNATIONAL FINANCE JOHN LOPEZ, Special Assistant to the Board KAREN H. JOHNSON, Director BOB STAHLY MOORE, Special Assistant to the Board DAVID H. HOWARD, Deputy Director ROSANNA PI AN ALTO-CAMERON, Special Assistant to the Board THOMAS A. CONNORS, Associate Director DAVID W. SKIDMORE, Special Assistant to the Board DALE W. HENDERSON, Associate Director RICHARD T. FREEMAN, Deputy Associate Director LEGAL DIVISION WILLIAM L. HELKIE, Deputy Associate Director J. VIRGIL MATTINGLY, JR., General Counsel STEVEN B. KAMIN, Deputy Associate Director SCOTT G. ALVAREZ, Associate General Counsel JON W. FAUST, Assistant Director RICHARD M. ASHTON, Associate General Counsel JOSEPH E. GAGNON, Assistant Director KATHLEEN M. O'DAY, Associate General Counsel MICHAEL P. LEAHY, Assistant Director STEPHANIE MARTIN, Assistant General Counsel D. NATHAN SHEETS, Assistant Director ANN E. MISBACK, Assistant General Counsel RALPH W. TRYON, Assistant Director STEPHEN L. SICILIANO, Assistant General Counsel KATHERINE H. WHEATLEY, Assistant General Counsel DIVISION OF RESEARCH AND STATISTICS CARY K. WILLIAMS, Assistant General Counsel DAVID J. STOCKTON, Director OFFICE OF THE SECRETARY EDWARD C. ETTIN, Deputy Director DAVID W. WILCOX, Deputy Director JENNIFER J. JOHNSON, Secretary MYRON L. KWAST, Associate Director ROBERT DEV. FRIERSON, Deputy Secretary STEPHEN D. OLINER, Associate Director MARGARET M. SHANKS, Assistant Secretary PATRICK M. PARKINSON, Associate Director DIVISION OF BANKING SUPERVISION LAWRENCE SLIFMAN, Associate Director AND REGULATION CHARLES S. STRUCKMEYER, Associate Director JOYCE K. ZICKLER, Deputy Associate Director RICHARD SPILLENKOTHEN, Director J. NELLIE LIANG, Assistant Director STEPHEN C. SCHEMERING, Deputy Director S. WAYNE PASSMORE, Assistant Director HERBERT A. BIERN, Senior Associate Director DAVID L. REIFSCHNEIDER, Assistant Director ROGER T. COLE, Senior Associate Director JANICE SHACK-MARQUEZ, Assistant Director WILLIAM A. RYBACK, Senior Associate Director WILLIAM L. WASCHER, Assistant Director GERALD A. EDWARDS, JR., Associate Director ALICE PATRICIA WHITE, Assistant Director STEPHEN M. HOFFMAN, JR., Associate Director GLENN B. CANNER, Senior Adviser JAMES V. HOUPT, Associate Director DAVID S. JONES, Senior Adviser JACK P. JENNINGS, Associate Director THOMAS D. SIMPSON, Senior Adviser MICHAEL G. MARTINSON, Associate Director MOLLY S. WASSOM, Associate Director DIVISION OF MONETARY AFFAIRS HOWARD A. AMER, Deputy Associate Director NORAH M. BARGER, Deputy Associate Director VINCENT R. REINHART, Director BETSY CROSS, Deputy Associate Director DAVID E. LINDSEY, Deputy Director DEBORAH P. BAILEY, Assistant Director BRIAN F. MADIGAN, Deputy Director BARBARA J. BOUCHARD, Assistant Director WILLIAM C. WHITESELL, Deputy Associate Director ANGELA DESMOND, Assistant Director JAMES A. CLOUSE, Assistant Director JAMES A. EMBERSIT, Assistant Director WILLIAM B. ENGLISH, Assistant Director CHARLES H. HOLM, Assistant Director RICHARD D. PORTER, Senior Adviser WILLIAM G. SPANIEL, Assistant Director Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A73 MARK W. OLSON DIVISION OF CONSUMER DIVISION OF RESERVE BANK OPERATIONS AND COMMUNITY AFFAIRS AND PAYMENT SYSTEMS DOLORES S. SMITH, Director LOUISE L. ROSEMAN, Director GLENN E. LONEY, Deputy