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LETTER OF TRANSMITTAL Federal Deposit Insurance Corporation W a s h in g to n , D.C. June 15. 1 98 2 SIRS: In a c c o rd a n c e w ith th e p ro v is io n s o f S e ction 1 7(a) o f the Federal D e p o sit In su ra n ce A ct, the Federal D e p o s it In su ra n ce C o rp o ra tio n is pleased to s u b m it its A n nu a l R eport fo r the c a le n d a r year 1 9 8 1 . Very tru ly yours, W illiam M. Isaac C ha irm an The P resident o f the Senate The Speaker of the House o f R epresentatives http://fraser.stlouisfed.org/ ii Federal Reserve Bank of St. Louis BOARD OF DIRECTORS iii FEDERAL DEPOSIT INSURANCE CORPORATION http://fraser.stlouisfed.org/ iv Reserve Bank of St. Louis Federal WASHINGTON OFFICE D e p u ty to th e C h a irm a n (A d m in is tra tio n ) Jack E. Edgington D e p u ty to th e C h a irm a n (P u blic A ffa irs ) Margaret L. Egginton A s s is ta n t to th e D e p u ty to th e C h a irm a n (A d m in is tra tio n ) Edward T. Lutz D e p u ty to th e D ire c to r John R. Curtis S pecial A s s is ta n t to th e D ire c to r Kenneth Fulton A ss is ta n t to th e D ire c to r (C o m p tro lle r o f th e C u rre n cy) Alan Herlands S pecial A s s is ta n t to th e D ire c to r (C o m p tro lle r o f th e C u rre n cy) Laura L. M cAuliffe D ire c to r, D iv is io n o f Bank S u p e rv is io n Quinton Thompson G eneral C ou nse l Thomas Brooks D ire c to r, D ivisio n o f L iq u id a tio n James A. Davis D ire c to r, D ivisio n o f A c c o u n tin g and C o rp o ra te S ervices Robert V. Shumway D ire c to r. D ivisio n o f R esearch and S tra te g ic P la nn ing Stanley C. Silverberg E xecutive S e cre ta ry Hoyle L. Robinson D ire c to r, O ffic e o f C o n g re s s io n a l R ela tion s and P u b lic In fo rm a tio n Graham T. Northup D ire c to r, O ffice o f C o rp o ra te A u d its Robert D. Hoffman D irector, O ffice o f Personnel M anagem ent Jack C. Pleasant D ire c to r, O ffic e o f Equal E m p lo y m e n t O p p o rtu n ity Joe S. Arnold S pecial A s s is ta n t fo r P u b lic In fo rm a tio n Alan J. Whitney V FEDERAL DEPOSIT INSURANCE CORPORATION REGIONS AND DIRECTORS Atlanta Memphis E dw in B. B urr 2 3 3 P e ach tree S tre et. N.E. S u ite 2 4 0 0 A tla n ta , G eorgia 3 0 0 4 3 A. D avid M ea d o w s 1 C o m m e rc e S quare, S u ite 1 8 0 0 M e m p h is, T ennessee 3 8 1 0 3 Boston Minneapolis A n th o n y S. Scalzi 6 0 State Street, 1 7 th Floor B o sto n, M a s s a c h u s e tts 0 2 1 0 9 R obert P. G ough 7 3 0 S econd A venue S o uth, S uite 2 6 6 M in n e a p o lis , M in n e s o ta 5 5 4 0 2 Chicago New York W. H arlan S a rsfield 2 3 3 S. W a cke r D rive, S uite 6 1 1 6 C h ica g o , Illin o is 6 0 6 0 6 B e rna rd J. M cK e o n 3 4 5 Park A venue, 2 1 st F loor New York, New Y ork 1 0 1 5 4 Columbus Omaha S tan le y J. P oling 1 N a tio n w id e Plaza, S uite 2 6 0 0 C o lu m b u s , O hio 4 3 2 1 5 V a ca n t 1 7 0 0 Farnam Street, S uite 1 2 0 0 O m aha, N ebraska 6 8 1 0 2 Dallas Philadelphia Roy E. Ja ckson 3 5 0 N orth St. Paul S treet, S u ite 2 0 0 0 D allas, Texas 7 5 2 0 1 Paul G. Fritts 1 9 0 0 M a rk e t Street, S uite 61 6 P h ila d e lp h ia , P ennsylvania 1 9 1 0 3 Kansas City San Francisco Jo se p h V. Prohaska 2 3 4 5 G rand A venue, S uite 1 5 0 0 Kansas C ity, M is s o u ri 6 4 1 0 8 C harles E. D o ste r 4 4 M o n tg o m e ry Street, S uite 3 6 0 0 San F ra n cisco , C a lifo rn ia 9 4 1 0 4 Madison Jam es E. H alvo rso n 1 S o u th P inckney S treet, Room 81 3 M a d is o n , W is c o n s in 5 3 7 0 3 http://fraser.stlouisfed.org/ vi Federal Reserve Bank of St. Louis TABLE OF CONTENTS v iii CHAIRMAN'S STATEMENT PART ONE OPERATIONS OF THE CORPORATION D iv is io n o f Bank S u p e rv is io n D iv is io n o f L iq u id a tio n D iv is io n o f A c c o u n tin g and C o rp o ra te S e rvices Legal D ivisio n D iv is io n o f R esearch and S tra te g ic P la nn ing E xecutive and A d m in is tra tiv e O ffice s O ffic e o f P ersonnel M a n a g e m e n t O ffic e o f Equal E m p lo y m e n t O p p o rtu n ity O ffic e o f C o rp o ra te A u d its O ffic e o f th e E xecutive S e cre ta ry O ffic e o f C o n g re s s io n a l R ela tion s and P u blic In fo rm a tio n F ina ncia l S ta te m e n ts 3 13 17 19 21 22 22 24 24 24 25 26 PART TWO LEGISLATION AND REGULATIONS L e g is la tio n — 1981 Rules and R e g u la tio n s — 1 981 37 38 PART THREE ENFORCEMENT PROCEEDINGS E n fo rc e m e n t A c tio n s A c tio n s to T e rm in a te In sured S tatus C e a s e -a n d -D e s is t A c tio n s 43 43 43 PART FOUR STATISTICS OF CLOSED BANKS AND DEPOSIT INSURANCE Banks C losed B ecause o f F ina ncia l D iffic u ltie s , FDIC In com e, D is b u rs e m e n ts , and Losses 68 VII CHAIRMAN'S STATEMENT For nearly fifty years th e FDIC has sto od as the g u a rd ia n o f d e p o s ito rs ' fu n d s at c o m m e rc ia l and m utu al savings banks. D u rin g 1 9 8 1 , banks fa ced b oth in te n sifie d c o m p e titiv e pressures fro m u n re g u la te d fin a n c ia l in te rm e d ia rie s and u n p re c e d ented e c o n o m ic c o n d itio n s . These co m b in e d to create m ajor p ro ble m s fo r a n u m b e r o f in s titu tio n s , p a rtic u la rly o u r m utu al savings banks. The e c o n o m y w as ch aracte rize d by a h igh b ut d e c lin in g rate o f in fla tio n a c c o m p a n ied by relative ly high and vo la tile inte re st rates w h ic h caused m any d e p o s ito rs to s h ift th e ir fu n d s to h ig h e r yie ld in g in stru m e n ts, o fte n in n o n d e p o s ito ry in te rm e d ia r ies such as m on ey m arket fu n d s. W h ile m any d e p o s ito ry in s titu tio n s su ffe re d the e ffe cts o f in te re st rate v o la tility and h e ig h te n e d c o m p e titio n , c o m m e rc ia l banks, desp ite o n ly m od est d e p o s it g ro w th , g e n e ra lly fa re d b etter th a n th rifts . W ith th e ir broader, m ore fle xib le asset pow ers, co m m e rcia l banks w ere able to m a in ta in net in te re st m argin s and p ro fita b ility in 1 9 8 1 . As a result, c o m m e rc ia l banks in general w ere able to s lig h tly increase th e ir e q u ity ca pita l ratios. The th rift in d u stry, w ith its tra d itio n a l p o rtfo lio o f lo n g -te rm fixed rate assets, w as n ot able to a d ju st asset yield s to o ffse t its increased c o s t o f fu n d s. As a result, the net w o rth at m any th rifts w as se rio u sly e ro de d, re su ltin g in the m ost se riou s c h a l lenge to th e FDIC since the firs t fe w years o f its o p e ra tio n . In N ovem ber and D ecem ber, the FDIC arranged th re e assisted m ergers in vo lvin g tro u b le d savings banks in New York C ity at an e stim a ted co st to the FDIC o f $ 7 4 7 m illio n . These tra n s a c tio n s p ro te cte d the banks' d e p o sito rs and m aintain ed p u b lic c o n fid e n c e in th e in d u s try at a s u b s ta n tia lly lo w e r co st th a n paying o ff d e p o sito rs. D espite the c o s t o f d ea lin g w ith th o se p ro ble m s, the in su ra n ce fu n d increased by $ 1 .2 b illio n to over $ 1 2 b illio n d u rin g 1 9 8 1 . The fu n d 's p o rtfo lio o f T reasury s e c u ritie s is h ig h ly liq u id w ith an average m a tu rity o f tw o years, ten m onths. The FDIC w as involved in a n u m b e r o f a ctivitie s d u rin g th e year w h ic h w ere d esign ed to reduce the re g u la to ry b urd e n on in s titu tio n s . These e ffo rts in clu d e d p a rtic ip a tio n in the a ctivitie s o f th e D e p o sito ry In s titu tio n s D e re g u la tio n C om m ittee (DIDC), w h ic h w as created by th e C ongress in 1 9 8 0 w ith a m andate to oversee the o rd e rly p ha se o u t o f d e p o sit in te re st rate ce iling s. The C om m ittee is fa ced w ith th e d iffic u lt task o f b a lan cing the pace and type of d e p o s it d e re g u la tio n a g a in st the p o te n tia l im p a c t o f h ig h e r d e p o s it co sts on already depressed th rift e arnin gs. For the m ost part, the DIDC acted c a u tio u s ly in 1 9 8 1 . The C om m ittee 's m a jo r a c c o m p lis h m e n ts w ere th e rem oval o f th e in te re s t rate c e il ing on the 3 0 -m o n th Sm all Saver C e rtifica te and th e in tro d u c tio n o f a new c e ilin g free IR A /K e o g h tim e d e p o sit w ith a m in im u m m a tu rity o f one and o n e -h a lf years. This d e re g u la te d a cco u n t, w h ic h becam e e ffe ctive N ovem ber 1, 1 9 8 1 , sh o u ld help d e p o s ito ry in s titu tio n s c o m p e te e ffe ctive ly fo r th e new re tire m e n t savings d o lla rs generated by th e liberalized IR A /K e o g h e lig ib ility and inve stm en t re q u ire m e n ts p ro vided by th e E co n o m ic Recovery Tax A ct o f 1 9 8 1 . The FDIC c o n tin u e d its e ffo rts to reduce the re g u la to ry burde n on banks by p ro m o t ing in itia tive s beg un in re ce n t years: • T w e n ty -fo u r states at th e end o f the year w ere p a rtic ip a tin g in th e d ivid ed exam i n a tio n p ro g ra m , w h ic h fe a tu re s a lte rn a te instead o f dual federal and state bank e xam in a tion s, up fro m 14 states a year earlier. • S tre am lin e d a p p lic a tio n fo rm s deve lo pe d by the D ivisio n o f Bank S u pe rvisio n to red uce the p a p e rw o rk b u rd e n on banks w ere in jo in t use by the FDIC and 2 5 states, http://fraser.stlouisfed.org/ viii Federal Reserve Bank of St. Louis co m p a re d to 1 3 states at year-end 1 9 8 0 . • The FDIC fie ld -te s te d a new e xa m in a tio n re p o rt d u rin g th e year to e lim in a te nonessential item s and p ro d u c e a re p o rt m ore va lu ab le to b oth the FDIC and insured banks. The FDIC also to o k im p o rta n t steps to im p rove its interna l o p e ra tio n s and p o lic y d e c is io n -m a k in g . These initia tive s in clu d e d th e clo sin g o f th e R ichm on d Regional O ffice and re a ssig n m e n t o f its fu n c tio n s to the A tla nta and P hiladelphia Regional O ffices, the re d u c tio n by h alf o f th e n u m b e r o f o ffic ia ls re p o rtin g d ire c tly to the C hairm an, and re o rg a n iza tio n o f th e FDIC's sta n d in g co m m itte e s and som e o f its o p e ra tin g division s. In sum , th e FDIC in 1 981 s u c c e s s fu lly a da pte d to a ra p id ly e v o lv in g e n v iro n m e n t w h ile at th e sam e tim e p re p a rin g fo r even g re a te r c h a lle n g e and c h a n g e . The C o rp o ra tio n c o n tin u e d to m ee t its re s p o n s ib ilitie s in th e h ig h e s t tra d itio n s o f p u b lic se rvice. William M. Isaac C h a irm a n IX DIVISION OF BANK SUPERVISION Exam ining insu re d State n o n m e m b e r banks is the p rin c ip a l m ission o f the D ivision of Bank S u pe rvisio n (DBS). DBS also a d m in iste rs o th e r im p o rta n t fu n c tio n s re g a rd ing these banks in c lu d in g co n s u m e r and civil rig h ts p ro gram s, o v e rs ig h t o f banks' s e c u ritie s and review o f a p p lic a tio n s to m erge, set up new fa c ilitie s , ch a n g e lo c a tio n s o r q u a lify fo r d e p o s it insu ra n ce. W ith 2 ,3 5 9 o f th e FDIC's 3 ,3 9 4 em ployees, DBS is the C o rp o ra tio n 's large st o rg a n iza tio n a l elem ent. D u rin g 1 9 8 1 , a series o f o rg a n iza tio n a l changes w as im p le m e n te d th a t s trea m lin ed the D ivisio n's m an ag em en t stru c tu re , e n h a n cin g d e c is io n -m a k in g and p la n n in g and p o lic y fo rm u la tio n . These ch an ge s w ere as fo llo w s: — The M a n a g e m e n t S u p p o rt Branch w as created to m ore e ffe c tiv e ly handle a d m in is tra tiv e a ctivitie s and p la n n in g and p ro g ra m d eve lo pm e nt. — The O p eratio n s B ranch reorganized to increase e ffic ie n c y in its a p p lic a tio n and e xa m in a tio n review and p ro cessin g fu n c tio n s . — To a cco m o d a te changes o c c u rrin g in th e ban kin g in d u s try and achieve m ore e c o n o m ica l and e ffic ie n t bank su pe rvision , the FDIC closed th e R ichm ond R egional O ffice and rea llo cated the banks u n d e r its ju ris d ic tio n . Banks in N orth C arolina and S o uth C arolina w ere tra n s fe rre d to the A tla nta Regional O ffice and th o se in V irg in ia w ere tra n sfe rre d to the P hiladelphia Regional O ffice. — The to ta l n u m b e r o f fie ld o ffice s decreased fro m 1 5 0 to 1 4 2 as the resu lt of the m o d ific a tio n o f fie ld o ffic e stru ctu re s in th e A tlanta, Kansas C ity and M e m p h is R egions. A b o u t 1 ,9 0 0 fie ld e xam iners are assigned to th e C o rp o ra tio n 's reg io n al and fie ld o ffices. Examinations The C o rp o ra tio n 's bank e xa m in a tio n p ro g ra m is the fo u n d a tio n o f a c o o rd in a te d o p e ra tio n to p ro m o te safe and so un d banking and to ensure c o m p lia n c e w ith bank ing laws, in c lu d in g fe de ra l co n su m e r p ro te c tio n and civil rig h ts statutes. The C o rp o ra tio n c o n d u c ts fo u r p rin c ip a l types o f e xa m in a tio n s: 1) fo r safety and soun dn ess; 2) fo r c o m p lia n c e w ith co n s u m e r and civil rig h ts laws and reg u la tio n s; 3) fo r p ro p e r p e rfo rm a n ce o f fid u c ia ry re s p o n s ib ilitie s in tru s t d ep artm en ts, and 4) fo r ade qu acy o f in terna l c o n tro ls in e le c tro n ic data p ro cessin g o pe ra tio n s. C o rp o ra tio n exam in e rs in 1 981 c o n d u c te d 2 0 ,2 6 6 e x a m in a tio n and in ve stig a tio n a ctivitie s, co m p a re d to 2 0 ,2 5 3 in 1 9 8 0 . This to ta l in c lu d e d 6 ,3 8 3 safety and so un dn ess e xam in a tion s, 6 ,9 6 2 co n s u m e r and civil rig h ts c o m p lia n c e e xam in a tio n s and visita tio n s, 1 ,3 9 4 e xa m in a tio n s o f tru s t d e p a rtm e n ts, 1 ,1 9 7 e xam in a tion s o f data p ro cessin g fa c ilitie s , 1 ,7 0 9 in ve stig a tio n s and 2 ,6 2 1 a p p lic a tio n reviews. Safety and Soundness Examinations The e xa m in a tio n p rocess is a co m p re h e n sive e valua tion o f a bank's fin a n c ia l s tru c tu re and o p e ra tio n s in w h ic h th e bank is rated on its c o n d itio n , c o m p lia n c e w ith laws and re g u la tio n s and overall o p e ra tin g soundness. Banks are m easured against th e U n ifo rm Financial In s titu tio n s Rating System a do pte d in 1 9 8 0 by th e five fe d eral re g u la to ry age ncies represented on the Federal Financial In s titu tio n s E xam ina tio n C o u n cil (FFIEC). The ratin g system id e n tifie s in s titu tio n s w ith fin a n c ia l, o p e ra t ing or c o m p lia n c e w eaknesses th a t re q u ire special s u p e rviso ry a tte n tio n . E xa m inations are a ug m e nted by the C o rp o ra tio n 's co m p u te riz e d Integrated M o n i- 3 BANK EXAMINATION ACTIVITIES OF THE FEDERAL DEPOSIT INSURANCE CORPORATION IN 1980 AND 1981 Number Activity 1981 1980 Bank examination activities— t o ta l.................................................................... ..... 20,266 20,253 Safety and soundness exam inations................................................................. ..... 6,383 6,562 Other exam inations.......................................................................................... 6,155 44 184 6.169 153 240 Compliance exa m ina tion s.................................................................................. 6,025 6,373 Compliance v is ita tio n s ........................................................................................ 937 484 Data-processing fa c ilitie s ................................................................................. 2,591 1,394 1,197 2,450 1,379 1,071 Investigations........................................................................................................ 1,709 1,697 Application re vie w s.............................................................................................. 2,621 2,687 New banks: State banks members of Federal Reserve System.................................................................................. 5 14 101 1,027 301 1.187 115 1,166 192 1,200 Regular examination of insured banks not members of Federal Reserve System.......................................................... ..... Re-examinations .............................................................................................. Examinations of departm ents............................................................................ ..... Trust de pa rtm e nts.................................................................................................... New banks: State banks not members of Federal Reserve System.................................................................................. New bra nch es.................................................................................................... ...... Mergers and con solida tio ns........................................................................... O ther.................................................................................................................... to rin g System (IMS), w h ic h fo llo w s banks betw een exam in a tion s in o rd er to q u ickly alert FDIC to the p o ss ib ility of a p ro ble m before it reaches a serious level. The IMS p erform s tests on data in banks' Reports of C o n d itio n and Incom e to m easure a bank's ca pita l adequacy, asset quality, liq u id ity, p ro fita b ility and asset and lia b ility m ix and g ro w th . If a bank fa ils a te st and fu rth e r analysis o f a d d itio n a l data fro m the system ind icate s an adverse c o n d itio n exists, th en th e FDIC begins a p p ro p ria te su p e rviso ry a ction . The IMS also assists in d e te rm in in g the fre q u e n c y and scope of e xam in a tion and serves as a to o l fo r use by exam iners in the actual exam in a tion process and in d iscu ssio n s w ith bank m anagem ent. FDIC exam iners and fin a n c ia l analysts use the C om parative P erform ance R eport (CPR) as a s u p p le m e n t to IMS in fo rm a tio n . The CPR show s in d ivid ua l bank in fo rm a tio n on both a c u rre n t and tre n d basis, as w ell as peer g ro u p data. It evolved fro m a su ccession of bank p e rfo rm a n ce rep orts the FDIC has sent to all n on m e m b er insured co m m e rc ia l banks since 1 9 6 7 . Effective D ecem ber 31, 1 9 8 1 , th e CPR was replaced by a new U nifo rm Bank Perform ance R eport fo r all insured co m m ercial banks as part of an in te ra g e n cy e ffo rt w ith the Federal Reserve and th e C o m p tro lle r o f th e C urren cy (see U nifo rm S upe rviso ry Policies and Procedures). The FDIC also reviews e xam in a tion rep orts prepared by the C o m p tro lle r of the C u r rency on n ational banks and by the Federal Reserve Board on S tate -cha rte red banks th a t b elong to th e Federal Reserve System. This review enables th e C o rp o ra tio n to m ore a cc u ra te ly assess th e risk e xposure o f its insu ra n ce fu n d and to a nticip a te p ote ntia l liab ilities. In a d d itio n , th e FDIC reviews Reports o f Bank H old in g C om pany Inspe ction prepared by the Federal Reserve. http://fraser.stlouisfed.org/ 4 Federal Reserve Bank of St. Louis Compliance Examinations The re s p o n s ib ility o f th e c o m p lia n c e e xa m in e r is to e n fo rc e th e c o n s u m e r and civil rig h ts sta tu tes a ffe c tin g State n o n m e m b e r banks. These sta tu tes in c lu d e : th e T ru th in L ending Act, the Fair C re d it R e p ortin g Act. th e Fair H ou sing A ct, th e C o m m u n ity R einvestm ent Act, the Home M o rtg a g e D isclosure Act, the Fair D ebt C ollectio n Prac tices Act, the E le ctron ic Funds Transfer A ct and th e Equal C redit O p p o rtu n ity Act. W h e n v io la tio n s o r e xce p tio n s are noted, th e FDIC n o tifie s th e bank involved. The reg io n al o ffic e fo llo w s up w ith m easures such as m oral suasion and a d d itio n a l e xam in a tion s to assure th a t co rre c tiv e a ctio n or v o lu n ta ry c o m p lia n c e is taken. If firm e r steps are necessary, th e reg io n al d ire c to r o r th e O ffice o f C on sum e r Pro g ram s m ay re co m m e n d fu rth e r e n fo rc e m e n t a ctio n u nd er S e ction 8(b) o f the FDI Act. D uring 1 9 8 1 , the FDIC's Board o f D ire ctors issued nine cease-and-desist o rd ers in vo lvin g v io la tio n s o f co n s u m e r p ro te c tio n and c ivil rig h ts laws and re g u la tio n s. Electronic Data Processing (EDP) Examinations The co st o f data p ro ce ssin g has c o n tin u e d its d o w n w a rd tren d and th is has resulted in fu rth e r g ro w th in th e n u m b e r o f banks o w n in g th e ir ow n c o m p u te rs . Once it was rare fo r an in s titu tio n u n d e r $ 5 0 m illio n to have its ow n system , b u t n o w it is a fre q u e n t o c c u rre n ce . In o rd e r to c o n d u c t e ffe ctive EDP e xa m in a tio n s o f th is size in s ti tu tio n , th e C o rp o ra tio n in tro d u c e d th e C o m m u n ity Data C enter W o rk p ro g ra m . This w o rk p ro g ra m w as s p e c ific a lly d esign ed fo r the sm aller in s titu tio n and provides g re ate r fle x ib ility to fie ld e xam iners in e valua ting se c u rity and c o n tro ls in sm aller system s. A b o u t 1 ,5 0 0 insu re d State n o n m e m b e r banks n o w have th e ir ow n c o m p u te rs. To in fo rm bankers o f sta nd ard s the C o rp o ra tio n seeks w he n c o n d u c tin g a data p ro cessing e xa m in a tio n , the FDIC issued a bank letter, "In fo rm a tio n S tate m en t on InHouse C om pu te rs; FDIC Guides fo r C o m m u n ity Bank A u to m a tio n ," to re in fo rc e the pre vio u sly-issue d EDP E xam ination H andbook. A c o n c e rn over th e fin a n c ia l s ta b ility o f som e th ird p arties th a t p ro vid e data p ro cessing services to n o n m e m b e r banks led to th e issuance o f a n o th e r bank letter d u rin g th e year a le rtin g banks to review th e fin a n c ia l sta te m e nts o f th e ir servicers. As m any banks rely to ta lly on th ird p arties fo r data p ro cessin g, the fin a n c ia l c o l lapse o f such a se rvicer w o u ld se rio u sly im pede bank o p e ra tio n s. T herefore, a bank sh ou ld be aware o f its servicer's fin a n c ia l sta bility. Trust Department Examinations C o rp o ra tio n co n s e n t and a p p ro val o f a bank's state re g u la to r are re q u ire d b efo re an FD IC -supervised bank m ay exercise tru s t pow ers. In 1 9 8 1 , th e FDIC app ro ved fid u c ia ry p ow ers fo r 1 0 8 banks. All o f these a p p lic a tio n s w ere processed at the reg io n al o ffic e level, re s u ltin g in m ore tim e ly approval o f each a p p lic a tio n . At th e end o f th e year, th e FDIC supervised 2,1 9 4 bank tru s t d e p a rtm e n ts and 1 8 m utu al savings bank tru s t d e p a rtm e n ts c o n tro llin g over $ 5 7 b illio n in tru s t a c c o u n t assets. A lth o u g h 9 5 o f th e m m anage m ore th a n $ 1 0 0 m illio n in tru s t assets, m ost o f the d e p a rtm e n ts are relative ly sm all, averag ing $ 2 8 m illio n . In a d d itio n to e xam in ing tru s t d ep artm en ts, th e FDIC supervises 4 0 0 banks th a t are registered se cu ritie s tra n s fe r agents. U nder the S e curities Exchange A ct o f 1 9 3 4 , a bank is re q uired to re g iste r w ith th e C o rp o ra tio n as a tra n s fe r a ge nt o r re g istra r w he ne ver it acts in th is ca p a city fo r any c o rp o ra tio n having $ 1 m illio n in assets and or m ore sh areh old ers. Digitized5 0 for0 FRASER 5 FDIC is s u b s ta n tia lly revising th e re g is tra tio n /a m e n d m e n t Form TA-1 to reduce the p a p e rw o rk b urd e n on banks. The tra n s fe r a ge nt e xam in a tion re p o rt also is being revised extensively to im p rove th e q u a lity o f th e e xam in a tion process and reduce the hou rs necessary fo r th e e xam in a tion . Examiner Training A b o u t 1 ,7 0 0 FDIC e xam iners received intensive tra in in g th is year at the C o rp o ra tio n 's tra in in g ce n te r in Rosslyn, V irg in ia , in areas such as: bank e xam in a tion fu n d am entals; a c c o u n tin g and a u d itin g te ch n iq u e s; c re d it appraisal; m anagem ent; fin a n c ia l analysis; c o n s u m e r and civil rig h ts co m p lia n c e ; in te rn a tio n a l banking and e xam in a tion o f e le c tro n ic data p ro cessin g d ep a rtm e n ts and tru s t d e p artm en ts. Som e 2 9 0 e xam iners fro m State bank d ep artm en ts, fo re ig n c e ntral banks and o th e r federal a gencies also to o k FDIC co urses in 1 9 8 1 . An in s tru c to r sta ff o f 1 8 0 exam iners fro m the fie ld and h eadquarters, aug m e nted by speakers fro m b an kin g, academ ia and related business fie ld s, provid e d u p -to -d a te tra in in g . In te ra g e n c y tra in in g sp o n so re d by th e Federal Financial In s titu tio n s E xam ination C o u n c il also w as c o n d u c te d at the tra in in g ce nte r. C ourses in data pro cessin g, in s tru c to r tra in in g , m anagem ent, in te rn a tio n a l banking, w h ite c o lla r crim e , c o n su m e r and civil rig h ts c o m p lia n c e and tru s t d e p a rtm e n t e xam in a tion s w ere held in 1 981 fo r e xam iners fro m the five m em be r agencies. Applications Proposed State banks th a t do n o t inten d to becom e m em bers o f th e Federal Reserve System b ut w a n t d e p o sit insu ra n ce m ust a pp ly to th e C o rp o ra tio n to o b ta in such insu ra n ce. A ll State n o n m e m b e r banks m ust a p p ly fo r c o n s e n t to establish new b ra nch es or fa c ilitie s or reloca te e xisting o ffices. The C o rp o ra tio n also has the a u th o rity to g ra n t or deny c o n se n t to m erger, c o n s o lid a tio n or p urcha se and a ssu m p tio n tra n s a c tio n s if the re su ltin g bank w o u ld be s u b je ct to FDIC supervision, or to any m e rg e r-typ e tra n s a c tio n in vo lvin g an FD IC -insured bank and a n o n in su re d in s titu tio n . To red uce p ro ce ssin g tim e fo r ro u tin e b ra nch a p p lica tio n s , the FDIC's Board of D ire c to rs in 1981 d eleg ated a u th o rity to the D ire c to r o f DBS to act on such a p p liFDIC APPLICATIONS 1981 1980 Deposit Insurance— total ...................................... ............................................. A pp rove d........................................................................... ............................................. D enied................................................................................ ................................. 98 98 0 149 148 1 New Branches — total ...................................................... ............................................. Approved........................................................................... ............................................. Branch ......................................................... ................................. Limited Branch .............................................................. ................................. Remote Service F a c ility ................................... ................................. D e nie d ........................................................... ............................................. 1,324 1,321 704 151 466 3 1,312 1,307 747 137 423 5 ’ Mergers — total ................................................................. ............................................. A pproved........................................................................... ............................................. D enied................................................................................ ............................................. 87 86 1 85 79 6 ‘ Certain m ergers undertaken as part of internal reorganizations not included. http://fraser.stlouisfed.org/ 6 Federal Reserve Bank of St. Louis ca tion s. The D ire c to r w ill act on b ra nch a p p lic a tio n s if th e a p p lic a n t's adjusted e q u ity ca p ita l and reserves (adjusted su rp lu s and reserves fo r m utu al savings banks) are d e te rm in e d to be a dequate relative to its adjusted gross assets. S e ction 1 9 o f th e FDI A ct p ro h ib its anyone co n victe d o f a c rim in a l o ffe nse in v o lv ing d is h o n e sty or breach o f tru s t fro m serving as a d ire c to r, o ffic e r or em ployee o f any insu re d bank w ith o u t th e C o rp o ra tio n 's co n se n t. D u rin g 1 9 8 1 , th e FDIC c o n s id ered 5 6 requests u n d e r S e ction 1 9 fo r co n s e n t to serve, a p p ro v in g all b ut tw o. S e ction 7(j) o f th e FDI A ct gives th e C o rp o ra tio n a u th o rity to d isa p p ro ve in advance ce rta in ch an ge s in c o n tro l o f insu re d State n o n m e m b e r banks. The law requires any person or persons a ctin g in c o n c e rt w h o are a c q u irin g c o n tro l o f a bank to p rovide th e FDIC 6 0 days p rio r w ritte n n otice , su p p o rte d by d etailed personal and fin a n c ia l data, a lo ng w ith in fo rm a tio n on th e te rm s and fin a n c in g o f th e p roposed a c q u is itio n . In 1 9 8 1 , th e FDIC received 6 2 7 re p o rts o f ch an ge o f c o n tro l, co m p a re d w ith 4 7 8 the pre vio u s year. The FDIC's review o f 2 4 6 cases re q u irin g p rio r n o tice resulted in the issuance o f 21 2 "le tte rs o f in te n t n ot to d isa p p ro v e " and seven notice s w ere w ith d ra w n p rio r to a ction . The FDIC Board o f D ire cto rs d isa pp rove d one tra n s a c tio n and at year-end 2 4 tra n s a c tio n s w ere p e n ding . In tw o cases, the 6 0 -d a y review perio d was allo w e d to expire w ith o u t the issuance o f a letter o f in te n t n ot to d is a p prove, w h ic h p e rm itte d the ch an ge to o ccu r. Average p ro ce ssin g tim e o f p rio r n o ti ces in 1981 was 3 2 days. On M arch 10, 1 9 8 1 , th e FDIC m ade a d etailed re p o rt to the C ongress c o n c e rn in g its a d m in is tra tio n o f th e C hange in Bank C o n tro l Act. International Banking The FDIC a llo w s o n ly fo re ig n banks in so un d fin a n c ia l c o n d itio n w ith ca pa ble m an a g e m e n t to o b ta in d e p o sit in su ra n ce fo r th e ir U.S. branches. Further, the C o rp o ra tio n co n s id e rs w h e th e r th e b ra n ch w ill be a viable, w e ll-m a n a g e d o p e ra tio n . In 1 9 8 1 , the FDIC app ro ved a p p lic a tio n s o f seven fo re ig n banks fo r d e p o s it insu ra n ce in seven d o m e stic branches, b rin g in g to 31 the n u m b e r o f such b ranches and to 1 8 the n u m b e r o f fo re ig n banks w ith one or m ore insured U.S. o ffices. In 1 9 8 1 , the FDIC c o n d u c te d 2 3 e xa m in a tio n s o f insu re d U.S. bra nch es o f fo re ig n banks using th e U n ifo rm R eport o f E xam ination fo r Foreign A g en cies and Branches. A t ye ar-e nd , th e FDIC also w as su p e rvisin g th e a ctivitie s o f 6 5 U.S. banks th a t are ow n ed by fo re ig n banks o r bank h o ld in g co m p a n ie s and 2 8 in w h ic h fo re ig n in d i v id u a ls ow n 2 5 p e rce n t or m ore o f th e bank's stock. D u rin g 1 9 8 1 , th e C o rp o ra tio n a pp ro ved th re e a p p lic a tio n s by FD IC -supervised U.S. banks to engage in fo re ig n a ctivitie s b rin g in g to 31 the n u m b e r o f such banks o p e ra tin g o ffs h o re b ra nch es o r o th e r overseas e ntitie s. Five F D IC -supervised banks o perate Edge A ct or A g re e m e n t C o rp o ra tio n s to fa c ilita te th e ir in te rn a tio n a l ope ra tio n s. Securities Registration and Reporting Each in s u re d n o n m e m b e r b an k w ith m o re th a n $ 1 m illio n in assets and 5 0 0 or m o re s h a re h o ld e rs o f any class o f e q u ity s e c u rity m u s t re g is te r w ith th e FDIC and file p e rio d ic p u b lic re p o rts as re q u ire d by th e S e c u ritie s E xchange A c t o f 1 9 3 4 . C o p ie s o f th ese re p o rts are a va ila b le fo r p u b lic in s p e c tio n in th e C o rp o ra tio n 's W a s h in g to n O ffic e and at th e N ew York, C h ica g o and San F ra n c is c o Federal Reserve Banks and at th e Reserve Bank o f th e d is tric t in w h ic h th e bank filin g the s ta te m e n t is lo ca te d . 