We've made some difficult decisions this year. In February, we announced that Little Rock and Louisville check-processing services will be moving to Memphis and Cincinnati, respectively, by the end of 2004.
The loss of check-processing revenues would force us to rely upon cash-processing services to support these two branches. That's neither practical nor efficient; so, we must discontinue Little Rock and Louisville cash-processing operations, also by the end of 2004.
This move will save the St. Louis Fed approximately $3.4 million a year, which is in addition to the $4.9 million annual savings realized from the check re-engineering initiative. While these savings are very important, you have my assurance that this initiative will not come at your expense. Financial institutions that process cash through either Little Rock or Louisville should notice little change in their service. We will contract with local third-party providers and use their facilities, allowing institutions to drop off and pick up cash in each city.
Despite the elimination of cash- and check-processing services, the St. Louis Fed is committed to maintaining an active presence in both cities. We will expand our community outreach, economic education and community development activities, and each Branch will maintain its own board. Our directors provide extremely valuable knowledge and insight into their businesses and regional economies, which, in turn, shape our monetary policy recommendations.
As for the affected cash employees, we want them to remain with the Fed through the transition so, we've offered them the same retention benefits and severance packages as our check employees. This will ensure that each Branch continues to operate fully and efficiently.
Once the transition is complete, the Little Rock and Louisville branches will have a small staff headed by a senior executive. We're considering several options, such as selling the branch buildings and moving to leased quarters in both cities, but it will take some time to work out the details. For upcoming announcements, visit our web site, www.stlouisfed.org.