Director PAUL W. BETTGE, Associate Director SANDRA F. BRAUNSTEIN, Assistant Director JEFFREY C. MARQUARDT, Associate Director MAUREEN P. ENGLISH, Assistant Director KENNETH D. BUCKLEY, Assistant Director ADRIENNE D. HURT, Assistant Director JOSEPH H. HAYES, JR., Assistant Director IRENE SHAWN MCNULTY, Assistant Director EDGAR A. MARTINDALE III, Assistant Director MARSHA W. REIDHILL, Assistant Director OFFICE OF JEFF J. STEHM, Assistant Director STAFF DIRECTOR FOR MANAGEMENT JACK K. WALTON, Assistant Director STEPHEN R. MALPHRUS, Staff Director OFFICE OF THE INSPECTOR GENERAL SHEILA CLARK, EEO Programs Director BARRY R. SNYDER, Inspector General MANAGEMENT DIVISION DONALD L. ROBINSON, Deputy Inspector General WILLIAM R. JONES, Director STEPHEN J. CLARK, Associate Director DARRELL R. PAULEY, Associate Director DAVID L. WILLIAMS, Associate Director CHRISTINE M. FIELDS, Assistant Director DIVISION OF INFORMATION TECHNOLOGY MARIANNE M. EMERSON, Deputy Director MAUREEN T. HANNAN, Associate Director TILLENA G. CLARK, Assistant Director GEARY L. CUNNINGHAM, Assistant Director WAYNE A. EDMONDSON, Assistant Director Po KYUNG KIM, Assistant Director SUSAN F. MARYCZ, Assistant Director SHARON L. MOWRY, Assistant Director RAYMOND ROMERO, Assistant Director ROBERT F. TAYLOR, Assistant Director Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

74 Federal Reserve Bulletin • August 2002 Federal Open Market Committee and Advisory Councils FEDERAL OPEN MARKET COMMITTEE MEMBERS ALAN GREENSPAN, Chairman WILLIAM J. MCDONOUGH, Vice Chairman SUSAN SCHMIDT BIES JERRY L. JORDAN ANTHONY M.SANTOMERO ROGER W. FERGUSON, JR. ROBERT D. MCTEER, JR. GARY H. STERN EDWARD M. GRAMLICH MARK W. OLSON ALTERNATE MEMBERS J. ALFRED BROADDUS, JR. MICHAEL H. MOSKOW JAMIE B. STEWART, JR. JACK GUYNN ROBERT T. PARRY STAFF DONALD L. KOHN, Secretary and Economist CHRISTINE M. CUMMING, Associate Economist NORMAND R.V. BERNARD, Deputy Secretary DAVID H. HOWARD, Associate Economist GARY P. GILLUM, Assistant Secretary DAVID E. LINDSEY, Associate Economist MICHELLE A. SMITH, Assistant Secretary LORETTA J. MESTER, Associate Economist J. VIRGIL MATTINGLY, JR., General Counsel STEPHEN D. OLINER, Associate Economist THOMAS C. BAXTER, JR., Deputy General Counsel ARTHUR J. ROLNICK, Associate Economist KAREN H. JOHNSON, Economist HARVEY ROSENBLUM, Associate Economist VINCENT R. REINHART, Economist MARK S. SNIDERMAN, Associate Economist DAVID J. STOCKTON, Economist DAVID W. WILCOX, Associate Economist THOMAS A. CONNORS, Associate Economist DINO KOS, Manager, System Open Market Account FEDERAL ADVISORY COUNCIL DAVID A. DABERKO, President L. M. BAKER, JR., Vice President DAVID A. SPINA, First District ALAN G. MCNALLY, Seventh District DAVID A. COULTER, Second District DAVID W. KEMPER, Eighth District RUFUS A. FULTON, JR., Third District R. SCOTT JONES, Ninth District DAVID A. DABERKO, Fourth District CAMDEN R. FINE, Tenth District L. M. BAKER, JR., Fifth District RICHARD W. EVANS, JR., Eleventh District L. PHILLIP HUMANN, Sixth District MICHAEL E. O'NEILL, Twelfth District JAMES ANNABLE, Co-Secretary WILLIAM J. KORSVIK, Co-Secretary Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A75 CONSUMER ADVISORY COUNCIL DOROTHY BROADMAN, Falls Church, Virginia, Chairman RONALD A. REITER, San