7 In 1 9 8 1 , 2 2 banks file d re g is tra tio n sta te m e n ts w ith th e FDIC and one re g is te re d bank c o n v e rte d fro m n a tio n a l to S tate c h a rte r. F orty banks te rm in a te d re g is tra tio n d u rin g th e year, b ecause th e y fe ll b e lo w th e re p o rtin g c rite ria o r fo r o th e r re a sons, fo r a ye a r-e n d to ta l o f 3 7 9 State n o n m e m b e r re g is te re d banks. To h elp banks u n d e rs ta n d th e ir re s p o n s ib ilitie s u n d e r th e s e c u ritie s d is c lo s u re law s and re g u la tio n s , th e C o rp o ra tio n sp o n s o re d o n e -d a y se m in a rs at v a rio u s site s fo r th e b e n e fit o f bankers, a tto rn e y s and a c c o u n ta n ts w h o p re p a re re p o rts fo r re g is te re d n o n m e m b e r banks. An FDIC p o lic y s ta te m e n t o u tlin e s m in im u m s ta n d a rd s u n d e r th e a n tifra u d p ro v i sio n s o f s e c u ritie s law s fo r th e d is c lo s u re by c irc u la r o f m a te ria l fa c ts in c o n n e c tio n w ith th e o ffe r and sale o f bank se c u ritie s . A lth o u g h FDIC p o lic y does n o t re q u ire filin g o f o ffe rin g c irc u la rs w ith th e C o rp o ra tio n , it e n c o u ra g e s th e s u b m is s io n o f c irc u la rs fo r review . It re q u ire s th e use o f c irc u la rs in c o n n e c tio n w ith th e sale o f s e c u ritie s by banks s u b je c t to e n fo rc e m e n t o rd e rs. The FDIC a lso re view s w h e th e r p u b lic in v e s to rs have been p ro v id e d s u ffic ie n t d is c lo s u re o f m a te ria l fa cts. The FDIC's s ta ff is a va ila b le fo r c o n s u lta tio n and a ss is ta n ce as n eeded, and in 1 9 8 1 , 51 banks s u b m itte d o ffe rin g c irc u la rs fo r s ta ff re v ie w and s u g g e s tio n s . D u rin g 1 9 8 1 , th e C o rp o ra tio n a d o p te d a p o lic y s ta te m e n t to p ro v id e g u id a n c e to in s u re d n o n m e m b e r banks is s u in g re ta il re p u rc h a s e a g re e m e n ts. A reta il re p u r ch ase a g re e m e n t in vo lve s an in d e b te d n e s s a ris in g fro m a tra n s fe r o f d ire c t U.S. o b lig a tio n s , o r fro m o b lig a tio n s w ith p rin c ip a l and in te re s t fu lly g u a ra n te e d by the U.S. The bank is o b lig a te d to re p u rc h a s e th e d e b t, w h ic h w ill be in d e n o m in a tio n s o f less th a n $ 1 0 0 ,0 0 0 , w ill m a tu re in less th a n 9 0 days and c a n n o t be a u to m a ti c a lly re n ew e d o r e xte n d e d . The s ta te m e n t o f p o lic y a le rts issue rs to b a n k in g and s e c u ritie s law s c o n c e rn s , as w e ll as to sa fety and s o u n d n e s s c o n s id e ra tio n s . A lso d u rin g th e year, th e FDIC a m e nd ed its p o lic y c o n c e rn in g in te re s t rate fu tu re s c o n tra c ts , fo rw a rd c o n tra c ts and s ta n d b y c o n tra c ts . In sured State n o n m e m b e r banks in te n d in g to take p o s itio n s in in te re s t rate fu tu re s c o n tra c ts s p e c ify in g d e liv e ry o f c e rtific a te s o f d e p o s it issued by d o m e s tic banks (ba nk CDs) s h o u ld do so in a c c o rd a n c e w ith th e C o rp o ra tio n 's e x is tin g p o lic y s ta te m e n t g o v e rn in g fu tu re s and fo rw a rd c o n tra c ts on U.S. g o v e rn m e n t and a g e n c y s e c u ritie s , jo in tly issued by th e FDIC, th e B oard o f G o verno rs o f th e Federal Reserve System and th e O ffic e o f th e C o m p tro lle r o f th e C u rre n c y on N ove m b e r 2 0, 1 9 7 9 , and am e nd ed on M a rc h 2 0 , 1 9 8 0 and on O c to b e r 19, 1 981 C on sum e r P ro te ctio n and C ivil R ights The DBS O ffic e o f C o n s u m e r P ro gram s (OCP) is re s p o n s ib le fo r th e C o rp o ra tio n 's c o n s u m e r and c iv il rig h ts p ro te c tio n e ffo rts . The O ffic e p e rfo rm s p e rio d ic c o m p lia n c e e x a m in a tio n s and c o m p la in t in v e s tig a tio n s c o n d u c te d by s p e c ia lly tra in e d fie ld c o m p lia n c e e xa m in e rs. Each re g io n a l o ffic e has a c o n s u m e r a ffa ir s / c iv il rig h ts e x a m in e r w h o oversees th e se fu n c tio n s . One o f OCP's im p o rta n t tasks is to reso lve c o n s u m e r c o m p la in ts and in q u irie s in v o lv in g F D IC -su pe rvise d banks. The largest n um be r o f in q uiries in 1981 centered on ce rtific a te o f d e p o sit w ith d ra w a l p e n a ltie s and th e FDIC's d e p o s it in s u ra n c e co ve ra g e . The m o s t fre q u e n t c o m p la in ts c e n te re d on th e Equal C re d it O p p o rtu n ity A ct, bank d e p o s it p o lic y and p ra c tic e s , d is c re p a n c ie s in d e p o s it a c c o u n ts and th e T ru th in L e n d in g A ct. Thefor C FRASER o rp o ra tio n 's re g io n a l o ffic e s c o n d u c t B anker C o m p lia n c e S e m in a rs to Digitized http://fraser.stlouisfed.org/ 8 Reserve Bank of St. Louis Federal im p ro v e c u s to m e r re la tio n s and bank c o m p lia n c e and to re d u c e th e co s ts o f s u p e rv is o ry and e n fo rc e m e n t m easures. In 1 9 8 1 , 3 6 o f th e se s e m in a rs w ere a tte n d e d by 4 ,2 3 6 bank o ffic e rs and e m p lo ye es. The O ffice o f C o n su m e r P ro gram s d e ve lo p e d and c o n d u c te d tw o , d a y -lo n g C o n s u m e r A w a re ne ss S e m in a rs to m ake m in o rity and o th e r c o n s u m e rs aw are o f the FDIC's re g u la to ry re s p o n s ib ilitie s . The fir s t s e m in a r to o k place in B o sto n and a ttra c te d 41 c o n s u m e r re p re se n ta tive s. The se co n d s e m in a r a ttra c te d 7 3 re p re s e n ta tiv e s and w as h eld in Los A n ge les. The se m in a rs also gave a tte n d e e s a c h a n c e to ask q u e s tio n s o f th e bankers re p re se n te d on th e p ro g ra m . T his ye ar a n ew p u b lic a tio n , "C o n s u m e r N ew s," w as p u b lis h e d on an e x p e rim e n tal basis. It features a rticles on to p ic s such as estab lish ing cred it, e le c tro n ic bank ing, c e rtific a te o f d e p o s it p e n a ltie s, h om e m o rtg a g e loans, c o s ig n in g fo r a loan and c re d it life in su ra n ce . A new C o m p u te r A ssiste d S u p e rv is o ry System , C O M PAS S, w as in itia te d in late 1 9 8 0 and w as fu lly im p le m e n te d in 1 9 8 1 . The system id e n tifie s areas o f p o te n tia l d is c rim in a tio n in h om e m o rtg a g e le n d in g , and aids e x a m in e rs in th e c o n d u c t o f Fair H o u sin g a sp e cts o f th e c o m p lia n c e e x a m in a tio n . C O M PAS S c a te g o riz e s and c o m p a re s, u sin g race, sex and m a rita l sta tu s as bases, s u c c e s s fu l and u n s u c c e s s fu l loan a p p lic a n ts and loan te rm s g ra n te d to b o rro w e rs . D u rin g 1 9 8 1 , 9 2 FDICs u p e rv is e d banks q u a lifie d fo r C O M PAS S p ro g ra m m in g . A ll o f th e se banks w ere v is ite d by an e xa m in e r u tiliz in g C O M PAS S data. The re s u lts o f th e se v is its c u r re n tly are b eing analyzed. Bank Secrecy T reasury D e p a rtm e n t re g u la tio n s u nd er the Bank S ecrecy A ct o f 1 9 7 0 req uire banks to m aintain reco rd s and file c u rre n c y tra n s a c tio n re p o rts to aid law e n fo rc e m ent a u th o ritie s in c rim in a l and re g u la to ry in ve stig a tio n s and p ro ce e d in g s. D uring 1 9 8 1 , c o n g re ssio n a l and p u b lic co n c e rn fo cu se d on the e n o rm o u s surpluses of c u rre n c y flo w in g th ro u g h banks in ce rta in parts of th e c o u n try , m ost n o ta b ly south Florida. M u ch o f th is su rp lu s c u rre n c y was believed to have been generated by illic it d ru g dealers, w h o a p p a re n tly w ere using the banking system to lau nd er ille g a lly -o b ta in e d cu rre n cy. A t th e d ire c tio n o f the Treasury D ep artm en t, a m u lti a gency e ffo rt w as lau nch ed to im p rove the c u rre n c y tra n s a c tio n re p o rtin g system . Greater bank c o m p lia n c e w ith th e c u rre n c y re p o rtin g re q u ire m e n ts w as co n sid e re d a c ritic a l e le m e n t in im p ro v in g the effe ctiven ess o f law e n fo rc e m e n t in inv e s tig a tin g and p ro s e c u tin g c rim in a l d ru g tra fficke rs. The FDIC has co o p e ra te d fu lly w ith the T reasury and law e n fo rc e m e n t a u th o ritie s, and in several cases d u rin g the year has p rovid e d bank exam iners to assist in d e ve lo p in g e vidence fo r possible in d ic tm e n ts by fe de ra l grand juries. Early in 1 9 8 1 , the FDIC im p lem en te d a new tw o -s ta g e e xam in a tion p ro c e d u re c o v e ring bank c o m p lia n c e w ith th e c u rre n c y re p o rtin g re q u ire m e n ts and o th e r Bank S ecrecy rules. The firs t stage is d esign ed to p ro vid e lim ite d coverage in the m a jo rity o f banks w he re p ro b le m s are n o t in d ica te d . The second stage c o m p rise s a broad scale e x a m in a tio n a p p ro a ch and is to be used in th o se banks w h e re n o n c o m p lia n c e w ith the re g u la tio n s is su spected or w he re u n u su a lly large c u rre n c y m ovem ents are evident. Bank Security Part 3 2 6 o f the FDIC's Rules and R egulations im p le m e n ts the Bank P ro tectio n A c t o f 1 9 6 8 . The re g u la tio n s set fo rth g u id e lin e s to banks fo r d is c o u ra g in g robberies, 9 b u rg la rie s and larcenies and p re scrib e p ro ce d u re s to aid in the id e n tific a tio n and a pp re h e n sio n o f persons c o m m ittin g such crim es. As part o f FDIC's c o n tin u in g e ffo rt to reduce u n p ro d u c tiv e pap erw ork, tw o re p o rts p re v io u s ly re q uired by Part 3 2 6 w ere e lim in a te d in 1 981 The ro u tin e c o lle c tio n o f in fo rm a tio n on se cu rity d evices on Form P-1 was suspended at th e b e g in n in g o f the year. The FDIC w as able to e lim in a te th is re p o rt w ith o u t re d u c tio n in s u p e rviso ry e ffe ctiven ess because o f a c o m b in a tio n o f fa c to rs in c lu d in g 1) o n -s ite m o n ito rin g by exam iners, 2) a lterna tive review p ro ce d u re s used in p ro cessin g new bank and b ra nch a p p lic a tio n s and 3) th e g e n e ra lly h igh level o f s e c u rity m aintain ed by insured fin a n c ia l in s titu tio n s . In A u gu st, the FDIC e lim in a te d th e R eport o f C rim e, Form P-2, re q u irin g instead th a t banks prepare an in fo rm a l reco rd after any a tte m p ted or su ccessfu l crim e, and th a t th e y m aintain th a t reco rd fo r exam iner review at a ce ntral lo ca tio n . This fo rm a l re p o rt w as no lo n g e r co n sid e re d necessary because s im ila r in fo rm a tio n is available elsew here. D espite the change, DBS urged in s titu tio n s to c o n tin u e p ro m p tly n o tify in g th e ir FDIC reg io n al o ffic e o f any such event having s ig n ific a n t im p a c t on the bank. FDIC-State Cooperation The d ivid e d e xa m in a tio n p ro g ra m c o n tin u e d to g ro w in 1 9 8 1 . T w e n ty -fo u r States, w ith 3 ,7 5 8 banks, have entered in to fo rm a l d ivid ed e xa m in a tio n agree m e nts w ith the FDIC. This represents 41 p e rce n t o f th e 9 ,3 0 0 S tate -ch a rte re d banks s u p e r vised by the FDIC. The d ivid e d e xa m in a tio n p ro g ra m is a co o p e ra tive su p e rv is o ry e ffo rt by th e FDIC and State b anking d e p a rtm e n ts. A d vantages o f the p ro g ra m in c lu d e im p rove d bank s u p e rvisio n , red uce d re g u la to ry burde n on banks and im p rove d service to the p u b lic th ro u g h shared reso urces and red uce d d u p lic a tio n in FDIC and State su pe rvision . U nder th e d ivid ed e xa m in a tio n p ro gram , banks w ith no fin a n c ia l or s u p e rviso ry p ro b le m s are s p lit in to tw o g ro u p s and are exam ined a lte rn a te ly by th e FDIC and the State. A ny State w ith a q u a lifie d e xam in a tion sta ff and statutes th a t p e rm it p a r tic ip a tio n in th e p ro g ra m is e lig ib le to e nte r into a d ivid ed e xam in a tion agreem ent. M any ben efits a ccru e to States jo in in g the p ro gram . A new fe ature added to the p ro g ra m th is year w as FDIC tra in in g fo r State exam iners. D u rin g 1 9 8 1 , a to ta l of 5 2 7 State exam in e rs fro m ten States received tra in in g in EDP Bank A nalysis T ech niques, Financial Futures and tra in in g in th e S ch oo l fo r S enior A ssista n t Exam iners. O ther ben efits in c lu d e reg io n al ty p in g ce nte rs to expedite ty p in g o f e xam in a tion rep orts, c o m m o n a p p lic a tio n fo rm s fo r bank use in a p p lyin g fo r b oth State and FDIC p e rm issio n to m erge, estab lish a b ra nch or ro u tin e service fa c ility , m ove an o ffic e o r receive a c h a rte r and fe de ra l d e p o s it insu ra n ce, access to FDIC's c o m p u terized data base and p a rtic ip a tio n in jo in t e n fo rc e m e n t a ctions. Uniform Supervisory Policies and Procedures The p rincip al national fo ru m fo r interag en cy c o o p e ra tio n on supe rviso ry m atters is the Federal Financial In stitu tio n s E xam ination C ouncil (FFIEC), c o n sistin g of the FDIC, the O ffice o f the C o m p tro lle r of the C urren cy (OCC), the Federal Reserve Board (FRB), the Federal Hom e Loan Bank Board (FHLBB) and the N ational C redit U nion A d m in is tra tio n (NCUA). The FFIEC in 1 9 7 9 established task fo rce s to address several objectives. Notable pro je cts co m p le te d by the task forces, approved by the FFIEC, and adopted by the FDIC in 1 981 inclu de : http://fraser.stlouisfed.org/ 10 Federal Reserve Bank of St. Louis — A u n ifo rm rating system fo r app ra isin g co m p lia n c e w ith th e C o m m u n ity Rein ve stm e nt Act; — U nifo rm exam in a tion p ro ced ures fo r th e Real Estate S e ttle m e nt Procedures Act; — U nifo rm e xam ination p ro ced ures fo r R egulation D c o n c e rn in g reserve requirem ents; — M a n d a to ry accrual a cco u n tin g re p o rtin g req uirem en ts fo r banks w ith greater than $ 10 m illio n in assets by Ja nu ary 1. 1 9 8 2 , and fo r banks w ith less th an $ 10 m illio n in assets by January 1, 1 9 8 5 , plus a re co m m e n d a tio n to require banks to m aintain th e ir books on an accrual basis in c o n ju n c tio n w ith the rep orting schedule; — A U n ifo rm Bank P erform ance R eport fo r all insured co m m e rc ia l banks produced by the FDIC b e g in n in g D ecem ber 3 1 , and d istrib u te d to exam iners and fin a n cia l analysts o f the th re e federal banking agencies, to State bank supervisors w ho request it, and to all insured co m m e rcia l banks; — E lim in atio n o f Forms P-1 and P-2, w h ic h banks p re viously had to co m plete under the Bank P rotection Act. O ther o n g o in g p ro je cts o f the FFIEC in clu d e : a stu dy o f e xam in a tion p hiloso ph ies, p ro ce d u re s and co n ce p ts; d e ve lo p m e n t o f u n ifo rm e xa m in a tio n p ro ce d u re s fo r v a r ious c o n s u m e r p ro te c tio n laws and re g u la tio n s; id e n tific a tio n and d e ve lo p m e n t of c o re tra in in g m od ule s th a t are c o m m o n to all agencies; and a stu dy o f revision of Reports o f Incom e and C o n d itio n . (For a c o m p le te re p o rt on the FFIEC's activities, see th e C o u n cil's 1 981 A n nu a l Report). D u rin g 1 9 8 1 , the C o rp o ra tio n c o n tin u e d its p a rtic ip a tio n w ith th e O ffice o f the C o m p tro lle r o f th e C u rre n cy and th e Federal Reserve in an a nnual review o f shared n a tio n a l cre d its. These are c re d its a g g re g a tin g $ 2 0 m illio n o r m ore to one b o rro w e r th a t are p a rticip a te d in o r shared by tw o or m ore banks. The Shared N ational C re dit p ro g ra m pro vid e s u n ifo rm tre a tm e n t o f large m u ltib a n k c re d its in exam in a tion re p o rts and co nserves e xam in e r resources by e lim in a tin g d u p lic a te appraisals of shared cred its. For 1 9 8 1 , th e th re e a gencies agreed to the fo llo w in g : — M a jo r fin a n c e co m p a n ie s, o th e r th a n ca ptive fin a n c e co m p a n ie s, w ere in c lu d e d fo r th e firs t tim e. They w ere selected fro m a p u b lish ed list th a t in d i cated th e len din g banks, and g en e ra lly the bank w ith th e largest line was selected fo r review. — Banks w ere re q u ire d to ch arge o ff id e n tifie d losses by th e end o f th e q u a rte r in w h ic h th e y w ere n o tifie d o f the classifica tio n s. — Because o f e c o n o m ic c o n d itio n s d u rin g th e latter p art o f 1 981 all c riticize d lines o f c re d it w ere reevaluated d u rin g D ece m b e r 1 981 to review p ro ble m c re d its and to u pd ate assigned classifica tio n s. A lth o u g h the Shared N ational C re d it p ro g ra m has a tta in ed its tw o p rim a ry g oals of u n ifo rm tre a tm e n t by e xam iners o f large cre d its, and c o s t-e ffe c tiv e use o f exam iner resources, c o n tin u in g im p ro ve m e n ts to th e p ro g ra m w ill a llo w fo r a m ore useful data base and fu rth e r c o n se rva tio n o f e xam in e rs' tim e. A to ta l o f 1 87 FDICsupervised banks p a rtic ip a te d in shared n atio na l c re d its in 1 9 8 1 . Problem Banks As p art o f its bank m o n ito rin g e ffo rt, the FDIC m aintain s a c u rre n t list o f banks u n d e r th e U n ifo rm Financial In s titu tio n s Rating System as having unsafe or u n so u n d c o n d itio n s and a relative ly h igh p o s s ib ility o f fa ilu re . The n u m b e r o f banks 11 on the list, w h ic h peaked at 3 8 5 in N ovem ber 1 9 7 6 , d e clin e d ste a d ily th ro u g h yearend 1 9 8 0 . The n u m b e r o f banks on the list has rem ained sta tic d u rin g th is year and sto od at 2 2 3 by the end o f 1 9 8 1 . How ever, in lig h t o f the c u rre n t u n fa vo ra b le e c o n o m ic c o n d itio n s , th a t n u m b e r is e xpected to increase sligh tly. Because the FDIC insures bank dep osits, its p ro ble m list in c lu d e s n atio na l. State m em be r and insured State n o n m e m b e r banks. The C o m p tro lle r o f the C u rre n cy and the Federal Reserve m aintain separate su p e rviso ry lists o f the banks th e y oversee. H ow ever, all the lists are based on th e u n ifo rm ratin g system and any d iffe re n ce s a m o ng th e m g e n e ra lly re su lt fro m tim in g d iffe re n ce s in th e review process. S e ction 1 3(e) o f th e FDI A c t a uthorizes th e C o rp o ra tio n to take d ire c t a ctio n to red uce or avert a th re a te n e d loss to the C o rp o ra tio n and a rran ge a m e rge r o f a fa ile d or fa ilin g insured bank w ith a n o th e r insured bank. The C o rp o ra tio n may make loans secured in w h o le or in part by assets o f an open o r closed bank, o r it may p u rc h a s e any assets or gua ra ntee any o th e r insu re d bank a g a in st loss by reason of the FDIC a ssum in g th e lia b ilitie s and p u rch a sin g the assets o f an open bank. In N ovem ber and D ece m b e r o f 1 9 8 1 , FDIC assistance u nd er S e ction 1 3(e) was re q u ire d to a c c o m p lis h the m ergers o f th re e New York C ity savings banks having to ta l assets o f a p p ro x im a te ly $ 4 .9 b illio n . Estim ated d e p o s it payoffs, had these banks fa ile d and been closed, w o u ld have co st th e C o rp o ra tio n $ 1.4 b illio n . By c o m p a riso n , the present value o f th e FDIC's e s ti m ated losses resu ltin g fro m the assisted m ergers a m o unted to $ 7 4 6 .8 m illion . http://fraser.stlouisfed.org/ 12 Federal Reserve Bank of St. Louis DIVISION OF LIQUIDATION The D iv is io n o f L iq u id a tio n d isp o se s o f th e assets a c q u ire d by th e FDIC in a bank c lo s in g and uses th e p ro ce e d s to h e lp co ve r fu n d s d is b u rs e d in c o n n e c tio n w ith th e clo s e d bank. S u ch c lo s in g s are a c c o m p lis h e d by one o f th re e m e th o d s : a d ire c t p ayo ff, a p u rch a se and a s s u m p tio n , or th e g ra n tin g o f fin a n c ia l a ssista n ce to c o m p le te a m e rg e r w ith a h e a lth y bank. In 1 9 8 1 , ten insured banks, w ith to ta l deposits ranging fro m $ 2 .9 m illio n to $ 1 ,8 8 1 .2 m illio n failed. This co m p ares w ith ten bank fa ilu re s in 1 9 7 9 and ten in 1 9 8 0 . The C o rp o ra tio n used the d ire c t payoff m ethod in tw o cases, th e purchase and a ssum ptio n m ethod in five cases and co n d u cte d assisted m ergers of the other th re e banks. In both o f the payoff cases, the FDIC Board o f D ire ctors c o n clu d e d it co uld n ot arrange purchase and a ssum ptio n tra n sa ctio n s because o f u nce rta inty a bo ut th e vo lu m e and nature o f the failed bank's assets and liabilities. INSURED BANK FAILURES, 1934-1981 N u m b e r o f banks 70 60 50 40 30 20 10 0 '3 4 '3 8 '4 2 '4 6 D e posit A s s u m p tio n '5 0 '5 4 '5 8 I '6 2 D e posit Payoff '6 6 '7 0 '7 4 '7 8 The C o rp o ra tio n d isbursed $ 6 .9 b illio n to p ro te ct d e p o sito rs in 5 7 8 insured banks w ith d eposits a gg re ga ting $ 1 0 .0 5 b illio n fro m Ja nu ary 1. 1 9 3 4 th ro u g h D ecem ber 3 1, 1 9 8 1 . Total losses experienced by the C orpo ratio n, in c lu d in g losses c u rre n tly expected on assets in process o f liq u id a tio n , am ounted to $ 1.0 b illio n th ro u g h the end o f 1 9 8 1 . In the 5 7 8 fa ile d bank cases, 9 9 .9 p e rce n t o f the d e p o s ito rs had received o r w ere assured o f paym ents o f th e ir d e p o sits in fu ll at the end o f 1 9 8 1 , and 9 9 .8 p e rce n t o f th e to ta l d e p o sits had been paid o r m ade available to th em . In d e p o s it p ayo ff cases, 9 9 .3 p e rce n t o f d e p o s ito rs had received fu ll recovery, and a lth o u g h th e re covery o f u n in su re d d e p o sits varies fro m case to case, in th e a gg re ga te 9 7 .2 p e r ce nt o f to ta l d e p o sits had been paid or m ade available. A b o u t 71 p e rc e n t o f this a m o u n t w as p ro vid e d by FDIC paym ents o f insu re d am o un ts, w ith a d d itio n a l re c o v eries p ro vid e d fro m th e p ro cee ds o f liq u id a te d assets, offsets a ga in st ind eb te dn ess, and p le dg ed assets. A t th e end o f 1 9 8 1 , the D ivisio n o f L iq u id a tio n w as in the process o f liq u id a tin g 9 9 cases in 2 5 States and Puerto Rico and th e V irg in Islands. Four o f th ese are h an dled fro m th e W a s h in g to n O ffice and 9 5 are being h andled fro m 4 8 fie ld liq u i d a tio n o ffices. The D ivisio n has 4 3 0 e m ployees involved in th e liq u id a tio n o f fa ile d bank assets, o f w h ic h 2 0 0 are p e rm a n e n t em ployees and 2 3 0 are te m p o ra ry e m ployees w h o live in the area o f the closed bank. INSURED BANKS CLOSED DURING 1981 REQUIRING DISBURSEMENTS BY THE FEDERAL DEPOSIT INSURANCE CORPORATION Name and location Date of deposit payout, assumption or assisted merger Number of depositors or accounts Am ount of deposits (in m illons of dollars) The Des Plaines Bank Des Plaines, Illinois March 14. 1981 15,090 42.9 South Side Bank Chicago, Illinois March 14. 1981 9,767 25.8 Peoples Banking Company Boston, Georgia March 17, 1981 1,316 6.8 Northwest Commerce Bank North Bend, Oregon June 19, 1981 1,980 4.3 Southwestern Bank Tucson, Arizona September 25. 1 981 1,793 4.6 High Lakes Com m unity Bank La Pine, Oregon October 23. 1 981 1,500 2.9 M idtown National Bank Pueblo, Colorado October 30. 1 981 1,484 9.6 Greenwich Savings Bank* New York, New York November 4, 1 981 2 9 9,54 6 1.881.2 Central Savings Bank* New York, New York December 4, 1 981 14 4 .0 0 0 675.7 Union Dime Savings Bank * New York. New York December 18, 1981 2 1 6 .6 8 5 1.172.2 'Merged with financial assistance from FDIC into operating banks to prevent probable failure. http://fraser.stlouisfed.org/ 14 Federal Reserve Bank of St. Louis LIQUIDATION ACTIVITY— FEDERAL DEPOSIT INSURANCE CORPORATION, 1970-1981 M illions of dollars 1970 '71 '7 2 '73 '7 4 '75 '7 6 '7 7 '7 8 '7 9 '8 0 '81 Number All n atio na l banks and S tate -ch a rte re d banks th a t are v o lu n ta rily m em bers o f the Federal Reserve System are req uired by law to o b ta in d e p o s it in su ra n ce fro m the FDIC. S ta te -ch a rte re d banks th a t are n ot m em bers o f the Federal Reserve System m ay p a rtic ip a te in th e fe de ra l d e p o sit insu ra n ce p ro gram . On D ece m b e r 3 1, 1 9 8 1 , 9 6 p e rc e n t o f all co m m e rcia l banks in th e U.S., and 7 5 p e rc e n t o f all m utu al sav ings banks, w ere p ro te cte d by federal d e p o s it insurance. D eposits are insured up to $ 1 0 0 ,0 0 0 in these banks. The tw o p rin c ip a l m eth od s available to p ro te c t d e p o s ito rs w he n insured banks fail are the d e p o s it a ssu m p tio n m ethod and the d ire c t p ayo ff m ethod. In th e case o f a d e p o s it a ssu m p tio n , d e p o s ito rs ’ a cco u n ts in th e fa ile d bank becom e d e p o s it a cc o u n ts in the assum ing bank. All d e p o s ito rs receive fu ll p ro te c tio n w ith m in im a l, or no d is ru p tio n o f ban kin g services to th e co m m u n ity . W hen th e d e p o s it p ayo ff m eth is used, th e FDIC pays d ire c tly to d e p o sito rs the net a m o u n t e lig ib le fo r Digitized for od FRASER 15 DEPOSITS AN D LOSSES IN A L L INSURED BANKS REQUIRING DISBURSEMENTS BY FDIC, 1934-1981 Total Deposits $ 10 .05 billion D isbursem ents by FDIC* $6.9 billion Losses to FDIC $ 1.0 billion or not yet available to depositors $ 15 .3 m illio n 'In c lu d e s colle ction s and disbu rsem ents by liq u id a to rs in th e fie ld ($1.5 billion) w h ic h w e re previously excluded from th is chart. d e p o s it in su ra n ce usua lly w ith in five to seven days fo llo w in g the bank clo s in g . The FDIC pays on th e u nin su re d p o rtio n s o f d e p o sits fro m the pro cee ds o f liq u id a te d assets and o th e r sources. Of the 5 7 8 banks th a t have fa ile d since 1 9 3 4 , 2 6 6 w ere d e p o s it a ssu m p tio n cases and 31 2 w ere d ire c t p ayo ff cases. The FDIC is a u th o riz e d u n d e r S e c tio n 1 3(e) o f th e Federal D e p o s it In s u ra n c e A c t to a ssist fin a n c ia lly a p u rch a se and a s s u m p tio n tra n s a c tio n w h e n e v e r th e B oard o f D ire c to rs d e te rm in e s th a t th e e xp e cte d loss o r risk to th e C o rp o ra tio n th e re b y w ill be re d u c e d . S e c tio n 1 3(e) also o ffe rs a th ird o p tio n — fin a n c ia l a s s ista n ce to fa c ilita te th e m e rg e r o f a fa ilin g b an k p rio r to th e bank's c lo s u re . T his a p p ro a c h is d e s c rib e d on page 1 2 u n d e r "P ro b le m B anks." http://fraser.stlouisfed.org/ 16Reserve Bank of St. Louis Federal DIVISION OF ACCOUNTING AND CORPORATE SERVICES The O ffice o f th e C o n tro lle r and th e D ivisio n o f M a n a g e m e n t System s and Financial S ta tistics w ere m erged in 1981 to fo rm th e D ivision o f A c c o u n tin g and C orpo rate Services. This n ew ly-crea te d D ivisio n is re sp o n sib le fo r all fin a n c e s o f the C o rp o ra tio n and fo r a d m in is tra tiv e and s u p p o rt services in c lu d in g b u d g e t p re pa ra tion , a c c o u n tin g , bank sta tistics, c o m p u te r su p p o rt, b u ild in g m ainten an ce, te le c o m m u n icatio ns, lib ra ry services, g ra p h ic design and p rin tin g . Income and Expenses Gross revenues fo r 1 981 am ounted to $2.1 billion, the highest in the history o f the C orporation. Of this am o un t $1.1 billion represents interest earned on investments, and $ 1 .0 billion is fro m assessments, interest on notes receivable and other sources. The C o rp o ra tio n 's expenses in 1 981 in clu d e d $ 8 .4 m illio n in c o n n e c tio n w ith the year's seven bank fa ilu re s, and $ 3 7 3 .6 m illio n in the fo rm o f m erge r assistance to th re e savings banks. Total d isb u rse m e n ts o f $ 3 8 2 m illio n rep re sen te d 31.1 p ercen t o f 1 981 net inco m e . The FDIC's a d m in istra tive expenses in 1 981 w ere $ 1 2 7 .2 m illio n , an increase of 8 .2 p e rce n t over 1 9 8 0 , co m p a re d w ith an increase o f 1 2 .2 p e rc e n t fo r overall fe d eral o utla ys and an e stim a ted increase o f 8 .9 p e rce n t in th e c o n s u m e r p rice index. This was th e th ird successive year in w h ic h th e C o rp o ra tio n , th ro u g h tig h t c o n tro ls and a v ig o ro u s b u d g e tin g process, held its rate o f e x p e n d itu re increase b e lo w both th e rate o f in fla tio n and the increased co st o f the fe de ra l g o v e rn m e n t as a w hole. The C o rp o ra tio n 's in su ra n ce expenses increased d ra m a tic a lly in 1981 due to the m erge r assistance p ro vid e d fo r th e G reenw ich Savings Bank ($ 4 2 1 .5 m illio n ), C en tral Savings Bank ($ 1 5 9 .3 m illio n ), and U nion D im e Savings Bank ($ 1 6 6 .0 m illio n ). This assistance was by fa r the m ost expensive in th e h is to ry o f the FDIC, w h ic h in 4 7 years o f o p e ra tio n had sustained to ta l losses o f $30 1 m illio n in 5 6 8 bank fa il ures. How ever, had these th re e banks failed and been closed, th e c o s t to the C o rp o ra tio n w o u ld have been $ 1.4 b illio n instead o f $ 7 4 7 m illio n . The losses sustained by the.FD IC in 1981 w ill re su lt in a net assessm ent c re d it to banks o f $ 11 7 m illio n , c o m p a re d to $ 5 2 1 m illio n in 1 9 8 0 , a re d u c tio n o f a lm o st 8 0 p ercent. The 1 981 c re d it represents an e ffe ctive assessm ent rate to the banks o f 1 / 1 4 o f one p e rce n t o f assessable d eposits, co m p a re d to 1 / 2 7 o f one p e rce n t in 1 9 8 0 . The 1 981 assessm ent cre d its rep re sen t 1 1 .2 8 8 8 3 p e rce n t o f to ta l assess m ents, c o m p a re d to 5 4 .7 8 p e rce n t in 1 9 8 0 . Deposit Insurance Fund D espite th e e x tra o rd in a ry expenses re su ltin g fro m m erge r assistance to th e th re e large New York C ity savings banks, th e d e p o sit in su ra n ce fu n d increased d u rin g 1981 to a new year-end high o f $ 1 2 .2 b illio n , an increase o f $ 1 .2 b illio n or 11.1 p e rce n t over 1 9 8 0 . This fu n d is fu rth e r backed w ith s ta tu to ry a u th o rity to b o rro w $3 b illio n fro m the U.S. Treasury, an a u th o rity th e FDIC has never exercised. The C o rp o ra tio n s ig n ific a n tly sh o rte n e d th e average m a tu rity date o f its investm ents in U.S. T reasury se cu ritie s fro m ju s t over fo u r years to tw o years and ten m onths. This a c tio n w as taken to fu rth e r im p rove the liq u id ity o f the fu n d and to p ut the FDIC in p o s itio n to react as re q u ire d to the situ a tio n in the m utu al savings bank ind ustry. The p o rtfo lio , w h ic h is by fa r th e large st single asset in th e d e p o s it in s u r ance fu n d , a m o u n te d to $ 1 2 .2 b illio n at the end o f 1 9 8 1 , w ith a d e p re c ia tio n of $1.1 b illio n caused by th e d iffe re n c e betw een the book value o f assets in the p o rt fo lio and th e ir fa ir m arket value. 17 The FDIC had a cash flo w o f a b o u t $ 2 .0 7 b illio n ste m m ing fro m its o pe ra tio n s, w h ic h represents a net increase o f $ 6 6 5 m illio n over 1 9 8 0 . Failed bank assets u nd er liq u id a tio n had an appraised value o f a b o u t $661.1 m illio n at the end o f 1981. The D e p o sito ry In s titu tio n s D e re g u la tio n and M o n e ta ry C o n tro l A ct o f 1 9 8 0 , w h ic h estab lish ed an assessm ent c re d it o f 6 0 p e rce n t o f net assessm ent inco m e , also auth orized the FDIC Board o f D ire cto rs to reduce th a t p ercen ta ge if the ra tio o f the in su ra n ce fu n d to insured d e p o sits fa lls b e lo w 1 .1 0 p ercent. The law p e rm its th e Board to increase the banks' share w he ne ver the ratio exceeds 1 .2 5 p ercent, and m andates an increase w he n th e ratio exceeds 1 .4 0 p ercent. The ratio was e s ti m ated to be 1 .1 9 p e rce n t at the end o f 1 9 8 1 , co m p a re d to 1 .1 5 p e rce n t in 1 9 8 0 . The c o m p le te fin a n c ia l sta te m e nt o f the FDIC fo r 1981 begins on page 26. Management Systems and Financial Analysis The C o rp o ra tio n 's co m p u te rize d data base co n ta in s c o m p re h e n sive bank s tru c tu re and fin a n c ia l files on each o f the insured co m m e rcia l and m utu al savings banks in th e U.S. This in fo rm a tio n is used by FDIC exam iners and State b anking d e p a rtm e n ts linked to th e base to m o n ito r banks betw een e xam in a tion s and to signal p ote ntia l d iffic u ltie s . The FDIC sh ares its p ro c e sse d bank d ata w ith Federal and S tate a u th o ritie s th ro u g h a te le p ro c e s s in g system accessed th ro u g h o n -lin e te rm in a ls . In a d d itio n to the C o r p o ra tio n 's n e tw o rk o f te rm in a ls serving its W a s h in g to n and reg io n al o ffices, te rm i nals also are located in c o o p e ra tin g State banking d e p a rtm e n ts and Federal Reserve banks, the Federal Reserve Board, the O ffice o f th e C o m p tro lle r o f th e C u r ren cy and th e Ju stice D ep artm en t. The system gives FDIC reg io n al o ffice s im m e diate access to the bank data base and to the In te grate d M o n ito rin g System (IMS). The IM S p e rfo rm s c e rta in basic tests fro m data in banks' R eports o f C o n d itio n and Incom e, w h ic h enables th e C o rp o ra tio n to id e n tify banks (or p a rtic u la r aspects o f a bank's o p e ra tio n ) th a t m e rit close r su p e rv is o ry a tte n tio n . IMS re p o rts are s u p p le m e n te d by the C om pa rative P erform ance R eport (CPR), w h ic h show s b oth in d ivid u a l bank and peer g ro u p data. The C o rp o ra tio n also d e ve l oped, u nd er FFIEC auspices, a U n ifo rm Bank P erform ance R eport fo r all insured c o m m e rc ia l banks. http://fraser.stlouisfed.org/ 18Reserve Bank of St. Louis Federal LEGAL DIVISION The Legal D ivisio n fu rn is h e s general legal services to the FDIC's Board o f D irectors, d ivisio n s and o ffices. In th is role, it analyzes and in te rp re ts the laws and re g u la tio n s a ffe c tin g th e C o rp o ra tio n and the banks the FDIC supervises. Its re s p o n s ib ilitie s also in c lu d e the d ra ftin g o f re g u la tio n s, p ro s e c u tio n o f e n fo rc e m e n t a ctio n s against banks and bankers and p a rtic ip a tio n in litig a tio n a rising fro m the C o rp o ra tio n 's liq u id a tio n a ctivities. D u rin g the year, the C o rp o ra tio n w as a p p o in te d receiver o f seven closed banks. N um ero us suits w ere b ro u g h t to tria l or settled d u rin g the year. Flowever, m any new su its w ere in s titu te d and th e re rem ain p e n d in g in excess o f 4 ,0 0 0 cases co n n e c te d w ith the C o rp o ra tio n 's bank liq u id a tio n a ctivities. The Legal D ivisio n c o n tin u e s to review FDIC's re g u la tio n s in o rd e r to reduce the re g u la to ry and p a p e rw o rk b urd e n on banks and th e p u b lic. As a resu lt o f th is review, e ig h t re g u la tio n s have been review ed fo r s im p lific a tio n and th e re p o rtin g re q u ire m e n ts o f tw o re g u la tio n s have been e lim in a te d . Enforcement Proceedings The a u th o rity to o rd e r th e c o rre c tio n o f im p ro p e r ban kin g p ra ctice s is an essential p art o f th e FDIC's e ffo rts to p ro m o te a safe and so un d ban kin g system . If a bank fa ils to c o rre c t an unsafe or u n so un d p ra ctice or a v io la tio n o f a law, rule, or re g u la tio n or fa ils to c o m p ly w ith a w ritte n a gre e m e n t w ith th e FDIC, the FDIC may, after n o tice and o p p o rtu n ity fo r hearing, issue a ce a se -a n d -d e sist o rd e r d ire c tin g sp e c ific c o rre c tiv e steps. If th e bank does n o t co m p ly, the FDIC m ay seek e n fo rc e m e n t o f th e o rd e r in th e a p p ro p ria te U.S. d is tric t c o u rt o r levy a fine. The FDIC's a u th o rity to issue ce a se -a n d -d e sist o rd ers is fo u n d in S e ction s 8(b) and 8(c) o f th e FDI Act. D u rin g 1 9 8 1 , th e Board o f D ire c to rs a u th orized 3 7 such a ction s, re su ltin g in 2 8 fin a l o rd e rs u n d e r S e ction 8(b) and one te m p o ra ry o rd er u nd er S e ction 8(c). E ight a ctio n s w ere still p e n d in g at year-end. In a d d itio n , th ere w ere nine fin a l o rd ers issued in 1981 ste m m in g fro m ce a se -a n d -d e sist p ro c e e d ings begun in 1 9 8 0 . The FDIC levied th re e civil m on ey pen alties in 1 9 8 1 . In tw o instances, th e assessed fin es w ere paid. In one case, th e assessm ent o f a m on ey p en alty w as n ot paid and e n fo rc e m e n t o f th e o rd e r has been refe rre d to th e U.S. a tto rn e y fo r c o lle c tio n . The FDIC firs t used its a u th o rity to issue ce a se -a n d -d e sist ord ers to c o rre c t w ea k nesses or c o m p lia n c e v io la tio n s in banks in 1 97 1, and fro m 1971 th ro u g h 1 9 7 5 issued 3 7 orders. In the last six years, it has issued 2 5 5 orders. In 1 9 8 1 , nine w ere to c o rre c t v io la tio n s o f co n s u m e r p ro te c tio n laws and re g u la tio n s and 2 8 w ere p rim a rily to c o rre c t u n s a tis fa c to ry fin a n c ia l c o n d itio n s or m an ag em en t practices. U nder the FDI Act, a bank may seek ju d ic ia l review o f a fin a l FDIC o rd er to ceaseand-desist. One such appeal was filed in 1 98 1. The FDIC also is a u th orized u n d e r S e ction 8(a) o f th e FDI A c t to in itia te te rm in a tio n o f-in s u ra n c e p ro ce e d in g s if it fin d s th a t a bank is in an unsafe or u n so un d fin a n c ia l c o n d itio n . If a bank does n ot c o rre c t its c o n d itio n w ith in a p re scrib ed period, an a d m in is tra tive hearing is held d u rin g w h ic h th e bank m ay resp on d to the charges. If th e ch arge s are u ph eld, the FDIC m ay te rm in a te th e bank's insu ra n ce. The d e p o s i to rs are th e n re q u ire d to be n o tifie d o f th e te rm in a tio n , b u t d e p o s its (less su bse q u e n t w ith d ra w a ls ) c o n tin u e to be insu re d fo r tw o years. 