Francisco, California, Vice Chairman ANTHONY S. ABBATE, Saddlebrook, New Jersey PATRICK LIDDY, Cincinnati, Ohio JANIE BARRERA, San Antonio, Texas RUHI MAKER, Rochester, New York KENNETH BORDELON, Baton Rouge, Louisiana OSCAR MARQUIS, Park Ridge, Illinois TERESA A. BRYCE, St. Louis, Missouri PATRICIA MCCOY, Cleveland, Ohio MANUEL CASANOVA, JR., Brownsville, Texas JEREMY NOWAK, Philadelphia, Pennsylvania CONSTANCE K. CHAMBERLIN, Richmond, Virginia ELIZABETH RENUART, Boston, Massachusetts ROBERT M. CHEADLE, Ada, Oklahoma DEBRA REYES, Tampa, Florida ROBIN COFFEY, Chicago, Illinois BENSON ROBERTS, Washington, District of Columbia LESTER WM. FIRSTENBERGER, Pittsfield, New Hampshire AGNES BUNDY SCANLAN, Boston, Massachusetts THOMAS FITZGIBBON, Chicago, Illinois RUSSELL W. SCHRADER, San Francisco, California LARRY HAWKINS, Houston, Texas FRANK TORRES, III, Washington, District of Columbia EARL JAROLIMEK, Fargo, North Dakota HUBERT VAN TOL, Sparta, Wisconsin THRIFT INSTITUTIONS ADVISORY COUNCIL MARK H. WRIGHT, San Antonio, Texas, President KAREN L. MCCORMICK, Port Angeles, Washington, Vice President JOHN B. DICUS, Topeka, Kansas KEVIN E. PIETRINI, Virginia, Minnesota RONALD S. ELIASON, Provo, Utah HERBERT M. SANDLER, Oakland, California D. R. GRIMES, Alpharetta, Georgia WILLIAM J. SMALL, Defiance, Ohio JAMES F. MCKENNA, Brookfield, Wisconsin EVERETT STILES, Franklin, North Carolina CHARLES C. PEARSON, JR., Harrisburg, Pennsylvania DAVID L. VIGREN, Rochester, New York Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

76 Federal Reserve Bulletin • August 2002 Federal Reserve Board Publications For ordering assistance, write PUBLICATIONS SERVICES, Rates for subscribers outside the United States are as follows MS-127, Board of Governors of the Federal Reserve System, and include additional air mail costs: Washington, DC 20551, or telephone (202) 452-3244, or FAX Federal Reserve Regulatory Service, $250.00 per year. (202) 728-5886. You may also use the publications order Each Handbook, $90.00 per year. form available on the Board's World Wide Web site FEDERAL RESERVE REGULATORY SERVICE FOR PERSONAL (http://www.federalreserve.gov). When a charge is indicated, pay- COMPUTERS. CD-ROM; updated monthly. ment should accompany request and be made payable to the Standalone PC. $300 per year. Board of Governors of the Federal Reserve System or may be Network, maximum 1 concurrent user. $300 per year. ordered via Mastercard, Visa, or American Express. Payment from Network, maximum 10 concurrent users. $750 per year. foreign residents should be drawn on a U.S. bank. Network, maximum 50 concurrent users. $2,000 per year. Network, maximum 100 concurrent users. $3,000 per year. Subscribers outside the United States should add $50 to cover BOOKS AND MISCELLANEOUS PUBLICATIONS additional airmail costs. THE FEDERAL RESERVE SYSTEM—PURPOSES AND FUNCTIONS. THE FEDERAL RESERVE ACT AND OTHER STATUTORY PROVISIONS 1994. 157 pp. AFFECTING THE FEDERAL RESERVE SYSTEM, as amended ANNUAL REPORT, 2001. through October 1998. 723 pp. $20.00 each. ANNUAL REPORT: BUDGET REVIEW, 2001. 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 EDUCATION PAMPHLETS 1980-89 March 1991 712 pp. $25.00 Short pamphlets suitable for classroom use. Multiple copies are 1990 November 1991 185 pp. $25.00 available without charge. 1991 November 1992 215 pp. $25.00 1992 December 1993 215 pp. $25.00 1993 December 1994 281 pp. $25.00 Consumer Handbook on Adjustable Rate Mortgages 1994 December 1995 190 pp. $25.00 Consumer Handbook to Credit Protection Laws 1990-95 November 1996 404 pp. $25.00 A Guide to Business Credit for Women, Minorities, and Small 1996-2000 March 2002 352 pp. $25.00 Businesses Series on the Structure of the Federal Reserve System The Board of Governors of the Federal Reserve System SELECTED INTEREST AND EXCHANGE RATES—WEEKLY SERIES OF The Federal Open Market Committee CHARTS. Weekly. $30.00 per year or $.70 each in the United Federal Reserve Bank Board of Directors States, its possessions, Canada, and Mexico. Elsewhere, Federal Reserve Banks $35.00 per year or $.80 each. A Consumer's Guide to Mortgage Lock-Ins REGULATIONS OF THE BOARD OF GOVERNORS OF THE FEDERAL A Consumer's Guide to Mortgage Settlement Costs RESERVE SYSTEM. A Consumer's Guide to Mortgage Refinancings ANNUAL PERCENTAGE RATE TABLES (Truth in Lending— Home Mortgages: Understanding the Process and Your Right Regulation Z) Vol. I (Regular Transactions). 1969. 100 pp. to Fair Lending Vol. II (Irregular Transactions). 1969. 116 pp. Each volume How to File a Consumer Complaint about a Bank (also available $5.00. in Spanish) GUIDE TO THE FLOW OF FUNDS ACCOUNTS. January 2000. In Plain English: Making Sense of the Federal Reserve 1,186 pp. $20.00 each. Making Sense of Savings FEDERAL RESERVE REGULATORY SERVICE. Loose-leaf; updated Welcome to the Federal Reserve monthly. (Requests must be prepaid.) When Your Home is on the Line: What You Should Know Consumer and Community Affairs Handbook. $75.00 per year. About Home Equity Lines of Credit Monetary Policy and Reserve Requirements Handbook. $75.00 Keys to Vehicle Leasing (also available in Spanish) per year. Looking for the Best Mortgage (also available in Spanish) Securities Credit Transactions Handbook. $75.00 per year. Privacy Choices for Your Personal Financial Information The Payment System Handbook. $75.00 per year. When Is Your Check Not a Check? Federal Reserve Regulatory Service. Four vols. (Contains all four Handbooks plus substantial additional material.) $200.00 per year. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A77 STAFF STUDIES: Only Summaries Printed in the 167. A SUMMARY OF MERGER PERFORMANCE STUDIES IN BANK- BULLETIN ING, 1980-93, AND AN ASSESSMENT OF THE "OPERATING Studies and papers on economic and financial subjects that are of PERFORMANCE" AND "EVENT STUDY" METHODOLOGIES, by Stephen A. Rhoades. July 1994. 37 pp. general interest. Staff Studies 1-158, 161, 163, 165, 166, 168, and 169 are out of print, but photocopies of them are available. Staff 170. THE COST OF IMPLEMENTING CONSUMER FINANCIAL REGU- Studies 165-174 are available on line at www.federalreserve.gov/ LATIONS: AN ANALYSIS OF EXPERIENCE WITH THE TRUTH IN SAVINGS ACT, by Gregory Elliehausen and Barbara R. pubs/staff studies. Requests to obtain single copies of any paper or Lowrey. December 1997. 17 pp. to be added to the mailing list for the series may be sent to Publications Services. 171. THE COST OF BANK REGULATION: A REVIEW OF THE EVI- DENCE, by Gregory Elliehausen. April 1998. 