19 CEASE-AND-DESIST ORDERS AND ACTIONS TO CORRECT SPECIFIC UNSAFE OR UNSOUND PRACTICES OR VIOLATIONS OF LAW OR REGULATIONS: 1978, 1979, 1980 AND 1981 Actions authorized by Board of D ire cto rs................................. ................... 1978 1981 1980 1979 37 36 59 51 22 Actions in negotiation at end of y e a r ........................................ ................... 8 11 16 Cease-and-desist orders outstanding at beginning of year-total..................................................................................... ................... Section 8 (b )................................................................................ ................... Section 8 (c )................................................................................ ................... 90 88 2 88 88 0 70 67 3 65 63 2 Cease-and-desist orders initiated and issued during year .... ................... Section 8 (b )................................................................................ ................... Section 8 ( c ) ................................................................................ ................... 29 28 1 28 25 3 42 37 6 31 26 5 Cease-and-desist orders issued in actions authorized in prior year ................................................................................ ................... Section 8 (b )................................................................................ .................. 9 9 13 13 15 15 6 6 Cease-and-desist orders issued during ye a r-to ta l................... ................... 38 41 57 37 Cease-and-desist orders term inated-total ................................ ................... Section 8 (b )................................................................................ ................... Section 8 ( c ) ................................................................................ ................... 50 47 3 39 38 1 40 31 9 32 28 4 Cease-and-desist orders in force at end of yea r-to tal............. ................... Section 8 (b )................................................................................ ................... Section 8 ( c ) ................................................................................ .............. 78 78 0 90 88 2 88 88 0 70 67 3 The FDIC in 1 981 initiated three term ination-of-insurance proceedings, tw o of w hich were still pending at the end of the year. One became m oot by the failure of the bank involved. From 1 9 3 4 th ro u g h 1 9 8 1 , the FDIC has taken action under Section 8(a) against 2 6 3 banks, and 261 cases w ere closed at the end o f 1 9 8 1 . In slig h tly less th an half o f the closed cases, the banks involved made th e necessary co rrectio n. In m ost o f the rem aining cases, the banks w ere absorbed by other banks or ceased operations before a date was set to te rm ina te insurance. In 1 5 cases, insurance was term inated or the bank ceased operations after a date was fixed to te rm ina te its insurance. U nder S e ction 8(e) o f th e FDI Act, th e FDIC m ay rem ove an o ffic e r, d ire c to r or o th e r person p a rtic ip a tin g in th e m an ag em en t o f an F D IC -supervised bank if the person has (1) v io la te d a law, rule, re g u la tio n or fin a l ce a se -a n d -d e sist o rd er, (2) engaged in unsafe or u n so u n d ban kin g p ra ctices, or (3) breached his o r her fid u c ia ry duty. The in d iv id u a l's a ctio n m ust involve personal d ish o n e s ty o r a w illfu l d isre g a rd fo r the safety and so un dn ess o f th e bank. Also, the a ctio n m ust entail s u b s ta n tia l fin a n cial dam age to th e bank, se rio u sly p re ju d ic e the interests o f its d e p o s ito rs or result in fin a n c ia l gain to th e in d ivid u a l. Two fin a l ord ers w ere issued u n d e r th is s e ctio n in 1 9 8 1 , w h ic h w ere in itia te d in 1 9 8 0 . The very sm all n u m b e r o f o ffic ia l a ctio n s a c tu ally re q uired is in d ica tive o f the high degree o f v o lu n ta ry c o o p e ra tio n betw een s u p e rviso rs and bankers. S e ction 1 9 o f th e FDI A ct p ro h ib its anyone co n victe d o f a c rim in a l o ffe n se invo lvin g d is h o n e s ty or b reach o f tru s t fro m serving as a d ire c to r, o ffic e r or e m ployee o f any insu re d bank w ith o u t th e FDIC's co nse nt. D u rin g 1 9 8 1 , the FDIC co n s id e re d 56 requests u n d e r S e ction 1 9 fo r p e rm issio n to serve, g ra n tin g c o n s e n t on all b u t tw o. The age and evid en ce o f re h a b ilita tio n o f the in d ivid u a l re q ue sting p e rm issio n to serve, and th e se n sitivity o f th e desired p o sitio n are im p o rta n t fa c to rs FDIC c o n s id ers for in FRASER a S e ction 1 9 request. Digitized http://fraser.stlouisfed.org/ 20Reserve Bank of St. Louis Federal DIVISION OF RESEARCH AND STRATEGIC PLANNING The D ivision o f Research and S trategic Planning provides research and analyses to the Board o f D ire ctors and to o th e r d ivision s and o ffices o f the C o rp o ra tio n on c u r rent and em e rg ing issues, e co n o m ic and fin a n cia l developm ents, and p olicy issues related to the C o rp o ra tio n 's legislative, reg ula tory and a dm in istra tive activities. The title o f th e D ivision was changed in 1 981 to Research and S tra te gic Planning to m ore a ccu ra te ly represent the b ro ad er nature o f its resp on sibilitie s. The c o n d itio n and p ro ble m s o f insured m utual savings banks d o m in a ted the D i vision 's a ctivity d u rin g 1 9 8 1 . S taff m em bers prepared fin a n c ia l data fo r C orpo ratio n o ffic ia ls m o n ito rin g the c u rre n t p erform an ce and fu tu re prospects o f those banks. V arious D ivision studies dealt w ith the cost to the FDIC and fin a n cia l im p lica tio n s fo r these in s titu tio n s o f alternative assistance program s. O ther analyses co nce rn ed p ro posed new o p e ra ting pow ers and ways to im prove reserves o f th rift in s titu tio n s, tax incentives to e n co urag e th e flo w s o f savings to th o se in s titu tio n s and issues involved in the conve rsio n o f m utual banks to th e stock fo rm o f organization. The D ivision also su pp o rte d the activities o f the D ep osito ry In s titu tio n s D eregulation C om m ittee (DIDC), established under the D ep osito ry In stitu tio n s D ereg u la tion and M on eta ry C o n tro l A ct o f 1 9 8 0 . M em bers o f the staff assisted th e C hairm an o f the C o rp o ra tio n in his ca pa city as a m em ber o f DIDC, and prepared papers relating to v a riou s C om m ittee action s in clu d in g : revisions o f d e p o s it ce ilin g interest rates and rem oval o f the cap on the m axim um rate o f interest payable on th e Small Saver C er tifica te ; crea tion o f a new IRA-Keogh a ccou nt; p re pa ra tion o f im p le m e n tin g re g ula tio n s fo r th e All Savers C ertificate, and a d m in istra tio n o f o the r regulations, such as th ose g o ve rn ing the o ffe rin g o f d e p o sit a c c o u n t prem ium s. Preparation o f C ongressional te stim o n y and w o rk on o th e r le g isla tion -re late d m at ters was a th ird m ajor D ivision a ctivity d u rin g th e year. On b eh alf o f th e C hairm an, the D ire c to r o f the D ivision te stified on tw o bills to provide fo r federal pre em ptio n of State usury ceilings. The D ivision sent to C ongress a study, requested by the Senate Banking, H ousing and Urban A ffairs C om m ittee, on c ro s s -in d u s try takeovers invo lv ing d iffe re n t types o f fin a n cia l in stitu tio n s. In a n o th e r area, sta ff m em bers represented the FDIC on an interag en cy task fo rce stu dy o f sm all business c re d it needs. This study is required under the Small Business D evelopm ent A ct o f 1 9 8 0 . D ivision staffers assisted o th e r C o rp o ra tio n d ivision s and o ffices on diverse a ssig n m ents. Using reg ula r bank reports, the D ivision assem bled and evaluated in fo rm a tio n p e rta in in g to th e p erform an ce o f sm all banks and the overall banking system, and also p articip a te d in an in te r-d ivisio n review o f re p o rtin g form s. O ther internal pro je cts in clu d e d : the va lu a tio n o f certain assets acqu ire d in bank failures; p re d ic tio n s o f bids on p urcha se and a ssu m p tio n tra n sa ctio n s ; studies o f d iffe re n ce s in c a p ital ratios o f co m m ercial banks; a statistical study o f in te r-re g io n a l exam iner p e rfo rm ance ratings; analysis o f a p rospective purchase o f o ffice space fo r th e San F rancisco regional headquarters, and d e te rm in a tio n o f the costs to sm all banks of c o nve rsio n fro m cash-basis to accrual a cco u n tin g . A d d itio n a l studies w ere co nce rn ed w ith fo re ig n bank a c q u is itio n s o f U.S. banks in the lig h t o f the In te rn atio na l Banking Act, recent deve lo pm e nts in fin a n cia l services offered by d e p o sito ry and n o n d e p o sito ry in stitu tio n s, effects on the banking system s tru c tu re o f te c h n o lo g ic a l changes and p roposed m ethods of evaluating bank risks as a basis fo r levying d e p o sit insu ra n ce assessm ents. 21 EXECUTIVE AND ADMINISTRATIVE OFFICES Office of Personnel Management The C o rp o ra tio n 's O ffice o f Personnel M a n a g e m e n t (OPM) is re sp o n sib le fo r p ro gram s fo r the h irin g , a d va n ce m e n t and re c o g n itio n o f FDIC em ployees. These p ro g ram s in c lu d e d e ve lo p m e n t and a d m in is tra tio n o f em ployee b en efit program s, re c ru itm e n t and pla cem e nt, and p o s itio n and pay m anagem ent. In 1 9 8 1 , OPM's re s p o n s ib ilitie s w ere expanded to in c lu d e la b o r-m a n a g e m e n t relations, grievances, u pw ard m o b ility and th e Em ployee A d viso ry C ouncil. Employment FDIC e m p lo y m e n t at th e end o f 1 981 to ta le d 3 ,3 9 4 . This in c lu d e d 3 4 2 n o n p e r m an en t e m ployees such as co lle g e s tu d e n ts p a rtic ip a tin g in a w o rk -s tu d y p ro g ra m and cle ric a l w o rke rs em p lo ye d on a s h o rt-te rm or as-needed basis. A b o u t 7 0 p e r ce nt o f th e C o rp o ra tio n 's em ployees are assigned to the D ivisio n o f Bank S u p e rv i sion, o f w h ic h 7 7 p e rce n t are fie ld exam iners. D uring th e year, th e n u m b e r of co m m is s io n e d exam in e rs increased fro m 1 ,2 4 9 to 1 ,3 4 0 . The 1 981 tu rn o v e r rate fo r fie ld e xam iners w as 8 .0 percent, c o m p a re d to 8 .9 p e r c e n t fo r 1 9 8 0 . Of the 1 4 9 e xam iners w h o resigned d u rin g th e year, 2 4 fo u n d e m p lo y m e n t w ith banks. For all em ployees — exclusive o f te m p o ra ry fie ld p e rs o n nel, co lle g e stu d e n ts in the FDIC's co o p e ra tive w o rk -s tu d y p ro g ra m and te m p o ra ry su m m e r p e rson ne l — the tu rn o v e r rate w as 1 2 .8 p e rce n t c o m p a re d to 1 3 .8 p ercen t in 1 9 8 0 . NUMBER OF OFFICIALS AND EMPLOYEES OF THE FEDERAL DEPOSIT INSURANCE CORPORATION, DECEMBER 1980 AND 1981 Unit Total 1981 T otal...................................................... 3,394 Directors ......................................... 2 11 Executive O ffices............................ Legal Division ................................ 106 Division of Research 30 and Strategic P lanning............. Division of Liquid a tio n ................. 4 29 Division of Bank Supervision................................. 2,359 Division of Accounting 164 and Corporate S ervices............ Office of Management Systems 187 and Financial Analysis ............. Office of Corporate Audits .......................................... 31 Office of Equal Employment 7 O pportunity ................................ Office of Personnel M anagem ent............................... 38 Office of Congressional Relations and Public A ffa irs ...................... 15 Office of Executive Secretary .................................... 15 http://fraser.stlouisfed.org/ 22 Federal Reserve Bank of St. Louis 1980 Washi ngton office 1980 1981 Regional and field offices 1981 1980 3,644 2 14 107 928 2 11 88 982 2 14 91 2,466 0 0 18 2,662 0 0 16 33 460 30 199 33 207 0 230 0 253 2,5 44 158 167 2,201 2,377 1 76 147 160 17 16 187 187 187 0 0 33 31 33 0 0 10 7 10 0 0 49 38 49 0 0 15 15 15 0 0 14 15 14 0 0 Increased em phasis th is year on h irin g th e h a n d ica p p e d or disa ble d resulted in the a p p o in tm e n t o f 1 2 su ch persons in c lu d in g several veterans. H iring fo r Bank Exam iner (Trainee) u n d e r U.S. delegated a u th o rity fro m th e U.S. O ffice o f Personnel M a n a g e m e n t has been lim ite d fo r the past year. There c o n tin u e s to be a g re ate r rate o f success u nd er FDIC's scree nin g e xa m in a tio n in te rm s o f q u a lity o f ca n d id a te s in c lu d in g th a t o f m in o ritie s and w o m e n th a n w h a t was expe rie nce d u n d e r e xa m in a tio n s c o n d u c te d by th e U.S. OPM. The open p e rio d fo r 1 981 w as held fro m February 2 -2 7 and m ore th a n 3 0 0 ca n d id a te s app lie d, of w h ic h 1 5 p e rce n t w ere m in o ritie s and 2 4 p e rce n t w ere w om en . In 1 9 8 1 ,8 2 va can cie s w ere fille d , 1 1 p e rce n t o f w h ic h w ere m in o rity m em bers and 2 5 p ercen t w ere w om en . Training OPM c o o rd in a te s a va riety o f in -h o u se courses to better e q u ip FDIC em ployees to p e rfo rm th e ir assigned d utie s and advance in th e ir ca re er fields. For the m ost part, these co urses are d eveloped and presented by in s tru c to rs d ra w n fro m the FDIC fie ld and h e a dq ua rters staff. T ra inin g in 1981 e nco m p asse d su b je cts such as: p erson ne l m an ag em en t fo r su pe rviso rs; ca re er d e ve lo p m e n t; la b o r relations; re p o rt w ritin g ; c o m m u n ic a tio n ; s ta tis tic s fo r n o n -s ta tis tic ia n s ; AD P fo r m anagers and non -A D P p ro fessio na ls; p re re tire m e n t p la n n in g ; m e m o ry d eve lo pm e nt; tim e m anagem ent, and equal e m p lo y m ent o p p o rtu n ity . C ourses d eveloped fo r p re se n ta tio n in 1 9 8 2 in c lu d e business English and p e rfo rm a n ce appraisal. Employee Relations In 1 9 8 1 , th e C o rp o ra tio n a p p ro ve d a revised in c e n tiv e a w a rd s p ro g ra m th a t p ro vide s inc re a se d cash a w a rd s to e m p lo ye e s fo r b e n e fic ia l s u g g e s tio n s and o u t s ta n d in g p e rfo rm a n c e . The revised p ro g ra m a lso e sta b lis h e d a m ore c o m p re h e n sive se rvice a w ard p ro g ra m w h ic h w ill give m ore fre q u e n t and m o re ta n g ib le re c o g n itio n to e m p lo ye e s fo r lo n g C o rp o ra tio n service. R e c ip ie n ts o f th e 198 1 H o n o ra ry A w a rd s w e re as fo llo w s : Award Recipient N an cy K. R ector E dw ard J. R oddy C h a irm a n 's D o n a ld C. G o rm a n, C h ic a g o Ray B. G ardner, M e m p h is M a ry S. D ixon , DBS In 1 9 8 1 , the C o rp o ra tio n estab lish ed a V ision Care Plan fo r em ployees. This plan p ro vid e s a sch e d u le o f p aym en t fo r eye e xam in a tion s, fram es and lenses. The c o v erage p ro vid e d u n d e r the existin g D ental Insurance Plan was increased in re c o g n i tio n o f th e in cre a sin g costs o f d en tal services. Classification The a n n u a l m a in te n a n c e re vie w o f C o rp o ra tio n p o s itio n d e s c rip tio n s and c la s s ifi c a tio n is c o n tin u in g . T his p ro g ra m is a m a jo r e ffo rt to assure th e a c c u ra c y o f the C o rp o ra tio n 's c la s s ific a tio n and pay system . The P o sition M a n a g e m e n t and C la s s ific a tio n S ta ff c o m p le te d a re v ie w o f th e m is sion , o rg a n iz a tio n and p o s itio n c la s s ific a tio n o f all DBS, W a s h in g to n , D.C. s ta ff to a s c e rta in re la tio n s h ip s w ith fie ld fu n c tio n s and to id e n tify sh a rp , n o n c o n flic tin g d e lin e a tio n s o f d u tie s. E xtensive p o s itio n m a n a g e m e n t and c la s s ific a tio n a na lysis and a d v is o ry review s have for and c o n tin u e to be give n to DBS in th e re a lig n m e n t and g ra d in g o f fie ld o ffi Digitized FRASER http://fraser.stlouisfed.org/ 23 Federal Reserve Bank of St. Louis ces. M a jo r changes have taken palce in A tlanta. Om aha. New York and C olum bus, and m in o r changes o ccu rre d in Dallas. M in n e a p o lis and C hicago. H ealth U n it The Health U nit c o n tin u e d to tre a t in ju re d or ill em ployees and to sp o n so r im p o rta n t preventive health services. Special p ro g ra m s co n d u c te d by the u n it in clu d e d tra in in g in c a rd io p u lm o n a ry resu scitatio n and firs t aid. The u n it also sp on sored a health fair, blo od pressure screening, a sto p -sm o kin g p ro gram and g la uco m a d e te ctio n tests. Office of Equal Employment Opportunity The O ffic e o f Equal E m p lo y m e n t O p p o rtu n ity (OEEO) is th e s u c c e s s o r to the O ffic e o f E m p lo yee R ela tion s fo llo w in g tra n s fe r o f la b o r re la tio n s and u p w a rd m o b ility to th e O ffic e o f P ersonnel M a n a g e m e n t in S e p te m b e r 1 9 8 1 . The re s p o n s ib ilitie s o f OEEO in vo lve a ffirm a tiv e p ro g ra m s fo r th e e m p lo y m e n t and a d v a n c e m e n t o f w o m e n and m in o ritie s in th e FDIC's w o rk fo rc e . In 1 9 8 1 , th e OEEO p re p a re d th e C o rp o ra tio n 's M u lti-Y e a r A ffirm a tiv e A c tio n Plans, d e v e lo p e d a c o m p u te riz e d w o rk fo rc e re p o rtin g system , and p ro v id e d d is c rim in a tio n p re c o m p la in t c o u n s e lin g and c o m p la in t p ro c e s s in g . As a re s u lt o f several re o rg a n iz a tio n s to a ch ie ve im p ro v e d e ffic ie n c ie s and e ffe c tiv e n e s s , and p e rs o n n e l c e ilin g s o n e m p lo y m e n t, th e G eneral G raded w o rk fo rc e d e c re a s e d by m o re th a n 2 0 0 p o s itio n s d u rin g 1 9 8 1 . D u rin g th e sam e p e rio d , th e p e rc e n ta g e o f w o m e n in th e FDIC w o rk fo rc e d e c lin e d fro m 3 1 .6 p e rc e n t to 3 0 .6 p e rc e n t. The p e rc e n ta g e re p re s e n ta tio n o f m in o ritie s d e c lin e d fro m 1 5 .7 p e rc e n t to 1 5.1 p e rce n t. Office of Corporate Audits The O ffic e o f C o rp o ra te A u d its (OCA) has c o m p le te in te rn a l a u d it and in v e s tig a tiv e re s p o n s ib ility fo r th e FDIC's fin a n c ia l and o p e ra tio n a l a c tiv itie s . O C A a u d its a s sist th e B o ard o f D ire c to rs and s ta ff m a n a g e m e n t o ffic ia ls in a p p ly in g re s o u r ces e ffic ie n tly , e c o n o m ic a lly and e ffe c tiv e ly . In 1 9 8 1 , O CA p e rfo rm e d a u d its to d e te rm in e w h e th e r FDIC c o n d u c te d fin a n c ia l o p e ra tio n s p ro p e rly , p re se n te d a c c o u n tin g re p o rts fa irly , c o m p lie d w ith a p p lic a ble law s a nd re g u la tio n s , m an ag ed re s o u rc e s e ffic ie n tly and a c h ie v e d C o rp o ra tio n o b je c tiv e s e ffe c tiv e ly . OCA re p o rte d a u d it fin d in g s and re c o m m e n d a tio n s to th e B o ard o f D ire c to rs . A fo rm a l p o lic y re q u irin g re sp o n se by u n its a u d ite d , e x e c u tiv e c o m m itte e a rb itra tio n o f d iffe re n c e s and m o n ito rin g o f c o rre c tiv e a c tio n in s u re d th e e x p e d itio u s re s o lu tio n o f a u d it fin d in g s . Office of the Executive Secretary The O ffice o f the Executive Secretary p erform s C orpo rate secretarial fu n c tio n s , such as issuing notice s o f all m eetings o f the Board o f D ire ctors and the FDIC's sta nd ing com m ittees, re co rd in g all votes and m in utes o f these m eetings, m ain ta in in g an index o f all o ffic ia l C o rp o ra tio n actions, p u b lish in g in the Federal Register notices o f proposed o r fin a l rulem a kin g and receiving p u b lic co m m e n ts on p roposed re g u la to ry actions. Infor 1 9FRASER 8 1 , th e Executive Secretary's sta ff perform ed secretarial fu n c tio n s fo r 1 2 6 Digitized http://fraser.stlouisfed.org/ 24 Federal Reserve Bank of St. Louis B oard m e e tin g s and n u m e ro u s c o m m itte e m e e tin g s. The O ffic e also p ro v id e d s ta ff c o o rd in a tio n fo r n in e p ro p o s e d re g u la to ry a c tio n s on w h ic h p u b lic c o m m e n t w as received. The O ffic e o f th e E xe cutive S e cre ta ry c o o rd in a te d and a d m in is te re d FDIC c o m p lia n c e w ith th e F reedom o f In fo rm a tio n A ct, th e G o v e rn m e n t in th e S u n s h in e Act, th e Privacy A c t o f 1 9 7 4 , th e P a pe rw o rk R e d u ctio n A c t and th e R e g u la to ry F le x ib il ity A ct. It also p e rfo rm e d e d ito ria l fu n c tio n s in c o n n e c tio n w ith th e FDIC's lo o se leaf re p o rtin g se rvice o f law s, re g u la tio n s and re la te d m a te ria ls. In a d d itio n , th e E xe cutive S e cre ta ry served as th e C o rp o ra tio n 's E thics C o u n s e lo r u n d e r th e E thics in G o ve rn m e n t A c t o f 1 9 7 8 and FDIC's o w n re g u la tio n s . Office of Congressional Relations and Public Information The O ffic e o f C o n g re s s io n a l R ela tion s in c o o p e ra tio n w ith o th e r C o rp o ra te d iv i sio n s and o ffic e s a dvises th e Board o f D ire c to rs on le g is la tiv e issues, p re pa re s te s tim o n y , and re s p o n d s to C o n g re s s io n a l in q u irie s re g a rd in g p e n d in g le g is la tio n . A d d itio n a lly , th e O ffice c o o rd in a te s resp o n se s to C o n g re s s io n a l c o n s titu e n t c o m p la in ts and in q u irie s . The O ffic e o f P u b lic In fo rm a tio n is th e FDIC's p o in t o f c o n ta c t w ith banks, th e new s m edia and d e p o s ito rs . It also p re p a re s and d is trib utes in fo rm a tio n on re g u la tio n s , th e FDIC's A n n u a l R eport, new s releases, the FDIC News and o th e r in fo rm a tio n m ate ria ls. The 1 981 C o rp o ra te re o rg a n iz a tio n re su lte d in th e re titlin g o f the O ffic e o f L e g is lative A ffa irs and th e O ffic e o f P u b lic In fo rm a tio n as th e O ffic e o f C o n g re s s io n a l R ela tion s and P u b lic In fo rm a tio n . D e sp ite fa irly e xten sive h e a rin g s. C on g re ss e n a cte d ve ry little le g is la tio n d u rin g 1 981 a ffe c tin g th e b a n k in g in d u s try o r th e C o rp o ra tio n . Federal re g u la to rs w ere u n s u c c e s s fu l in o b ta in in g passage o f le g is la tio n re q u e s te d to fa c ilita te th e ir h a n d lin g o f tro u b le d fin a n c ia l in s titu tio n s . The c o m b in a tio n o f severe e c o n o m ic c o n d itio n s and ra p id ly c h a n g in g d e v e lo p m ents in th e p ro v is io n o f fin a n c ia l se rvices in 198 1 re s u lte d in a g re a te r v o lu m e o f in fo rm a tio n re q u e sts flo w in g in to th e O ffic e o f P u blic In fo rm a tio n fro m the new s m edia, banks and d e p o s ito rs . Q u eries fro m m e m b e rs o f th e new s m edia and fro m d e p o s ito rs revealed h e ig h te n e d in te re s t in C o rp o ra tio n a c tiv itie s , the d e p o s it in s u ra n c e c e ilin g and th e b a n kin g system . G eneral e c o n o m ic c o n d itio n s also g e n e ra te d a need fo r c lo s e r c o m m u n ic a tio n w ith th e in d u s try itse lf. To a c c o m p lish th is , th e O ffic e o f P u b lic In fo rm a tio n c o o rd in a te d m e e tin g s b etw e en the FDIC C h a irm a n , o th e r FDIC o ffic ia ls and b an kers fo r th e p u rp o s e o f d is c u s s in g c o m m o n c o n c e rn s and e x p lo rin g s o lu tio n s to p ro b le m s . 25 Federal D e p o sit Insurance C o rp o ra tio n FINANCIAL STATEMENTS COMPARATIVE STATEMENT OF FINANCIAL POSITION (In Thousands) Assets December 31 1981 Cash $ Current investment in U.S. Treasury obligations: Securities at amortized cost (Note 1) Accrued interest receivable Total 382 1980 $ 1,986 4.1 19.401 231.406 4,350,807 1,479,433 226.921 1,706,354 21.969 1,836 23,805 43,219 3,018 46,237 4,542 4,997 Total Current Assets 4,379,536 1,759,574 Long-term investm ent in U.S. Treasury notes and b o n d s (Note 1) 7,885,591 9,014,547 Long-term notes purchased from insured banks (Note 2) 406,512 428,431 Equity in assets acquired from insured banks: Depositors' claims paid Depositors' claims unpaid Loans and assets purchased Assets purchased outright Less: Allowance fo r losses (Note 4) Total 64,336 1,410 463,483 528,230 510,245 547,214 41,640 1,458 565.984 39,658 239,042 409,698 22,932 23,370 $13,241,785 $11,635,620 Current m aturities on notes purchased from insured banks: Principal (Note 2) Accrued interest receivable Total Other receivables and prepaid items (Note 3) Land and office buildings, less accumulated depreciation on buildings Total Assets The accompanying summary of significant policies and notes to financial statements are an integral part of these statements. http://fraser.stlouisfed.org/ Federal26 Reserve Bank of St. Louis Liabilities and the Deposit Insurance Fund December 31 1981 Accounts payable and accrued liabilities $ 13,458 1980 $ 7,912 Collections held for others 3,299 4,169 Accrued annual leave of employees 6,533 6,174 Due insured banks: Net assessment income credits: Available July 1.1981 Available July 1.1 982 (Note 5) Available excess credits (Note 6) Total 0 1 17,135 1 1,737 128,872 521,086 0 47,631 568,717 Current m aturities on notes payable plus accrued interest (Notes 7, 8 and 9) 155,269 3,094 75,417 0 382,848 590,066 Long-term notes payable - F Street property (Note 7) 12,282 13,335 Long-term liabilities incurred in failures of insured banks: FRB indebtedness (Note 8) Franklin buildings (Note 9) Income maintenance agreements (Note 10) Depositors' claims unpaid 2 85 ,3 3 3 9,647 3 0 4 ,1 2 5 1,410 0 1 1,220 0 1,458 Total 600,515 12,678 Total Liabilities 995,645 616,079 12,246,140 11,019,541 $13,241,785 $11,635,620 Current estimated payments due on income maintenance agreements (Note 10) Total Current Liabilities Deposit Insurance Fund Total Liabilities and The Deposit Insurance Fund The accom panying summary of significant policies and notes to financial statements are an integral part of these statements. 27 COMPARATIVE STATEMENT OF INCOME AND THE DEPOSIT INSURANCE FUND (In Thousands) For the twelve months ended December 31 1981 Income: Gross assessments earned Less: Provision fo r assessment credits Total Interest on U.S. Treasury obligations Am ortization of premiums and discounts (net) Total Interest earned on notes receivable Other income Total Income Expenses and Losses: Adm inistrative operating expenses (net) Income maintenance expenses and losses (net) Provision fo r insurance losses (net) Nonrecoverable insurance expenses Total Expenses and Losses Net Income Deposit Insurance Fund— January 1 Deposit Insurance Fund— December 31 $ 1 ,040,940 1 19,024 1980 $ 9 5 2 ,5 3 5 5 2 1 ,7 8 0 921,916 430,755 985,41 7 130,043 8 6 7 ,8 7 3 (4,766) 1,115,460 863,107 31,924 12,620 5,390 3,232 2,074,690 1,309,714 127,185 387,71 2 3 20 ,41 2 12,782 1 17,555 0 (38,098) 3,448 848,091 82,905 1,226,599 1,226,809 11,019,541 9,792,732 $12,246,140 $11,019,541 The accom panying summary of significant policies and notes to financial statements are an integral part of these statements. http://fraser.stlouisfed.org/ 28 Federal Reserve Bank of St. Louis COMPARATIVE STATEMENT OF CHANGES IN FINANCIAL POSITION (In Thousands) For the twelve m onths ended Decem ber 31 1981 1980 $ 1 .2 2 6 .5 9 9 438 2 5 .9 0 7 2 7 1 .5 0 7 $ 1 ,2 2 6 .8 0 9 287 9 .2 8 8 (3 8 .0 9 8 ) 1,524,451 1,198,286 1 ,6 0 8 .9 3 8 2 1 ,9 1 9 1.2 9 3 .5 7 1 4 3 .2 1 9 1 1,8 73 2 4 3 ,7 3 5 0 3 .8 2 0 3 3 3 .0 7 7 1 4 .4 0 6 4 2 8 .0 0 0 3 8 2 .7 2 9 0 0 4,221,645 2,886,379 0 3 2 5 ,0 0 0 7 5 ,4 1 7 8 ,6 9 9 1 4 5 ,2 9 3 0 0 0 2,621 23 3 4 ,8 5 5 6 2 9 .8 2 4 5 0 0 .3 7 7 0 1 3 .8 9 5 1 5 1 .7 0 0 2 .0 8 9 .4 0 6 1 7 .5 0 9 1,394,465 2,600,154 Sources of Working Capital From operations: Net incom e Add: D e pre ciation expense A m ortiza tion not a ffe ctin g w o rkin g capital A llo w a nce fo r loss adjustm ents Total working capital generated from operations From other sources: P ortion o f lo n g -te rm investm ents in U.S.T. notes & bonds at am ortized cost transfe rre d as c u rre n tly due Portion o f notes purchased transfe rre d as c u rre n tly due C o lle ctio ns fro m assets acquired fro m insured b a n k s : Receivership and payoff cases D eposit assum ption transa ction s Increase in notes payable - land and bu ild in g Increase in lia b ilitie s in curred in fa ilu re s o f insured banks Notes payable - FRB indebtedness Incom e m aintenance agreem ents Total sources of working capital Uses of Working Capital Increase in notes purchased fro m insured banks Portion o f incom e m aintenance agreem ents transfe rre d as c u rre n tly due Payments on incom e m aintenance agreem ents Portion o f notes payable transfe rre d as c u rre n tly due Payments on notes payable Assets acquired fro m insured banks: Receivership and payoff cases D eposit assum ption transa ction s Purchase of U.S.T. notes and bonds Purchase of land and b u ild ing Total uses of working capital Net increase (decrease) in working capital $ Changes in Working Capital Accounts 2,827,180 $ 286,225 W orkin g Capital (Increase — (Decrease)) Cash C u rrent investm ent in U.S.T. securities at am ortized cost A ccrue d in te rest receivable C u rrent m aturities on notes purchased A ccrued in te rest receivable on notes purchased O ther receivables and prepaid items A cco u n ts payable and accrued lia b ilitie s C o lle ctio n s held fo r others A ccrued annual leave o f em ployees Net assessm ent incom e cred its due insured banks C urrent m aturities on notes payable A ccrued in te rest on notes payable C urrent lia b ilitie s on incom e m aintenance agreem ents $ (1 ,6 0 4 ) 2 .6 3 9 ,9 6 8 4 .4 8 5 (2 1 .2 5 0 ) (1 .1 8 2 ) (4 5 5 ) (5 .5 4 6 ) 870 (3 5 9 ) 4 3 9 ,8 4 5 (1 4 2 .6 7 2 ) (9 .5 0 3 ) (7 5 .4 1 7 ) $ 489 2 5 7 .8 3 8 4 0 .4 1 0 2 2 .5 3 6 (2 7 6 ) 2 .2 3 2 (2 .6 0 3 ) (2 .2 4 0 ) (7 8 1 ) (3 0 .0 6 4 ) (1 .0 4 8 ) (2 6 8 ) 0 Net increase (decrease) in working capital $ 2,827,180 $ 286,225 The acco m pa nyin g sum m ary o f s ig n ific a n t p o licie s and notes to fin a n cia l statem ents are an integral part o f these statem ents. 29 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES General These statements do not include accountability fo r assets and liabilities of closed insured banks fo r w hich the C orporation acts as receiver or liquidating agent. Periodic and final accou nta b ility reports of its activities as receiver or liquidating agent are fu r nished by the C orporation to courts, supervisory authorities, and others as required. U.S. Treasury Obligations Securities are shown at amortized cost w hich is the purchase price of the securities less the amortized prem ium or plus the accreted discount. Such am ortization and accretion are com puted on a daily straight-line basis from the date of acquisition to the date of m aturity. Deposit Insurance Assessments The C orporation assesses insured banks at the rate of 1 /1 2 of one percent per year on the bank's average deposit liab ility less certain exclusions and deductions. Assessments are due in advance fo r each six-m onth period and credited to income each m onth. On March 3 1 ,1 980, President Carter signed into law the D epository Institutions Deregula tion and M onetary C ontrol Act of 1 980, one provision of w hich revised the mechanism fo r determ ining the credit banks receive against the annual assessment they pay for deposit insurance. The statute changes the basis fo r the assessment credit to 60 per cent from 66 2 / 3 percent of net assessment incom e and authorizes the FDIC Board of D irectors to make adjustm ents to this percentage w ithin certain lim its in order to m ain tain the Deposit Insurance Fund between 1.25 and 1.40 percent of estimated insured deposits. If this ratio falls below 1.10 percent or above 1.40 percent, the FDIC is man dated to make fu rth e r reductions, up to 50 percent, or increases to the percentage dis trib u tio n of net assessment income. Allow ance for Losses It is the policy of the C orporation to establish an estimated allowance fo r loss at the time a bank fails. These allowances are reviewed every six m onths and adjusted as required, based on financial developm ents w hich accrue during each six-m onth period. The C or poration does not state its estimated co ntingent liability fo r unknown future bank clo s ings because such estimates are im possible to make. The C orporation's co ntin ge nt lia bility fo r eventual net losses depends upon factors w hich cannot be assessed until or after a bank has actually failed. The C orporation's entire Deposit Insurance Fund and borrow ing authority are available, however, fo r such contingencies. Depreciation The W ashington Office Buildings are depreciated on a straight-line basis over a 50-year estimated life. The cost of furniture, fixtures, and equipm ent is expensed at tim e of acquisition. Reclassifications and Accounting Procedures Changes 1. Assets and Liabilities: a) Beginning w ith the March 3 1 ,1 9 8 0 Financial Statements, assets and liabilities have been presented under tw o m ajor groups, current and long-term . b) Assets acquired from insured banks, w hich in prior presentations have been shown under tw o separate groupings, have been consolidated into a single major asset category. 