35 pp. 172. USING SUBORDINATED DEBT AS AN INSTRUMENT OF MAR- 159. NEW DATA ON THE PERFORMANCE OF NONBANK SUBSIDI- KET DISCIPLINE, by Study Group on Subordinated Notes ARIES OF BANK HOLDING COMPANIES, by Nellie Liang and and Debentures, Federal Reserve System. December 1999. Donald Savage. February 1990. 12 pp. 69 pp. 160. BANKING MARKETS AND THE USE OF FINANCIAL SER- 173. IMPROVING PUBLIC DISCLOSURE IN BANKING, by Study VICES BY SMALL AND MEDIUM-SIZED BUSINESSES, by Group on Disclosure, Federal Reserve System. March 2000. Gregory E. Elliehausen and John D. Wolken. September 35 pp. 1990. 35 pp. 174. BANK MERGERS AND BANKING STRUCTURE IN THE UNITED 162. EVIDENCE ON THE SIZE OF BANKING MARKETS FROM MORT- STATES, 1980-98, by Stephen Rhoades. August 2000. 33 pp. GAGE LOAN RATES IN TWENTY CITIES, by Stephen A. Rhoades. February 1992. 11 pp. 164. THE 1989-92 CREDIT CRUNCH FOR REAL ESTATE, by James T. Fergus and John L. Goodman, Jr. July 1993. 20 pp. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

78 Federal Reserve Bulletin • August 2002 Maps of the Federal Reserve System ALASKA HAWAII LEGEND Both pages Facing page • Federal Reserve Bank city • Federal Reserve Branch city • Board of Governors of the Federal — Branch boundary Reserve System, Washington, D.C. NOTE The Federal Reserve officially identifies Districts by num- of Puerto Rico and the U.S. Virgin Islands; the San Franber and Reserve Bank city (shown on both pages) and by cisco Bank serves American Samoa, Guam, and the Comletter (shown on the facing page). monwealth of the Northern Mariana Islands. The Board of In the 12th District, the Seattle Branch serves Alaska, Governors revised the branch boundaries of the System and the San Francisco Bank serves Hawaii. most recently in February 1996. The System serves commonwealths and territories as follows: the New York Bank serves the Commonwealth Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A79 1-A 2-B 3-C 4-D 5-E Pittsburgh NY • 1 T S k J. M cinnati •Charlotte Buffalo Jf MA / NY KY CT ^ hi NJ BOSTON NEW YORK PHILADELPHIA CLEVELAND RICHMOND 6-F 7-G 8-H , 7 Birmingham- •" /"•• 1 Louisville MO Y « Memphis MS ATLANTA CHICAGO ST. LOUIS 99--11 HHBr HHii MMWWhhMMkk**.. •• HHeelleennaa NN°° g •111 wmK^a^^^0^ Wl * ^ ^ i BB MINNEAPOLIS 10-J 12-L amtMrnm - JIMHHMMI CO Omaha® IBWWBWPfSHB^ < —^ MO m •• pp -"i! Denver ALASKA NM 1 * ^^SSeeaattttllee // (>klahnmd Cit\ • Portland _ OK KANSAS CITY CA 11-K , TX • « ) Salt Lake C ity f— . 11 •Los Angeles HAWAII \Z DALLAS SAN FRANCISCO Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

80 Federal Reserve Bulletin • August 2002 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 O. Taylor Cathy E. Minehan James J. Norton Paul M. Connolly NEW YORK* 10045 Peter G. Peterson William J. McDonough Gerald M. Levin Jamie B. Stewart, Jr. Buffalo 14240 Patrick P. Lee Barbara L. Walter1 PHILADELPHIA 19105 Charisse R. Lillie Anthony M. Santomero Glenn A. Schaeffer William H. Stone, Jr. CLEVELAND* 44101 David H. Hoag Jerry L. Jordan Robert W. Mahoney Sandra Pianalto Cincinnati 45201 George C. Juilfs Barbara B. Henshaw Pittsburgh 15230 Charles E. Bunch Robert B. Schaub RICHMOND* 23219 Jeremiah J. Sheehan J. Alfred Broaddus, Jr. Wesley S. Williams, Jr. Walter A. Varvel Baltimore 21203 George L. Russell, Jr. William J. Tignanelli1 Charlotte 28230 James F. Goodmon Dan M. Bechter1 ATLANTA 30303 John F. Wieland Jack Guynn Paula Lovell Patrick K. Barron James M. McKee1 Birmingham 35242 V. Larkin Martin Lee C. Jones Jacksonville 32231 Marsha G. Rydberg Christopher L. Oakley Miami 33152 Rosa Sugranes James T. Curry III Nashville 37203 Beth Dortch Franklin Melvyn K. Purcell1 New Orleans 70161 R. Glenn Pumpelly Robert J. Musso' CHICAGO* 60690 Robert J. Darnall Michael H. Moskow W. James Farrell Gordon R. G. Werkema Detroit 48231 Timothy D. Leuliette Glenn Hansen' ST. LOUIS 63166 Charles W. Mueller William Poole Walter L. Metcalfe, Jr. W. LeGrande Rives Little Rock 72203 A. Rogers Yarnell, II Robert A. Hopkins Louisville 40232 J. Stephen Barger Thomas A. Boone Memphis 38101 Russell Gwatney Martha Perine Beard MINNEAPOLIS 55480 Ronald N. Zwieg Gary H. Stern Linda Hall Whitman James M. Lyon Helena 59601 Thomas O. Markle Samuel H. Gane KANSAS CITY 64198 Terrence P. Dunn Thomas M. Hoenig Richard H. Bard Richard K. Rasdall Denver 80217 Robert M. Murphy Maryann Hunter1 Oklahoma City 73125 Patricia B. Fennell Dwayne E. Boggs Omaha 68102 Bob L. Gottsch Steven D. Evans DALLAS 75201 H. B. Zachry, Jr. Robert D. McTeer, Jr. Patricia M. Patterson Helen E. Holcomb El Paso 79999 Gail Darling Sammie C. Clay Houston 77252 Edward O. Gaylord Robert Smith III' San Antonio 78295 Ron Harris James L. Stull1 SAN FRANCISCO 94120 Nelson C. Rising Robert T. Parry George M. Scalise John F. Moore Los Angeles 90051 William D. Jones Mark L. Mullinix2 Portland 97208 Nancy Wilgenbusch Richard B. Hornsby Salt Lake City 84125 H. Roger Boyer Andrea P. Wolcott Seattle 98124 Boyd E. Givan D. Kerry Webb' *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

A81 Publications of Interest FEDERAL RESERVE REGULATORY SERVICE To promote public understanding of its regulatory func- The Payment System Handbook deals with expedited tions, the Board publishes the Federal Reserve Regu- funds availability, check collection, wire transfers, and latory Service, a four-volume loose-leaf service con- risk-reduction policy. It includes Regulations CC, J, and taining all Board regulations as well as related statutes, EE, related statutes and commentaries, and policy interpretations, policy statements, rulings, and staff statements on risk reduction in the payment system. opinions. For those with a more specialized interest in For domestic subscribers, the annual rate is $200 for the Board's regulations, parts of this service are pub- the Federal Reserve Regulatory Service and $75 for lished separately as handbooks pertaining to monetary each handbook. For subscribers outside the United policy, securities credit, consumer affairs, and the pay- States, the price including additional air mail costs is ment system. $250 for the service and $90 for each handbook. These publications are designed to help those who The Federal Reserve Regulatory Service is also availmust frequently refer to the Board's regulatory materi- able on CD-ROM for use on personal computers. For a als. They are updated monthly, and each contains cita- standalone PC, the annual subscription fee is $300. For tion indexes and a subject index. network subscriptions, the annual fee is $300 for 1 con- The Monetary Policy and Reserve Requirements