2. Income Statement: Items related to incom e from securities and income from assessments have been regrouped in order to provide a more m eaningful presentation of incom e derived http://fraser.stlouisfed.org/ 30 Federal Reserve Bank of St. Louis from each of these m ajor categories of income to the C orporation. Also, rents earned on leased space, w hich in prior presentations had been shown as a separate income item, has been netted into adm inistrative operating expenses. 3. Liquidators Cash C ollections: Cash collected by the Liquidators w ill only be recognized in the books of the C orpora tion at the tim e the funds are received by the C orporation. 4. Reclassifications: Reclassifications have been made in the 1 9 80 Financial Statements to conform to the presentation used in 1981. Accrued Interest Accrued interest, when classified in the current portions of the Comparative Statement of Financial Position, represents the entire am ount of interest due to or due from the C orporation w ithin one year, including interest accrued on those principal amounts classified as long-term . Income M aintenance Agreements It is the policy of the C orporation to record its liab ility under an Income M aintenance Agreem ent at the present value of each estimated cash outlay at the tim e the agreement is accepted. Estimated cash outlays are anticipated future payments the C orporation w ill provide to offset the difference between the annualized cost of funds and the annualized return on the declining volum e of earning assets acquired in a merger tra n saction, plus an am ount to cover overhead costs. The charge is recorded to Insurance Loss. The present value of the liab ility is then amortized daily and recorded m onthly over the term of the agreement. Any differences between the estimated and actual cash o u t lays are recorded as adjustm ents. The o riginally recorded loss, plus or minus any adjustments, w ill be prorated between insured banks and the Deposit Insurance Fund as provided in Section 7(D), revised March 3 1 ,1 9 8 0 , of the Federal Deposit Insurance Act. 31 NOTES TO FINANCIAL STATEMENTS — DECEMBER 31, 1981 AND 1980 1. U.S. Treasury Obligations All cash received by the C orporation w hich is not used to defray operating expenses or fo r outlays related to assistance to banks and liquidation activities, is invested in U.S. Treasury securities. As of December 31. 1981 the C orporation's investm ent p ortfo lio consisted of the fo llo w in g : Maturity 1 Day Less than 1 Year Description Par Value Special Treasury Certificates $ 8 2 2 .5 7 8 U.S.T. Bills 1 .8 0 9 ,0 0 0 U.S.T. Notes & Bonds 1 .6 0 9 .8 9 6 Total Current (In thousands) Book Value M arket Value $ 8 2 2 ,5 7 8 1 ,6 8 7 ,8 8 6 1 ,6 0 8 ,9 3 8 $ 8 2 2 ,5 7 8 1 .6 9 2 ,7 3 3 1 ,5 8 1 ,7 4 9 Cost $ 8 2 2 ,5 7 8 1 ,6 0 1 ,2 9 8 1 ,6 1 9 ,2 5 4 4 ,2 4 1 ,4 7 4 4,1 19,40 2 4 ,0 9 7 ,0 6 0 4,0 4 3 ,1 3 0 1-5 Years 5-10 Years U.S.T. Notes & Bonds U.S.T. Notes & Bonds 4 ,8 4 2 ,3 2 6 2 ,9 4 0 ,0 0 0 4 ,8 8 1 ,5 6 7 2,9 30,65 1 4 .4 0 1 .6 9 9 2 .3 6 2 .0 6 9 4 ,9 0 8 ,8 9 8 2 .9 2 6 ,1 2 6 Over 10 Years U.S.T. Notes & Bonds 7 5 ,5 4 6 7 3 ,3 7 3 48,821 7 1 ,8 0 6 Total Long-Term 7,857,872 7,885,591 6,812,589 7,906,830 Total Investment $12,099,346 $12,004,993 $10,909,649 $11,949,960 2. Notes Purchased from Insured Banks The C orporation's outstanding principal balances on notes purchased from insured bank's at Decem ber 31, 1981 and 1 9 8 0 are: 1981 1980 To Assist Operating Banks: Unity Bank and Trust Company $ 1 ,3 5 0 ,0 0 0 $ 1 ,4 0 0 ,0 0 0 Bank of the C om m onwealth 3 3 ,0 0 0 ,0 0 0 3 4 ,5 0 0 ,0 0 0 3 2 5 ,0 0 0 ,0 0 0 First Pennsylvania Bank, N.A. 3 2 5 ,0 0 0 ,0 0 0 359,350,000 360,900,000 To Facilitate Deposit Assum ptions: First Tennessee National C orporation First Tennessee National Bank Bank Leumi Trust Com pany of New York New Orleans Bancshares, Inc. European-Am erican Bancorp. Drovers Bank of Chicago Tow n-C ountry National Bank Total 0 0 6 .2 5 0 .0 0 0 4 .1 6 7 .0 0 0 5 5 ,0 0 0 ,0 0 0 3 .5 0 0 .0 0 0 2 1 4 ,0 0 0 1 6 ,0 0 0 ,0 0 0 8 ,0 0 0 ,0 0 0 7 ,5 0 0 ,0 0 0 5 .0 0 0 .0 0 0 7 0 ,0 0 0 ,0 0 0 4 .0 0 0 .0 0 0 2 5 0 ,0 0 0 69,131,000 $ 428,481,000 110,750,000 $ 471,650,000 3. Other Receivables and Prepaid Items The C orporation's other receivables and prepaid items at December 31, 1 981 and 1 980are: Receivables Prepaid Items Total http://fraser.stlouisfed.org/ 32 Federal Reserve Bank of St. Louis 1981 $ 4 ,4 0 5 ,0 0 0 1 3 7 ,0 0 0 $ 4,542,000 1980 $ 4 .0 4 7 ,0 0 0 9 5 0 ,0 0 0 $ 4,997,000 4. Allow ance for Losses An analysis of the changes in the allowance fo r losses on the accounts described below fo r years ended December 31. 1981 and 198 0 follow s: 1981 D epositors' claim s paid: Balance, beginning of period Add (Subtract): Provision charged to expense Net adjustm ent to prior years W rite -o ff at term ination Balance, end of period Loans and assets purchased: Balance, beginning of period Add (Subtract): Provision charged to expense Net adjustm ent to prior years W rite -o ff at term ination Balance, end of period Assets purchased outright: Balance, beginning of period Add (Subtract): Provision charged to expense Net adjustm ent to prior years W rite -o ff at term ination Balance, end of period Total 1980 $ 1 8 .3 4 6 .0 0 0 $ 1 6 ,8 0 0 .0 0 0 3 2 5 ,0 0 0 (7 ,3 8 6 ,0 0 0 ) 0 1 1 ,2 8 5 ,0 0 0 7 .0 1 5 .0 0 0 (5 ,3 5 2 ,0 0 0 ) ( 1 17 ,00 0 ) 1 8 ,3 4 6 ,0 0 0 1 8 3 ,9 6 2 .0 0 0 2 2 2 ,3 2 4 .0 0 0 7 ,4 2 2 .0 0 0 (3 7 ,2 7 0 .0 0 0 ) 0 1 3 ,7 7 5 ,0 0 0 (5 2 ,1 3 7 ,0 0 0 ) 0 1 54,1 1 4,0 00 1 8 3 ,9 6 2 ,0 0 0 3 6 ,7 3 4 ,0 0 0 3 8 ,2 6 0 ,0 0 0 3 6 4 ,1 0 5 ,0 0 0 (7 .0 8 8 .0 0 0 ) (4 8 .9 0 5 .0 0 0 ) 3 4 4 ,8 4 6 ,0 0 0 0 (1 ,5 2 6 .0 0 0 ) 0 3 6 ,7 3 4 ,0 0 0 $ 239,042,000 $ 5 1 0 ,2 4 5 ,0 0 0 5. Assessment Credits Due Insured Banks - July 1, 1982 The com putation of net assessment income credits that w ill become available to banks on July 1. 1982 is as follow s: Com putation: Gross Assessment Income-C.Y. 1981 $ 1,037,621,000 Less: Adm inistrative Operating Expenses (Net) $12 7,1 8 5,0 00 Income M aintenance Expenses and Losses less Am ortization Charges (Net) 3 82 ,20 0 .00 0 Provision fo r Losses (Net) 3 20 ,41 2 ,00 0 Insurance Expenses (Net) 12.771.000 8 42 ,5 6 8 .0 0 0 Net Assessment Income $ 1 95,0 53 .0 00 Distribution: 40% to Deposit Insurance Fund 60% to Insured Banks Assessment Credits Due Insured Banks-July 1,1 982: Assessment Credits - C.Y. 1 981 Prior Years Credits Assessment Credits Due Insured Banks-July 1,1982 $ 7 8,021,000 1 17 ,032,000 $ 195,053.000 $ 117 ,03 2 ,00 0 1 0 3 ,0 0 0 11 7 ,13 5,00 0 $ Effective Rate of Assessment fo r C.Y. 1981: 1 /1 4 of 1% of Total Assessable Deposits 6. Available Excess Credits As of December 31, 1 981 and 1 9 80 assessments receivable from insured banks reflected credit balances representing excesses of assessment incom e credits made available to insured banks o n J u ly 1, 1981 and 1980 over assessments due fo r the last six months of each calendar year. These excess credits continue to be available to insured banks at the beginning of the next assessment period in the follow ing calendar year. 7. Notes Payable - F Street Property On June 30, 1 980, the C orporation purchased property located at 1 7 76 F Street, N.W.. W ashington, D.C. fo r a purchase price of $ 1 7 ,4 0 6 ,3 0 8 , plus closing costs. The purchase price of the land was $ 2 ,3 7 8 ,8 8 0 , and the building purchase price amounted to $ 1 5,1 3 0 ,2 2 1 . This purchase was financed by cash outlays am ounting to $ 3 ,1 0 2 ,7 9 3 , the assum ption of the existing mortgage on the property am ounting to $ 6 ,4 0 6 ,3 0 8 , and the issuance of a prom issory note, m aturing over seven years, am ounting to $ 8 ,0 0 0 ,0 0 0 . 8. Notes Payable - FRB Indebtedness On November 4, 1 981, the C orporation assumed a $ 4 2 8 ,0 0 0 ,0 0 0 Federal Reserve Bank Note from Greenwich Savings Bank. On November 4, 1 982, and each year thereafter until m aturity, the C orporation w ill be required to pay one-third of the principal sum plus accrued interest. The interest rate on this note is the average rate (equivalent coupon-issue yield) established at the auction fo r 13-week U.S. Treasury Bills m ost recently preceding November 4, 1 981, or the firs t calendar day of the threem onth period ending on the relevant Quarterly Interest Date plus fifty basis points. Interest is to be com pounded quarterly. 9. Notes Payable - Franklin Buildings Indebtedness These am ounts represent the unpaid principal and accrued interest on the C orporation's unsecured notes designated "5 .7 75 % Series A Notes due January 1, 1 9 8 8 " and "5 .7 7 5 % Series B Notes due January 1, 1 9 9 0 " as set fo rth in the consents, exchange agreement, and agreements of release and satisfaction related to the sale of Franklin Buildings. Inc. to European-Am erican Bank and Trust Company. 10. Income Maintenance Agreements The incom e m aintenance agreements, including amounts to cover overhead costs, are classified and presented on the financial statements at the present value of anticipated future payments. The present value of current estimated payments is expected to be amortized to future value and paid within the next twelve months. As of December 31. 1981, the C orporation's current liability balances at present value w ith operating insured banks are as follow s: M etropolitan Savings Bank $19 1,8 7 4,0 00 Harlem Savings Bank 6 9,9 75 ,0 00 Buffalo Savings Bank 117,693,000 Total $ 379,542,000 11. Southern-Bancorporation Note Receivable On December 9. 1 9 76 , Southern Bancorporation repaid in full the $8 m illion note that the C orporation had purchased on September 24, 1974. Southern Bancorporation financed this transaction by obtaining a loan from First Union National Bank of North Carolina. To induce FUNB to enter the loan agreement, the FDIC agreed to guarantee the payment of 75 percent of the unpaid principal am ount of the loan on the term s and co nditions set forth in the guarantee agreement. On June 24, 1 981, Southern Bancorporation paid in full the rem aining principal balance of $ 4 ,8 0 0 ,0 0 0 . 12. Lease Com m itments Rent for office premises charged to expense was $ 5 ,7 7 1 ,0 0 0 (1 981) and $ 5 ,7 0 8 ,0 0 0 (1 980). M inim um rentals fo r each of the next five years and fo r subsequent years thereafter are as follow s: 1982 1983 1984 1985 1986 19 8 7 /a fte r $ 3 ,9 9 4 ,0 0 0 $ 2 ,6 7 8 ,0 0 0 $ 1 ,8 2 4 ,0 0 0 $ 1 ,1 4 5 ,0 0 0 $ 1 ,1 0 2 ,0 0 0 $ 3 ,6 6 2 ,0 0 0 M ost office premise lease agreements provide for increase in basic rentals resulting from increased property taxes and m aintenance expense. PART TWO LEGISLATION AND REGULATIONS LEGISLATION — 1981 Cash Discounts Act P u b lic Law 9 7 - 2 5 . a p p ro v e d J u ly 2 7 , 1 9 8 1 , a m e n d e d th e T ru th in L e n d in g A c t to e xten d to F e b ru a ry 2 7 , 1 9 8 4 , th e p ro h ib itio n a g a in s t s u rc h a rg e s on c re d it ca rd p u rc h a s e s and to e lim in a te th e fiv e p e rc e n t c e ilin g on d is c o u n ts o ffe re d by m e rc h a n ts fo r p a y m e n t by ca sh o r ch eck. The A c t a lso s u b je c te d c re d ito rs e le c t ing to co m p ly w ith the new requirem ents o f the Truth in Lending S im plification A ct as o f A p ril 1, 1 9 8 1 . to its revised c iv il lia b ility p ro v is io n s , and a llo w e d n a tio n a l banks n o t to d iv e s t c e rta in real e state h o ld in g s u n til D e c e m b e r 3 1 ,1 9 8 2 . International Banking Facility Deposit Insurance Act P ublic Law 9 7 - 1 1 0 . app ro ved D ece m b e r 2 6, 1 9 8 1 , a m ended the Federal D e p o sit In suran ce A c t to e xem pt fro m fe de ra l d e p o s it in su ra n ce assessm ents and coverage o f th e s o -c a lle d in te rn a tio n a l b an kin g fa c ilitie s , w h ic h a c c e p t d e p o sits fro m and m ake loans to fo re ig n cu s to m e rs and are e xe m p t fro m reserve re q u ire m e n ts o f the Federal Reserve and fe d e ra lly im p ose d d e p o sit in te re s t rate lim ita tio n s . It also e xtends th e a v a ila b ility o f fe d e ra l d e p o s it insu ra n ce to banks o p e ra tin g in th e T rust T e rrito ry o f th e P acific Islands. The n ew law also p o stp o n e s fro m A p ril 1 to O cto b e r 1, 1 9 8 2 , th e e ffe ctive date o f th e 1 9 8 0 T ru th in L ending S im p lific a tio n A c t and re g u la tio n s issued u n d e r it. in o rd e r to give a ffe cted p erson s m ore tim e to c o m p ly w ith th e new re q u ire m e n ts o f the 1 9 8 0 Act. A n o th e r p ro v is io n o f th e n ew law c la rifie d th a t th e te n -y e a r g ra ce p e rio d fo r m an a g e m e n t in te rlo c k s as c o n ta in e d in th e F inancial In s titu tio n s R eg ula tory and Interest Rate C o n tro l A c t o f 1 9 7 8 w o u ld n o t be red uce d in th e case o r m ergers, a c q u is i tio n s , increases in assets, e sta b lish m e n t o f an o ffic e o r ch a n g e s in m an ag em en t re s p o n s ib ilitie s . The n ew law also c o n ta in s a p ro visio n on m a n a g e m e n t in te rlo c k s d esign ed to fa c ilita te th e m e rge r o f fin a n c ia lly tro u b le d th rift in s titu tio n s into h e a lth y in s titu tio n s . O th e r p ro v is io n s in th e n ew law relate to th e se co n d a ry m arket o p e ra tio n s o f the Federal N ational M o rtg a g e A sso cia tio n and the Federal H om e Loan M o rtg a g e C o r p o ra tio n , to m e m b e rsh ip in th e Alaska USA Federal C re d it U nion, and to federal fu n d in g o f a N ew York h o u sin g p ro g ra m . 37 RULES AND REGULATIONS — 1981 Delegation of Authority (Part 303) Effective O cto b e r 1 9 8 1 , th e FDIC Board of D irectors delegated to the D ire cto r of its Division of Bank Supervision, and to its Regional Directors w h e n delineated criteria are met, increased a u th o rity to approve branch applications. FDIC expects these action s w ill shorten the processing tim e fo r rou tine a pp lica tion s and w ill reduce FDIC's costs fo r p ro cessin g applications. Elimination of Form Reports and of External Crime Reports (Part 326) On M a rc h 10, 1 9 8 1 . in c o n ju n c tio n w ith o th e r m e m b e rs o f the Federal Financial In s titu tio n s E x a m in a tio n C o u n c il, FDIC review ed the r e g u la to r y r e p o rtin g r e q u ir e m e n ts im p o s e d on fin a n c ia l in s titu tio n s u n d e r th e Bank P ro te c tio n A c t (1 2 U.S.C. §§ 188 1 - 8 4 ). Having d e te rm in e d th a t c e rta in o f th ese re p o r tin g r e q u ir e m ents are u n n e c e s s a rily b u r d e n s o m e and th e usage o f re p o rts is lim ite d, th e FDIC d eleted its re q u ir e m e n t th a t Form s P-1, "R e p o rts on S e c u rity D evice s," be s u b m itte d . FDIC e x a m in e rs w ill c o n tin u e to review an in s titu tio n 's c o m p lia n c e w ith a g e n c y s e c u rity re g u la tio n s d u r in g re g u la r s u p e rv is o ry e xa m in a tio n s. On O c to b e r 6, 1 9 81 th e FDIC, again in c o n ju n c tio n w ith o th e r m e m b e rs o f th e Federal Financial In s titu tio n s E xa m in a tio n C o u n c il, revised its re g u la tio n s by d e le tin g th e re q u ir e m e n t fo r s u b m is s io n o f external c rim e reports. In place o f th e r e q u ir e m e n t th a t th e in s titu tio n file a "R e p o rt o f C rim e ," th e a g e n cies im p o s e d th e r e q u ir e m e n t th a t t h e v ictim ize d in s titu tio n m a in ta in an in fo rm a l, in te rn a l re c o rd o f each external c r im e and file all su ch re c o rd s in th e m ain o ffice of th e in s titu tio n . These re co rd s w ill th e n be available fo r in s p e c tio n upo n e xa m in a tio n . Advertisement of Membership (Part 328) Effective J u ly 23, 1 9 8 1 , FDIC a m e n d e d several p ro v is io n s o f Part 3 2 8 c o n c e r n ing a d v e rtis e m e n t o f m e m b e rs h ip . The a m e n d m e n ts (1) add la n g u a g e to § 3 2 8 . 0 to cle a rly in d ic a te th a t the p art a pp lie s to the insu re d b ra n ch e s o f fo re ig n banks u n d e r th e FDI A c t as a m e n d e d by th e In te rn a tio n a l Banking Act; (2) e lim in a te the r e q u ir e m e n t u n d e r § 3 2 8 .1 (a) fo r insu re d banks to d is p la y th e o ffic ia l FDIC sign on a u to m a tic se rvice fa c ilitie s w h ic h receive d e p o s its and are p art o f a p p ro ve d offices; (3) in c o rp o ra te in § 3 2 8 .1 (b) th e existin g d im e n s io n s and available co lo rs fo r the o ffic ia l FDIC sign and d elete the re fe re n ce to th e "O ffic ia l C atalog of In sured Bank S ig n s " w h ic h c o n ta in s th e in fo r m a tio n , b u t is no lo n g e r p u b lish e d ; and (4) in c o rp o ra te in § 3 2 8 . 2 th e existin g in te rp re tiv e ru lin g w h ic h re q u ire s f o r eign banks to id e n tify t h e ir in su re d and u n in s u re d b ra n ch e s in all a d ve rtis e m e n ts w h ic h m u s t c o n ta in the FDIC o ffic ia l a d v e rtis e m e n t sta te m e nt. The a m e n d m e n ts do n o t im p o s e any n e w r e q u ire m e n ts and do n o t a dversely a ffe c t any insured banks. The a u th o r itie s fo r the a m e n d m e n ts are S e ctio n s 9 (Tenth) and 18(a) o f the Federal D e p o s it In su ra n c e Act. NOW Account Eligibility (Part 329) Effective S e p te m b e r 28, 1 9 8 1 , FDIC issued an in te rp re ta tio n to Part 3 2 9 to c la r ify th e rules c o n c e r n in g th e class o f d e p o s ito rs e lig ib le to m a in ta in interes t b e a r ing d e p o s its s u b je c t to w ith d r a w a l by n e g o tia b le o r tr a n s fe r in s tru m e n ts at insured State n o n m e m b e r banks. U n d e r th e in te rp re ta tio n , th e class of d e p o s ito rs e lig ib le to m a in ta in N O W a c c o u n ts in clu d e s: (1) all in d ivid ua ls, in c lu d in g sole p ro p r ie to r s h ip s and tr u s t or fid u c ia r y a c c o u n ts in w h ic h the entire ben eficial http://fraser.stlouisfed.org/ 38 Federal Reserve Bank of St. Louis in te re st is held by ind ivid u a ls; (2) n o n p r o f it o rg a n iz a tio n s th a t are d e s c rib e d in S e ctio n 501 (c)(3) t h r o u g h (1 3 ) and (19). and S e ctio n 5 2 8 o f th e Internal Revenue C ode; and (3) g o v e rn m e n ta l units, if the fu n d s are in th e n am e o f and used fo r th e p u rp o s e s o f s c h o o ls, c o lle ge s, u niversities, libraries, h o s p ita ls or o th e r m ed ica l fa cilitie s. H ow ever, p a rtn e rsh ip s, c o r p o r a tio n s , or o th e r a s s o c ia tio n s o p e ra te d fo r a p ro fit and m o s t g o v e rn m e n ta l units are not p e rm itte d to m a in ta in N O W a c c o u n ts . Interest on Deposits (Part 329) In N o v e m b e r 1 981 th e State o f W a s h in g t o n e n a cte d le g is la tio n a u th o riz in g sto ck savings banks. The State o f M a in e a lrea d y has s im ila r le g isla tion . Since these banks w o u ld f u n c t io n e ssen tially as m u tu a l savings banks, but fo r the fo rm of o w n e rs h ip , FDIC, e ffe ctive D e c e m b e r 7, 1 9 8 1 , a m e n d e d its r e g u la tio n s to d efin e sto ck savings banks ch a rte re d in th e States of W a s h in g t o n and M a in e as m utu al savings banks. This a m e n d m e n t a llo w s s to c k savings banks in W a s h in g t o n and M a in e to avail th e m s e lv e s o f th e o n e -q u a rte r o f o n e - p e r c e n t in te re st rate d if fe r e n tial a llo w e d m u tu a l savings banks. On D ece m b e r 3, 1 9 8 1 , FDIC again a m ended Part 3 2 9 to enable insured n o n m e m b e r banks to establish In ternational Banking Facilities (IBFs) in th e United States on a c o m p etitive basis u nd er the Federal Reserve Board's IBF program , also effective D ece m b e r 3, 1 9 8 1 . Under th e program , an IBF is a m o ng othe r things, able to accept deposits fr o m fo re ig n residents or other IBFs and th e deposits are exem pt fro m reserve req uirem en ts and interest rate limitations. Further, IBFs may offer f o r eign n o n b a n k residents large d e n o m in a tio n 'tim e deposits w ith a m in im u m m aturity or required notice period before w ith d ra w a l of o nly tw o business days. Rules of Practice and Procedure (Part 308) Effective D e c e m b e r 2 9, 1 9 8 1 , the FDIC a m e n d e d its Rules o f Practice and P ro ce dures, w h ic h c o n ta in rules fo r th e c o n d u c t o f a d m in is tra tiv e p ro c e e d in g s befo re the FDIC. A n ew S u b p a rt M to the Rules o f Practice and P ro ced ures im p le m e n ts the Equal A cce ss to J u stice Act. That A c t a llo w s ce rta in parties w h o prevail a g a in st the FDIC in c o n te s te d a d m in is tra tiv e p ro c e e d in g s to reco ver litig a tio n expenses f r o m the FDIC, if th e p o s itio n o f th e FDIC in th e p ro c e e d in g w as not s u b s ta n tia lly ju s tifie d . The n e w s u b p a r t e stab lish es p ro c e d u re s to be used in a p p lyin g fo r fee a w a rd s and in d e te rm in in g w h e th e r th e c o n d it io n s fo r a fee aw ard have been m e t and, if so, th e p ro p e r a m o u n t fo r th e award. Securities of Nonmember Insured Banks (Part 335) In o rd e r to b rin g th e m into s u b s ta n tia l s im ila rity w ith r e g u la tio n s issued u n d e r the S e c u ritie s E xchange A c t o f 1 9 3 4 by the S e curities and Exchange C o m m is s io n , the FDIC, e ffe ctive J u ne 4, 1 9 8 1 , a m e n d e d its s e c u ritie s d is c lo s u re reg u la tio n s. The a m e n d m e n t, w h ic h u p d a te s th e r e g u la tio n and makes the r e g u la tio n m ore u n d e rs ta n d a b le co v ers th e fo llo w in g : (1) n e w fo r m a t o f Part 3 3 5 ; (2) safe h a rb o r f o r p ro je c tio n s ; (3) fo re ig n b an k r e p o rtin g ; (4) c o rp o r a te g o v e rn a n c e ; (5) d iv id e n d re in v e s tm e n t plans; (6) te n d e r offers; (7) issuer te n d e r offers; (8) g o in g private tra n s a c tio n s ; and (9) s e c tio n 1 6(b) e xe m p tio n . Registration of Transfer Agents (Part 341) On J a n u a ry 13, 1 9 8 1 , FDIC a m e n d e d its tra n s fe r a ge nt re g is tra tio n rule. The a m e n d m e n t e lim in a te d th e r e q u ir e m e n t th a t t r a n s fe r a ge nts reg istered w ith th e FDIC file a nn ua l a m e n d m e n ts to Item 7 o f th e ir re g is tra tio n fo rm . Item 7 involved s u b m it tin g a nn u a l c h a n g e s to a list w h ic h itemized all issues f o r w h ic h th e r e g is te re d tr a n s fe r a g e n t p e r fo r m e d services. 39 PART THREE ENFORCEMENT PROCEEDINGS ENFORCEMENT ACTIONS Actions to Terminate Insured Status Federal Deposit Insurance Act-Section 8(a) The C o r p o r a tio n has issued 53 te r m in a tio n o f in s u ra n c e o rd e rs since January, 1 9 7 1 , in c lu d in g th re e in 1 9 8 1 . In each case, th e bank was fo u n d to be in an u nsafe or u n s o u n d c o n d itio n . As in th e case o f c e a s e -a n d -d e s is t a ction s, th e th re a t o f te rm in a tio n o f in s u ra n c e has ca use d m any banks to take a ffirm a tiv e steps to c o rr e c t d e fic ie n c ie s th u s e lim in a tin g th e need fo r fin al a ction . Summary of Cases Bank No. 51 D e p o s its — $ 2 3 4 . 8 m illio n N otice o f in te n tio n to te rm in a te in su re d status issued on M a rc h 2, 1 9 8 1 . Bank o rd e re d to p ro vid e a c c e p ta b le m a n a g e m e n t; increase s u r plus; re d u c e a dversely classifie d assets; p ro vid e a c c e p ta b le liqu id ity; e stab lish an a d e q u a te loan loss reserve; c o lle c t a n d / o r service all o u t sta n d in g e xte n sio n s o f c r e d it by s p e c ifie d a ction s; e lim in a te existing and refra in fr o m cre a tin g a d d itio n a l c o n c e n tr a tio n s o f c r e d it e x cee ding a sp e c ifie d level; a d o p t a c c e p ta b le w r itte n le n d in g and leew ay in v e s tm e n t policies; c o r r e c t a n d / o r p ro v id e an a c c e p ta b le p ro g r a m to e lim in a te v i o la tio n s o f laws; and e ffe c t g e n e ra lly a c c e p ta b le a n d / o r p ru d e n t a c c o u n t ing p ro c e d u re s . 52 D e p o s its — $ 5 .6 m illio n N otice o f in te n tio n to te rm in a te insu re d status issued on S e p te m b e r 1 5. 1 9 8 1 . Bank o rd e re d to increase ca pital; re d u ce a dversely classified assets; cease e x te n d in g a d d itio n a l c r e d it to b o r ro w e r s w h o s e c r e d it has been c h a rg e d o ff or c lassifie d d o u b tf u l o r loss; and p ro vid e an a cce p ta b le asset c o n d it io n and a c e rta in level o f capital. 53 D e p o s its — $ 5 .3 m illio n N otice o f in te n tio n to te rm in a te insu re d sta tu s issued on N o v e m b e r 2, 1 9 8 1 . Bank o rd e re d to p ro v id e a c c e p ta b le m a n a g e m e n t; increase capital; re d u c e a dve rse ly c lassifie d assets; cease e xte n d in g a d d itio n a l c r e d it to b o r ro w e r s w h o s e c r e d it has been c h a rg e d o ff or c lassifie d d o u b tf u l or loss; and p ro v id e an a c c e p ta b le asset c o n d it io n and a ce rta in level of capital. Cease-and-Desist Actions Federal Deposit Insurance Act-Section 8(b) The C o r p o r a tio n has issued 2 6 4 o rd e rs since January, 1 9 7 1 , in c lu d in g 3 7 in 1 9 8 1 . In a d d itio n , 2 8 te m p o r a ry c e a s e -a n d -d e s is t o rd e rs w ere issued in th a t perio d , in c lu d in g one in 1 9 8 1 . In each case, the bank was o rd e re d to c e a s e -a n d -d e s is t fr o m unsafe or u n s o u n d p ra c tic e s and to take a ffirm a tiv e a c tio n to c o r r e c t c o n d itio n s . Several su ch a c tio n s are in v a rio u s stages o f p ro ce ss in g . On six o th e r o cc a s io n s , b u t n o n e in 1 9 8 1 , fo rm a l w ritte n a g re e m e n ts b etw e en banks and the C o r p o r a tio n w e re ratifie d by the FDIC Board of D ire cto rs. N o n c o m p lia n c e w ith these fo rm a l w ritte n a g re e m e n ts can resu lt in a c e a s e -a n d -d e s is t a ction. 228 D o c ke t No: F D IC - 8 0 - 6 8 b D ep osits: $6.1 m illio n N otice o f C harges Issued: O c to b e r 27, 1 9 8 0 O rde r Issued: J a n u a ry 26, 1 981 The FDIC c h a rg e d th a t the bank and a d ir e c to r had e n g a g e d in t r a n s a c tio n s far in excess of th a t n o rm a lly a ssociated w ith a bank o f its size and the board o f d ir e c to r s had fa ile d to p ro vid e su p e rv is io n and d ir e c tio n over the bank's o p e ra tin g o ffic e rs to p re ven t the p ra ctice s cited. S im u lta n e o u s ly w ith the issua nce o f the N otice of Charges, a te m p o r a ry c e a s e -a n d -d e s is t o rd e r w as issued p ro h ib it in g th e bank and a d ir e c to r f r o m using th e bank's te lex m a c h in e and fr o m using the bank's nam e in c o n n e c tio n w ith any business tr a n s a c tio n o f the d ir e c to r a n d / o r any p e r son e n g a g e d in business w ith or e m p lo ye d by th is in d iv id u a l a n d / o r any business e n tity o w n e d or c o n tr o lle d by th is in d ivid u a l. The bank was fu r t h e r o rd e re d n o t to ente r into business tr a n s a c tio n s w ith th e d ire c to r. S u b se q u e n tly, a c e a s e -a n d -d e s is t o rd e r w as issued a g a in s t th e bank by c o n se n t, in c o r p o r a tin g all p ro h ib it io n s o f th e te m p o r a r y order. 229 D o cke t No: FDIC 8 0 - 7 3 b D ep osits: $ 4 0 .6 m illio n N otic e o f C harges Issued: N o ve m b e r 1 7, 1 9 8 0 O rde r Issued: February 1 1, 1981 The FDIC c h a rg e d th a t th e bank was e n g a g in g in haza rd ou s le n d in g and lax c o lle c tio n p o lic ie s re su ltin g in an excessive v o lu m e o f p o o r q u a lity loans; fa ile d to m a in ta in an a d e q u a te loan loss reserve; had c o m m itte d c e rta in v io la tio n s o f law: w as o p e ra tin g w ith an in a d e q u a te level o f capital p ro te c tio n , and had o p e ra te d in s u ch a m a n n e r as to resu lt in lo w net o p e ra tin g in c o m e . The bank's d ir e c to r s fa iled to p ro v id e s u p e rv is io n and d ir e c tio n o ver th e bank's o p e ra tin g o ffic e rs to p re ven t th e p ra ctice s and v io la tio n s cited. The bank c o n s e n te d to th e e n try o f a c e a s e -a n d -d e s is t o rd e r and was o rd e re d to p ro v id e and retain m a n a g e m e n t a cc e p ta b le to the su p e rv is o ry a u th o ritie s ; increase e q u ity ca pita l by a sp e c ifie d a m o u n t; estab lish and m a in ta in an a d e q u a te loan loss reserve; e lim in a te v io la tio n s of law; c h a r g e - o ff losses and re d u ce classifie d assets; refrain fr o m m aking new loans to b o rro w e r s classifie d d o u b tf u l and loss; refrain fr o m paying d iv i d e n d s on c o m m o n sto c k w i t h o u t s u p e rv is o ry app ro val; d ev e lo p a loan p o lic y a c c e p ta b le to the s u p e rv is o ry a u th o ritie s; s tre n g th e n c r e d it file d o c u m e n t a tio n ; estab lish a plan to c o n tr o l expense and fu rn is h p e rio d ic p ro g re s s reports. 230 D o cke t No: F D IC - 8 0 - 7 1 b D ep osits: $ 2 6 . 3 m illio n N otice of C harges Issued: N o ve m b e r 1 7. 1 9 8 0 O rde r Issued: M a rc h 2. 1 981 The FDIC c h a rg e d th a t the bank w as o p e ra tin g w i t h o u t an a d e qu ate level o f ca pita l p ro te c tio n ; w as e n g a g e d in haza rd ou s le n d in g and lax c o l le c tio n p ra ctices; w as o p e ra tin g w it h o u t a d e q u a te p ro v is io n s fo r liqu id ity; and had c o m m ite d ce rta in v io la tio n s o f law. The b oard of d ir e c to r s had fa iled to p ro v id e a d e q u a te su p e rv is io n and d ir e c tio n over active o ffice rs to p re v en t the p ra c tice s and v io la tio n s cited. The bank c o n s e n te d to the e n try of a c e a s e -a n d -d e s is t o rd e r and was o rd e re d to increa se and m a in ta in to ta l ca pita l and reserves at a m in im u m sp e cifie d level; e lim in a te loss and 5 0 p e rc e n t o f d o u b tf u l c la s s ific a tio n s and re d u ce re m a in in g c la s s ific a tio n s to sp e cifie d levels; cease e xte n d in g c r e d it to b o r ro w e r s w h o s e o b lig a tio n s have been c h a r g e d - o f f or classified d o u b tf u l or loss unless su ch e x ten sion s o f c re d it are in the best interest of the bank; p ro vid e fo r an a d e q u a te loan v a lu a tio n reserve; re d u ce c o n c e n tr a tio n s o f cred it; a d o p t a s a tis fa c to ry w r itte n loan p olicy; re d u c e loan v o lu m e ; c o m p ly w ith laws, rules and reg u la tio n s; p ro vid e a cce p ta b le m a n a g e m e n t; and fu rn is h p e rio d ic p ro g re ss reports. 231 D o cke t No: F D IC - 8 0 - 5 5 b Dep osits: $ 7 2 . 4 m illio n N otice of C ha rg e s Issued: O c to b e r 6, 1 9 8 0 O rde r Issued: M a rc h 9, 1981 The bank and its board o f d ir e c to r s w ere c h a rg e d w ith o p e ra tin g w ith in a d e q u a te capital; e n g a g in g in hazardous le n d in g and lax c o lle c tio n p ra ctices; fa ilu re to a d e q u a te ly p ro vid e fo r p o te n tia l loan losses; having excessive a dversely classifie d o th e r assets; paying excessive div id en ds; m aking excessive tax tra n s fe rs to its h o ld in g c o m p a n y ; e lim in a tin g fro m its b ooks an a c c o u n t receivable due fr o m its h o ld in g c o m p a n y ; having excessive d iffe re n c e s in a c c o u n ts and lia b ilities n o t s h o w n on its books; and o p e ra tin g w i t h o u t a d e q u a te s u p e rv is io n of and d ir e c tio n of its c h ie f e xecutive o ffic e r and o th e r officers. The bank and its b oa rd o f d ire c to rs c o n s e n te d to the issuance o f a c e a s e -a n d -d e s is t o rd e r and w ere o rd e re d to retain m a n a g e m e n t a c c e p ta ble to s u p e rv is o ry a u th o ritie s ; m ain ta in m in im u m sp e cifie d capital ratios; e lim in a te loss and 5 0 p e rc e n t o f d o u b tf u l c la s s ific a tio n s ; re d u ce r e m a in in g a dversely classifie d assets; cease a d d itio n a l c r e d it to b o rro w e rs w h o s e c r e d it is classifie d d o u b tf u l or loss, lim it the v o lu m e of d ir e c t and in d ire c t c r e d it to a ce rta in b o rro w e r; re strict the le n d in g a u th o r ity of th e bank's o fficers; a dh ere to an a c c e p ta b le w ritte n loan policy; assure the loan v a lu a tio n reserve is b r o u g h t to an a de qu ate level; pay no d iv id e n d s w i t h o u t p rio r w r itte n a pp ro va l o f s u p e rv is o ry a u th o ritie s ; make no paym en ts or tra n s fe rs to th e bank's h o ld in g c o m p a n y ; f o l lo w the FDIC's s ta te m e n t of p o lic y c o n c e r n in g " In c o m e Tax R em itta nce By Banks To H old in g C o m p a n y A ffilia te s"; reverse ce rta in b o o k e ntries relatin g to a c c o u n ts receivable d ue fr o m its h o ld in g c o m p a n y ; im p le m e n t p ro c e d u re s to e nsu re th a t its a c c o u n ts are b r o u g h t into, and m a in ta in e d in b alan ce and e nsure th a t le g itim a te bills are p r o m p tly b o o ked and paid; and p ro vid e p e r io d ic p r o g ress reports. 232 D o c k e t No: F D IC - 8 0 - 7 5 b D ep osits: $ 9 .9 m illio n N otice o f C ha rg e s Issued: N o v e m b e r 24, 1 9 8 0 O rde r Issued: M a rc h 9, 1981 The bank was c h a rg e d w ith e n g a g in g in haza rd ou s len d in g and lax c o l le c tio n p ra ctices; fa ilin g to p ro v id e an a d e q u a te loan loss reserve; o p e r a t ing w ith an in a d e q u a te level o f capital; and the bank's b oa rd o f d ire c to rs w as c h a rg e d w ith fa ilin g to p ro vid e a d e q u a te s u p e rv is io n o f and d ir e c tio n over th e o ffic e rs o f the bank. The bank c o n s e n te d to th e issuance o f a c e a s e -a n d -d e s is t o rd e r and w as o rd e re d to cease e xte n d in g c r e d it w i t h o u t o b ta in in g d o c u m e n t s to 45 p e rfe c t th e bank's lien and evaluate its p rio r ity and e v id en ce o f insu ra n ce, w h e n a p p ro p ria te ; g ra n tin g c r e d it w i t h o u t c u rr e n t and c o m p le te c re d it and fin a n c ia l in fo r m a tio n , w h e re a p p ro p ria te ; and g ra n tin g c r e d it w i t h o u t e s ta b lis h in g a re p a y m e n t p ro g ra m . The bank w as o rd e re d to c h a r g e - o ff all assets classifie d loss and 5 0 p e rc e n t of th o s e classified d o u b tfu l; review the b alan ce o f its reserve fo r p o ssible loan losses and p ro vid e an a d e q u a te reserve; f o l lo w th e bank's loan p olicy; e n fo rc e re p a y m e n t p ro g ra m s; retain m a n a g e m e n t a c c e p ta b le to s u p e rv is o ry a u th o ritie s; re d u c e r e m a in ing adversely classifie d assets; increase total ca pita l and reserves by a sp e c ifie d a m o u n t; pay no d iv id e n d s w i t h o u t p rio r w r itte n a p p ro va l of s u p e rv is o ry a u th o ritie s ; and p ro vid e p e r io d ic p ro g re ss reports. 233 D o c k e t No: F D IC - 8 0 - 6 5 b D ep osits: $ 5 7 . 9 m illio n N otice o f C harges Issued: N o ve m b e r 3, 1 9 8 0 O rde r Issued: A p ril 13, 1981 The FDIC c h a rg e d th a t th e bank w as e n g a g in g in h a za rd o u s le n d in g and lax c o lle c tio n p o licie s re su ltin g in an excessive v o lu m e of p o o r q u a lity loans; w a s o p e ra tin g w ith an in a d e q u a te level o f ca pita l p ro te c tio n ; c o m m itte d c e rta in v io la tio n s o f th e law; and fa ile d to e stab lish and m a in ta in an a d e q u a te reserve fo r loan losses. The bank's d ir e c to r s fa iled to p ro vid e s u p e rv is io n and d ir e c tio n over the bank's o p e ra tin g o ffic e rs to p re ven t th e p ra c tic e s and v io la tio n s cited. The b an k c o n s e n te d to the e n try o f a ce a s e -a n d -d e s is t o rd e r and was o rd e re d to p ro v id e and reta in m a n a g e m e n t a c c e p ta b le to the s u p e rv is o ry a u th o ritie s ; increase e q u ity ca p ita l by a s p ecified a m o u n t; establish and c o n tin u e to m a in ta in an a d e q u a te reserve fo r loan losses t h r o u g h q u a r te rly b oa rd review; e lim in a te v io la tio n s o f law; c h a r g e - o ff losses and re d u c e c lassifie d assets; refrain fr o m e xte n d in g a d d itio n a l c r e d it to b o r ro w e rs w h o s e cre d its have been classified d o u b tf u l or loss; review c u rr e n t w r itte n loan p o licie s and a d o p t necessary ch an ge s; adh ere to w ritte n loan p olicie s; s tre n g th e n c r e d it file d o c u m e n t a tio n ; refrain fr o m e n te rin g into p ro fit p a r tic ip a tio n a g re e m e n ts w ith b o rro w e rs ; take a c tio n to assure its c o m p lia n c e w ith p a r tic ip a tio n a gree m e nts; re d u c e c o n c e n tr a tio n s of cred it; and fu rn is h p e rio d ic p ro g re ss reports. 234 D o c k e t No: F D I C - 8 1 -1 b D ep os its: $ 1 4 .7 m illio n N otic e o f C ha rg e s Issued: J a n u a ry 26, 1 981 O rder Issued: A p ril 13, 1981 The FDIC c h a rg e d the bank and its b oard o f d ir e c to r s w ith o p e ra tin g w i t h o u t a d e q u a te ca pital; h aving an excessive and d is p r o p o r tio n a t e ly large vo lu m e of poor quality loans; fo llo w in g hazardous lending and c o l le c tio n p ra ctic e s and fa ilin g to im p le m e n t e ffe ctive w ritte n loan policies; e xte n d in g a d d itio n a l c r e d it to b o r ro w e r s w h o s e p re v io u s c r e d it lines have been classified; m aking loans and g ra n tin g lines o f c r e d it w i t h o u t r e q u ir ing s u ffic ie n t c r e d it in fo r m a tio n , w it h o u t regard to the a b ility o f th e b o r ro w e rs to repay a n d / o r w i t h o u t o b ta in in g a d e q u a te c o lla tera l; having an excessive v o lu m e o f o v e rd u e loans; fa ilu re to make an a d e q u a te p ro v is io n f o r loan losses; and o p e ra tin g w ith a m a n a g e m e n t having p o licie s and p ra c tice s d e trim e n ta l to th e bank. The FDIC fu r t h e r c h a rg e d th a t the b oard o f d ir e c to r s fa ile d to a d e q u a te ly p ro vid e d ir e c tio n and su p e rv is io n o ver th e o ffic e rs of th e bank. http://fraser.stlouisfed.org/ Federal46 Reserve Bank of St. Louis The b an k c o n s e n te d to the e n try of a c e a s e -a n d -d e s is t o rd e r and w as ordered to charge-off losses and 5 0 percent of doubtful classifications and reduce re m a in in g adverse c la s s ific a tio n s to s p ecified levels; cease e xte n d in g c r e d it to b o r ro w e r s w h o s e o b lig a tio n s have been c h a rg e d o ff or classified d o u b tf u l o r loss; cease e xte n d in g c r e d it to b o r ro w e r s w h o s e c r e d it has been classifie d s u b s ta n d a rd w i t h o u t the p rio r a pp ro va l o f th e bank's b oard o f d ire c to rs ; review, am e nd , a d o p t and im p le m e n t w ritte n loan p o li cies; re d u c e o v e rd u e loans; p ro v id e a d e q u a te c o lla te ra l and c r e d it file d o c u m e n t a tio n ; increa se to ta l ca pita l and reserves by a sp e cifie d a m o u n t; p ro v id e fo r an a d e q u a te loan v a lu a tio n reserve; o b ta in r e g u la to ry a pp ro val p rio r t o p a y m e n t o f d iv id e n d s ; p e r io d ic a lly review th e te rm s and p ro v i sions o f th is O rde r and w ritte n p o licie s and e s tab lish ed p ro c e d u re s o f th e bank and re c o rd su ch review in the b o a rd ’s m in utes; and fu rn is h p e rio d ic p ro g re s s reports. 235 D o c k e t No: F D IC - 8 0 - 5 8 b D ep osits: $ 5 4 . 9 m illio n N otice o f C ha rg e s Issued: O c to b e r 1 0, 1 9 8 0 O rde r Issued: A p ril 13, 1981 The FDIC c h a rg e d th a t the bank and its c h a irm a n o f the b oard had e n g a g e d in tr a n s a c tio n s th a t expo sed the bank to losses e xce e d in g c a p i tal a c c o u n ts ; th a t these tra n s a c tio n s involved the c h a irm a n of the board and w ere a fla g r a n t abuse o f his p o sitio n ; and th a t so m e m e m b e rs o f the b oard o f d ir e c to r s fa ile d to p ro vid e s u p e rv is io n and d ir e c tio n over the bank's o p e ra tin g o ffic e rs to p re ven t the p ra c tic e s cited. S im u lta n e o u s ly w ith th e issua nce o f th e N otice o f Charges, a te m p o r a ry c e a s e -a n d -d e s is t o rd e r w as issued p ro h ib itin g the bank and the c h a irm a n of the board fro m entering into or co n su m m a tin g any business tran sac tio n w ith or fo r th e b e n e fit o f the c h a irm a n and fo r any o f th e business interests o f the c h a irm a n and or any p erson e m p lo ye d by or e n g a g e d in business w ith the ch a irm a n . Subsequently, a cease-and-desist o rd e r was issued against the bank by consent, in co rp o ra tin g all the p rovisions o f the te m p o ra ry order. 236 D o c ke t No: F D IC - 8 1 - 9 b D ep osits: $ 1 6 . 9 m illio n N otic e o f C ha rg e s Issued: M a rc h 4, 1 981 O rder Issued: A p ril 13, 1981 The FDIC c h a rg e d th a t the b a n k a n d its a g ric u ltu ra l rep re sen ta tive, a m e m b e r of th e bank's loan and d is c o u n t c o m m itte e , had e n g a g e d in t r a n s a c tio n s th a t exposed th e bank t o losses o f s u c h a m a g n itu d e as to e lim i nate o r severely im p a ir its capital; th a t th ese tr a n s a c tio n s th a t involved the bank's a g r ic u ltu ra l re p re se n ta tive w e re a fla g r a n t abuse o f his p o s itio n and resu lted in v io la tio n s o f la w and re g u la tio n s; th a t the bank fa ile d to retire all o f its m a tu re d ca pita l notes and fa ile d to o b ta in FDIC p rio r w r i t ten c o n s e n t to retire th ese notes as re q uired ; and th a t the b oard m e m b e rs fa ile d to p ro v id e s u p e rv is io n and d ir e c tio n o ver th e bank's o p e ra tin g o ffic e rs to p re ven t the p ra c tic e s cited. S im u lta n e o u s ly w ith th e issua nce o f th e N otice o f Charges, a te m p o r a ry c e a s e -a n d -d e s is t o rd e r w as issued and th e b an k w as o rd e re d to cease f r o m e n te rin g into any business tr a n s a c tio n w ith , a n d / o r fr o m e x te n d in g c r e d it o f any kind to o r f o r th e b e n e fit o f the a g ric u ltu ra l re p re se n ta tive a n d / o r any related b usine ss interest. The in d iv id u a l re s p o n d e n t was 47 o rd e re d to re d u c e th e o v e r d r a ft in his p erson al a c c o u n t and th o s e o f his related interests to zero; and th e bank was o rd e re d not to retire its m a tu re d ca p ita l notes w i t h o u t p rio r w ritte n c o n s e n t o f th e FDIC. S u b s e q u e n tly, a c e a s e -a n d -d e s is t o rd e r w as issued a g a in s t th e bank and th e in d iv id u a l re s p o n d e n t by c o n se n t, in c o r p o r a tin g all th e p ro v is io n s o f th e te m p o r a ry o rd er. In a d d itio n , the bank w as o rd e re d to d e v e lo p le n d ing, o v e r d r a ft and o p e ra tio n a l p olicie s, and e lim in a te a n d / o r c o r r e c t all v io la tio n s of law and re g u la tio n s. 237 D o c k e t No: FDIC-81 - 8 b D ep os its: $ 1 4 0 . 4 m illio n N otic e o f C ha rg e s Issued: M a rc h 9, 1 981 O rde r Issued: M ay 11, 1981 The FDIC c h a rg e d th a t th e bank w as e n g a g in g in h aza rd ou s le n d in g and lax c o lle c tio n p ra ctice s re su ltin g in an excessive v o lu m e o f p o o r q u a lity loans; th a t it fa ile d to m a in ta in an a d e q u a te reserve fo r loan losses; was o p e ra tin g w ith an in a d e q u a te level o f ca pita l p ro te c tio n ; and c o m m itte d c e rta in v io la tio n s o f law. The bank's d ir e c to r s fa ile d to p ro vid e a d e q u a te s u p e rv is io n and d ir e c tio n over th e bank's o p e ra tin g o ffic e r s to p re ven t the p ra c tic e s and v io la tio n s cited. The b an k c o n s e n te d to th e e n try o f a c e a s e -a n d -d e s is t o rd e r and was o rd e re d to p ro v id e and retain m a n a g e m e n t a c c e p ta b le to th e s u p e rv is o ry a u th o ritie s ; increase e q u ity ca p ita l by a s p e c ifie d a m o u n t; e stab lish and c o n tin u e to m a in ta in an a d e q u a te reserve fo r loan losses t h r o u g h q u a r te rly b o a rd review; c o r r e c t v io la tio n s o f law; c h a r g e - o ff a p p ro p r ia te c la s s i fic a tio n s ; re d u c e re m a in in g c la s s ific a tio n s to a sp e cifie d p e r c e n ta g e of ca p ita l fu n d s ; refrain fr o m e x te n d in g a d d itio n a l c r e d it to b o r ro w e r s w h o s e loans are c lassifie d d o u b tf u l o r loss; review loan p olicie s, p lans and p ro c e d u r e s fo r s u b m is s io n to s u p e rv is o ry a u th o ritie s ; s tre n g th e n c r e d it file d o c u m e n t a tio n ; a d o p t b oa rd r e s o lu tio n to assure p erson al a tte n d a n c e at b o a rd m ee tin g s; and fu rn is h p e r io d ic p ro g re ss reports. 238 D o c k e t No: FDIC 8 1-1 2b D e p o s its : $ 1 0 . 2 m illio n N o tice o f C ha rg e s Issued: M a rc h 3 0 , 1981 O rde r Issued: J u n e 1, 1981 The FDIC c h a rg e d th a t th e bank w as e n g a g in g in h aza rd ou s le n d in g and lax c o lle c tio n p o licie s re su ltin g in an excessive v o lu m e o f p o o r q u a lity loans; th a t it fa ile d to m a in ta in an a d e q u a te reserve f o r loan losses; c o m m itte d c e rta in v io la tio n s o f th e law; o p e ra te d in s u c h a m a n n e r as to in c u r an o p e ra tin g loss in 1 9 8 0 ; and w as o p e ra tin g w ith a w e a k liq u id ity c o n d i tio n . The bank's d ir e c to r s fa ile d to p ro v id e s u p e rv is io n and d ir e c tio n over th e bank's o p e ra tin g o ffic e rs to p re v en t the p ra ctice s and v io la tio n s cited. The b an k c o n s e n te d to th e e n try o f a c e a s e -a n d -d e s is t o rd e r and w as o rd e re d to p ro v id e and retain m a n a g e m e n t a c c e p ta b le to th e s u p e rv is o ry a u th o ritie s ; e stab lish and m a in ta in an a d e q u a te reserve fo r loan losses; e lim in a te loss c la s s ific a tio n s by c h a r g e - o ff or c o lle c tio n ; re d u ce r e m a in ing s u b s ta n d a rd c la s s ific a tio n s w ith in sta ted p aram eters; e lim in a te v io la tio n s o f law; refra in f r o m e x te n d in g a d d itio n a l c r e d it to b o r ro w e r s w h o s e loans are c lassifie d d o u b tf u l o r loss; review c u r r e n t loan p o lic ie s and d e v e lo p n e w p o lic ie s a c c e p ta b le to s u p e rv is o ry a u th o ritie s ; in itia te a p r o g ra m to o b ta in a c c u ra te and a d e q u a te co lla te ra l d o c u m e n t a tio n ; d eve lo p and im p le m e n t a p ro g r a m d e s ig n e d to im p ro v e o p e ra tin g e arnin gs; a d o p t http://fraser.stlouisfed.org/ Federal48 Reserve Bank of St. Louis and f o l lo w a liq u id ity p o lic y s a tis fa c to ry to th e s u p e rv is o ry a uth o ritie s; and fu rn is h p e r io d ic p ro g re s s reports. 239 D o c k e t No: None A ssig n e d D ep osits: $ 1 7 .6 m illio n N otice o f C ha rg e s Issued: A p ril 23, 1 9 7 9 O rde r Issued: J u n e 2, 1 981 The bank w as c h a rg e d w ith having v io la te d a n u m b e r of c o n s u m e r p r o te c tio n and civil rig h ts laws and re g u la tio n s, nam ely: T ru th in Len ding R eg ula tion Z by fa ilin g to p ro p e rly d is c lo s e the a nn ua l p e rc e n ta g e rate, fin a n c e c h arge , n u m b e r or d ue dates o f p aym ents, the te rm s or c o n d i tio n s o f any p re p a y m e n t penalty, and by fa ilin g to p ro v id e c u s to m e rs w ith th e r e q u ire d n o tic e o f th e r ig h t to re s c in d c e rta in tr a n s a c tio n s ; HUD R eg u latio n X, w h ic h im p le m e n ts the Real Estate S e ttle m e n t P ro ced ures Act, by fa ilin g to use or im p r o p e r ly c o m p le tin g th e u n ifo r m se ttle m e n t s ta te m e n t fo rm and by fa ilin g to make p ro p e r d is c lo s u re s and m a in ta in re c o rd s in c o n n e c tio n w ith ce rta in e x e m p t tra n s a c tio n s ; Equal C re d it O p p o rtu n ity R eg ula tion B by fa ilin g to p ro vid e a p p ro p r ia te w r itte n n o tific a tio n s to a p p lic a n ts a g a in st w h o m adverse a c tio n w as taken, and FDIC Part 3 3 8 by fa ilin g to c o lle c t and retain fa ir h o u s in g le n d in g m o n it o r in g in fo r m a tio n w ith re s p e c t to h o m e loan in q u irie s and a pp lic a tio n s . A fte r an a d m in is tra tiv e hea rin g, th e b oa rd o f d ir e c to r s issued its final o rd e r w h ic h re q u ire d th e bank to c e a s e -a n d -d e s is t fr o m th e v io la tio n s d e s c rib e d and to take a ffirm a tiv e a c tio n to c o r r e c t th e c o n d it io n s re s u lt ing fr o m su ch v io la tio n s by s e a rc h in g th e bank's loan files fo r a d d itio n a l v io la tio n s o f R eg ula tion Z o f th e types id e n tifie d and by r e d is c lo s in g loan te rm s and a ffo rd in g affe cted c u s to m e rs an o p p o r tu n ity to cancel u n w a n te d c r e d it in s u ra n c e to o b ta in r e im b u rs e m e n t fo r p re m iu m s paid and, w h e re a p p lic a b le , by n o tify in g c u s to m e r s o f th e ir rig h t to rescind th e ir c r e d it tra n s a c tio n s and a ffo rd in g th e m an o p p o r t u n i t y to d o so. In a d d itio n , the bank w as re q u ire d to review loan a p p lic a tio n s received d u r ing th e six m o n th s p re c e d in g the D e c e m b e r 1 9 7 8 c o m p lia n c e e x a m in a tio n to id e n tify th o s e a p p lic a n ts n o t p ro v id e d w ith p ro p e r n o tific a tio n s of adverse a c tio n and p ro v id e each su ch a p p lic a n t w ith th e re q u ire d n o t i f i c a tio n s as p re s c rib e d by Equal C re dit O p p o r t u n ity R eg ula tion B, and re c o n s tr u c t fa ir h o u s in g le n d in g m o n it o r in g data w ith resp ect to h om e loan in q u irie s and a p p lic a tio n s as re q u ire d by FDIC Part 3 3 8 . The bank w as fu r t h e r re q u ire d to d e s ig n a te a c o m p lia n c e o ffic e r to b rin g th e bank in to fu ll c o m p lia n c e w ith the re g u la tio n s v io la te d and p ro vid e p e rio d ic p ro g re s s re p o rts to th e FDIC until th e c o rr e c tio n s re q u ire d by th e O rder are a c c o m p lis h e d . 240 D o cke t No: F D IC -8 1 -1 3 b D ep osits: $ 1 7 .4 m illio n N otice o f C ha rg e s Issued: A p ril 6, 1 981 O rde r Issued: J u n e 8, 1 981 The FDIC c h a rg e d th a t th e bank exten de d and m a in ta in e d an excessive v o lu m e o f p o o r q u a lity assets and o v e rd u e loans, m a in ta in e d haza rd ou s le n d in g and lax c o lle c tio n practices, fa ile d to p ro p e rly e lim in a te n o n b a n k able assets fr o m the books o f th e bank, o pe ra te d w ith an in a d e q u a te level o f ca p ita l p ro te c tio n , o verstated the e a rn in g s and ca p ita l a c c o u n ts of the bank, and fa iled to heed the a d m o n itio n s and w a r n in g s o f th e s u p e rv is o ry a ge ncies. In a d d itio n , th e bank's board of d ire c to rs w as c h a rg e d w ith the fa ilu re to p ro v id e a d e q u a te s u p e rv is io n o ver th e o ffic e rs o f th e bank. 49 The bank e ntered into a c o n s e n t a g re e m e n t and a ce a s e -a n d -d e s is t o rd e r w as issued. The bank w as o rd e re d to m a in ta in m a n a g e m e n t a c c e p ta b le to th e s u p e rv is o ry a u th o ritie s ; c o m p ly w ith an a c c e p ta b le le n d in g policy; c h a r g e - o ff losses; re d u c e classified assets not re q u ire d to be ch a rg e d o ff to d e s ig n a te d levels w ith in sp e cifie d tim e fram es; m a in ta in an a d e q u a te reserve fo r loan losses, and c o rr e c t te c h n ic a l excep tion s. Further, th e b an k w as o rd e re d to cease r e c o rd in g as in c o m e th e u n c o l lected in te re st on ren ew e d and re w ritte n notes and w as o rd e re d to reverse p re v io u s ly re c o rd e d in c o m e w h ic h rep re sen te d u n c o lle c te d in t e r est on ren ew e d loans over a s p e c ifie d a m o u n t. The bank was also o rd e re d to m a in ta in a sp e cifie d ratio o f e q u ity to assets and to p ro v id e b im o n th ly re p o rts d e ta ilin g c o m p lia n c e w ith th e Order. 241 D o c ke t No: F D IC - 8 1 - 2 2 b D ep osits: $ 1 7 .6 m illio n N otice o f C ha rg e s Issued: M ay 18, 1981 O rde r Issued: J u n e 22, 1 981 The FDIC c h a rg e d th a t the bank m a in ta in e d an excessive v o lu m e of p o o r q u a lity assets and o v e rd u e loans; overstated e a rn in g s and the c a p i tal a c c o u n ts o f the bank; m a in ta in e d an in a d e q u a te level o f ca pita l p r o te c tio n ; m a in ta in e d an excessive v o lu m e o f loans in relatio n to th e natu re and v o lu m e o f d e p osits; c o n d u c te d hazardous le n d in g and lax c o lle c tio n p ra ctices; and fa ile d to c o m p ly w ith an a d m in is tra tiv e a c tio n issued by the State s u p e rv is o ry a u th o rity . The bank's board o f d ir e c to r s w as also c h a rg e d w ith fa ilu re to p ro v id e a d e q u a te s u p e rv is io n o ver th e o ffic e rs of the bank. The bank e ntered into a c o n s e n t a g re e m e n t and a ce a s e -a n d -d e s is t o rd e r w as issued. The bank w as o rd e re d to retain m a n a g e m e n t a c c e p ta ble to the s u p e rv is o ry a u th o ritie s, a d o p t a cc e p ta b le w r itte n loan p o licie s and take a p p ro p r ia te m ea sures to e nsu re c o m p lia n c e w ith th o s e loan p o l icies. Further, the bank w as o rd e re d to refrain fr o m r e c o rd in g as in c o m e u n c o lle c te d interest on ren ew e d or re w ritte n loans, e lim in a te losses, cease e x te n d in g a d d itio n a l c r e d it to b o rro w e rs w h o s e c h a r g e d - o f f loans or loans c lassifie d d o u b tf u l or loss rem ain u n c o lle c te d and refra in fr o m re n e w in g any classifie d loan w i t h o u t fu ll c o lle c tio n o f interest. A d d i t i o n ally, th e b an k w as o rd e re d to re d u c e classifie d assets, n o t re q u ire d to be c h a rg e d off, b e lo w sp e cifie d levels w ith in d e s ig n a te d tim e fram es; c o rr e c t te c h n ic a l e xcep tion s; red uce loan v o lu m e to sp e cifie d ratios o f to ta l d e posits; re s tric t le n d in g w h e n the sp e cifie d loan to d e p o s it ratio is exceeded; m a in ta in a sp e cifie d ratio o f e q u ity capital to assets; refrain f r o m th e p a y m e n t o f d iv id e n d s w i t h o u t a p p ro v a l o f th e s u p e rv is o ry a u t h o r ities; and p ro v id e b im o n th ly re p o rts d e ta ilin g c o m p lia n c e w ith the order. Finally, th e bank's b oard of d ir e c to r s w as o rd e re d to in je ct capital equal to any c h a r g e - o ff a ssociated w ith a sp e cifie d loan and th e bank w as o rd e re d to refra in fr o m p u r c h a s in g any in d e b te d n e s s o f a b o r ro w e r w h o s e lia b ili ties to th e bank have been c h a rg e d off. 242 D o c k e t No: F D IC -8 1-1 7b Dep osits: $ 1 3 . 8 m illio n N otice of C harges Issued: A p ril 23, 1 981 O rde r Issued: J u n e 29, 1 981 The FDIC c h a rg e d th a t the bank was e n g a g in g in haza rd ou s len d in g and lax c o lle c tio n p o licie s re su ltin g in an excessive v o lu m e o f p o o r q u a lity http://fraser.stlouisfed.org/ 50 Federal Reserve Bank of St. Louis loans and o th e r assets in relatio n to its c a pita l and reserves; a llo w e d c e r ta in a ffilia te d fin a n c ia l in s titu tio n s the use o f u n c o lle c te d fu n d s and o v e r dra fts in excessive a m o u n ts ; fa ile d to m a in ta in an a d e q u a te reserve fo r loan losses; fa ile d to im p le m e n t w ritte n loan policies; w as o p e ra tin g w ith in a d e q u a te liq u id ity p ro vis io ns; w as o p e ra tin g th e bank in such a m a n n e r as to resu lt in lo w net in co m e ; and c o m m itte d ce rta in v io la tio n s o f law. It w as also c h a rg e d th a t th e b oa rd o f d ir e c to r s fa ile d to a d e q u a te ly s u p e r vise the active o ffic e rs to p re v en t th e p ra ctice s and v io la tio n s cited. The bank c o n s e n te d to the e n try o f a c e a s e -a n d -d e s is t o rd e r and was o rd e re d to p ro v id e and retain m a n a g e m e n t a c c e p ta b le to th e s u p e rv is o ry a u th o ritie s ; a d o p t and s tr ic tly f o l lo w a p o lic y of e s ta b lis h in g g u id e lin e s and p ro c e d u r e s fo r the e lim in a tio n o f th e excessive use o f u n c o lle c te d fu n d s ; a d o p t and s tr ic tly fo l lo w a p o lic y o f n o t a llo w in g o ve rd ra fts fo r office r, d ire c to r, c o n tr o l o w n e r, or th e ir interests; c h a r g e - o ff losses and re d u c e classifie d assets; e stab lish and c o n tin u e to m a in ta in an a de qu ate reserve fo r loan losses; refra in fr o m e x te n d in g a d d itio n a l c r e d it to b o r ro w e rs w h o s e loans are classifie d d o u b tf u l o r loss; e lim in a te v io la tio n s of law; s tre n g th e n c r e d it file d o c u m e n t a tio n ; estab lish a plan to c o n tro l expenses; review c u r r e n t w r itte n loan policies; a d o p t and s tric tly fo llo w w ritte n loan p o licie s a c c e p ta b le to th e su p e rv is o ry a u th o ritie s; and fu rn is h w ritte n p ro g re ss reports. 243 D o c k e t No: F D IC -8 1 -1 5b D ep osits: $ 2 7 . 4 m illio n N otice o f C harges Issued: A p ril 13, 1 981 O rde r Issued: J u ly 13, 1981 The FDIC c h a rg e d th e bank w ith o p e ra tin g w i t h o u t a d e q u a te m a n a g e m ent; o p e ra tin g w ith an in s u ffic ie n t level o f ca pital; im p r o p e r ly h a n d lin g b o o k k e e p in g entries; o p e ra tin g w ith d e fic it e arnin gs; fa ilu re to heed r e g u latory a d m o n itio n s ; fa ilu re to d iv e rs ify loan risk; and v io la tin g laws and reg u la tio n s. The bank c o n s e n te d to th e e n try o f a c e a s e -a n d -d e s is t o rd e r and was o rd e re d to c o r r e c t v io la tio n s o f laws and re g u la tio n s; lim it c r e d it to any in d iv id u a l to a s p e c ific p e rc e n ta g e o f ca pita l and reserves; e m p lo y an o ffic e r to oversee g en eral le d g e r a c c o u n tin g ; s u b m it a plan to restore p ro fita b ility ; retain m a n a g e m e n t a c c e p ta b le to s u p e rv is o ry a u th o ritie s and increa se e q u ity ca pita l to a sp e cifie d level. 244 D o c k e t No: F D IC - 8 1 - 2 0 b D ep osits: $ 8 .2 m illio n N otice o f C harges Issued: M ay 4, 1 981 O rde r Issued: J u ly 13, 1981 The bank w as c h a rg e d w ith having v iola ted a n u m b e r o f c o n s u m e r p r o te c tio n and civil rig h ts laws and re g u la tio n s . Tru th in L en d in g R eg ula tion Z w as n o t c o m p lie d w ith by fa ilin g to p ro p e rly d is c lo s e th e a nn u a l p e r c e n t age rate, fin a n c e c h arge , a m o u n t fin a n c e d , the n u m b e r, a m o u n t, and due dates o r p e rio d s o f p a ym e n ts and to ta l o f p aym ents, th e a m o u n t or m e th o d o f c o m p u t i n g any d e lin q u e n c y ch arge , the typ e o f any se c u rity held, and by fa ilin g to p ro v id e c u s to m e r s w ith tw o c o m p le te c o p ie s o f the re q u ire d n o tic e o f th e r ig h t t o resc ind ce rta in tra n s a c tio n s . The Fair C re dit R e p ortin g A c t w as n o t a dh ered to by fa ilin g to p ro p e rly d is c lo s e to c r e d it a p p lic a n ts th e n am e and address o f a c o n s u m e r re p o r tin g a g e n c y f u r n i s h ing re p o rts th a t c o n tr ib u te d to th e d enial o f c r e d it and by fa ilin g to p r o p e rly d is c lo s e th e r ig h t o f a p p lic a n ts to make a w ritte n req ue st fo r th e 51 n a tu re o f adverse in f o r m a tio n fu rn is h e d by th ir d parties o th e r t h a n c o n s u m e r r e p o r tin g a ge ncies. In a d d itio n , th e bank v io la te d : HUD R eg ula tion X, w h i c h im p le m e n ts th e Real Estate S e ttle m e n t P ro ced ures Act, by fa ilin g t o use and retain fo r t w o years th e u n ifo rm s e ttle m e n t s ta te m e n t fo rm ; E le c tro n ic F unds T ra n sfe r R e g u la tio n E by fa ilin g to p ro v id e d is c lo s u re s a nd e r r o r r e s o lu tio n n o tice s to c u s to m e r s having c o n tr a c t s fo r EFT se rv i ces; Equal C re d it O p p o r t u n ity R e g u la tio n B by fa ilin g to p ro v id e a p p ro p r ia te w r itt e n n o tific a tio n to an a p p lic a n t a g a in st w h o m adverse a c tio n was taken; FDIC Part 3 3 8 by fa ilin g to c o lle c t and retain fa ir h o u s in g le n d in g m o n it o r in g in f o r m a tio n w ith re s p e c t to h o m e loan in q u irie s and a p p lic a tio n s ; FDIC Part 3 4 5 by fa ilin g to rev iew th e CRA s ta te m e n t a n n u a lly and re c o rd th e a c tio n in th e b o a rd m in utes; th e T re a sury D e p a rtm e n t's Finan cial R e c o rd k e e p in g and R e p o rtin g o f C u r r e n c y and F oreign T ra n s a c tio n s re g u la tio n s by fa ilin g to r e c o rd th e p u rp o s e o f e xte n sio n s o f c r e d it in a m o u n ts in excess o f $ 5 , 0 0 0 ; and FDIC Part 3 2 8 by fa ilin g to use the o ffic ia l a d v e rtis in g s ta te m e n t, " M e m b e r FDIC" in bank a dve rtise m e nts . The b an k c o n s e n te d to th e e n try o f a c e a s e -a n d -d e s is t o rd e r and was o rd e r e d to c o r r e c t t h e c o n d it io n s re s u ltin g fr o m s u ch v io la tio n s ; to search th e bank's loan files fo r a d d itio n a l v io la tio n s o f R e g ula tion Z in w h ic h the b a n k had fa ile d to n o tify c u s to m e r s o f th e ir r ig h t to re s c in d c e rta in c re d it tr a n s a c t io n s and to n o tify th e m o f th e ir rig h t and to re scin d th e tra n s a c tio n s . In a d d itio n , th e b an k w as re q u ire d to re v ie w loan a p p lic a tio n s received sin c e M a rc h 1 9 8 0 t o id e n tify th o s e a p p lic a n ts not p r o v id e d w ith p ro p e r n o tific a tio n s o f adverse a c tio n and to p ro v id e each s u c h a p p lic a n t w ith th e re q u ire d n o tific a tio n s as p re s c rib e d by Equal C re d it O p p o r t u n ity R e g u la tion B. The bank w as also o rd e re d to r e c o n s tr u c t f a ir h o u s in g le n d in g m o n it o r in g data w ith re s p e c t to h o m e loan in q u ir ie s and a p p lic a tio n s as re q u ire d by FDIC Part 3 3 8 . The bank w a s f u r t h e r r e q u ire d to a d o p t a p ro g ra m , in c lu d in g a p p ro p r ia te tra in in g fo r b an k o ffic e r s and e m p lo ye e s to assure fu tu r e c o m p lia n c e . 245 D ocke t No: F D IC -8 1 -21 b Deposits: $1 1.8 m illion N otice o f Charges Issued: May 4, 1 981 O rder Issued: Ju ly 13. 1 981 The bank w as ch arge d w ith o pe ra tin g w ith o u t adequate capital; eng ag in g in hazardous len din g and lax c o lle c tio n practices; fa iling to provide a de q u a tely f o r potential loan losses; a cc ru in g interest on loans m ore than 9 0 days overdue; v io la ting State law; opera ting w ith excessive operating expenses and o pe ra tin g w ith o u t adequate supervision and d ire ctio n fro m its board o f directors. The bank consented to the entry o f a cease-and-desist ord er and was ordered to provide and retain m a n ag em en t and su p p o rt staff acceptable to supervisory authorities; increase capital by a specified a m o u n t w ith in a spe cific tim e frame; eliminate fro m its books assets classified loss and 50% of th ose classified d o u btful; reduce rem aining adversely classified assets; im prove loan d o c u m e n ta tio n ; reduce overdue loans; require prior board of d irector's approval fo r certain loans; fo rm u la te an acceptable loan policy; im p le m e n t p rocedures to assure an adequate loan valuation reserve; stop a ccru in g interest on loans more than 9 0 days overdue; pay no dividends w ith o u t prior approval o f the supervisory authorities; review expenses; reduce operating expenses; fo rm u la te an acceptable policy governing salar ies, bonuses and fees; c o rre c t violations of law and provide progress reports. http://fraser.stlouisfed.org/ 52 Federal Reserve Bank of St. Louis 246 D o c k e t No: F D I C - 8 1 - 2 5 b D e p o sits : $7.1 m illio n N o tice o f C ha rg e s Issued: J u n e 2 2 , 1 981 O rde r Issued: J u ly 2 0 . 1981 The b a n k w a s c h a r g e d w ith h aving v io la te d a n u m b e r o f c o n s u m e r p r o te c tio n and civil r ig h ts laws and re g u la tio n s . T ru th in L e n d in g R e g u la tion Z w as v io la te d by fa ilin g to p ro p e rly d is c lo s e th e a nn u a l p ercen ta ge , fin a n c e c h a rg e , th e m e th o d o f c o m p u t i n g reb ate o f a n y u n e a rn e d p o r tio n o f t h e fin a n c e c h a rg e , th e te rm s and c o n d it io n s of a n y p re p a y m e n t p enalty, th e typ e o f s e c u r ity held and th e p ro p e rty t o w h i c h it relates, and by fa ilin g to p ro p e rly p ro v id e c u s to m e r s w ith th e r e q u ire d n o tic e o f the r ig h t to re s c in d c e rta in tra n s a c tio n s . Federal Reserve R e g u la tio n E. w h ic h im p le m e n ts th e E le c tr o n ic Funds T ra n sfe r Act, w a s vio la te d t h r o u g h f a il ing to p ro v id e c u s to m e r s w ith c e rta in w r itt e n d is c lo s u re s re q u ire d by the r e g u la tio n ; a nd Equal C re d it O p p o r t u n ity R e g u la tio n B w as vio la te d by fa ilin g to p ro v id e a p p ro p r ia te w r itt e n n o tific a tio n to a p p lic a n ts a g a in st w h o m adverse a c tio n w as taken. The bank w as also c h a r g e d w ith h aving v io la te d : th e Financial R e c o rd k e e p in g and R e p o rtin g o f C u r r e n c y and For e ig n T ra n s a c tio n s r e g u la tio n s by fa ilin g to r e c o rd th e n a tu re and p u rp o s e o f all a p p lic a b le loans o ve r $ 5 , 0 0 0 , and to m a in ta in a r e c o rd o f each d e p o s ito r's ta x p a y e r id e n tific a tio n n u m b e r; FDIC Part 3 2 9 f o r fa ilin g to p ro p e rly d is c lo s e and assess th e m in im u m p e n a lty fo r e arly w ith d r a w a l o f tim e d e p o sits, a nd to p ro v id e c u s to m e r s w ith a s ta te m e n t w h i c h a c c u rately d e s c rib e s th e m in im u m penalty; FDIC Part 3 3 8 by fa ilin g to c o lle c t and reta in fa ir h o u s in g le n d in g m o n it o r in g i n f o r m a tio n w ith re sp e ct to h o m e loan in q u irie s and a p p lic a tio n s , and FDIC Part 3 3 9 by m aking e x te n s io n s o f c r e d it s e c u re d by im p ro v e d real estate p ro p e rty and fa ilin g to m a in ta in s u ffic ie n t re c o rd s to in d ic a te th e m e th o d used to d e te rm in e w h e th e r s u c h p ro p e rt y w as lo c a te d in a d e s ig n a te d flo o d hazard area. The bank c o n s e n te d to th e e n try o f a c e a s e -a n d -d e s is t o rd e r and w as o rd e re d to c o r r e c t t h e c o n d it io n s re s u ltin g fr o m s u c h v io la tio n s ; to search th e bank's loan files f o r a d d itio n a l v io la tio n s o f R e g u la tio n Z of th e type id e n tifie d and to re d is c lo s e loan te rm s and, w h e re a p p lica b le , to n o tify c u s to m e r s o f th e ir r ig h t to re scin d th e ir c r e d it t ra n s a c tio n s . In a d d itio n , th e bank w as re q u ire d to id e n tify th o s e a p p lic a n ts a g a in s t w h o m adverse a c tio n w a s taken and to p ro v id e each s u c h a p p lic a n t w ith th e re q u ire d n o tific a tio n as p re s c rib e d by Equal C re d it O p p o r t u n ity R e g ula tion B; to c o m p ile a list o f all d e p o s it a c c o u n ts s u b je c t to e le c tr o n ic fu n d s tra n s fe r and to p ro v id e s u c h c u s to m e r s w ith th e d is c lo s u re s re q u ire d by Elec t r o n i c Funds T ra n sfe r R e g ula tion E; to c o m p ile a list o f all d e p o s ito rs w h o o p e n e d tim e d e p o s it a c c o u n ts o n o r a fte r M a y 6, 1 9 8 0 , and p ro v id e each listed d e p o s ito r w ith a c o p y o f a p e n a lty d is c lo s u r e s ta te m e n t w h ic h a c c u rately d e s c rib e d th e m in im u m p e n a lty r e q u ire d f o r early w ith d r a w a l o f tim e d e p o s its as p ro v id e d in FDIC Part 3 2 9 . The b an k w as f u r t h e r r e q u ire d t o d e s ig n a te a c o m p lia n c e o ffic e r to b rin g th e bank in to fu ll c o m p lia n c e and to p ro v id e p e r io d ic p ro g re s s r e p o rts t o th e FDIC u ntil th e c o r r e c t io n s r e q u ire d by th e O rde r w e re a c c o m p lis h e d . 247 D o c k e t No: F D IC -8 1 -1 6 b D e p o sits : $ 1 0 .4 m illio n N o tic e o f C ha rg e s Issued: A p ril 2 3 , 1 9 81 O rd e r Issued: J u ly 20, 1 981 The FDIC c h a rg e d t h a t th e b an k had e n g a g e d in u nsa fe o r u n s o u n d 53 b a n k in g p ra c tic e s in th a t it fa ile d to p ro m p tly and fu lly inve stiga te and d is c lo s e a s ig n ific a n t c r im in a l irre g u la rity; p re sen te d a b o n d in g c la im to its b o n d in g c o m p a n y w h ic h th e b an k settled and sig n e d a release w i t h o u t d e te rm in in g th a t all losses had been fo u n d ; w as careless in th e im p le m e n ta tio n o f an in h o u s e c o m p u te r o p e ra tio n ; lost in te g rity o f its re co rd s and inte rn a l c o n tr o l; fa ile d to p ro p e rly d o c u m e n t its a c c o u n tin g reco rd s; fa iled to re s p o n d to th e c o lla p s e o f its a c c o u n tin g system; in a d e q u a te ly c o m m u n ic a te d th e n atu re o f its a c c o u n tin g p ro b le m s ; s u b m itte d g ro s sly in a c c u ra te fin a n c ia l data on re p o rts o f c o n d it io n ; p e rm itte d p ro n o u n c e d w e a k nesses in inte rn a l c o n tr o ls and a u d it p ro c e d u re s to go u n c o rre c te d ; fa ile d to p ro p e rly d is c lo s e th e p ro b le m s and m ade in a c c u ra te and m is lea d in g re p o rts to th e p u b lic and its sh a re h o ld e rs. It w as also c h a rg e d th a t th e b oa rd of d ir e c to r s fa ile d to p ro vid e a d e q u a te s u p e rv is io n and d ir e c tio n over th e active o ffic e rs to p re ven t th e p ra ctice s cited. The bank consented to the entry of a cease-and-desist o rd er and was ordered to e m p lo y a chief executive officer and an operations officer both of w h o m should be acceptable to the regulatory authorities; provide fo r the satisfactory co rrectio n of existing a c cou ntin g errors and fo r a 1 0 0 percent positive verification program of certain bank accou nts in co n n e ctio n w ith a State-required audit; a dopt procedures to insure the m aintenance o f the bank's books in a p roper manner, eliminate scheduled weaknesses in inter nal routine and controls, and im p lem en t a satisfactory internal aud it p ro gram; s u bm it fo r prior review all materials to be c o m m u n ic a te d to th e bank's shareholders; and properly s u b m it n otification and essential facts of any and all suspected or possible crim inal violations involving th e bank. 248 D o c k e t No: FDIC-81 -1 8 b D ep osits: $ 4 0 .1 m illio n N otice o f C ha rg e s Issued: A p ril 23, 1 981 O rd e r Issued: A u g u s t 3, 1 981 The FDIC c h a rg e d th a t the bank had fo llo w e d haza rd ou s le n d in g and lax c o lle c tio n p ra c tic e s re s u ltin g in an excessive v o lu m e o f p o o r q u a lity loans; fa ile d to m a in ta in an a d e q u a te reserve fo r loan losses; w as o p e r a t ing w ith an in a d e q u a te level of capital p ro te c tio n ; and had invested its fu n d s in su ch a m a n n e r as to expose th e bank to u n d u e risk o f loss. The bank's d ir e c to r s fa ile d to p ro vid e a d e q u a te s u p e rv is io n and d ir e c tio n over th e bank's o p e ra tin g o ffic e rs to p re ve n t the p ra ctice s and v io la tio n s cited. The bank c o n s e n te d to th e e n try o f a ce a s e -a n d -d e s is t o rd e r and was o rd e re d to p ro vid e and retain m a n a g e m e n t a c c e p ta b le to th e su p e rv is o ry a u th o ritie s ; e stab lish and c o n tin u e to m a in ta in an a d e q u a te reserve fo r loan losses; increa se e q u ity ca pita l by a sp e cifie d a m o u n t; c h a r g e -o ff a p p ro p r ia te cla s s ific a tio n s ; re d u ce r e m a in in g c la s s ific a tio n s to a s p ecified p e r c e n ta g e of ca pita l fu n d s; refrain fr o m e xte n d in g a d d itio n a l c r e d it to b o r ro w e r s w h o s e loans are classified d o u b tf u l or loss; review loan p o li cies, plans and p ro c e d u re s fo r s u b m is s io n to s u p e rv is o ry a u th o r itie s fo r re vie w and a c c e p ta n c e ; fo rm an in v e s tm e n t c o m m itte e and a d o p t a w r i t ten in v e s tm e n t p o lic y s a tis fa c to ry to s u p e rv is o ry a u th o ritie s , and fu rn is h p e r io d ic p ro g re s s reports. 249 D o ck e t No: F D IC - 8 1 - 2 8 b D ep osits: $ 2 5 . 3 m illio n N otice o f C ha rg e s Issued: J u n e 29, 1 981 O rde r Issued: A u g u s t 10, 1981 The FDIC c h a rg e d th a t th e bank m a in ta in e d an excessive v o lu m e of http://fraser.stlouisfed.org/ 54 Federal Reserve Bank of St. Louis p o o r q u a lity loans and o v e rd u e loans, m a in ta in e d hazardous len d in g and lax c o lle c tio n p ra ctices, exten de d p o o r q u a lity loans to a d ir e c to r and to fa m ily m e m b e rs o f o th e r d ire c to rs , fa ile d to im p le m e n t an e ffe ctive loan d o c u m e n t a tio n system, fa ile d to p ro p e rly rem ove n o n b a n k a b le assets fr o m th e books, and fa ile d to m a in ta in an a d e q u a te reserve fo r losses. In a d d itio n , the bank w as c h a rg e d w ith paying excessive r e m u n e r a tio n w i t h o u t regard to th e type or q u a lity o f services p ro v id e d by ce rta in em p lo ye es. The bank w as also c h a rg e d w ith c o m m ittin g v a rio u s v io la tio n s of laws, rules, and re g u la tio n s . Finally, the bank's b oa rd o f d ire c to rs was ch a rg e d w ith a fa ilu re to p ro vid e a d e q u a te su p e rv is io n over the o ffic e rs of th e bank. The b an k e ntered into a c o n s e n t a g re e m e n t and a c e a s e -a n d -d e s is t o rd e r w as issued. The bank w as o rd e re d to retain m a n a g e m e n t a c c e p ta ble to the s u p e rv is o ry a u th o ritie s and to s u b m it a list o f dutie s and c o m p e n sa tio n fo r review and a c c e p ta n c e . The bank w as also o rd e re d to review loan p o licie s and p ro c e d u re s fo r a p p ro p r ia te ch an ge s; e lim in a te losses; and re d u ce classifie d assets b e lo w sp e cifie d levels w ith in s p e c ific tim e fram e s. Further, the bank was o rd e re d to s u b m it a p ro g ra m to the s u p e rv is o ry a u th o ritie s fo r th e liq u id a tio n of ce rta in loans to d ire c to rs and d ire c to rs ' fa m ily m em be rs, c o r r e c t all loan d o c u m e n t a tio n e xcep tion s, m a in ta in an a d e q u a te reserve fo r loan losses, c o r r e c t all v io la tio n s of laws, rules, and re g u la tio n s and s u b m it b im o n th ly p ro g re ss rep orts to the s u p e rv is o ry a u th o r itie s d e ta ilin g the exten t of c o m p lia n c e w ith th e Order. 250 D o c ke t No: FDIC-81 -1 4b Dep osits: $ 1 0.1 m illio n N otice of C harges Issued: A p ril 13, 1981 O rde r Issued: A u g u s t 10, 1981 The FDIC c h a rg e d th a t th e bank w as o p e ra tin g w i t h o u t a d e qu ate capital and th a t the bank fa ile d to make an a d e qu ate p ro v is io n fo r possible loan losses. The bank c o n s e n te d to th e e n try o f a c e a s e -a n d -d e s is t o rd e r and was o rd e re d to re vie w th e b a la n ce o f its loan loss reserve and m ake nece ssary e n trie s to p ro v id e an a d e q u a te loan v a lu a tio n reserve; increa se to ta l c a p i tal and reserves by a s p e c ifie d a m o u n t w ith in th e tim e lim it set and th e re a fte r m a in ta in a s p e c ific level o f c a p ita l p ro te c tio n ; and p ro v id e a p ro g ress re p o rt. 2 51 D o c k e t No: F D I C - 8 1-1 9b D ep osits: $ 9 .9 m illio n N otice o f C ha rg e s Issued: A p ril 23, 1981 O rde r Issued: A u g u s t 10, 1981 The FDIC c h a rg e d th e bank w ith e n g a g in g in haza rd ou s le n d in g and lax c o lle c tio n p ra ctices; fa ilu re to make an a d e qu ate p ro v is io n fo r loan losses; o p e ra tin g w ith an in a d e q u a te level o f ca pita l; and c a pita lizing expense item s w i t h o u t rea s on ab le e xp e c ta tio n o f c o lle c tio n . The bank's b oa rd o f d ir e c to r s w as c h a rg e d w ith fa ilu re to p ro v id e a d e qu ate s u p e rv i sion and d ir e c tio n over th e o ffic e rs o f th e bank. The bank c o n s e n te d to the e n try of a ce a s e -a n d -d e s is t o rd e r and was o rd e re d n o t to extend c r e d it w i t h o u t c o m p le te d o c u m e n t a tio n ; n o t sell loans w ith reco urse; to e n fo rc e a g re e m e n ts e s ta b lis h in g p ro g ra m s of loan rep aym en t; e lim in a te loss and 5 0 p e rc e n t of d o u b tf u l c la ssifica tio n s; not e xtend a d d itio n a l c r e d it to b o r ro w e r s w h o s e c r e d it is classifie d d o u b tf u l 55 o r loss o r has been c h a rg e d o ff the bank's books; not e xtend a d d itio n a l c r e d it to b o r ro w e r s classifie d s u b s ta n d a rd w i t h o u t a pp ro v a l o f the b oard o f d ire c to rs ; review th e balan ce o f the reserve fo r loan losses and p ro vid e fo r an a d e q u a te loan v a lu a tio n reserve; p ro p e rly ca pita lize expenses paid to m a in ta in c o lla te ra l or lien p o s itio n ; retain a c c e p ta b le m a n a g e m e n t; incre a se ca p ita l and reserves to a sp e cifie d a m o u n t and p ro v id e s u p e rv i s o ry a u th o r itie s w ith a plan d e ta ilin g the strateg y o f o b ta in in g the capital level re q u ire d ; re d u c e assets classifie d s u b s ta n d a rd and p ro v id e a r e p o rt to th e s u p e rv is o ry a u th o r itie s c o n c e r n in g c o m p lia n c e w ith the order. 252 D o c k e t No: F D IC - 8 1 - 2 6 b D ep osits: $ 2 2 . 5 m illio n N otice o f C ha rg e s Issued: J u n e 15, 1 981 O rd e r Issued: S e p te m b e r 15, 1 981 The FDIC c h a rg e d the bank w ith o p e ra tin g w it h o u t a d e q u a te ca pital; e n g a g in g in h az a rd ou s le n d in g and lax c o lle c tio n p ra ctices; fa ilin g to a d e q u a te ly p ro v id e fo r p o te n tia l loan losses; a c c ru in g interest on loans m o re th a n 9 0 days past due; fa ilin g to a c c u ra te ly r e p o r t e arnin gs; paying excessive c o m p e n s a tio n to an o ffic e r; havm g an excessive in v e s tm e n t in fixed assets and fa ilin g to p ro vid e a d e q u a te su p e rv is io n of active o fficers. The bank c o n s e n te d to th e e n try of a ce a s e -a n d -d e s is t o rd e r and was o rd e re d to p ro v id e and retain m a n a g e m e n t a c c e p ta b le to s u p e rv is o ry a u th o ritie s ; increase to ta l ca pita l and reserves by sp e cifie d a m o u n ts w ith in sta ted tim e fram e s; c h a r g e - o ff o r c o lle c t assets c lassifie d loss and 5 0 p e rc e n t o f th o s e c lassifie d d o u b tfu l; re d u c e re m a in in g a dversely c la s sified assets to s p e c ific levels w ith in s p e c ific tim e lim its; im p ro v e loan d o c u m e n t a tio n and o b ta in c u rr e n t c r e d it in f o r m a tio n on existin g loans; re d u c e o v e rd u e loans to sp e cifie d p e rce n ta g e s o f to ta l loans o ver the e n s u in g o ne and o n e -h a lf years; p ro h ib it tw o o ffic e rs fr o m m aking loans w i t h o u t loan c o m m itte e a pp ro val; estab lish a loan c o m m itte e ; revise the o v e r d r a ft p olicy; assure an a d e q u a te loan loss reserve; p ro vid e a CPA a u d it o f assets, d o c u m e n t a tio n and entries; lim it fixed asset p urcha ses; n o t e n te r in to or m o d ify leases; cease a c c ru in g interes t on se rio u sly o v e rd u e loans; rev iew and p ro p e rly refle ct e xpense items; c h a rg e o ff d e fi c ie n c y b alan ces c a rrie d as o th e r real estate; reassess the r e m u n e r a tio n paid to an o ffic e r; n o t pay d iv id e n d s w i t h o u t p rio r a pp ro va l o f th e s u p e rv i so ry a u th o ritie s , and fu rn is h p e r io d ic p ro g re ss reports. 253 D o ck e t No: F D IC - 8 1 - 2 3 b D ep osits: $ 3 4 . 6 m illio n N otice of C ha rg e s Issued: M ay 18, 1981 O rde r Issued: S e p te m b e r 21, 1981 The bank was c h a rg e d w ith having viola ted a n u m b e r of c o n s u m e r p r o te c tio n and civil rig h ts laws and re g u la tio n s , nam ely: T ru th in Lending R e g ula tion Z by fa ilin g to p ro p e rly d is clo se the a nn ua l p e rc e n ta g e rate, fin a n c e ch arge , a m o u n t fin a n c e d , th e n u m b e r, a m o u n t, and d ue dates or p e rio d s o f p aym ents, a clea r id e n tific a tio n o f p ro p e rty to w h ic h a se c u rity in te re st relates, and by fa ilin g to p ro vid e c u s to m e rs w ith tw o c o m p le te c o p ie s o f th e re q u ire d n o tic e o f th e r ig h t to rescind c e rta in tra n s a c tio n s ; The Fair C re d it R e p ortin g A c t by fa ilin g to p ro p e rly d is c lo s e to c re d it a p p lic a n ts th e n am e and address of a c o n s u m e r re p o r tin g a g e n c y f u r n i s h ing re p o rts th a t c o n tr ib u te d to the d enial o f c r e d it and by fa ilin g to p r o p erly d is c lo s e the r ig h t of a p p lic a n ts to make a w ritte n req ue st fo r the http://fraser.stlouisfed.org/ Federal 56Reserve Bank of St. Louis n atu re o f adverse in f o r m a tio n fu rn is h e d by th ird parties o th e r th a n c o n su m e r re p o r tin g a ge ncies; HUD R e g u la tion X. w h ic h im p le m e n ts The Real Estate S e ttle m e n t P ro ced ures Act, by fa ilin g to p ro v id e m o rtg a g e loan a p p lic a n ts w ith g o o d fa ith e stim a tes o f s e ttle m e n t costs; FDIC Part 3 3 9 by fa ilin g to m a in ta in fo r all e xte n sio n s o f c r e d it se cured by im p ro v e d real estate or a m o b ile h o m e s u ffic ie n t re co rd s to d e te rm in e w h e th e r flo o d in s u ra n c e is re q uired , and fa ilin g to n o tify a p p lic a b le c u s to m e r s th a t p ro p e rty s e c u rin g an e x te n sio n o f c r e d it is loca te d in a d e s ig n a te d flo o d hazard area; FDIC Part 3 2 6 by fa ilin g to a p p ro v e a s e c u rity p ro c e d u re s p ro g r a m in c o n fo r m a n c e w ith th is part and by fa ilin g to m a in ta in a rec o rd o f th e reasons fo r n o t in s ta llin g ce rta in s e c u rity devices; FDIC Part 3 2 9 by fa ilin g to a c c u ra te ly d is c lo s e th e w ith d ra w a l p e n a lty on tim e d e p o s its and by paying interest on d e p o s its in excess o f th e m a x im u m a llo w a b le rate; E le c tro n ic Funds T ra n s fer R eg ula tion E by fa ilin g to p ro vid e c u s to m e rs w ith c o m p le te d e s c r ip tio n s o f EFT tra n s fe rs to th e ir a c c o u n ts ; Equal C re d it O p p o r t u n ity R e g ula tion B by fa ilin g to p ro vid e s p e c ific reasons fo r adverse a c tio n to an a p p lic a n t a g a in st w h o m adverse a c tio n was taken; FDIC Part 3 3 8 by fa ilin g to use the re q u ire d n o n d is c r im in a to r y sta te m e n ts in h o m e loan a d ve rtis e m e n ts and by fa ilin g to c o lle c t and retain fa ir h o u s ing le n d in g m o n it o r in g in f o r m a tio n w ith re s p e c t t o h o m e loan in q u irie s and a p p lic a tio n s ; H om e M o r tg a g e D is c lo s u re R eg ula tion C by fa ilin g to c o m p ile m o r tg a g e loan data and make m o r tg a g e loan d is c lo s u re s ta te m ents available to the p u b lic; FDIC Part 3 4 5 by fa ilin g to review the CRA s ta te m e n t a n n u a lly and re c o rd th e a c tio n in th e b oa rd m in utes; and the T re a sury D e p a rtm e n t's Financial R eco rd k e e p in g and R e p ortin g o f C u r re n c y and Foreign T ra n s a c tio n s re g u la tio n s by fa ilin g to re c o rd the p u r pose o f e xte n sio n s o f c r e d it in a m o u n ts in excess o f $ 5 ,0 0 0 . The bank c o n s e n te d to th e e n try of a c e a s e -a n d -d e s is t o rd e r and was o rd e re d to c o r r e c t th e c o n d it io n s re su ltin g fr o m su ch vio la tio n s . The bank w as re q u ire d to search its loan files fo r a d d itio n a l v io la tio n s o f Regulation Z w h e re th e bank fa ile d to n o tify c u s to m e rs of th e ir r ig h t to rescind c e r ta in c r e d it tr a n s a c tio n s and to n o tify th e m o f th e ir rig h t to rescind the tra n s a c tio n s . In a d d itio n , the bank w as re q u ire d to review loan a p p lic a tio n s received since O c to b e r 1 9 7 9 to id e n tify th o s e a p p lic a n ts n o t p r o vide d w ith p ro p e r n o tific a tio n s o f adverse a c tio n and p ro vid e each s u ch a p p lic a n t w ith th e re q u ire d n o tific a tio n s as p re s c rib e d by Equal C re d it O p p o r t u n ity R e g ula tion B. The bank was also o rd e re d to r e c o n s tr u c t fa ir h o u s in g le n d in g m o n it o r in g data w ith resp ect to h o m e loan in q u irie s and a p p lic a tio n s as re q u ire d by FDIC Part 3 3 8 . The bank w as fu rth e r req uired to a d o p t a p ro g ra m , in c lu d in g a p p ro p r ia te tr a in in g fo r bank o ffic e rs and em p lo ye es, to assure fu tu r e c o m p lia n c e . 254 D o c k e t No; F D I C - 8 1 - 3 7 b D ep osits: $1 1.8 m illio n N otice o f C ha rg e s Issued: S e p te m b e r 8, 1981 O rde r Issued: O c to b e r 26, 1 981 The bank w as c h a rg e d w ith having v io la te d a n u m b e r o f c o n s u m e r p r o te c tio n and civil rig hts laws and re g u la tio n s , nam ely: T ru th in L ending R eg ula tion Z by fa ilin g to p ro p e rly d is c lo s e th e a nn ua l p e rc e n ta g e rate, fin a n c e ch arge , the n u m b e r, a m o u n t, due dates o r p e rio d s o f p ay m en ts and to ta l o f p aym ents, a clea r d e s c r ip tio n or id e n tific a tio n o f any se c u rity held, and by fa ilin g to p ro p e rly p ro v id e c u s to m e r s w ith th e req uired n o tic e o f th e r ig h t to resc ind c e rta in tra n s a c tio n s ; HUD R e g ula tion X, 57 w h ic h im p le m e n ts th e Real Estate S e ttle m e n t P ro c ed ures Act, by fa ilin g to use or im p r o p e r ly c o m p le tin g th e u n ifo r m s e ttle m e n t s ta te m e n t fo rm and by fa ilin g to p ro v id e m o r tg a g e loan a p p lic a n ts w ith Good Faith Estim ates o f s e ttle m e n t co sts and Special In fo rm a tio n Booklets; FDIC Part 3 3 8 by fa ilin g to c o lle c t and retain fa ir h o u s in g le n d in g m o n it o r in g in fo r m a tio n w ith re s p e c t to h o m e loan in q u irie s and a p p lic a tio n s ; the Fair C re dit R e p o rtin g A c t by fa ilin g to d is c lo s e to c r e d it a p p lic a n ts th e ir rig h ts to make a w r itte n req ue st fo r the n atu re o f adverse in f o r m a tio n fu rn is h e d by t h ird parties o th e r th a n c o n s u m e r re p o r tin g agencies; Equal C re dit O p p o r t u n ity R e g ula tion B by fa ilin g to p ro vid e a p p ro p r ia te w r itte n n o tifi c a tio n s to a p p lic a n ts a g a in st w h o m adverse a c tio n w as ta ken, by using c r e d it a p p lic a tio n fo rm s w h ic h req ue ste d the race o f the a p p lic a n t, and by using c r e d it a p p lic a tio n fo rm s w h ic h m ade a g eneral in q u ir y a b o u t in c o m e w h ile fa ilin g to make d is c lo s u re s c o n c e rn in g a lim o n y, c h ild s u p p o rt or se parate m a in te n a n c e p aym ents; E le c tro n ic Funds T ra n sfer R eg u la tio n E by fa ilin g to p ro vid e c o n s u m e rs w ith an initial d is c lo s u re s ta te m e n t p rio r to m aking p re a u th o riz e d tra n s fe rs of Social S e cu rity and VA p e n s io n p a y m e n ts to th e c o n s u m e rs ' a c c o u n ts ; FDIC Part 3 3 9 by m aking loans se cu re d by im p ro v e d real estate loca te d in a flo o d hazard area and fa ilin g to c o v e r the p ro p e rty w ith flo o d insu ra n ce, and by fa ilin g to m a in tain s u ffic ie n t re co rd s to d e te rm in e w h e th e r flo o d in s u ra n c e is req uired ; FDIC Part 3 4 5 by fa ilin g to review the CRA s ta te m e n t a n n u a lly and reco rd the a c tio n in th e board m in utes; and the T reasury D e p a rtm e n t's Financial R e c o rd k e e p in g and R e p o rtin g o f C u r r e n c y and F oreign T ra n s a c tio n s r e g u la tio n s by fa ilin g to re c o rd th e p u rp o s e of e x ten s ion s o f c r e d it in a m o u n ts in excess o f $ 5 , 0 0 0 . The bank c o n s e n te d to the e ntry of a ce a s e -a n d -d e s is t o rd e r and was o rd e re d to c o rre c t th e c o n d itio n s re s u ltin g fro m su ch v io la tio n s ; to se arch the bank's loan files to id e n tify th o s e loans w h ic h w e re se cu re d by im p ro v e d real estate or a m o b ile h om e loca te d in a flo o d hazard area and w h ic h w e re n o t co ve re d by flo o d in su ra n ce; and to make ce rta in th a t re q u ire d flo o d in s u ra n c e w as o b ta in e d . In a d d itio n , th e b an k w as req uired to p re pa re a list o f c u s to m e r s w h o had c o n tr a c te d fo r e le c tr o n ic fu n d tr a n s fe r o f Social S e c u rity and VA p en sio n ch ecks and to fu rn is h all such c u s to m e r s w ith a c o p y of th e a p p ro p r ia te d is c lo s u re sta te m e nt. The bank w as fu r t h e r re q u ire d to a d o p t a p ro g ra m , in c lu d in g a p p ro p r ia te tra in in g fo r bank o ffic e r s and e m p lo y e e s to assure fu tu r e c o m p lia n c e and to p r o vide p e r io d ic p ro g re s s re p o rts to the FDIC until th e c o r r e c t io n s req uired by th e o rd e r w e re a c c o m p lis h e d . 255 D o cke t No: F D IC - 8 1 - 3 4 b D ep osits: $ 5 .2 m illio n N otice o f C ha rg e s Issued: A u g u s t 17, 1981 O rde r Issued: N o ve m b e r 2, 1981 The FDIC c h a rg e d th a t the bank and its m a n a g e m e n t w e re e n g a g in g in h aza rd ou s le n d in g and lax c o lle c tio n policies; e x ten de d an excessive and d is p r o p o r tio n a t e ly large v o lu m e of p o o r q u a lity loans; exten de d c re d it w i t h o u t a d e q u a te security; a p p ro v e d loans w i t h o u t re q u irin g s u ffic ie n t c r e d it in f o r m a tio n a n d / o r o th e r d o c u m e n t a tio n ; fa ile d to e s tab lish and e n fo rc e re p a y m e n t p ro g r a m s on loans; m a in ta in e d excessive c o n c e n t r a tio n s o f cred it; r e fin a n c e d c lassifie d loans to n e w b o rro w e r s w i t h o u t im p r o v in g th e quality; fa ile d to p ro vid e and m a in ta in an a d e q u a te loan v a lu a tio n reserve; and viola ted ce rta in laws and re g u la tio n s. The FDIC http://fraser.stlouisfed.org/ 58 Federal Reserve Bank of St. Louis f u r t h e r c h a rg e d th a t th e b oa rd o f d ir e c to r s fa iled to p ro v id e a d e qu ate s u p e rv is io n and d ir e c tio n o ver th e o ffic e rs of th e bank. The bank c o n s e n te d to th e e n try o f a c e a s e -a n d -d e s is t o rd e r and was o rd e re d to p ro v id e m a n a g e m e n t a c c e p ta b le to s u p e rv is o ry a u th o ritie s ; e lim in a te lo s s a n d 5 0 p e rc e n t of d o u b tf u l c la s s ific a tio n s and red uce r e m a in ing c la s s ific a tio n s to s p ecified levels; cease e x te n d in g c r e d it to b o rro w e rs w h o s e o b lig a tio n s have been c h a rg e d o ff or classifie d d o u b tf u l or loss; in itia te a p ro g r a m to s tre n g th e n its c r e d it files and c o r r e c t te c h n ic a l e x c e p tio n s ; e stab lish and m a in ta in an a d e q u a te reserve fo r loan losses; cease re fin a n c in g existin g loans to n e w b o r ro w e r s w i t h o u t p rio r a pp ro val by a d is in te re s te d m a jo r ity o f the d ire c to rs ; cease e xte n d in g c r e d it to any d ire c to r, o fficer, p rin c ip a l s h a re h o ld e r, or related interests in excess of s p e cifie d a m o u n ts , unless a p p ro ve d by a m a jo rity o f th e d isin te re ste d d ire c to rs ; re d u ce c o n c e n tr a tio n s o f credit, c o r r e c t all v io la tio n s o f laws and re g u la tio n s ; and fu rn is h p e r io d ic p ro g re s s reports. 256 D o ck e t No: F D IC - 8 1 - 3 1 b D ep osits: $ 1 0 .7 m illio n N otice o f C ha rg e s Issued: A u g u s t 3, 1 981 O rder Issued: N o ve m b e r 2, 1 981 The FDIC c h a rg e d th a t the bank and its m a n a g e m e n t w e re e n g a g in g in haza rd ou s le n d in g and c o lle c tio n policies; had an excessive v o lu m e of p o o r q u a lity loans; had an excessive v o lu m e o f o v e rd u e loans; had exten de d c r e d it w i t h o u t a d e q u a te security; had a p p ro v e d loans w ith o u t s u ffic ie n t c r e d it in f o r m a tio n a n d / o r d o c u m e n t a tio n ; had fa iled to e s ta b lish and e n fo rc e re p a y m e n t p ro g ra m s ; had exten de d c r e d it in the fo rm of cash items; and had an excessive c o n c e n tr a tio n of cred it. The FDIC fu r t h e r c h a rg e d th a t the b oard o f d ire c to rs fa ile d to p ro v id e a de qu ate s u p e rv is io n and d ir e c tio n over th e active o ffic e rs o f th e bank. The bank c o n s e n te d to th e e n try of a c e a s e -a n d -d e s is t o rd e r and was o rd e re d to p ro v id e m a n a g e m e n t a c c e p ta b le to s u p e rv is o ry a uth orities; e lim in a te loss c la s s ific a tio n s and re d u ce r e m a in in g c la s s ific a tio n s to sp e cifie d levels; cease e x te n d in g c r e d it to b o r ro w e r s w h o s e o b lig a tio n s have been c h a r g e d - o f f or classifie d loss; cease e xte n d in g c r e d it to b o r ro w e rs in th e fo rm of cash items, o verdrafts, or by p a ym e n t a g a in st u n c o l lected fu n d s ; initia te a p ro g r a m to s tre n g th e n its c r e d it files and c o rr e c t te c h n ic a l e x ce p tio n s; re d u ce a c o n c e n tr a tio n o f c r e d it to a s p ecified level; re a ffirm its in te n t to c o m p ly w ith a p re v io u s ly a d o p te d loan p olicy; and fu rn is h p e r io d ic p ro g re s s reports. 257 D o c k e t No: F D IC - 8 1 - 1 0 b D ep osits: $ 8 m illio n N otice o f C harges Issued: M ay 4, 1 981 O rde r Issued: N o v e m b e r 9, 1 981 The FDIC c h a rg e d th e bank and in d iv id u a l re s p o n d e n ts w ith e n g a g in g in h aza rd ou s le n d in g and lax c o lle c tio n p ra ctices; fa ilin g to a d e q u a te ly p ro v id e fo r p ossib le loan losses; o p e ra tin g w i t h o u t an a d e q u a te fu n d s m a n a g e m e n t policy; o p e ra tin g w ith an in a d e q u a te level o f capital; paying excessive fees to tw o in d iv id u a l re s p o n d e n ts; v io la tin g a p p lic a b le laws and rules and re g u la tio n s; o p e ra tin g w ith n egative e arnin gs; fa ilu re o f th e bank's b oa rd o f d ir e c to r s to p ro vid e a d e q u a te s u p e rv is io n of and d ire c tio n o ver the active o fficers, and fa ilu re to heed th e w a r n in g s and f o l lo w the a d m o n itio n s o f th e s u p e rv is o ry a u th o ritie s. 59 The bank and one in d iv id u a l re s p o n d e n t c o n s e n te d to th e e n try o f a c e a s e -a n d -d e s is t o rd e r and w e re o rd e re d : to sto p e x te n d in g c re d it w i t h o u t o b ta in in g p ro p e r d o c u m e n t a tio n and se lling loans w ith re c o u rs e to th e bank; e n fo rc e loan re p a y m e n t p ro g ra m s; e lim in a te fr o m its books assets classifie d loss and 5 0 p e rc e n t o f th o s e classifie d d o u b tfu l; n ot e xten d c r e d it to b o rro w e r s w h o s e loans are classifie d loss or had been c h a r g e d o ff th e bank's books; req uire b oa rd of d ir e c to r a p p ro va l fo r a d d i tio n a l c r e d it to b o rro w e rs w h o s e loans are classifie d s u b s ta n d a rd ; review th e a d e q u a c y of and p ro v id e fo r an a d e qu ate loan loss reserve; p re pa re a re p o rt o f all fees paid to tw o in d iv id u a l r e s p o n d e n ts and req uire the c o n se n tin g in d iv id u a l re s p o n d e n t to repay to th e bank u n a u th o riz e d fees c o l lected; a d o p t and im p le m e n t a fu n d s m a n a g e m e n t p o lic y a c c e p ta b le to th e s u p e rv is o ry a u th o ritie s; p ro v id e lien p e rfe c tio n e v id en ce fo r ce rta in loans; e lim in a te a n d / o r c o r r e c t and take steps to insure fu tu re c o m p lia n c e w ith laws and rules and re g u la tio n s ; in cre a se to ta l c a p ita l to a c e r ta in p e r c e n ta g e of assets; re d u ce r e m a in in g assets classifie d su b s ta n d a rd to s p e c ific levels; im p ro v e o p e ra tin g e arnin gs, and p ro v id e p ro g re ss reports. The s e c o n d in d iv id u a l re s p o n d e n t did n o t c o n s e n t in th e O rde r to C ea se -a n d -D e sist. and a h ea rin g b efo re an a d m in is tra tiv e law ju d g e was s ch e d u le d . 258 D o cke t No: F D IC - 8 1 - 4 0 b D ep osits: $ 8 m illio n N otic e o f C ha rg e s Issued: O c to b e r 13, 1981 O rd e r Issued: N o ve m b e r 23, 1 981 The b an k w as c h a rg e d w ith e n g a g in g in haza rd ou s le n d in g and lax c o l le c tio n p ra ctices; o p e ra tin g w ith an in a d e q u a te level o f ca pital; o p e ra tin g w ith in a d e q u a te liq u id ity; fa ilin g to make p ro v is io n s fo r an a d e q u a te loan loss reserve; v io la tin g laws, rules and r e g u la tio n s and fa ilu re o f its board o f d ir e c to r s to p ro v id e a d e qu ate s u p e rv is io n and d ir e c tio n over o ffic e rs of th e bank. The bank c o n s e n te d to the e n try o f a ce a s e -a n d -d e s is t o rd e r and was o rd e re d to cease e xte n d in g c r e d it w i t h o u t p ro p e r d o c u m e n t a tio n ; n o t sell loans w ith re c o u rs e to the bank; stop e xte n d in g c r e d it in c o n tr a v e n tio n of e sta b lish e d loan policy; re d u c e the v o lu m e o f loans b eing m ade; e n fo rc e e sta b lish e d loan re p a y m e n t te rm s; e lim in a te fr o m its b oo ks all assets cla ssifie d loss; n o t extend c r e d it to b o rro w e rs w h o s e loans w e re classified loss, d o u b tf u l o r had been c h a r g e d - o ff; req uire p rio r b oa rd o f d ir e c to r a pp ro va l o f a d d itio n a l c r e d it to b o r ro w e r s w h o s e loans are classifie d s u b sta n d a rd ; review loan loss reserve and p ro v id e an a d e q u a te p ro v is io n fo r loan losses; lim it d ivid e n d s; retain s a tis fa c to ry o ffic e rs and em ployees; in c re a s e c a p ita l by a s p e c ifie d a m o u n t; re d u c e re m a in in g a dv e rs e ly c la s s i fie d loans to s p e c ific levels w ith in s p e c ific tim e fra m e s and p ro vid e a p ro g re s s report. 259 D o c k e t No: F D IC - 8 1 - 3 2 b D ep osits: $ 1 9 .6 m illio n N otice of C ha rg e s Issued: A u g u s t 10. 1 981 O rde r Issued: N o ve m b e r 23. 1 981 The FDIC c h a rg e d th a t th e bank and its m a n a g e m e n t w as o p e ra tin g w ith h az a rd ou s le n d in g and lax c o lle c tio n policies; had an excessive and d is p r o p o r tio n a t e ly large v o lu m e o f p o o r q u a lity loans in relatio n to capital http://fraser.stlouisfed.org/ 60 Federal Reserve Bank of St. Louis and reserves; had an excessive and d is p r o p o r tio n a t e ly large v o lu m e of loans in re la tio n to to ta l d e p osits; had exten de d c r e d it w i t h o u t a d e q u a te security; had a p p ro v e d loans w i t h o u t s u ffic ie n t c r e d it in f o r m a tio n a n d / o r d o c u m e n t a tio n ; had fa ile d to estab lish and e n fo rc e re p a y m e n t p ro g ra m s; had an excessive v o lu m e of o v e rd u e loans; had excessive c o n c e n tr a tio n s o f cred it; had fa ile d to p ro v id e and m a in ta in an a d e q u a te loan v a lu a tio n reserve; w as o p e ra tin g w i t h o u t an a d e q u a te level o f ca p ita l p ro te c tio n ; and w as in v io la tio n o f c e rta in laws and re g u la tio n s. The FDIC fu rth e r c h a rg e d th a t th e b oa rd o f d ir e c to r s fa iled to p ro v id e a d e q u a te su p e rvisio n and d ir e c tio n o ver th e active o ffic e rs o f th e bank. The bank c o n s e n te d to the e n try o f a ce a s e -a n d -d e s is t o rd e r and was o rd e re d to p ro v id e m a n a g e m e n t a c c e p ta b le to s u p e rv is o ry a uth o ritie s; increa se to ta l ca pita l and reserves by a sp e cifie d a m o u n t on a sp e c ific date; e lim in a te loss and 5 0 p e rc e n t o f d o u b tf u l c la s s ific a tio n s and red uce re m a in in g adverse c la s s ific a tio n s to sp e c ifie d levels; cease e x ten din g c r e d it to b o r ro w e r s w h o s e o b lig a tio n s have been c h a r g e d - o f f o r classified d o u b tf u l or loss; initia te a p ro g r a m to s tre n g th e n its c r e d it files and to c o r r e c t te c h n ic a l e x c e p tio n s; estab lish and m a in ta in an a d e q u a te loan v a lu a tio n reserve; re d u c e c o n c e n tr a tio n s o f c r e d it to s p e cifie d levels; re d u c e th e a m o u n t o f net loans to a sp e cifie d p e rc e n ta g e o f net dep osits; re v ie w c o lle c tio n p ro c e d u r e s and initia te a p ro g r a m to re d u c e th e v o lu m e of o v e rd u e loans; e lim in a te a n d / o r c o r r e c t all v io la tio n s o f laws and r e g u lations. and fu rn is h p e r io d ic p ro g re s s reports. 260 D o c k e t No: F D I C - 8 1 - 4 4 b D ep osits: $2.1 m illio n N otice of C harges Issued: N o v e m b e r 2. 1 981 O rde r Issued: N o ve m b e r 30, 1981 The bank w as c h a rg e d w ith having v io la te d a n u m b e r o f c o n s u m e r p r o te c tio n and civil rig h ts laws and re g u la tio n s , nam ely: T ru th in Lending R e g ula tion Z by fa ilin g to p ro p e rly d is c lo s e the a nn ua l p e rc e n ta g e rate, fin a n c e c h arge , a m o u n t fin a n c e d , th e d ue dates o r p e rio d s o f paym ents, to p ro p e rly n o tify b o r ro w e r s of th e ir r ig h t to re s c in d ce rta in tra n s a c tio n s and to d elay d is b u r s e m e n t o f fu n d s until the resciss ion p erio d had expired, and to m a in ta in and preserve a re c o rd of e vid e n ce of c o m p lia n c e w ith R e g ula tion Z; Federal Reserve R eg ula tion E, w h ic h im p le m e n ts the E le c tro n ic Funds T ra n sfer Act, by fa ilin g to p ro vid e c u s to m e rs having c o n tra cts fo r e le c tr o n ic fu n d tra n s fe rs w ith th e w r itte n d is c lo s u re s re q u ire d by th e re g u la tio n ; FDIC Part 3 3 8 by fa ilin g to c o lle c t and retain fa ir h o u s ing le n d in g m o n it o r in g in f o r m a tio n w ith resp ect to h o m e loan in q u irie s and a p p lic a tio n s ; Part 3 3 9 by m aking e x ten sion o f c r e d it se cu re d by im p ro v e d real estate p ro p e rty and fa ilin g to m a in ta in s u ffic ie n t re co rd s to in d ic a te th e m e th o d used to d e te rm in e w h e th e r su ch p ro p e rty was loca te d in d e s ig n a te d flo o d hazard areas: and FDIC Part 3 4 5 by fa ilin g to a d o p t a C o m m u n it y R ein vestm e nt A c t S tatem ent, to a n n u a lly review such s ta te m e n t, to m a in ta in rea dily availab le CRA files, and to p ro v id e the CRA n o tic e in its p u b lic lobby. The bank c o n s e n te d to th e e n try o f a c e a s e -a n d -d e s is t o rd e r and was o rd e re d to c o r r e c t the c o n d it io n s re s u ltin g fr o m su ch v io la tio n s; to search the bank's loan files fo r a d d itio n a l v io la tio n s o f R e g ula tion Z o f the type id e n tifie d and to re d isclo se loan te rm s and r e im b u rs e a ffe cted c u s to m e r s and, w h e re a p p lic a b le , to n o tify th e m o f th e ir r ig h t to resc ind th e ir c re d it tra n s a c tio n s . In a d d itio n , th e bank w as re q u ire d to c o m p ile a list o f all 61 o u ts ta n d in g e xte n sio n s of c r e d it se cured by im p ro v e d real p ro p e rty lo ca te d in a d e s ig n a te d flo o d hazard area, a c q u ire such re c o rd s as m ig h t be n ece ssary to a llo w a d e te rm in a tio n o f w h e th e r flo o d in s u ra n c e w as re q uired , and, w h e re a p p lic a b le , cause th e a c q u is itio n of th e req uired flo o d insu ra n ce . The bank w as fu r t h e r re q u ire d to a d o p t a c o m p re h e n s iv e w r itt e n c o m p lia n c e p ro g ra m , in c lu d in g a p p ro p r ia te tr a in in g fo r bank o ffic e rs and e m p lo ye e s to assure fu tu re c o m p lia n c e and to p ro v id e p e r i o d ic p ro g re s s re p o rts to the FDIC until th e c o r r e c tio n s re q u ire d by th is o rd e r w e re a c c o m p lis h e d . 261 D o c k e t No: F D IC - 8 1 - 4 1 b D ep osits: $ 1 5 m illio n N otice o f C ha rg e s Issued: O c to b e r 26, 1 981 O rde r Issued: N o ve m b e r 3 0, 1 981 The b an k w as c h a rg e d w ith having v iola ted a n u m b e r o f c o n s u m e r p r o te c tio n and civil rig h ts laws and re g u la tio n s, nam ely: T ru th in Lending R e g ula tion Z by fa ilin g to p ro p e rly d is c lo s e th e ann ua l p e rc e n ta g e rate, f in a n c e c h arge , a m o u n t fin a n c e d , the c o n d it io n s u n d e r w h ic h a "b a llo o n p a y m e n t" m ay be re fin a n ce d , th e to ta l o f p aym ents, and by fa ilin g to p ro p e rly p ro v id e c u s to m e r s w ith th e re q u ire d n o tic e o f th e rig h t to re s c in d c e rta in tra n s a c tio n s ; FDIC Part 3 2 9 by fa ilin g to p ro v id e d e p o s ito rs w ith a w r itte n sta te m e n t th a t a c c u ra te ly d e s c rib e d the m in im u m early w ith d r a w a l penalty; FDIC Part 3 3 8 by fa ilin g to c o lle c t and retain fa ir h o u s in g le n d in g m o n it o r in g in f o r m a tio n w ith resp ect to h o m e loan in q u i r ies and a p p lic a tio n s ; FDIC Part 3 3 9 by m aking e x ten s ion s o f c re d it se cu re d by im p ro v e d real p ro p e rty and fa ilin g to m a in ta in s u ffic ie n t re c o rd s to in d ica te th e m e th o d used to d e te rm in e w h e th e r su ch p ro p e rty w as loca te d in a d e s ig n a te d flo o d hazard area, to p ro v id e b o r ro w e r s w ith th e re q u ire d n o tic e th a t th e p ro p e rty is loca te d in s u c h an area, and to assure th a t f lo o d insu ra n ce, w h e n req uired , w as o b ta in e d ; and FDIC Part 3 4 5 by fa ilin g to a n n u a lly review its C o m m u n it y R ein vestm e nt A c t s ta te m e nt. The bank c o n s e n te d to the e n try of a c e a s e -a n d -d e s is t o rd e r and was o rd e re d to c o r r e c t th e c o n d it io n s re su ltin g fr o m s u ch vio la tio n s ; to search th e bank's loan files fo r a d d itio n a l v io la tio n s o f R e g ula tion Z o f th e type id e n tifie d ; to re d is clo se loan te rm s and r e im b u rs e a ffe cte d c u s to m e rs and, w h e re a p p lica b le , to n o tify th e m o f th e ir rig h t to rescind th e ir c r e d it tr a n s a c tio n s . In a d d itio n , th e bank was re q u ire d to c o m p ile a list of all d e p o s ito rs w h o o p e n e d tim e d e p o s it a c c o u n ts on or after M ay 6, 1 9 8 0 , to p ro v id e w h e re necessary each listed d e p o s ito r w ith a c o p y o f a p en alty d is c lo s u r e s ta te m e n t w h ic h a c c u ra te ly d e s c rib e d the m in im u m pen alty re q u ire d fo r early w ith d ra w a l o f tim e d e p o sits as p ro v id e d in FDIC Part 3 2 9 and s e c tio n 1 2 0 4 . 1 0 3 of DIDC reg u la tio n s ; to c o m p ile a list of all o u ts ta n d in g e xte n sio n s o f c r e d it se cured by im p ro v e d real p ro p e rty lo ca te d in a d e s ig n a te d flo o d hazard area, a c q u ire s u c h re c o rd s as m ig h t be necessary to a llo w a d e te rm in a tio n o f w h e th e r flo o d in s u ra n c e is r e q u ire d , and w h e re a p p lica b le , cause the a c q u is itio n o f the req uired flo o d in su ra n ce . The bank w as fu r t h e r re q u ire d to im p le m e n t a c o m p r e h ensive w r itt e n c o m p lia n c e p ro g ra m , in c lu d in g a p p ro p r ia te tr a in in g fo r b an k o ffic e r s and em p lo ye es, to assure fu tu re c o m p lia n c e , and to p ro vid e th e FDIC w ith p e r io d ic p ro g re s s re p o rts until the c o r r e c tio n s re q u ire d by th is o rd e r w e re a c c o m p lis h e d . http://fraser.stlouisfed.org/ 6 2Reserve Bank of St. Louis Federal 262 D o ck e t No: F D IC - 8 1 - 3 8 b D ep osits: $ 4 7 m illio n N otice of C ha rg e s Issued: S e p te m b e r 8, 1 981 O rde r Issued: N o ve m b e r 3 0, 1 981 The bank was c h a rg e d w ith having v iola ted T ru th in L en d in g R egulation Z by fa ilin g to p ro p e rly d is c lo s e the a nn ua l p e rc e n ta g e rate in c o n n e c tio n w ith loans se cu re d by real p ro p e rty w h e re in p re pa id fin a n c e c h a rg e s w ere im p o se d . The bank c o n s e n te d to th e e n try o f a c e a s e -a n d -d e s is t o rd e r and was o rd e re d to c o r r e c t th e c o n d it io n s re s u ltin g fr o m su ch vio la tio n s ; to search the bank's loan files fo r a d d itio n a l v io la tio n s of R e g ula tion Z of th e type id e n tifie d and to r e im b u rs e a ffe cted c u sto m e rs. 263 D ocke t No: F D IC - 8 1 - 3 0 b D ep osits: $ 1 9.1 m illio n N otice o f C harges Issued: Ju ly 13, 1 981 O rde r Issued: N o ve m b e r 3 0, 1 981 The bank w as c h a rg e d w ith e n g a g in g in h aza rd ou s le n d in g and lax c o l le c tio n p ra ctices; fa ilu re to make an a d e q u a te p ro v is io n fo r loan losses; o p e ra tin g w ith in a d e q u te c apital; o p e ra tin g w ith in a d e q u a te interna l c o n trols; v io la tin g laws and re g u la tio n s , and fa ilu re o f th e b oard o f d ire c to rs to p ro vid e a d e q u a te s u p e rv is io n o f its o fficers. The bank c o n s e n te d to th e e n try o f a c e a s e -a n d -d e s is t o rd e r and was o rd e re d to c o r r e c t v io la tio n s o f laws and re g u la tio n s; review the loan v a lu a tio n reserve and make an a d e q u a te p ro v is io n fo r loan losses; n o t pay d iv id e n d s w i t h o u t s u p e rv is o ry a pp ro val; increase ca pita l by a sp e c ific a m o u n t w ith in a s p e c ific tim e; cease e xte n d in g c r e d it w i t h o u t p ro p e r d o c u m e n t a tio n ; n o t sell loans w ith re c o u rs e to th e bank; lim it o verdrafts; lim it a m o u n t o f loans to o ne entity; estab lish a loan p olicy; c h a r g e -o ff assets c lass ifie d loss; n o t extend c r e d it to b o r ro w e r s w h o s e loans are classifie d loss, d o u b tf u l or had been c h a r g e d - o ff; re q u ire p rio r b oard of d ir e c to r s a pp ro v a l fo r a d d itio n a l c r e d it to b o r ro w e r s w h o s e loans are classifie d s u b s ta n d a rd ; re d u c e re m a in in g a dversely classifie d loans; retain m a n a g e m e n t a c c e p ta b le to the s u p e rv is o ry a u th o ritie s ; in v e n to ry o ffic ia l ch ecks and ce rtific a te s o f d e p o s it and estab lish c o n tro ls ; review p ro c e d u re s to e nsu re s e g re g a tio n o f d utie s and p ro vid e p ro g re ss reports. 264 D ocke t No: F D I C - 8 0 - 7 8 b D ep osits: $ 2 1 . 4 m illio n N otic e of C ha rg e s Issued: D e c e m b e r 2 2, 1 9 8 0 O rder Issued: D e c e m b e r 21, 1981 The bank was c h a rg e d w ith having v io la te d T ru th in Len ding R egulation Z by fa ilin g to p ro p e rly d is c lo s e th e fin a n c e ch a rg e in c o n n e c tio n w ith loans co ve re d by c r e d it life insu ra n ce. A fte r an a d m in is tra tiv e hea rin g, the board o f d ir e c to r s issued its final c e a s e -a n d -d e s is t o rd e r w h ic h re q u ire d the bank to c o r r e c t the c o n d it io n s re s u ltin g fr o m su ch vio la tio n s ; to search the bank's loan files fo r a d d i tio n a l v io la tio n s o f R e g ula tion Z o f the type id e n tifie d and to in fo rm th e a ffe c te d c u s to m e r s o f the to ta l d o lla r c o s t to c o n tin u e c r e d it life in s u r a nce on th e ir loans and th a t th e y had th e o p tio n to ca n ce l c o n tin u e d in s u r ance coverage. 63 Temporary Cease-and-Desist Actions Federal Deposit Insurance Act-Section 8(c) Bank No. 28 D ep osits: $ 1 6 .9 m illio n T e m p o ra ry c e a s e -a n d -d e s is t o rd e r issued M a rc h 4, 1 9 8 1 . The bank was o rd e re d to cease fr o m e n te rin g into any business tr a n s a c tio n w ith a n d / o r fr o m e x te n d in g c r e d it o f any kind to o r fo r the b e n e fit o f the a g ric u ltu ra l re p re se n ta tive a n d / o r any related business interest. The ind ivid u a l re s p o n d e n t w as o rd e re d to re d u ce the o v e r d r a ft in his p ersonal a c c o u n t and th o s e o f his related interests to zero; and the bank was o rd e re d not to retire its m a tu re d ca pita l notes w i t h o u t p rio r w ritte n c o n s e n t o f the FDIC. Assessment of Civil Money Penalties The Financial In s titu tio n s R eg ula tory and In terest Rate C o n tro l A c t o f 1 9 7 8 p ro vid e s th a t th e Federal fin a n c ia l in s titu tio n s re g u la to ry a ge n cie s may assess civil m o n e y p en alties fo r th e v io la tio n o f a fin al c e a s e -a n d -d e s is t o rd e r or v io la tio n s o f th e p ro v is io n s o f c e rta in o th e r statutes. One su ch a c tio n w as b e g u n in 1 9 8 1 ; tw o a c tio n s th a t w e re p e n d in g fr o m the p re vio u s year resu lted in o ne fin e being paid. The o th e r fin e was n o t paid and e n fo rc e m e n t o f the o rd e r has been refe rre d to the U.S. A tto r n e y fo r c o lle c tio n . Summary of Cases 3 D o c ke t No: F D IC - 8 0 - 7 2 K N otice of A ss e s sm e n t o f Civil Penalty Issued: N o v e m b e r 1 7, 1 9 8 0 The FDIC fo u n d th a t th e bank exten de d c re d it in the fo r m of a loan, let te r o f c r e d it and cash item s fo r in s u ffic ie n t fu n d s to the bank's C h a irm a n o f th e Board and p rin c ip a l s h a r e h o ld e r in excess o f th e bank's lim it u n d e r R e g ula tion 0 . Interest w as n o t c o lle c te d on th e cash item s and th e t r a n sa ctio n s involved m ore th a n n o rm a l risk. These e x ten sion s of c re d it involved p re fe re n tia l te rm s and w ere m ade w i t h o u t th e p rio r a pp ro va l of th e b oa rd o f d ir e c to r s in v io la tio n o f R eg ula tion 0. N otice w as served to the re s p o n d e n t on J a n u a ry 2 8, 1 9 8 1 . On A p ril 1 4, 1 9 8 1 , a fin a l d e m a n d letter w as se nt to w h ic h th e in d iv id u a l did not re sp o n d . The D e p a r tm e n t o f J u s tic e was req ue ste d to assist th e C o r p o r a tio n in c o lle c tin g the fine. The in d iv id u a l s u b s e q u e n tly filed fo r b a n k ru p tc y and the FDIC's p ro o f of claim has been presented in th e b a n kru p tcy court. 4 D o ck e t No: F D I C - 8 1-5k D ep osits: $ 2 .2 m illio n A sse ssm e n t o f Civil Penalty Issued: February 2, 1 981 The FDIC fo u n d that the bank extended credit to a d irector and principal sto ckho lde r w h ic h was in excess of lending limits prescribed by Regulation 0. The b an k also exten de d c r e d it to a related interest o f th e d ir e c to r and p rin c ip a l s to c k h o ld e r w h ic h was in excess o f th e lim it s p ec ified in R eg ula tio n 0 . A d d itio n a lly , th e bank paid n u m e ro u s ch ecks w h ic h created o v e r d ra fts in th e p e rs o n a l c h e c k in g a c c o u n ts of a d ir e c t o r in v io la tio n o f R eg u la tio n 0 . A p en alty w as assessed a g a in st th e d ir e c to r and p rin c ip a l s to c k h o ld e r w h o received, and w h o s e related interest received, excessive credit. A p e n a lty was assessed a g a in st th e d ir e c to r w h o s e a c c o u n ts w e re over- http://fraser.stlouisfed.org/ 64 Federal Reserve Bank of St. Louis d ra w n . Penalties w e re also assessed a g a in s t the in d iv id u a l b oard m em be rs. 5 D o cke t No: F D IC - 8 0 - 3 5 k A sse ssm e n t of Civil Penalty Issued: M ay 1 9, 1 9 8 0 Final O rder to Pay Issued: A p ril 6, 1 981 Total a m o u n t assessed: $ 1 2 , 4 0 0 The FDIC c h a rg e d th a t th e bank paid n u m e r o u s c h e cks w h ic h created o v e rd ra fts a g a in s t th e p ersonal c h e c k in g a c c o u n ts o f d ir e c to r s w i th o u t assessing service c h a rg e s in the a m o u n t w h ic h it assesses o th e r c u s t o m ers o f th e bank in s im ila r c irc u m s ta n c e s . This c o n s titu te d e x ten s ion s of c r e d it to d ir e c to r s at te rm s m o re fa v o ra b le th a n th o s e p re vailing fo r c o m p arab le tra n s a c tio n s w ith o th e r p erson s w h o w e re not "e xe cu tive o fficers, d ire c to rs , or p rin c ip a l s h a re h o ld e rs ", in v io la tio n of R eg ula tion 0 . The FDIC f u r t h e r c h a rg e d th a t th e bank and tw o d ir e c to r s had v iola ted an FDIC o rd e r w h ic h re q u ire d th a t th e bank c e a s e -a n d -d e s is t fr o m ce rta in e n u m e ra te d p ra ctice s and take d e s ig n a te d a ffirm a tiv e co u rse s o f a ction. A fte r an a d m in is tra tiv e hea rin g, the case w as s u b m itte d to th e FDIC Board o f D ire c to rs fo r fin al d e cisio n . Penalties w e re assessed a gainst th e entire b oa rd of d ir e c to r s fo r v io la tio n s o f R eg ula tion 0 and fo r v io la tio n s of an FDIC c e a s e -a n d -d e s is t order. Two d ir e c to r s w e re assessed a d d i tio n a l penalties fo r v io la tio n s of the FDIC ce a s e -a n d -d e s is t order. 65 CT> 00 BANKS CLOSED BECAUSE OF FINANCIAL DIFFICULTIES: FDIC INCOME, DISBURSEMENTS, AND LOSSES Table 122. Number and deposits of banks closed because of financial difficulties, 1934— 1981 Table 1 23. Insured banks requiring disbursements by the Federal Deposit Insurance Corporation during 1981 Table 124. Depositors, deposits, and disbursements in failed banks requiring disbursements by the Federal Deposit Insurance Corporation, 1934— 1981 B an ks g ro u p e d b y class of bank, year o f deposit payoff or deposit assum ption, a m o u n t of deposits, an d State Table 125. Recoveries and losses by the Federal Deposit Insurance Corporation on principal disburse ments for protection of depositors, 1934— 1981 Table 126. Analysis of disbursements, recoveries, and losses in deposit insurance transactions, Janu ary 1, 1934— December 31, 1981 Table 1 27. Income and expenses, Federal Deposit Insurance Corporation, by year, from beginning of operations, September 11, 1933, to December 31, 1981 Table 128. Protection of depositors of failed banks requiring disbursements by the Federal Deposit Insurance Corporation, 1934— 1981 Table 129. Insured deposits and the deposit insurance fund, 1934— 1981 D eposit insurance disbursem ents Disbursem ents by the Federal Deposit Insurance Corporation to protect depositors are made w hen the insured deposits of banks in financial d iffi culties are paid off, or w hen the deposits of a failing bank are assumed by another insured bank w ith the financial aid of the Corporation. In deposit payoff cases, the disbursem ent is the amount paid by the Corporation on insured deposits. In deposit assumption cases, the principal disbursement is the am ount loaned to failing banks, or the price paid for assets purchased from them; additional disbursem ents are made in those cases as advances for protection of assets in process of liquidation and for liquidation expenses. In deposit assum ption cases, the Corporation also may purchase assets or guarantee an insured bank against loss by reason of itsassum ing the liabilities and purchasing the assets of an open or closed insured bank. Under its section 13(c) authority, the Corporation has made disburse CD co ments to five operating banks. The amounts of these disbursements are included in table 126, but are not included in tables 124 and 125. Noninsured bank failures Statistics in this report on failures of noninsured banks are compiled from inform ation obtained from State banking departments, field supervisory officials, and other sources. The Corporation received no reports of nonin sured bank closures due to financial difficulties in 1981. For detailed data regarding noninsured banks that suspended in the years 1934-1962, see the Annual Report for 1963, pp. 27-41. For 19631981, see table 122 of this report, and previous reports for respective years. Sources o f data Insured banks: books of bank at date of closing; and books of FDIC, December 31, 1981. Table 122. NUMBER AND DEPOSITS OF BANKS CLOSED BECAUSE OF FINANCIAL DIFFICULTIES, 1934— 1981 Number Deposits (in thousands of dollars) Insured Total Noninsured' Total 722 136 586 61 32 72 84 81 72 48 17 23 5 2 1 2 6 3 9 5 5 4 5 4 5 3 3 9 3 2 9 3 2 8 9 8 4 3 9 8 6 3 6 4 14 17 6 7 10 10 10 52 6 3 7 7 12 5 2 3 9 26 69 77 74 60 43 15 20 5 2 1 1 5 3 5 4 2 3 4 2 5 2 2 4 3 1 5 1 2 7 5 7 4 3 9 7 6 1 6 4 13 16 6 7 10 10 10 Year T o ta l....................................... 1934 1935 1936 1937 1938 1939 1940 1941 1942 1943 1944 1945 1946 1947 1948 1949 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 .................................... .................................... .................................... .................................... .................................... .................................... .................................... .................................... .................................... .................................... .................................... .................................... .................................... .................................... .................................... .................................... .................................... .................................... .................................... .................................... .................................... .................................... .................................... ..................................... .................................... .................................... .................................... .................................... .................................... .................................... .................................... .................................... .................................... .................................... .................................... .................................... .................................... .................................... .................................... .................................... .................................... .................................... .................................... .................................... .................................... .................................... .................................... .................................... 1 1 4 1 3 1 1 2 1 1 5 1 4 2 1 4 1 1 2 1 1 Without disbursements by FDIC2 8 Insured With disbursements by FDIC3 Total Non insured' Total Without disbursements by FDIC2 With disbursement by FDIC3 41.147 10.050.219 578 10.234.866 143.500 10,091.366 9 25 69 75 74 60 43 15 20 5 2 1 1 5 3 4 4 2 3 2 2 5 2 1 4 3 1 5 37,332 13,988 28,100 34,205 60,722 160,211 142,788 29.796 19.540 12.525 1.915 5.695 494 7,207 10,674 9,217 5,555 6,464 3,313 45,101 2,948 11.953 11,690 12.502 10,413 2.593 7,965 10,611 4.231 23,444 23,867 45,256 106,171 10,878 22,524 40,134 55,244 132,152 99,784 971,296 1,575.832 340,574 865,659 205,208 854,154 110,696 216,300 3,825,944 35,365 583 592 528 1,038 2,439 358 79 355 1,968 13.405 27.508 33,677 59.684 157,772 142,430 29.717 19.185 12.525 1.915 5,695 347 7,040 10,674 6,665 5,513 3,408 3,170 44,711 998 11,953 11,330 11,247 8,240 2,593 6,930 8,936 3,011 23.444 23.438 43.861 103.523 10.878 22,524 40.134 54,821 132,152 20,480 971,296 1,575,832 339,574 864,859 205,208 854,154 110,696 216,300 3,825,944 2 7 5 7 4 3 9 7 6 1 6 4 13 16 6 7 10 10 10 147 167 2,552 42 3,056 143 390 1,950 360 1,255 2.173 1,035 1,675 1,220 429 1,395 2,648 423 79,304 1,000 800 85 328 1,190 26,449 10,084 1,968 13,320 27,508 33,349 59,684 157,772 142,430 29.717 19.185 12.525 1,915 5,695 347 7,040 10,674 5,475 5,513 3,408 3,170 18,262 998 11,953 11,330 1,163 8,240 2,593 6,930 8,936 3,011 23,444 23,438 43,861 103,523 10,878 22,524 40,134 54,821 132,152 20,480 971,296 1,575.832 339.574 864,859 205.208 854,154 110.696 216,300 3,825,944 'For inform ation regarding each of these banks, see table 22 in the 1963 Annual Report (1963 and prior years), and explanatory notes to tables regarding banks closed becauseof financial d ifficulties in subse quent annual reports. One noninsured bank placed in receivership in 1934, w ith no deposits at time of closing, is om itted (see table 22, note 9). Deposits are unavailable for seven banks. 2For inform ation regarding these cases, see table 23 of the Annual Report for 1963. 3For inform ation regarding each bank, see the Annual Report for 1958, pp. 48 — 83 and pp. 98— 127, and tables regarding deposit insurance disbursements in subsequent annual reports. Deposits are adjusted as of December 31, 1981. T a b le 123. Case Number Deposit p a y o ff 317 318 Deposit a ssum ption 25§ IN S U R E D B A N K S R E Q U IR IN G D ISB U R SE M E N TS BY TH E FED ER A L DEP O SIT IN S U R A N C E C O R P O R A T IO N D U RING 1981 Number of dep osito rs or accounts Class of bank Name and lo ca tio n The Des Plaines Bank Des P laines. Illin o is NM 15,090 S o u thw este rn Bank Tucson. A riz o n a NM South S ide Bank Chicago. Illin o is F irst paym ent to d e p o sito rs or d isb u rse m en ts by FDIC Date of closin g o r deposit a ssum ption M a rch 14, 1981 M arch 19. 1981 1,793 Septem ber 25. 1981 Septem ber 28, 1981 SM 9.767 FDIC disb u rse m en ts Receiver o r liqu ida tin g agent o r assum in g bank 31.010,713 Federal D eposit Insurance C orporation 3.821,868 Federal D eposit Insurance C orporation M a rch 14. 1981 9.367.274 Drexel N a tio n a l Bank Chicago. Illin o is 260 Peoples B an king C o m pany Boston, G eorgia NM 1.316 M a rch 17. 1981 4.591,652 C om m ercial Bank Thom asville, Georgia 261 N o rth w e st C om m erce Bank N o rth Bend, Oregon SM 1.980 June 19. 1981 3,875.209 C itizen s Bank o f N orth Bend North Bend, Oregon 262 High L akes C o m m u n ity Bank La Pine. Oregon NM 1.500 O ctober 23. 1981 2.235.268 Bank o f P rine ville P rine ville , Oregon 263 M id to w n N a tio n a l Bank Pueblo. C olorado N 1.484 O ctober 30, 1981 4.372.325 F irst C olorado Bank of Pueblo. N.A. Pueblo. C olorado 264 G reenw ich S a vin a s B a n k * New Y ork. New York NM 265 C entral S a vin g s B a n k* New Y ork, New Y ork NM 266 Union Dime S a vin g s B a n k * New Y ork. New Y ork NM 299,546 N ovem ber 4, 1981 437.481.991 M e tro p o lita n S avin gs Bank New Y ork. New York 144.000 December 4. 1981 145.478.778 Harlem S avin gs Bank New Y ork, New York 216.685 December 18. 1981 B uffalo S avin gs Bank B uffalo . New Y ork Assets Case num ber Deposit pa yo ff 317 318 Deposit assum ption 25$ 260 261 262 263 264 265 266 Cash and due fro m banks S 3.213.651 471.757 5,438.423 653.187 451.633 225.424 1,014.505 22.481,568 3,692,726 16.074,943 Digitized for‘ Merged FRASER with financial assistance U.S. G overn m ent o b lig a tio n s S 850.931 933.916 Other securities S 2.280.592 10,689.622 67.801 418.651 22.500 316.506 16.650 399.097 26.927,202 4,049,915 225.618.357 1.926.010 1,247.116.062 320,485.027 337.616.331 Loans, d isco u nts, and o ve rd ra fts S 29,439.793 2.676.040 8.362.641 6,149,428 4,882.588 2,255,826 5,477,813 1.105,202,191 505,557,183 744.125.848 L ia b ilitie s and ca p ita l accounts B anking house, fu rn itu re , and fix tu re s S 820.906 358.629 922.073 431.558 457,863 188,155 57,946 12.199,257 12.738,275 3.015,104 from FDIC into operating banks to prevent probable failure. Other real estate S - 337.760 27.715 89,891 169,620 542.878 3.814.835 Other assets S 408.360 308,943 1.017.721 2.255 50.441 10,408 75,392 76.627,103 15.505.874 35,043.203 T otal S 46,269,320 4.749.285 26,790.740 7,620,735 6,305,541 2.770,104 9,120.383 2.491,096.260 899,029.000 1.365.308.621 Deposits S 42.863,535 4.557,062 25.848,789 6,780.488 4.345,145 2.906,029 9.626.832 1,881.155.174 675.681.787 1.172.179.416 Other lia b ilitie s S Capital stock 400.000 50.869 S2.896.000 1.189.608 531.634 593.114 1.763.573 123,325 300.000 100.000 370.000 416.660 300.000 557.544.692 212,160.282 168,439.622 Other ca pital accounts S 109.785 (1.048.254) 110.317 147,133 (173.177) 675.900 (806,449) 52.396.394 11.186.932 24.689.583 RS, DEPOSITS, AND DISBURSEMENTS IN FAILED BANKS REQUIRING DISBURSEMENTS BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, 1934— 1981 OF BANK, YEAR OF DEPOSIT PAYOFF OR DEPOSIT ASSUMPTION, AM O UNT OF DEPOSITS, AND STATE P a y o ll cases 36 136 9 25 69 75 74 60 43 15 20 5 2 T o ta l P a yo ff cases A ssum p tion cases A dvances and e xpenses2 P rin cip a l d isb u rse m en ts T o ta l P ayoff cases3 A ssu m p tion cases* P ayoff ca ses5 A ssum p tion ca se s' 3.928.782 10.050.225 5 46.045 9.504.180 6.010.412 365.158 5,625.254 10.970 344.841 37 12 263 69 24 173'" 1,555,768 442,632 2,579,980 111,728 91,650 446,220 1,444.040 351,082 2.133,760 3,325,787 478,061 6,246,377 124,208 44,023 377,814 3,201,579 434,038 5,868,563 3,136,576 378.312 2.495,524 74,320 34,028 276,810 3,062,256 344,284 2,218,714 3,390 1,653 5,927 206.491 27,539 110.811 15,767 44,655 89,018 130,387 203.961 392,718 256,361 73,005 60,688 27,371 5,487 12,483 1,383 10,637 18,540 5,671 6,366 5,276 6,752 24,469 1,811 17,790 15,197 2,338 9,587 3,073 11,171 15,767 32,331 43,225 74,148 44,288 90,169 20,667 38,594 5,717 16,917 899 1,968 13,320 27,508 33,349 59,684 157,772 142,430 29,717 19,185 12,525 1,915 5,695 347 7,040 10,674 5,475 5,513 3,408 3,170 18,262 998 11,953 11,330 1,163 8,240 2,593 6,930 1.968 9.091 11,241 14,960 10,296 32,738 5,657 14,730 1,816 6,637 456 941 8,891 14,460 19,481 30,479 67,770 74,134 23,880 10,825 7.172 1.503 1,768 265 1,724 2,990 2,552 3,986 1,885 1 369 5,017 913 6,784 3,458 1.031 3.026 1,835 4,765 941 6,026 7,735 12,365 9,092 26,196 4,895 12,278 1,612 5,500 404 9 24 42 50 50 32 19 8 6 4 1 2 2 1 Assum p tion cases 649.598 3 4 3 P ayoff cases 4,578,380 2 1 Total 2 6 6 ,0 1 1 5 A ssu m p tion cases D isbursem ents b y FDIC' (in th o u sa n d s o f d olla rs) 312 5 3 4 4 2 D e po sits' (in th o u sa n d s o f d o lla rs) Num ber o f d ep o sito rs' u m ber o l b anks 4 1 1 3 3 1 1 27 25 24 28 24 7 14 1 1 1 1 5 3 4 4 2 3 2 2 1 1 1 8,080 5,465 2,338 4,380 3,073 11,171 12,324 45,793 56,239 159,673 302,549 235,694 34,411 54,971 10,454 4,588 12,483 1,383 10,637 18,540 5,671 6,366 5,276 6,752 24,469 1,811 9,710 9,732 5,207 6,503 4,702 1,163 4,156 2,593 6,930 4,229 16,267 18,389 49,388 125,034 136,773 14,987 17,369 5,888 1,459 5,695 347 7,040 10.674 5,475 5,513 3,408 3,170 18,262 998 5,450 6,628 4,084 4,438 2,795 1,031 2,796 1,835 4,765 2,865 6,725 7,116 21,387 41,574 69,239 11,602 9,213 1,672 1,099 1 768 265 1 724 2,990 2,552 3 986 1.885 1 369 5,017 913 2,346 663 230 43 108 67 103 93 162 89 50 38 53 9 106 87 20 38 51 82 272 934 905 4,902 17,603 17,237 1,479 1,076 72 37 96 11 393 200 166 524 127 195 428 145 665 51 31 1961 ...................................................... 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 Banks with deposits of: Less than $100,000 ........................ $100,000 to $250,000 ...................... $250,000 to $500,000 ...................... $500,000 to $1,000,000 .................. $1,000,000 to $2,000,000 ................ $2,000,000 to $5,000,000 ................ $5,000,000 to $10,000,000 ............. $10,000,000 to $25,000,000 ........... $25,000,000 to $50,000,000 ........... $50,000,000 to $100,000,000 ......... $100,000,000 to $500,000,000 . . . . $500,000,000 to $1,000,000,000 .. $1,000,000,000 or m o r e .................. State A la b a m a ............................................. A riz o n a ............................................... A rk a n s a s ............................................. C a lifo rn ia .......................................... C o lorad o ............................................. C o n n e c tic u t........................................ F lo rid a ................................................. G eorgia ............................................... Idaho ................................................... Illin o is ................................................. Ind ian a ............................................... Iow a ..................................................... K ansas ................................................. K en tucky ............................................ L ou isia n a .......................................... M a in e ................................................... M a r y la n d ............................................. M a s s a c h u s e tts ................................. M ich ig a n ............................................. M in n e so ta .......................................... '• v l CO 5 2 7 5 7 4 3 9 7 6 1 6 4 13 16 5 2 7 3 1 4 ” 4 4 5 1 3 "3 3 6 7 10 10 10 107 109 62 72 60 65 42 29 12 7 7 3 3 9 2 8 6 10 3 6 14 2 30 20 11 15 26 6 " i 3 3 2 83 86 37 36 23 27 7 10 2 1 14 5 "3 5 3 1 "3 4 10 13 6 6 7 7 8 10 24 23 25 36 37 38 35 19 10 6 7 3 3 ’° 10 8,301 36,433 19,934 14,363 1,012 4,729 38,347 83,370 92,179 160,388 212,276 317,657 316,629 406,445 366,128 271,065 394,670 773,000 1,146,231 29,695 65,512 57,287 74,296 71,770 96,196 50,445 149,391 27,603 27,403 6,418 17,759 22,315 54,424 81,189 224,306 286,927 462,073 434,351 604,019 1,142,879 2,215,248 4,498,316 6,544 20,404 31,850 23,655 8,382 21,925 8,246 24 516 3,740 5,376 16,935 8,936 23,444 23,438 43,861 103,523 10,878 22,524 40,134 54,806 132,058 20,480 971,296 1,575,832 339,574 864,859 205,208 854,154 110,696 216,300 3,826,059 8,936 23,444 23,438 42,889 774 10,878 945,501 1,575,832 299,672 846,000 205,100 852,868 98,065 199,846 3,778,523 6,201 19,172 13,744 11,431 8,732 8,097 5,586 37,617 49,352 162,163 16,255 432,654 2,261,8048 302,976 559,269 21,825 498,276 79,973 133,889 1,078,491 4,947 13.920 12.921 26,820 30,815 91,989 55,870 158,759 83,102 66,902 1,471 3,839 9,394 27,604 50,374 132,317 231,057 303,314 351,249 537,117 1,142,879 2,215,248 4,498,316 5,000 12,906 15,615 36,057 48,090 138,020 171,809 292,432 217,624 396,711 716.5059 966,866 2,992,774® 4,309 11,554 10,549 20,962 24,510 69,340 37,956 117,839 41,117 47,021 691 1,352 5,066 15,095 23,580 68,680 133,853 174,593 176,507 349,690 716,505 966,866 2,992,774 88 209 164 445 815 1,688 958 2,815 1,003 532 1,028 1,225 154 173 611 2,352 4,091 10,765 17,369 21,389 31,911 32,272 56,145 12,575 155,031 ' 9,012 33,474 74,511 20,480 25,795 39,902 18,859 108 1,286 12,631 16,454 47,536 972 102,749 22,524 31,122 21,332 57,547 6,201 19,172 13,744 10,958 735 8,097 ' 7,596 29,347 53,790 16,255 16,782 25,992 11,462 818 9,958 13,903 35,643 473 7,997 5,586 30,021 20,005 108,373 415,872 2,261,804 276,984 547,807 21,825 497,458 70,015 119,986 1,042,848 154 349 599 640 35 242 301 698 809 395 1,617 1,419 1,399 50 285 420 360 123 1,613 1,114 4,445 1,967 11,545 1,150 168,165 27,360 35,941 3,309 28,404 5,563 5,384 1,207 3 1 6 3 5 6 1 2 3 5 31,738 4,505 6,350 390,819 21,740 2,572 1,813 4,541 17,890 7,486 88,426 9,654 4,836 1,032,658 39,339 5,270 4,610 1,942 46,220 11,367 83,156 5,044 2,894 986,438 27,972 47,784 9,301 3,408 464,118 22,042 3,384 4,219 1,576 12,946 8,296 44,400 5,082 1,832 451,172 13,746 144 77 43 1,901 444 3,576 589 374 5,268 2,852 2 3 8 2 11 1 3 6 5,379 3,402 8,797 2,451 59,505 4,326 21,917 66,552 1,894 427,654 1,526 6,920 1,870 1,894 71,804 2,800 14,997 64,682 1,242 5,293 1,551 1,493 55,287 225,336 8 167 33 29 797 825 698 4,725 355,850 3,391 14,325 43,424 1,493 280,623 2,149 9,032 41,873 19 8,839 15,759 35,228 2,451 199,514 21,170 15 5 8 20 4 5 6 7 6 2 30,006 25,207 41,061 40,313 79,117 12,549 5,737 5,961 19,352 8,999 13,595 29,949 101,524 16,072 176,274 3,933 8,520 10,672 5,768 9,735 9,662 21,429 90,852 10,304 166,539 6,197 17,793 68,034 12,519 141,939 3,096 6,469 9,049 5,041 4,938 3,101 11,324 58,985 7,478 137,001 39 149 202 157 149 384 854 3,342 640 7,363 1 3 5 9 9,710 22,567 46,732 172,607 2,650 6,643 23,655 10,452 2,650 5,450 4,566 43,615 194,399 818 " '8 2 8 20,399 13,477 818 5,450 3,738 23,216 180,922 2,346 3,109 29,154 142,590 640 735 16,255 12,242 640 1 5 6 "2 6 8,301 36,433 19,934 15,817 95,424 4,729 12,850 27,374 31,434 71,950 23,655 349,699 704,283 110,367 340,731 95,548 364,384 42,028 78,264 693,213 "2 1 5 5 2,346 2,374 12,899 130,348 9 394 203 17 665 371 2,960 14,833 Table 124. DEPOSITORS, DEPOSITS, AND DISBURSEMENTS IN FAILED BANKS REQUIRING DISBURSEMENTS BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, 1934— 1981— CONTINUED BANKS GROUPED BY CLASS OF BANK, YEAR OF DEPOSIT PAYOFF OR DEPOSIT ASSUMPTION, AM O UNT OF DEPOSITS, AND STATE C la s s ific a tio n Total P a yo ff cases Deposits' (in tho u san ds o f d o lla rs) Num ber of d ep o sito rs' N um ber o f b anks A ssu m p tion cases Total P ayoff cases Assum p tion cases T otal P ayo ff cases Disbursem ents b y FDIC' (in th o u san ds o f d olla rs) A ssum p tion cases T otal 20,720 9,921 96,907 113,553 2,988 11,053 1,368 14,340 136 2,862 9,667 8,553 82,567 113,417 126 10,952 80,986 130,973 50,123 3,254 2,370 23,077 376,689 220,696 5,992 3,725 17,779 4,836 142,135 4,179 12,200 43,508 3,212 1,538 23,487 112,627 2,033 369,840 14,229 789,442 141,925 131,109 3,254 11,057 35,715 P en nsylvania 13 4 31 3 23 8 1 8 1 22 15 47 1 3 9 9 33 1 3 20 8,523 5,689 138,762 67,677 1,103 6 14 1 1 5 3° 2 8 ’° 5 11 3 2 4 20,149 1,230 43,828 403 11,412 28,672 6,919 182,590 68,080 12,515 13 3 2 19 2 1 4 33 1 212,282 5,471,230 1,845 2,278 100,493 5 3 23 2 1 43 31 7 30 5 ............................................... 49,119 13,286 1,421 11,980 2,345 113,695 28,440 3,677 9,673 7,585 New J e r s e y ........................................ New Y ork .......................................... N orth C a ro lin a ................................. N o rth D akota ................................... Ohio ..................................................... V irg in ia 261,401 5,484,516 3,266 14,258 102,838 571,146 1,585,852 10,408 17,016 21,251 2 14 2 South D akota .................................... 457,451 1,557,412 6,731 7,343 13,666 24,611 17,577 651 3 38 3 8 Tennessee .......................................... 45,575 10,986 880 1,651 37,977 849 7,773 5 52 5 8 1 .................................... 334 18,169 215 11,644 1,780 45,909 29,155 1,095 11,644 296 26,262 55,554 1,500 7,773 1,780 M is s is s ip p i ........................................ M is s o u ri ............................................. 1 1 13 1 4,179 20,546 62,247 3,212 3 11,073 369,840 8,687 12,638 8,346 18,739 2,006 5,966 32,682 21,492 639 8,096 117 P ayoff ca ses3 A ssu m p tio n cases4 257 14,028 186 8,096 32,425 7,464 453 40,042 10,836 1,156 10,519 1,610 11,665 7,965 67,811 60,650 2,411 371,853 78,561 5,992 350 10,127 152,007 139,734 3,538 3,445 8,263 1,538 21,481 106,661 2,033 935 21,713 117,992 202 789,442 8,712 352,9379 296 3,375 7,652 A dvances and expenses2 P rincip al disb u rse m en ts 127,417 3,440,9718 2,387 11,778 90,621 P ayoff cases5 A ssum p tion ca ses6 5 339 6 152 1,542 1,188 21 87,375 3,430,135 1,231 1,259 89,011 520 1,060 23 143 7 24,580 165,878 179 203 6,466 7,936 986 10,133 136 2,388 3,729 6,979 57,678 60,514 23 178 11 75 939 288 11,582 11,450 9 3,594 97,111 148,413 42,623 3,538 186 4,396 127 1,843 8 117 3,259 3,867 1,458 5,096 935 20,255 112,896 202 26 21 305 14,381 6,118 300 22 505 512 148 54 13,505 19 Other areas Puerto Rico ........................................ 1 3 1 11,073 14,229 8,712 965 352,937 13,656 'A d ju s te d to Decem ber 3 1,1981. In a ssum ption cases, num ber of d ep osito rs refers to num ber o f deposit accounts. E x c lu d e s $2,261 tho u san d o f non re cove ra b le insurance expenses in cases th a t were resolved w itho u t paym ent o f claim s or a d isb u rse m en t to fa c ilita te a ssum ption of deposits by a no the r insured bank and other expenses of field liq u id a tio n em ployees not charge ab le to liq u id a tio n activities. In c lu d e s e stim ate d a d d itio n a l d isb u rse m en ts in a c tiv e cases ‘ Exlcudes excess co lle ctio n s turne d o v e r to banks as a dd itio na l purchase price at term ina tion of liqu ida tio n . T h e s e d isb ursem ents are not re co vera b le by the C o rp oration ; the y consist alm ost w h o lly of field p a y o ff expenses. “Includes advances to p ro te ct assets and liq u id a tio n expenses o f $325,639 thousand, a ll o f which have been fu lly recovered by the C o rp oration and $19,202 thousand o f n onrecoverable expenses. ?No cases in 1962 required d isb u rse m en ts. D isbursem ent to ta ls fo r each year relate to cases occurring during th a t year, including disbursem ents made in subsequent years. •Includes disb u rse m en ts by liq u id a to rs in fie ld ($1.5 b illio n ). 9ln 1977 the assets o f Banco E conom ias w e re purchases o u trig h t by the C orporation. D isbursem ents in the case are included in ta b le 126 u nder “ Other d isb u rse m en ts" and are not included in this table. ' “ "Assum ption cases" includes banks merged with financial assistance from F D I C to prevent probable failure. Note: Due to ro u nd ing d ifferences, co m p on en ts m a y not add to to ta ls . Table 125. RECOVERIES AND LOSSES BY THE FEDERAL DEPOSIT INSURANCE CORPORATION ON PRINCIPAL DISBURSEMENTS FOR PROTECTION OF DEPOSITORS, 1934— 1981 (Amounts in thousands of dollars) L iq u id a tio n o f d e p o sit p a yo ff or d ep osit a ssum ption A ll cases N um ber of b a n ks Deposit p a y o ff cases P rin cip a l d is b u rs e m ents Recoveries to Dec. 31. 1981 E stim ated a d d itio n a l recoveries Deposit a ssu m p tio n cases L osse s’ N um ber of banks P rincip al d isb u rse m e n ts2 Recoveries to Dec. 31. 1981 Estim ated a d d itio n a l reco verie s L osse s' Num ber of b anks P rin cip a l d is b u rs e m e n ts3 to Dec 31. 1981 recoveries L o sse s’ T o ta l ........................... 578 6 .0 1 0 .4 1 2 4 .4 5 1 .6 3 9 6 0 8 .9 5 2 9 49 .82 1 312 3 8 5 .1 5 8 300 .25 1 54.461 3 0 .4 4 6 2 66 5 .6 2 5 .2 5 4 4 .1 5 1 .3 8 8 554.491 9 1 9 .3 7 5 Status A c tiv e ................. T e rm in ate d ......... 92 486 5.661.382 449.030 4.035.210 416.429 608,952 917,220 32,601 27 285 209.411 175.747 143.665 156.586 54.461 11,285 19,161 65 201 5.351,971 273,283 3.891,545 259.843 554,491 905 935 13.440 1934 1935 1936 1937 1938 Y e a r4 ...................... ...................... ...................... ...................... ...................... 9 25 69 75 74 941 8.891 14,460 19,481 30.479 734 6.206 12.127 15,808 28,055 207 2.685 2.333 3,672 2,425 9 24 42 50 50 941 6.026 7.735 12.365 9.092 734 4,274 6,397 9 718 7,908 207 1.752 1,338 2 647 1,184 1 27 25 24 2.865 6,725 1.932 5.730 21,387 20.147 1939 1940 1941 1942 1943 ...................... ...................... ...................... ...................... ...................... 60 43 15 20 5 67.770 74,134 23,880 10.825 7.172 60,618 70,338 23,290 10,136 7,048 7,152 3,796 591 688 123 32 19 8 6 4 26.196 4.895 12.278 1,612 5.500 20,399 4.313 12.065 1.320 5.376 5.797 582 213 292 123 28 24 7 14 1 41.574 69.239 11,602 9.213 1.672 40.219 66.025 11,225 8,816 1,672 1944 1945 1946 1947 1948 ...................... ...................... ...................... ...................... ...................... 2 1 1 5 3 1.503 1,768 265 1,724 2,990 1,462 1,768 265 1,666 2,349 40 1 404 363 40 1 1 5 3 1 768 265 1949 1950 1951 1952 1953 ...................... ...................... ...................... ...................... ...................... 4 4 2 3 2 2.552 3,986 1.885 1.369 5,017 2.183 2,601 1.885 577 5.017 369 1,385 1954 1955 1956 1957 1958 ...................... ...................... ...................... ...................... ...................... 2 5 2 1 4 913 6,784 3.458 1.031 3,026 654 6.554 3.245 1.031 2.998 258 230 213 1959 1960 1961 1963 1964 ...................... ...................... ...................... ...................... ...................... 3 1 5 2 7 1,835 4,765 6,201 19,172 13,744 1.738 4.765 4,699 18,886 12,080 97 1965 1966 1967 1968 1969 ...................... ...................... ...................... ...................... ...................... 5 7 4 3 9 11.431 8,732 8.097 5,586 37,617 7,339 8,254 7,087 5.575 37.523 59 641 2 990 2 349 2 3 2 1 885 2 230 213 1 1 913 2,346 663 2,346 663 28 1 230 230 2 6 473 7.997 326 7.519 146 480 5 5 586 30.021 30,018 3 4 792 28 42 178 2 7 1,502 286 1,622 3.913 480 1.010 12 87 4,438 2.795 1,031 2,796 4,208 2.582 1.031 2.768 3 1 5 2 7 1,835 4.765 6,201 19.172 13,744 1.738 4.765 4.699 18,886 12,080 3 1 4 10.958 735 8,097 4 7,596 1 355 3 214 378 396 2 552 3 986 1 885 1 369 5 017 4 4 1 1 3 933 995 1.Ul J 1.241 1.385 792 258 97 42 1,502 286 1.622 7.013 735 7,087 178 3.767 7.505 8 1.010 3 84 o> Table 125. RECOVERIES AND LOSSES BY THE FEDERAL DEPOSIT INSURANCE CORPORATION ON PRINCIPAL DISBURSEMENTS FOR PROTECTION OF DEPOSITORS, 1934— 1981— CO NTINUED (Am ounts in thousands of dollars) L iq u id a tio n o f d e p o sit p a y o ff o r d ep osit a ssu m p tio n A ll cases N um ber of banks P rin cip a l d is b u rs e m ents R ecoveries to Dec. 31, 1981 Deposit p a y o ff cases E stim ate d a d d itio n a l reco verie s Losses' Num ber of banks P rincip al d isb u rse m e n ts' Recoveries to Dec. 31, 1981 D eposit a s s u m p tio n cases E stim ated a d d itio n a l reco verie s L osse s' N um ber of banks P rin cip a l d isb u rse m e n ts3 Recoveries to Dec. 31, 1981 E stim ated a d d itio n a l reco verie s Losses' 1970 1971 1972 1973 1974 7 6 1 6 4 49,352 162,163 16,255 432.654 2.261,804 48.806 161.869 13.017 290,540 2,183,705 267 102 1,327 88,894 76,753 279 193 1,911 53,220 1,346 4 5 1 3 29,347 53.790 16,255 16,782 28,871 53.553 13,017 16,771 197 45 1,327 11 279 193 1.911 3 1 20,005 108,373 19,935 108,316 70 57 3 4 415,872 2,261,804 273,769 2,183,705 88,883 76,753 53,220 1,346 1975 1976 1977 1978 1979 13 16 6 7 10 302,976 559,269 21,825 498,276 79.974 262,293 476,584 16.665 407.212 55.078 20,201 50,224 3,455 81,322 17,100 20.482 32,461 1,705 9,742 7,795 3 3 25,992 11,462 22,134 9,130 3,766 393 92 1.939 1 3 818 9,958 430 3.411 222 5,590 166 957 10 13 6 6 7 276.984 547.807 21,825 497,458 70,015 240.159 467,454 16,665 406,782 51,667 16,435 49,831 3,455 81.100 11,510 20,390 30,522 1.705 9.576 6,838 1980 1981 10 10 133.889 1.078.491 60,090 99,218 49.372 219,709 24,428 759,564 3 2 13,903 35.643 4.969 7,364 35,318 1,571 325 7 8 119,986 1.042,848 55,121 99,218 42.008 184,391 22,857 759,239 'In c lu d e s e s tim a te d losses in a c tiv e cases. Not a d ju ste d fo r in te re st or a llo w a b le re turn, w h ich was co lle cted in som e cases in w h ich the d isb u rse m e n t w a s fu llv re covered in c lu d e s e stim a te d a d d itio n a l d is b u rs e m e n ts in a c tiv e cases. E x c lu d e s excess c o lle c tio n s tu rn e d o ver to b a n ks as a d d itio n a l p urchase price a t te rm in a tio n o f liq u id a tio n . 4No case in 1962 re q uire d d isb u rse m e n ts. Note: Due to ro u n d in g d iffe re nce s, co m p o n e n ts m ay n ot add to tota ls. Table 126. ANALYSIS OF DISBURSEMENTS, RECOVERIES, AND LOSSES IN DEPOSIT INSURANCE TRANSACTIONS JANUARY 1, 1934— DECEMBER 31, 1981 (In thousands) T ype of d isb u rse m en t D isbursem ents R ecoveries' Losses All dis b u rse m en ts — to tal2 .................................................................................................................................................................................................. $ 6 ,8 7 4 ,9 0 0 $ 5 ,8 6 2 ,9 7 8 $ 1 ,0 1 1 ,9 2 2 P rin c ip a l disbursem ents in m ergers, deposit assum ption and payoff cases— total ................................................................... 6 .0 1 0 .4 1 2 5 .0 6 0.5 91 949.821 4,954,887 3,986,769 485,360 482,758 670,367 164,619 69,131 436 617 383,748 1,410 300,251 54,461 30,446 ......................................................................................... 3 55.81 1 3 2 5 .6 3 9 3 0 ,1 7 2 ................................................................................... 325,639 19,202 10,970 325,639 Loans and assets p urcha sed in liq u id a tio n s (266 m ergers and deposit assum ption cases):3 To December 31, 1981 ................................................................................................................................................... E stim ated a d d itio n a l ...................................................................................................................................................... T ra n s a c tio n s to fa c ilita te d e p o sit a ssu m p tio n s, m ergers, o r co n s o lid a tio n s :4 To Decem ber 31, 1981 ................................................................................................................................................... E stim ated a d d itio n a l ..................................................................................................................................................... D eposits paid (312 d e p o sit p a y o ff ca ses):5 To Decem ber 31, 1981 ................................................................................................................................................... E stim ated a d d itio n a l ..................................................................................................................................................... Advances and expenses in deposit assum ption and payoff cases— total Expenses in liq u id a tin g assets: L iq u id a tio n expenses and adva nce s to pro te ct assets Field p a y o ff ana o th e r in su ra n ce expenses in 312 dep osit p a y o ff ca ses5 ..................................................... O ther d is b u rse m en ts — total 19,202 10,970 ........................................................................................................................................................................................ 1 .5 2 8 .2 5 5 7 4 4 .5 0 9 783 .74 6 C o rp o ra tio n purcha ses: To fa c ilita te te rm in a tio n of liq u id a tio n s : To Decem ber 31, 1981 ............................................................................................................................................... 10,063 6,014 3,960 To purchase assets fro m o pe ra tin g insured banks: To Decem ber 31, 1981 ............................................................................................................................................... 51,153 18,206 7,239 25,708 U n allo cate d insu ra n ce expe nse s6 ................................................................................................................................. A ssista n ce to o pe ra tin g insured banks: To Decem ber 31, 1981 ................................................................................................................................................... E stim ate d a d d itio n a l ..................................................................................................................................................... 2,261 445,200 'E xclud es a m o un ts re turne d to closed ban k e q u ity holders and $169,3 m illio n o f interest and a llo w a b le re turn received by FDIC. 'In c lu d e s c o lle c tio n s and d isb u rse m e n ts by the liq u id a to rs in the field, (1.5 billion). “Includes $437.4 m illio n o f recorded lia b ilitie s at boo k va lu e p aya ble o ver fu tu re years. 'In c lu d e s $379.5 m illio n o f re co rde d lia b ilitie s at p resent value expected to be payable o ver fu tu re years. 'In c lu d e s e stim ate d a m o u n ts fo r pending and unpaid claim s on a ctive cases. ‘ Not reco vera b le . \l \l 2,261 85,850 359,350 Table 127. INCOME AND EXPENSES, FEDERAL DEPOSIT INSURANCE CORPORATION, BY YEAR, FROM BEGINNING OF OPERATIONS, SEPTEMBER 11, 1933 TO DECEMBER 31, 1981 (In millions) Expenses and losses Income Total Deposit insurance assessments! Investment and other sources^ Total $ 14 , 741.6 $ 6 , 731.4 $ 8, 010.2 1981 1980 1979 1978 1977 1976 1975 1974 1973 1972 1971 1970 1969 1968 1967 1966 1965 1964 1963 1962 1961 1960 1959 1958 1957 1956 1955 1954 1953 1952 1951 1950 1949 1948 1947 1946 2,074.7 1,310.4 1,090.4 952.1 837.8 764.9 689.3 668.1 561.0 467.0 415.3 382.7 335.8 295.0 263.0 241.0 214.6 197.1 181.9 161.1 147.3 144.6 136.5 126.8 117.3 111.9 105.7 99.7 94.2 88.6 83.5 84.8 151.1 145.6 157.5 130.7 921.9 430.8 356.4 367.0 319.4 296.5 278.9 302.0 246.0 188.5 175.8 159.3 144.0 132.4 120.7 111.7 102.2 93.0 84.2 76.5 73.4 79.6 78.6 73.8 69.1 68.2 66.1 62.4 60.2 57.3 54.3 54.2 122.7 119.3 114.4 107.0 1,152.8 879.6 734.0 585.1 518.4 468.4 410.4 366.1 315.0 278.5 239.5 223.4 191.8 162.6 142.3 129.3 112.4 104.1 97.7 84.6 73.9 65.0 57.9 53.0 48.2 43.7 39.6 37.3 34.0 31.3 29.2 30.6 28.4 26.3 43.1 23.7 Total $ 2 ,495.5 848.1 83.6 93.7 148.95 113.6 212.35 97.5 159.2 108.2 59.7 60.3 46.0 34.5 29.1 27.3 19.9 22.9 18.4 15.1 138 14.8 12.5 12.1 11.6 9.7 9.4 9.0 7.8 7.3 7.8 6.6 7.8 6.4 7.0 9.9 10.0 Deposit insurance losses and expenses $ 1, 029.1 Interest on capital stock3 Administrative and operating expenses Net income added to deposit insurance fund4 $ 80.6 $ 1, 385.8 $ 12 , 246.1 720.9 (34.6) (13.1) 45.6 24.3 31.9 29.8 100.0 53.8 10.1 13.4 3.8 1.0 0.1 2.9 0.1 5.2 2.9 0.7 0.1 1.6 0.1 0.2 o’ i 0.3 0.3 0.1 0.1 0.8 14 0.3 0.7 0.1 0.1 0 6 4.8 5.8 127.2 118.2 106.8 103.3 89.3 180.45 67.7 59.2 54.4 49.6 46.9 42.2 33.5 29.0 24.4 19.8 17.7 15.5 14.4 13.7 13.2 12.4 11.9 11.6 9.6 9.1 8.7 7.7 7.2 7.0 6.6 6.4 6.1 5.7 5.0 4.1 1,226.6 1,226.8 996.7 803.2 724.2 552.6 591.8 508.9 452.8 407.3 355.0 336.7 301.3 265.9 235.7 221.1 191.7 178.7 166.8 147.3 132.5 132.1 124.4 115.2 107.6 102.5 96.7 91.9 86.9 80.8 76.9 77.0 144.7 138.6 147.6 120.7 1 For the period from 1950 to 1981, inclusive, figures are net after deducting the portion of net assessment income credited to insured banks pursuant to provisions of the Federal Deposit insurance Act of 1950, as amended. Assessment credits to insured banks fo r these years amount to $6,458 m illion. ^Includes $39 m illion of interest and allowable return received on funds advanced to receivership and deposit assumption cases and $ 130 million of interest on capital notes advanced to facilitate deposit assumption transactions and assistance to open banks. 3Paid in 1950 and 1951, but allocated among years to which it applies. Initial capital of $289 million was retired by payments to the U.S. Treasury in 1947 and 1948. 4Assessments collected from members of the temporary insurance funds which became insured under the permanent plan were credited to their accounts at the termination of the temporary funds and were applied toward payment of subsequent assessments becoming due under the permanent insurance fund, resulting in no income to the Corporation from assessments during the existence of the temporary insurance funds. ^Includes net loss on sales of U.S. Government securities of $105.6 million in 1976 and $3.6 million in 1978. 6Net after deducting the portion of expenses and losses charged to banks withdrawing from the temporary insurance funds on June 30, 1934. CD 00 o Table 128. PROTECTION OF DEPOSITORS OF FAILED BANKS REQUIRING DISBURSEMENTS BY THE FEDERAL DEPOSIT INSURANCE CORPORATION 1934— 1981 A ll cases (578 banks) D eposit p a y o ff cases (312 b anks) D eposit a ssu m p tio n cases (266 banks) Item N um ber of a m o un t Percent N um be r of depositors or accounts— to tal' .................................................................................................................. 4 .5 7 8 .3 8 0 100.0 Full rec ov ery rec e ive d or ava ila b le .......................................................................................................................... 4 .5 7 3 ,5 5 6 From FDIC2 ....................................................................................................................................... 4,525.443 41,373 3,333 3,407 N um ber of am o un t Percent Num ber of am o un t Percent 6 4 9 ,5 9 8 100.0 3 ,9 2 8 ,7 8 2 100.0 99.9 6 4 4 .7 7 4 9 9.3 3 ,9 2 8 ,7 8 2 100.0 98.8 .9 .1 .1 596,6613 41,373 3,333 3,407 91.9 6.4 .5 .5 3,928,782 100.0 100.0 4 ,8 2 4 .1 4 ,8 2 4 .7 3,842 982 .1 .0 3,842 982 .6 .1 .................................................................................................................. 1 0,0 5 0 .2 2 5 100.0 5 4 6 ,0 4 5 100.0 9 ,5 0 4 ,1 8 0 Paid or made a va ila b le ..................................................................................................................................................... 1 0 ,0 3 4 .9 5 7 99.8 5 3 0 ,7 7 7 9 7.2 9 .5 0 4 ,1 8 0 100.0 By FDIC7 .............................................................................................................................................. 9,890,250 25,456 66,020 53,231 98.4 .3 .7 .5 386,0707 25,456 66,020 53,231 70.7 4.7 12 1 9.7 9,504,180 100.0 Am ount of deposits (in thousands)— total 1 5.2 68 .2 15,268 2.8 3,245 12,023 .0 .1 3,245 12,023 .6 2.2 'N u m b e r of d e p o s ito rs in d e p o sit p a y o ff cases; num ber o f accou nts in deposit a ssum ption cases. T h ro u g h d ire c t p a ym en ts to d e p o sito rs in d e p o s it p a y o ff cases; th rou g h a ssum ption of deposits by o th e r insured b anks fa c ilita te d by FDIC d isb u rse m en ts of $6,010,412 tho u sa n d , in m ergers and deposit a ssu m p tio n cases. in c lu d e s 64,495 d e p osito rs, in te rm in a te d cases, w h o fa ile d to cla im th e ir insured deposits (see note 7). •Includes o n ly d e p o s ito rs w ith cla im s o ffs e t in fu ll; m o st o f these w o uld have been fu lly protected by insu ra n ce in the absense o f o ffse ts. E x c lu d e s d e p o sito rs, paid in p a rt by th e FDIC; w hose d ep osit balances were less than the insurance m axim um . 6The insured p o rtio n s o f these d e p o s ito r cla im s w e re paid by the C orporation. 'In clu d e s $577 th o u sa n d u n cla im ed insu re d d ep osits in te rm in a te d cases (see note 3). “Inclu de s a ll am o un ts paid by o ffse t, ’ Includes a ll secured and p re fe rred cla im s paid fro m asset liq u id a tio n ; excludes secured and prefe rred cla im s paid by the C o rp o ra tio n . ' “Includes u ncla im ed d e p o sits paid to a u th o riz e d p u b lic cu sto d ia m s. "In c lu d e s $4,314 th o u san d re p rese n tin g d e p osits a va ila b le , expected th rou g h offse t, o r expected fro m proceeds o f liq u id a tio n . Table 129. INSURED DEPOSITS AND THE DEPOSIT INSURANCE FUND, 1934— 1981 (In m illions) Deposits in insured banks Year (Decem ber 31) Insurance coverage T otal' Ratio of dep osit insurance fund to — Insu re d ' Percentage of insu re d deposits $988,898 948,717 808,555 760,706 692,533 628,263 569,101 70.2% 71.6 65.9 66.4 65.9 66.7 65.0 $12,246.1 11,019,5 9,792.7 8,796.0 7,992.8 7,268.8 6,716.0 1981 1980 1979 1978 1977 1976 1975 ........................................ ........................................ ........................................ ........................................ ........................................ ........................................ ........................................ $100,000 100,000 40,000 40,0007 40.0006 40,000 40,000 1974 1973 1972 1971 1970 ........................................ ........................................ ........................................ ........................................ ........................................ 40,000 20,000 20,000 20,000 20,000 833,277 766,509 697,480 610,685 545,198 520,309 465,600 419,756 374,5684 349,581 62.5 60.7 60.2 61.34 64.1 1969 1968 1967 1966 1965 ........................................ ........................................ ........................................ ........................................ ........................................ 20,000 15,000 15,000 15,000 10,000 495,858 491,513 448,709 401,096 377,400 313,085 296,701 261,149 234,150 209,690 1964 1963 1962 1961 1960 ........................................ ........................................ ........................................ ........................................ ........................................ 10,000 10,000 10,000 10,000 10,000 348,981 313.3042 297,5483 281,304 260,495 1959 1958 1957 1956 1955 ........................................ ........................................ ........................................ ........................................ ........................................ 10,000 10,000 10,000 10,000 10,000 1954 1953 1952 1951 1950 ........................................ ........................................ ........................................ ........................................ ........................................ 1949 1948 1947 1946 1945 ........................................ ........................................ ........................................ ........................................ ........................................ $1,409,322 1,324,463 1,226,943 1,145,835 1,050,435 941,923 875,985 D eposit insurance fun d T otal deposits Insured deposits .87% .83 .80 .77 .76 .77 .77 1.24% 1.16 1 21 1.16 1.15 1.16 1.18 6,124.2 5,615.3 5,158.7 4,739.9 4,379.6 .73 .73 .74 .78 .80 1 18 1.21 1.23 1 274 1.25 63.1 60.2 58.2 58.4 55.6 4,051.1 3,749.2 3,485.5 3,252.0 3,036.3 .82 .76 .78 .81 .80 1.29 1 26 1.33 1.39 1.45 191,787 177,381 170,2104 160,3094 149,684 55.0 56.6 57.24 57.04 57.5 2,844.7 2,667.9 2,502.0 2,353.8 2,222.2 .82 .85 .84 .84 .85 1.48 1 50 1.47 1 474 1.48 247,589 242,445 225,507 219,393 212,226 142,131 137,698 127,055 121,008 116,380 57.4 56.8 56.3 55.2 54.8 2,089.8 1,965.4 1,850.5 1,742.1 1,639.6 .84 .81 .82 .79 .77 1.47 1 43 1.46 1.44 1.41 10,000 10,000 10,000 10,000 10,000 203,195 193,466 188,142 178,540 167.818 110,973 105,610 101,841 96,713 91,359 54.6 54.6 54.1 54.2 54.4 1,542.7 1,450.7 1,363.5 1.282.2 1,243.9 .76 .75 .72 .72 .74 1 39 1.37 1.34 1 33 1.36 5,000 5,000 5,000 5,000 5,000 156,786 153,454 154,096 148,458 157,174 76,589 75,320 76,254 73,759 67,021 48.8 49.1 49.5 49.7 42.4 1,203.9 1,065.9 1,006.1 1,058.5 929.2 .77 .69 .65 .71 .59 1 57 1.42 1 32 1 44 1.39 00 NJ Table 129. INSURED DEPOSITS AND THE DEPOSIT INSURANCE FUND, 1934— 1981 (In m illions) Deposits in insured banks Year (Decem ber 31) Insu ra n ce co verag e 1944 1943 1942 1941 1940 ........................................ ........................................ ........................................ ........................................ ........................................ 5.000 5.000 5,000 5,000 5,000 1939 1938 1937 1936 1935 1934 ........................................ ........................................ ........................................ ........................................ ........................................ ........................................ 5,000 5,000 5,000 5,000 5,000 5,000s To ta l' In su re d ’ Ratio o f d ep osit insurance fund t o — Percentage ot insu re d deposits D eposit insurance fun d Insured deposits 134,662 111.650 89.869 71,209 65,288 56,398 48,4 40 32,837 28,249 26,638 41.9 43.4 36.5 39.7 40.8 804.3 703.1 6169 553.5 496.0 .60 .63 69 .78 .76 1.43 1.45 1.88 1.96 1.86 57,485 50,791 48,228 50.281 45,125 40.060 24.650 23,121 22,557 22,330 20.158 18,075 42.9 45.5 46.8 44 4 44.7 45.1 452.7 420.5 383.1 343.4 306.0 291.7 .79 .83 .79 68 68 .73 1.84 1.82 1.70 1.54 1.52 1.61 'D eposits in fo re ig n b ranches are o m itte d fro m to ta ls because the y are not insured. I nsured deposits are estim ated by app lyin g to the d eposits in the va riou s types of a ccou nts at the regular Call dates, the percentages insured as determ ined fro m the S um m ary o f Deposits su rve y su bm itte d b y insured banks. D e cem be r 20, 1963 D e cem be r 28, 1962 4Revised. i n it ia l coverage w as $2,500 fro m Ja n u a ry 1 to June 30. 1934. ^lOO.OOO fo r tim e and sa v in g s dep osits o f in -sta te g ove rn m e nta l units p rovided in 1974. '$100,000 fo r In d iv id u a l Retirem ent a ccou nts and Keogh accounts provided in 1978. T o ta l deposits INDEX A c c o u n tin g and C o rp o ra te Services. D ivisio n o f 17 A c c o u n tin g Policies, S u m m a ry o f S ig n ific a n t 30 A d v e rtis e m e n t o f M e m b e rs h ip 38 A d m in is tra tiv e P ro ce e d in g s Before FDIC 39 A p p lic a tio n s : D e p o s it In s u ra n ce A p p ro v e d and D enied (1 9 8 0 - 1 9 8 1 ) 6 M e rg e rs A p p ro v e d and Denied (1 9 8 0 - 1 9 8 1 ) 6 N ew B ra nc h es A p p ro v e d and D en ied (1 9 8 0 - 1 9 8 1 ) 6 A ssessm ents: A c c o u n tin g Policy Relating to D e p o s it In su ra n ce 30 C redits D ue In sured Banks Level o f 1 7 ,3 3 30 Bank Failures: S u m m a ry 1 9 3 4 -1 981 14 D u rin g 198 1 (By Name o f Bank) 14 Book V a lue o f Assets ( 1 9 7 0 - 1 9 8 1 ) 15 D ep osits and Losses in All In sured Banks 16 M e th o d s Used to P rotect D e p o s ito rs 15 Bank S e cre cy A c t Bank S e c u rity 9 9 Bank S u pe rvisio n, D ivision o f Board of D ire c to rs Cash D is c o u n ts A c t 3 iii 37 C e a s e -a n d -D e s is t Orders: S tatistics (1 9 7 8 -1 9 8 1 ) Cases S u m m a rize d C h a irm a n 's A w a rd C h a irm a n 's S ta te m e n t C ha ng e o f C o n tro l, A p p ro v e d and D is a p p ro v e d C losed Banks and D e p o sit In s uran c e - S tatistics 20 43-65 23 viii 7 6 8-82 C o m p a ra tiv e P e rfo rm a n c e Reports 4 C o m p lia n c e E xa m in atio ns 5 83 C o m p u te r Assisted S u p e rv is o ry System (CO MPASS) 9 C o m p u te rs , N u m b e r of Banks Using 5 C o n g re s s io n a l R elations and P ublic In fo rm a tio n , O ffice of 25 C o n sum e rs: C o n s u m e r A w a re n e s s Se m in ars 9 C o n s u m e r News 9 C o n s u m e r P rogram s, O ffice of 9 C o n s u m e r P ro te c tio n and Civil Rights 8 C o rp o ra te A u dits, O ffice of D e le g a tio n o f A u th o r ity 24 6, 3 8 D e p o s it In s u ra n c e Fund: In c o m e (1 9 8 0 -1 9 8 1 ) 28 Liabilities ( 1 9 8 0 - 1 9 8 1 ) 27 Status of 17 E le c tro n ic Data P ro cessing E xa m in atio ns 5 E m p lo y m e n t, C o m p a r in g 1 9 8 0 - 1 9 8 1 22 E n fo rc e m e n t P ro c e e d in g s 19 S u m m a ry o f Cases Equal E m p lo y m e n t O p p o rtu n ity , O ffice of 43-65 24 E xam inations: Types of 3 N u m b e r C o n d u c te d by Types ( 1 9 8 0 - 1 9 8 1 ) 4 Examiners: N u m b e r of T ra in in g 3. 22 6 Excess C re dits A vailable 33 Executive and A d m in is tra tiv e Offices 22 Executive Secretary, O ffice of 24 FDIC News 25 FDIC-State C o o p e ra tio n 10 Fidu cia ry Powers, N u m b e r of Banks A p p ro v e d in 1 981 5 Field Offices, N u m b e r o f 3 Financial Position, C ha ng es in (1 9 8 0 - 1 9 8 1 ) F inancial S tate m en ts http://fraser.stlouisfed.org/ 84 Federal Reserve Bank of St. Louis 29 2 6-34 H a n d ic a p p e d , H iring of 23 Health U nit 24 In c o m e and Expenses ( 1 9 8 1 ) 17 In co m e and the D e p o s it In su ra n ce Fund 28 31, 34 In c o m e M a in te n a n c e A g re e m e n ts In s tr u c to r Staff, Size of 6 In te ra g e n c y T ra in in g 6 In terest on D eposits 39 In te rn a tio n a l Banking 7 In te rn a tio n a l Banking Facility D e p o sit In su ra n ce A ct 37 Lease C o m m itm e n ts 34 Legal D ivision 19 L egislation, 1 981 37 ii Letter o f T ra n sm itta l Liabilities and the D e p o s it In su ra n c e Fund (1 9 8 0 -1 9 8 1 ) 27 L iq u id a tio n , D ivision of 13 L iq u id a tio n s , Open (1 9 7 0 -1 9 8 1 ) 15 Losses, A llo w a n c e s fo r (1 9 8 0 -1 9 8 1 ) 33 M a n a g e m e n t System s and Financial Analysis, O ffice of 18 Notes Payable 34 Notes P urchased From Insured Banks 32 N O W A c c o u n t E ligib ility 38 Personnel M a n a g e m e n t, O ffice of 22 Pro blem Banks 11 R ector (N a ncy K.) A w a rd 23 R egions and D ire c to rs vi Reports, R e q u ire m e n ts Deleted 38 Research and S tra te g ic Planning, D ivision of 21 R od dy (Edward J.) A w a rd 23 Rules and R eg u la tio n s (1 9 8 1 ) Safety and S o u n d n e s s E xa m in atio ns Securities, o f N o n m e m b e r In sured Banks 3 8 , 39 3 39 85 S e curities, R eg istra tio n and R e p o rtin g 7 S e cu ritie s T ra n sfe r Agen ts. N u m b e r of Banks Registered 5 S o u th e rn B a n c o r p o ra tio n Note Receivable 34 State Examiners, T rained in 1 981 6 Table o f C o n te n ts vii Table o f O rg a n iz a tio n (FDIC) T ra in in g iv 23 T ra n sfe r Agen ts, R e g istra tio n o f 39 T re a su ry O b lig a tio n s: A c c o u n tin g Policy Relating to 30 Total In v e s tm e n t 32 T ru s t D e p a r tm e n t E xa m in atio ns 5 U n ifo rm Bank P e rfo rm a n c e Reports 4 U n ifo rm S u p e rv is o ry Policies and P ro ced ures V is io n Care Plan W a s h in g t o n O ffice s and D ire c to rs http://fraser.stlouisfed.org/ 8 6 Reserve Bank of St. Louis Federal 10 23 v
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