current user, $750 for a maximum of 10 concurrent Handbook contains Regulations A, D, and Q, plus users, $2,000 for a maximum of 50 concurrent users, related materials. and $3,000 for a maximum of 100 concurrent users. The Securities Credit Transactions Handbook con- Subscribers outside the United States should add $50 tains Regulations T, U, and X, dealing with exten- to cover additional airmail costs. For further informasions of credit for the purchase of securities, together tion, call (202) 452-3244. with related statutes, Board interpretations, rulings, All subscription requests must be accompanied by a and staff opinions. Also included is the Board's list of check or money order payable to the Board of Goverforeign margin stocks. nors of the Federal Reserve System. Orders should be The Consumer and Community Affairs Handbook addressed to Publications Services, mail stop 127, Board contains Regulations B, C, E, G, M, P, Z, AA, BB, and of Governors of the Federal Reserve System, Washing- DD, and associated materials. ton, DC 20551. GUIDE TO THE FLOW OF FUNDS ACCOUNTS A new edition of Guide to the Flow of Funds Accounts and describes how the series is derived from source is now available from the Board of Governors. The new data. The Guide also explains the relationship between edition incorporates changes to the accounts since the the flow of funds accounts and the national income and initial edition was published in 1993. Like the earlier product accounts and discusses the analytical uses of publication, it explains the principles underlying the flow of funds data. The publication can be purchased, flow of funds accounts and describes how the accounts for $20.00, from Publications Services, Mail Stop 127, are constructed. It lists each flow series in the Board's Board of Governors of the Federal Reserve System, flow of funds publication, "Flow of Funds Accounts of Washington, DC 20551. the United States" (the Z.l quarterly statistical release), Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

82 Federal Reserve Bulletin • August 2002 Federal Reserve Statistical Releases Available on the Commerce Department's Economic Bulletin Board The Board of Governors of the Federal Reserve Sys- For further information regarding a subscription to tem makes some of its statistical releases available to the economic bulletin board, please call (202) 482the public through the U.S. Department of Com- 1986. The releases transmitted to the economic bullemerce's economic bulletin board. Computer access tin board, on a regular basis, are the following: to the releases can be obtained by subscription. Reference Number Statistical release Frequency of release H.3 Aggregate Reserves Weekly/Thursday H.4.1 Factors Affecting Reserve Balances Weekly/Thursday H.6 Money Stock Weekly/Thursday H.8 Assets and Liabilities of Insured Domestically Chartered Weekly/Monday and Foreign Related Banking Institutions H.10 Foreign Exchange Rates Weekly/Monday H.15 Selected Interest Rates Weekly/Monday G.5 Foreign Exchange Rates Monthly/end of month G.17 Industrial Production and Capacity Utilization Monthly/midmonth G.19 Consumer Installment Credit Monthly/fifth business day Z. 1 Flow of Funds Quarterly Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis