The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
Comptroller of the Currency Administrator of National Banks Annual Report 1979 Comptroller of the Currency The Administrator of National Banks John G. Hermann Comptroller of the Currency Letter of Transmittal Treasury Department, Office of the Comptroller of the Currency, Washington, D.C., December 1, 1980 Sirs: Pursuant to the provisions of Section 333 of the United States Revised Statutes, I am pleased to submit the 1979 Annual Report of the Comptroller of the Currency. Respectfully, John G. Heimann, Comptroller of the Currency. The President of the Senate The Speaker of the House of Representatives Contents Title of Section I. II. III. IV. V. VI. VII. VIII. IX. X. Condition of the National Banking System Income and Expenses of National Banks Structural Changes in the National Banking System Office of the Comptroller Senior Deputy Comptroller Senior Deputy Comptroller for Bank Supervision Senior Deputy Comptroller for Operations Senior Deputy Comptroller for Policy Chief Counsel Financial Operations of the Office of the Comptroller of the Currency Page 1 5 9 19 21 23 25 29 37 43 Appendices A. B. C. D. Merger Decisions Statistical Tables Administrative Actions Selected Speeches and Congressional Testimony 49 145 207 231 Statistical Tables Table No. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. Title Assets, liabilities and capital accounts of national banks, 1978 and 1979 Income and expenses of national banks, 1978 and 1979 National banks and banking offices, by states, December 31, 1979 Applications for national bank charters and charters issued, by states, calendar 1979 Applications for national bank charters pursuant to corporate reorganizations and charters issued, by states, calendar 1979 Applications for conversion to national bank charter and charters issued, by states, calendar 1979 . . . Branches of national banks, by states, calendar 1979 CBCT branches of national banks, by states, calendar 1979 De novo branch applications of national banks, by states, calendar 1979 De novo applications for federal branches and agencies of foreign banks, by states, calendar 1979 . . Mergers, calendar 1979 Office of the Comptroller of the Currency: balance sheets Office of the Comptroller of the Currency: statements of revenues, expenses and Comptroller's equity Office of the Comptroller of the Currency: statement of changes in financial position VI Page 3 7 10 11 12 13 14 15 16 17 17 44 45 46 I. Condition of the National Banking System During 1979, accelerating inflation, declining U.S. economic growth, sharply higher imported crude oil prices and an abrupt shift in U.S. monetary policy induced some important changes within the financial system. Most importantly, there was a large increase in the demand for short-term, liquid financial instruments with higher yields, such as money market certificates of deposit and money market mutual funds. The rapid growth of the innovative instruments not only demonstrated the pervasiveness of inflationary expectations but substantially diminished the importance of traditional deposit instruments. While the effects of inflation, policy changes and financial innovation varied among banks, the aggregate asset, liability and capital accounts of the national banking system reflected some structural changes the banking system made to accommodate a more volatile and uncertain economic environment. Many of the changes in the national banking system during 1979, however, were simply continuations of trends already evident in previous years. The total assets of the national banking system, both foreign and domestic, grew by 11.7 percent in 1979 to $996.3 billion. The rate of growth was slightly below the 12 percent growth of 1978. Most of the growth in total assets during 1979 was in the form of loans, as net loans increased by $57.3 billion, an 11.7 percent rate of growth. The growth in loan assets was slightly below the $60.8 billion of new lending in 1978, which reflected the slowing of the national economy during the second and fourth quarters of 1979. While lending activity increased in line with the growth of total assets in 1979, the provision for possible loan losses increased somewhat faster at a rate of 14.7 percent. Though national banks purchased $9.2 billion in new securities during 1979, a substantial increase from $2.9 billion in security investment for 1978, the importance of securities within the asset portfolios of national banks has diminished in recent years. At the end of 1979, securities comprised 15.6 percent of total assets. Two years earlier, securities accounted for 18 percent of total assets. The fastest growing identifiable asset category during 1979 was lease financing receivables which grew by nearly $1.5 billion, an annual rate of 22.7 percent. Conversely, national banks reduced their holdings of real estate by $261 million, a decline of 16.6 percent. That reflects the continuing workout of problem real estate lending encountered in the last recession. The effects of rising inflation on the national banking system were most readily indentifiable on the liability side of the balance sheet. Most importantly, there was a decline in the importance of traditional deposit instruments and an increase in the use of purchased funds. Though total domestic deposits grew by $34 billion in 1979, the ratio of domestic deposits to total assets declined from 62.9 to 59.7 percent. In contrast, purchased funds, which include deposits at foreign offices, federal funds, repurchase agreements and other liabilities for borrowed money increased by $53.4 billion. As a percent of total assets, purchased funds increased from 26.2 to 28.9 percent in 1979. Further, total deposits in foreign offices increased by 21.9 percent, a rate more than three times as fast as the growth of total deposits in domestic offices. The growth in all deposit categories, other than deposits at foreign offices, was slower than the 11.8 percent increase in total liabilities. Most notably, demand deposits at domestic offices grew by only 6.5 percent. During 1979, 26-week certificates of deposit grew from just $12 billion, or 2 percent of domestic deposits, to $55 billion, more than 9 percent of domestic deposits. So in addition to the relatively slow growth of domestic deposits, there was a significant shift in those deposits to higher interest-bearing types. Indeed, savings accounts at national banks actually declined more than 7 percent to $111 billion. The deposits of federal, state and local governments also declined. The fastest growing liability categories reflected the shift towards increasing reliance on short-term market rate funds. Other liabilities for borrowed money grew by 37.8 percent while federal funds purchased and securities sold under agreements to repurchase increased by 22 percent. A year earlier the growth of federal funds and repurchase agreements was 9.1 percent. The aggregate capital asset ratio for the national banking system declined slightly in 1979 from 5.51 to 5.45 percent. In recent years, there has been a steady erosion of the capital asset ratio as total assets have grown faster than total equity capital. The influence of inflation is readily apparent in that decline of the capital asset ratio. While the value of bank stocks and the return on equity have remained relatively low for several 1 years, as it has for most stocks, inflation has accelerated the increase in the nominal value of bank assets. The effects of inflation and of the national economy approaching its cyclical peak could be discerned from the aggregate balance sheet accounts of the national banking system. A rise in loan demand induced a shift of national bank assets away from securities and into loan assets. At the same time, the effects of inflation caused banks to rely more heavily on purchased funds and less on traditional instruments. Table 1 Assets, liabilities and capital accounts of national banks, 1978 and 1979 (Dollar amounts in millions) Dec. 31, 1978 4,564 banks Consolidated foreign and domestic Change 1978-1979 Fully consolidated Dec. 31, 1979 4,448 banks Domestic offices Consolidated foreign and domestic Domestic offices Amount Percent Assets Cash and due from depository institutions* U.S. Treasury securities Obligations of other U.S. government agencies and corporations . Obligations of states and political subdivisions All other securities Total securities . $170,146 45,311 21,312 66,758 12,774 146,155 Federal funds sold and securities purchased under agreements to resell Total loans (excluding unearned income) Allowance for possible loan losses Net loans . 31,147 Lease financing receivables Bank premises, furniture and fixtures, and other assets representing bank premises Real estate owned other than bank premises All other assets Total assets $102,603 45,285 21,308 66,564 7,345 140,502 494,896 4,754 30,996 394,671 4,566 490,142 390,105 6,582 12,652 1,573 33,874 5,561 11,930 1,456 39,132 892,272 $188,554 44,281 24,751 71,268 15,095 155,395 $106,731 44,126 24,702 70,796 9,485 $ 18,408 -1,030 3,439 4,510 2,321 10.8 -2.3 16.1 6.8 18.2 149,109 9,240 6.3 36,447 36,119 442,986 5,296 437,690 5,300 57,962 707 17.0 11.7 14.9 11.7 552,858 5,461 547,397 57,255 6,780 12,923 1,193 41,711 1,492 1,104 -261 11,472 722,285 8,074 13,756 1,312 45,346 996,281 792,256 104,009 175,356 294,707 2,078 45,689 35,909 7,229 175,356 294,707 2,078 45,689 35,909 7,229 187,201 317,654 1,902 43,484 37,268 7,461 187,201 317,654 1,902 43,484 37,268 7,461 560,968 220,593 340,375 156,090 717,057 560,968 220,593 340,375 0 560,968 594,970 234,937 360,033 190,302 785,272 594,970 234,937 360,033 0 594,970 11,845 22,947 -176 -2,205 1,359 232 34,002 14,344 19,658 34,212 64,989 7,764 12,860 1,275 35,808 839,753 64,908 7,764 5,499 1,232 29,642 79,310 7,687 17,719 1,277 47,434 79,152 7,687 9,439 1,234 42,444 670,013 938,699 3,312 3,065 3.285 29 9,912 17,291 21,976 49,207 29 9,912 17,291 21,976 49,207 31 11,403 17,846 25,017 54,296 722,285 996,281 22.7 8.7 -16.6 33.9 11.7 Liabilities Demand deposits of individuals, partnerships and corporations Time and savings deposits of individuals, partnerships and corporations Deposits of U.S. government Deposits of states and political subdivisions All other deposits Certified and officers' checks Total deposits in domestic offices . Demand deposits Time and savings deposits . . . . Total deposits in foreign offices Total deposits . . . Federal funds purchased and securities sold under agreements to repurchase Interest-bearing demand notes issued to U.S. Treasury Other liabilities for borrowed money Mortgage indebtedness and liability for capitalized leases . All other liabilities Total liabilities Subordinated notes and debentures . 6.8 7.8 -8.5 -4.8 3.8 3.2 6.1 68,215 6.5 5.8 21.9 9.5 734,926 14,321 -77 4,859 2 11,626 98,946 22.0 -1.0 37.8 .2 32.5 11.8 3,034 -27 -.8 31 11,403 17,846 25,017 2 1,491 555 3,041 54,296 5,089 6.9 15.0 3.2 13.8 10.3 792,256 104,009 11.7 Equity Capital Preferred stock Common stock Surplus Undivided profits and reserve for contingencies and other capital reserves Total equity capital Total liabilities, subordinated notes and debentures and equity capital GO .. . . .. . .. . 892,272 * In 1978, this category was expanded to include all depository institutions rather than just banks. t Most demand deposits of the U.S. government were converted to "interest-bearing" demand notes issued to U.S. Treasury in late 1978. II. Income and Expenses of National Banks Total income and expenses of national banks grew even more rapidly in 1979 than during 1978, increasing more than 30 percent and reflecting both the continuing rise in interest rates and a substantial growth in bank assets. However, net income grew at the lower rate of 17 percent, representing a reduction in interest rate margins resulting from an increasing reliance on market rate funds, including the spectacular growth in the 26-week money market certificates. That 17 percent growth in net income, just over $1 billion, was the second largest increase in the last decade, exceeded only by last year's rise of 20 percent. During 1979, total operating income jumped 32.5 percent to $89.9 billion. That rate was nearly triple the 11.7 percent increase in assets over the year, reflecting the continued ability of banks to adjust their loan rates during a period of rapidly rising interest rates. The prime rate, the basic commercial lending rate, increased from 11.75 to 15.25 percent. All of that increase occurred during the second half of the year and followed an even larger 400-basis point increase during 1978. Total operating expenses increased even more rapidly during the year than income, growing 35.2 percent to $79.7 billion. The result was a $1.3 billion increase in income before taxes and securities gains, well below last year's $2 billion increase. However, applicable income taxes increased only $163 million, or 6.3 percent to $2.7 billion, following last year's growth of 46.6 percent. Net securities losses increased a further $57 million following a $175 million swing last year. Extraordinary income was virtually unchanged and added $26 million to net income. Net income was $7.2 billion, equal to 0.73 percent of end-ofyear assets, the second significant yearly increase in return on assets in a row. Interest income, including income from lease financing and corporate stock, increased 33.9 percent over 1978 to reach $82.9 billion; it accounted for more than 92 percent of total operating income. The largest component of that, interest and fees on loans, totalled $61.8 billion in 1979, an increase of more than 34 percent over 1978. Thus in addition to loans increasing almost 12 percent, national banks were able to increase the average return on their loan portfolio by nearly 2 percentage points over last year. However, interest on balances with depository institutions and income from federal funds transactions jumped even more dispro- portionately, 57 and 62 percent respectively, reflecting their short-term nature and responsiveness to changes in interest rates. Security holdings, which increased slowly during the year, accounted for less than 12 percent of total operating income. That continued the trend of decreasing reliance on income from securities, which was interrupted only in 1975 as a result of depressed loan demand during the recession. Although holdings of U.S. Treasury and government agency securities continued to decline as they have since 1976, income on those investments rose nearly 14 percent as older issues were replaced by higher yielding issues. Noninterest income, resulting mainly from fees for services, increased 18 percent to $7 billion. High and rising interest rates and the success of new market rate instruments in 1979 had a dramatic effect on deposit costs. Total interest expense on deposits was $43.4 billion, an increase of 44 percent. The expense of deposits which have long been acquired at competitive market rates, large time certificates of deposits and deposits in foreign offices, jumped 53 and 67 percent, respectively. The expense of foreign office deposits, which remained the fastest growing source of deposits, grew at more than three times the actual increase in those deposits as it did the previous year and accounted for nearly 40 percent of the total interest expense on deposits, although they equaled 24 percent of total deposits. The rapid growth of 26-week money market certificates during the year helped to push the interest expense on other deposits up 22 percent, three times the rate of increase for last year. The expense of other short-term market rate funds increased more rapidly than that for deposits. The cost of federal funds purchased and securities sold under agreements to repurchase grew $3.5 billion, or 70 percent over 1978. The 97 percent increase in expense on borrowed money is overstated, in part, because banks were paying interest on federal demand notes, for an entire year. Total interest expense was $54 billion, a 49 percent increase over 1979 and equal to 68 percent of total operating expenses. Salaries and employee benefits increased 14.4 percent, slightly greater than the rate of increase for total assets. However, because of the effect of rising interest rates, it continued to decline in proportion to total expenses. Net loan losses increased slightly to $1.5 billion, still well below the post-recession peak of more than $2 billion in 1975. As a result the expense for provision for loan losses increased only slightly to $2.3 billion. National banks declared $2.6 billion in dividends in 1979, equal to 36.6 percent of their net income. That was a slight increase in the payout ratio of 35.6 per- cent during 1978 but still the second lowest ratio since 1946. That high rate of retention of earnings was important because it was the primary source of equity capital growth. Because of the continued rapid increase in net income and the slight increase in leveraging, net income to equity capital rose to 13.3 percent from 12.5. Inconne and expenses of national banks, 1978 and 1979 (Dollar amounts in millions) 1978 4,564 banks Amount Operating income: Interest and fees on loans Interest on balances with depository institutions Income on federal funds sold and securities purchased under agreements to I \5 OC It , , , , . . . . Interest on U.S. Treasury securities and on obligations of other U.S. government agencies and corporations Interest on obligations of states and political subdivisions in the United States . . Income from all other securities (including dividends on stock) Income from lease financing Income from fiduciary activities Service charges on deposit accounts Other service charges, commissions, and fees . . Other operating income Total operating income Operating expenses: Salaries and employee benefits Interest on time certificates of $100,000 or more (issued by domestic offices) Interest on deposits in foreign offices Interest on other deposits Expense of federal funds purchased and securities sold under agreements to repurchase Interest on demand notes issued to the U.S. Treasury and on other borrowed money.* Interest on subordinated notes and debentures Occupancy expense of bank premises, net, and furniture & equipment expense Provision for possible loan losses Other operating expenses Total operating expenses 1979 4,448 banks Percent distribution Amount Change, 1978-1979 Percent distribution Amount Percent $45,997.7 4,407.3 67.8 6.5 $61,801.9 6,931.2 68.8 7.7 $15,804.2 2,523.9 34.4 57.3 2,197.8 3.2 3,551.2 4.0 1,353.4 61.6 4,721.6 3,252.1 693.2 639.4 1,214.8 1,089.5 1,932.2 1,696.9 67,842.4 7.0 4.8 1.0 0.9 1.8 1.6 2.8 2.5 100.0 5,367.2 3,748.2 754.9 730.5 1,345.0 1,316.1 2,453.0 1,887.0 89,886.1 6.0 4.2 .8 .8 1.5 1.5 2.7 2.1 100.0 645.6 496.1 61.7 91.1 130.2 226.6 520.8 190.1 22,043.7 13.7 15.3 8.9 14.2 10.7 20.8 27.0 11.2 32.5 10,845.2 7,021.9 10,139.7 12,873.9 18.4 11.9 17.2 21.8 12,403.7 10,723.5 16,903.5 15,737.0 15.6 13.5 21.2 19.7 1,558.5 3,701.6 6,763.8 2,863.1 144 52.7 66.7 22.2 4,989.6 8.5 8,498.4 10.7 3,508.8 70.3 1,023.1 234.3 3,194.3 2,131.2 6,522.5 58,975.8 1.7 0.4 5.4 3.6 11.1 100.0 2,014.7 265.4 3,571.3 2,251.7 7,356.2 79,725.5 2.5 .3 4.5 2.8 9.2 100.0 991.6 31.1 377.0 120.5 833.7 20,749.7 96.9 13.3 11.8 5.7 12.8 35.2 Income before income taxes and securities gains or losses . Applicable income taxes Income before securities gains or losses Securities gains (losses), gross Applicable income taxes Securities gains (losses), net . 8,866.6 2,591.0 6,275.6 -253.5 -125.2 -128.3 10,160.6 2,753.7 7,406.8 -349.4 -163.2 -186.2 1,294.0 162.7 1,131.2 -95.9 -38.0 -57.9 14.6 6.3 18.0 37.8 30.4 45.1 Income before extraordinary items Extraordinary items, net Net income . 6,147.3 26.1 6,173.4 7,220.7 26.0 7,246.7 1,073.4 -.1 1,073.3 17.5 -.4 17.4 2,194.7 1.4 2,196.1 2,648.2 1.5 2,649.7 453.5 1 453.6 20.7 7.1 20.7 70.7 171.9 101.2 10.3 8.1 7.0 Cash dividends declared on common stock . . . . Cash dividends declared on preferred stock Total cash dividends declared .... 685.9 756.6 Recoveries credited to allowance for possible loan losses . Losses charged to allowance for possible loan losses 2,124.6 2,296.5 Net loan losses 1,438.7 1,539.9 Percent Ratio to total operating income: Percent 44.3 48.2 Interest on deposits . . Other interest expense 9.2 12.0 Salaries and employee benefits 16.0 13.8 Other non-interest expense 17.5 14.7 Total operating expenses 86.9 88.7 Ratio of net income to: 0.69 Total assets (end of period) 0.73 Total equity capital (end of period) 12.5 13.35 http://fraser.stlouisfed.org/ " Most demand deposits of the U.S. government were converted to "interest-bearing" demand notes issued to the U.S. Treasury in late 1978 Federal Reserve Bank of St. Louis Structural Changes in the National Banking System During 1979, the structure of the national banking system, while continuing the trend of previous years toward concentration, was significantly affected by the full implementation of three new statutes previously enacted by Congress. The number of national banks decreased for the fourth consecutive year to 4,448 at year-end 1979. Of those, 2,153 were unit banks. The remaining 2,295 national banks operated a total of 18,285 branches. In addition to these 22,733 traditional banking offices, national banks operated 946 Customer-Bank Communications Terminal (CBCT) branches. The statutory requirement that all national banks belong to the Federal Reserve System and the liberalization of certain state branching laws, with a resulting increase in bank merger activity, remained the major causes for this decline in the number of national banks. During 1979, 51 national banks converted to state charters, while only one state bank converted to a national charter, and 39 national banks merged or consolidated with state banks. Forty-one new national banks were chartered during 1979. The Comptroller's Office approved 67 merger applications involving two or more operating banks in 1979, compared to 47 such applications in 1978. Seventy mergers were consummated during the year. However, despite the trend toward concentration of the existing system, applications for new national bank charters again showed a marked increase, especially in Texas, a unit-bank, multibank holding company state. One hundred fifty-three new national bank charter applications were considered during 1979. In addition, increased competition, especially from nonbanks, had a two-fold effect on the national bank system, further intensifying bank merger activity and stimulating expansion through branches and CBCT's. National banks opened 659 de novo branches and acquired 203 new branches through merger or consolidation, while closing only 14. The number of CBCT's operated by national banks increased by 181 during 1979. The previously enacted Community Reinvestment Act of 1977 (CRA), International Banking Act of 1978 (IBA) and Financial Institutions Regulatory and Interest Rate Control Act of 1978 (FIRA) all had a major impact on the national bank system during 1979. CRA, which became effective in November 1978, was fully implemented in early 1979; FIRA became effective March 10, 1979; the regulations implementing the Comptroller's responsibilities under the IBA were effective November 13, 1979. The purpose of CRA is to encourage federally insured commercial banks (including national banks), mutual savings banks, and savings and loan associations to help meet the credit needs of their entire communities, including low and moderate income neighborhoods, while preserving the flexibility necessary to operate safely and soundly. The Comptroller is required to take the record of CRA performance into account in deciding virtually all types of corporate applications filed by national banks. Although only one application was disapproved during 1979 solely on CRA factors, several others were approved with conditions designed to assure satisfactory compliance with CRA. FIRA contains the Depository Institutions Management Interlocks Act and the Change in Bank Control Act of 1978. The Interlocks Act generally prohibits management interlocks among nonaffiliated depository institutions, including national banks, in the same Standard Metropolitan Statistical Area or in the same or adjacent city or town. The Change in Bank Control Act requires persons who propose to acquire control of national banks to give the Comptroller 60 days notice prior to that acquisition. During that time, the Comptroller may disapprove the proposed acquisitions within the guidelines of established statutory criteria. During 1979, 52 prior notices of intent to acquire control of a national bank were received: no objection was made to 48, one was withdrawn, one was disapproved and two were pending at year-end. The IBA, enacted to promote competitive equality between domestic and foreign banks operating in the United States, created a federal system of licensing branch and agency operations of foreign banks in the United States. The federal system, which will coexist with the already-established state licensing system, created an alternative choice of licensing for foreign banks which maintain offices in the United States. The Comptroller's implementing regulations became effective in November. Six applications for de novo federal branches and agencies were received during 1979: two of these were approved and four were still pending at year-end. 9 Table 3 National banks and banking offices, by states, December 31, 1979 National banks With branches^ Numhpr of branches^ Numhpr 1 V t># I I I KJ ^> 1 Of Total Unit 4,448 2,153 2,295 18,285 22,733 50 States and D.C. 4,448 2,153 2,295 18,271 22,725 Alabama Alaska Arizona Arkansas California Colorado Connecticut Delaware District of Columbia Florida 99 6 3 68 42 139 19 6 16 221 32 0 1 15 13 93 3 2 4 80 67 6 2 53 29 46 16 4 12 141 346 80 333 181 2 845 ' 36 204 5 136 374 445 86 336 249 2 887 '175 223 11 152 595 Georgia Hawaii daho Ilinois ndiana owa Kansas Kentucky Louisiana viaine 63 3 7 410 119 99 148 79 55 14 10 1 1 247 25 48 97 17 13 1 53 2 6 163 94 51 51 62 42 13 343 11 184 211 526 94 79 263 290 118 406 14 191 621 645 193 227 342 345 132 Maryland Massachusetts Michigan Minnesota Mississippi Missouri Montana Nebraska Nevada New Hampshire 31 71 123 205 38 98 56 117 4 36 4 8 13 132 3 49 45 79 1 7 27 63 110 73 35 49 11 38 3 29 373 457 956 91 271 72 9 58 75 104 404 528 1,079 296 309 170 65 175 79 140 New Jersey New Mexico New York North Carolina North Dakota Ohio Oklahoma Oregon Pennsylvania Rhode Island 93 40 116 26 41 177 190 6 223 5 11 10 32 3 16 37 115 1 73 0 82 30 84 23 25 140 75 5 150 5 991 121 1 518 853 30 1,259 62 329 1,440 116 1,084 161 1,634 879 71 1,436 252 335 1,663 121 South Carolina South Dakota Tennessee Texas Utah Vermont Virginia Washington West Virginia Wisconsin Wyoming 18 33 69 615 11 12 72 21 107 131 47 1 20 6 560 7 4 4 2 78 83 46 17 13 63 55 4 8 68 19 29 48 1 335 90 368 27 117 48 712 615 28 95 0 353 123 437 642 128 60 789 636 135 226 47 0 0 0 0 0 0 6 0 6 0 17 4 13 138 155 All national banks Virgin Islands Puerto Rico District of Columbia—all* • offices^ * Includes national and nonnational banks in the District of Columbia, all of which are supervised by the Comptroller of the Currency. t For the purposes of this table, CBCT's are not considered branches or offices. For information on those branches, see Table 8 of this report. 10 Table 4 Applications for national bank charters* and charters issued, by states, calendar 1979 Received^ Total Approved Disapproved 153 71 17 1 0 0 1 1 0 0 1 Withdrawn Pending December 31, 65 41 0 0 0 0 0 0 0 0 0 0 0 0 0 0 10 1 2 0 0 0 3 2 0 1 0 4 1 0 0 0 5 19 8 0 0 0 6 7 6 0 0 0 2 0 0 0 0 2 1 0 0 0 2 Georgia . Hawaii . . Idaho . . . Illinois . . . Indiana . . Iowa Kansas . . Kentucky Louisiana Maine . . . 2 0 1 6 1 1 1 1 4 0 0 0 1 1 0 1 0 0 1 0 1 0 0 1 0 0 1 1 1 0 0 0 0 0 0 0 0 0 0 Maryland Massachusetts . Michigan Minnesota Mississippi . . . . Missouri Montana Nebraska Nevada New Hampshire 0 0 3 3 0 3 0 1 1 1 0 0 2 2 1 1 0 1 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 New Jersey . . . New Mexico . . . New York North Carolina . North Dakota . . Ohio Oklahoma Oregon Pennsylvania . . Rhode Island . . 1 1 1 1 0 0 3 0 0 0 0 0 0 0 0 0 3 0 0 0 0 0 1 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 South Carolina . . . South Dakota . . . . Tennessee 0 0 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 29 0 0 2 0 4 0 0 Alabama Alaska Arizona Arkansas California Colorado Connecticut Delaware District of Columbia . Florida Texas Utah Vermont Virginia Washington West Virginia Wisconsin Wyoming Virgin Islands .... .... 70 1 0 2 0 7 0 1 1 34 1 0 0 0 1 1 1 Chartered 1979 0 0 0 0 0 0 0 0 0 4 0 0 0 0 1 0 0 0 0 0 3 1 0 0 0 2 0 0 0 1 2 0 2 0 0 0 1 1 1 0 1 1 0 1 0 0 0 1 0 0 0 2 0 1 0 0 0 0 0 0 0 0 0 0 0 3 0 0 0 0 1 0 12 1 0 0 1 0 3 1 0 * Excludes conversions and corporate reorganizations. t Includes applications pending as of December 31, 1978. 11 Table 5 Applications for national bank charters pursuant to corporate reorganizations and charters issued, by states, calendar 1979 Received* Approved Disapproved Withdrawn Pending December 31, Chartered 1979 Total 50 23 Alabama Alaska Arizona Arkansas California Colorado Connecticut Delaware District of Columbia Florida 1 0 1 0 1 1 0 0 0 1 0 0 0 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Georgia Hawaii Idaho Illinois Indiana Iowa Kansas Kentucky Louisiana Maine 0 0 1 6 0 1 0 0 0 0 2 0 1 0 0 0 0 1 1 0 1 22 20 0 0 0 0 0 0 0 0 0 0 0 0 1 0 0 1 0 0 0 1 0 0 0 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 0 0 0 0 1 4 0 0 0 0 0 0 0 0 0 3 0 0 0 0 0 0 0 0 0 0 1 Maryland Massachusetts . Michigan Minnesota Mississippi Missouri Montana Nebraska Nevada New Hampshire 0 0 1 0 0 0 0 0 0 0 1 0 0 0 0 0 0 0 0 0 0 0 1 2 0 0 0 1 2 0 2 1 1 0 0 0 0 0 0 0 1 1 0 0 0 1 2 0 1 0 0 0 0 0 0 0 New Jersey . . . New Mexico . . . New York North Carolina . North Dakota . . Ohio Oklahoma Oregon Pennsylvania . . Rhode Island . . 4 1 1 0 0 8 0 2 0 0 2 0 0 0 0 6 0 1 0 0 0 0 0 0 0 0 0 0 0 0 1 0 0 0 0 0 0 0 0 0 1 1 1 0 0 2 0 1 0 0 0 0 0 0 0 6 0 0 0 0 South Carolina . South Dakota . . Tennessee Texas Utah Vermont Virginia Washington . . . West Virginia . . Wisconsin Wyoming 0 0 0 8 0 0 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 1 0 0 0 5 0 0 1 0 0 1 0 0 0 0 2 0 0 0 0 0 0 1 0 0 0 8 0 0 0 0 0 0 0 Virgin Islands . . Puerto Rico . . . 0 0 0 0 0 0 0 0 0 0 0 0 * Includes applications pending as of December 31, 1978. 12 1 0 0 0 0 0 0 0 Table 6 Applications for conversion to national bank charter and charters issued, by states, calendar 1979 Received* Approved Disapproved Withdrawn Pending December 31, 1979 Chartered 6 1 0 1 4 1 Alabama Alaska Arizona Arkansas California Colorado Connecticut Delaware District of Columbia Florida 0 0 0 2 0 0 0 0 0 2 0 0 0 0 0 0 0 0 0 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 0 0 0 2 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 Georgia Hawaii Idaho Illinois Indiana Iowa Kansas Kentucky Louisiana Maine 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Maryland Massachusetts Michigan Minnesota Mississippi Missouri Montana Nebraska Nevada New Hampshire 0 0 0 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 New Jersey New Mexico New York North Carolina North Dakota Ohio Oklahoma Oregon Pennsylvania Rhode Island 0 0 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 South Carolina South Dakota Tennessee Texas . . Utah Vermont Virginia Washington West Virginia Wisconsin Wyoming 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 ooooooooooo Total * Includes applications pending as of December 31, 1978. 13 Table 7 Branches* of national banks, by states, calendar 1979 Branches in operation December 31, 1978 De novo branches opened for business Jan. 1 to Dec. 31, 1979 Branches acquired through merger or conversion Jan. 1 to Dec. 31, 1979 Existing branches discontinued or consolidated Jan. 1 to Dec. 31, 1979 Branches in operation December 31, 1979 All national banks 17,437 659 203 14 18,285 50 states and D.C 17,431 659 203 14 18,279 340 79 319 175 2 761 31 201 5 133 302 5 1 14 4 79 5 3 0 3 59 1 0 0 2 5 0 0 0 0 13 0 0 0 0 0 0 0 0 0 346 80 333 181 2 845 36 204 5 136 374 Georgia Hawaii Idaho Illinois Indiana Iowa Kansas Kentucky Louisiana Maine 332 11 178 182 507 91 75 254 277 117 11 0 6 28 19 3 4 7 10 1 0 0 0 1 0 0 0 2 3 0 0 0 0 0 0 0 0 0 0 o 343 11 184 211 526 94 79 263 290 118 Maryland Massachusetts Michigan Minnesota Mississippi Missouri Montana Nebraska Nevada New Hampshire 356 447 868 67 256 67 8 56 85 98 15 10 88 24 11 5 0 2 4 5 2 0 0 0 4 0 1 0 0 1 0 0 0 0 0 0 0 0 14 0 373 457 956 91 271 72 9 58 75 104 New Jersey New Mexico New York North Carolina North Dakota Ohio Oklahoma Oregon Pennsylvania Rhode Island 973 118 1,489 809 29 1,096 60 321 1,408 115 16 3 29 20 1 64 2 8 29 1 2 0 0 24 0 99 0 0 3 0 0 0 0 0 0 0 0 0 0 0 991 121 1,518 853 30 1,259 62 329 1,440 116 South Carolina South Dakota Tennessee Texas Utah Vermont Virginia Washington West Virginia Wisconsin Wyoming 322 85 364 13 113 46 683 594 26 89 0 9 2 4 14 4 2 10 7 2 6 0 4 3 0 0 0 0 19 14 0 0 0 0 0 0 0 0 0 0 0 335 90 368 27 117 48 712 615 28 95 0 6 0 0 0 6 135 3 0 0 138 Alabama Alaska Arizona Arkansas California Colorado Connecticut Delaware District of Columbia Florida Virgin Islands District of Columbia—allf o o o o * Does not include CBCT or foreign branches. For those branches see Tables 8 and B-28. t Includes national and nonnational banks in the District of Columbia, all of which are supervised by the Comptroller of the Currency. 14 Table 8 CBCT branches* of national banks, by states, calendar 1979 Branches in operation December 31, 1978 De novo branches opened for business Jan. 1 to Dec. 31, 1979 Branches acquired through merger or conversion Jan. 1 to Dec. 31, 1979 Existing branches discontinued or consolidated Jan. 1 to Dec. 31, 1979 Branches in operation December 31, 1979 765 184 5 8 946 Alabama Alaska Arizona Arkansas California Colorado Connecticut Delaware District of Columbia Florida 7 2 0 4 3 12 0 0 1 36 4 0 0 3 0 3 0 0 0 8 0 0 0 0 0 0 0 0 0 5 0 0 0 0 0 0 0 0 0 0 11 2 0 7 3 15 0 0 1 49 Georgia . , Hawaii . . . Idaho Illinois . . . Indiana . . Iowa Kansas .. Kentucky . Louisiana Maine . . . 16 0 1 0 2 43 41 3 13 0 9 0 0 0 3 4 6 1 4 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 25 0 1 0 5 47 47 4 17 0 Maryland Massachusetts . Michigan Minnesota Mississippi Missouri Montana Nebraska Nevada New Hampshire 3 1 1 12 1 0 2 87 0 0 1 1 48 5 0 1 0 26 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 4 2 49 17 1 1 2 113 0 0 New Jersey New Mexico . . . New York North Carolina . North Dakota . . Ohio Oklahoma Oregon Pennsylvania . . . Rhode Island . . 4 0 108 1 13 58 102 8 18 0 0 0 5 2 1 12 7 0 4 0 0 0 0 0 0 0 0 0 0 0 0 0 6 0 0 1 0 0 0 0 4 0 107 3 14 69 109 8 22 0 South Carolina . South Dakota . . Tennessee Texas Utah Vermont Virginia Washington West Virginia . . . Wisconsin Wyoming Virgin Islands . . 12 6 47 0 0 0 19 9 0 69 0 0 6 2 3 0 0 3 0 0 0 12 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 0 0 0 0 0 0 0 0 0 18 8 49 0 0 3 19 9 0 81 0 0 All national banks * Customer-bank communications terminal branches. 15 Table 9 De novo branch applications of national banks, by states, calendar 1979 Total Alabama Alaska Arizona Arkansas California Colorado Connecticut Delaware District of Columbia Florida Georgia Hawaii Idaho Illinois Indiana Iowa Kansas Kentucky Louisiana Maine Maryland Massachusetts . . . Michigan Minnesota Mississippi Missouri Montana Nebraska Nevada New Hampshire . . . Abandoned Pending December 31, 1979 789 34 140 14 3 25 6 121 9 3 0 4 87 0 0 0 0 3 0 0 0 0 4 5 0 0 0 12 0 0 0 2 12 6 0 8 26 26 4 1 12 0 0 2 0 0 3 0 1 0 0 2 0 1 4 3 1 0 3 1 0 17 8 96 5 9 10 0 0 5 7 0 0 2 0 0 1 0 0 0 0 3 2 18 4 1 0 0 0 2 0 1 7 0 3 4 1 16 7 2 Received* Approved 964 19 3 25 6 137 9 3 0 6 104 0 11 30 30 8 1 16 9 3 20 10 116 9 10 11 0 0 7 7 Rejected New Jersey New Mexico New York North Carolina North Dakota Ohio Oklahoma Oregon Pennsylvania Rhode Island 25 4 25 22 2 87 10 14 58 2 17 4 20 18 1 71 3 9 45 2 0 2 0 0 0 0 3 4 0 South Carolina South Dakota Tennessee Texas Utah Vermont Virginia Washington West Virginia Wisconsin Wyoming Virgin Islands Puerto Rico 21 3 11 15 3 7 11 2 3 21 10 0 1 0 0 0 2 0 3 0 0 0 1 2 0 0 0 0 0 15 3 4 25 13 0 2 0 0 0 * Includes 194 applications pending as of December 31, 1978. 16 Table 10 De novo applications for federal branches and agencies of foreign banks, by states, calendar 1979 Received Approved Disapproved Withdrawn Pending Dec. 31, 1979 6 2 0 0 4 2 1 0 0 1 Limited federal branch District of Columbia Ohio 2 1 0 0 0 0 0 0 2 1 Federal agency New York 1 1 0 0 0 Total Federal branch New York Transactions involving two or more operating banks Others pursuant to corporate reorganization Applications received, 1979: Mergers Consolidations Purchases and Assumptions 53 3 13 26 5 0 79 8 12 Total received 69 31 100 Approvals issued, 1979: Mergers Consolidations Purchases and Assumptions 51 1 15 17 4 0 68 5 15 Total approvals 67 21 88 1 1 0 2 ooo Table 11 Mergers,* calendar 1979 0 1 1 0 2 54 1 15 70 16 4 0 20 70 5 15 90 Abandoned, 1979: Mergers Consolidations Purchases and Assumptions Total abandoned Consummated, 1979: Mergers Consolidations Purchases and Assumptions Total consummated Total * Includes mergers, consolidations and purchases and assumptions where the resulting bank is a national bank. 17 IV. Office of the Comptroller The Comptroller's staff directs, coordinates and manages the day-to-day operations of his office and advises the Comptroller on policy formulation and technical procedures. The staff conducts special studies, surveys and investigations and develops the framework, monitoring and management of special projects. Usually these have not been assigned to divisions or are projects in which the Comptroller has an immediate ongoing interest, such as the Minority Bank Development Program. The Comptroller's Executive Assistant and Special Assistants may act on behalf of the Comptroller, carrying out policies and directions and providing liaison with other agencies. services industry. During 1979, the Senior Advisor met with management personnel of over 50 banking organizations, investment bankers and others in the United States. The Senior Advisor reviews proposed congressional testimony, legislation, regulations, public statements, correspondence, corporate applications and examinations or other supervisory activities that have policy implications and provides an evaluation of the likely effects of OCC policies and actions on commercial banks and the financial services industry. In addition, the Senior Advisor consults with the Comptroller, members of the Policy Group, and others regarding the ongoing organization and management of the agency. Office of the Senior Advisor The Office of the Senior Advisor was established in 1979. The two major responsibilities of the Senior Advisor are to insure that OCC policies adequately reflect the realities of commercial banking operations and to strengthen the interface between the OCC and the commercial banking industry. To accomplish the objectives of the position, the Senior Advisor establishes and maintains contact with commercial banks, both state and national, bank holding companies and other segments of the financial Division of Inspections and Audits The Division of Inspections and Audits is an independent appraisal activity within OCC designed to provide independent, objective and constructive review and appraisal of financial, accounting and operational activities and to conduct investigations of matters relating to legality or propriety of actions by or conduct of OCC employees. The division, created in May 1979, functions as an independent counselor to the Comptroller and reports directly to the Comptroller. 19 V. Senior Deputy Comptroller The Senior Deputy Comptroller is the First Deputy, for statutory purposes and is first in order of succession to act in the absence of the Comptroller. Responsibilities of the Senior Deputy Comptroller include actively participating in administration of OCC policy, management and procedural matters as a member of the agency's Policy Group; coordination of all interagency activities; coordination of OCC's overall support and participation in the Federal Financial Institutions Examination Council; and supervision of the agency's communications, internally and with the public. The Office of the Senior Deputy Comptroller played an important role in the organization and the initial activities of the Federal Financial Institutions Examination Council. The council was established on March 10, 1979, pursuant to Title X of the Federal Financial Institutions Regulatory and Interest Rate Control Act of 1978 (Public Law 95-630). The purpose of Title X was to create a formal interagency body empowered to prescribe uniform principles, standards and report forms for the federal examinations of financial institutions performed by the Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation, Federal Home Loan Bank Board, National Credit Union Administration and Office of the Comptroller of the Currency and to make recommendations promoting uniformity in the supervision of financial institutions. The council is also tasked with developing uniform reporting systems for federally supervised financial institutions, their holding companies and their subsidiaries. It is to conduct schools for examiners employed by the five agencies represented on the council and to make such schools available to employees of state financial institutions supervisory agencies. The overall intent of the legislation is that the council's actions be designed to promote consistency in federal examination and to ensure progressive and vigilant supervision. The council has five members, who are the principals of each agency. In addition, to encourage the application of uniform examination principles and standards by state and federal supervisory authorities, the council has established in accordance with the requirement of the statute an Advisory State Liaison Committee composed of five representatives of state supervisory agencies. At the council's first meeting on March 16, 1979, John G. Heimann, Comptroller of the Currency, was elected Chairman and Lawrence Connell, Jr., Chairman of the National Credit Union Administration, was elected Vice Chairman. In addition, the council created the position of Executive Secretary to coordinate its activities. Lewis G. Odom, Jr., OCC's Senior Deputy Comptroller, served as Acting Executive Secretary until Robert J. Lawrence was appointed in August 1979. Some of the first actions by the council included establishing five interagency task forces (Supervision, Consumer Compliance, Reports, Examiner Education and Surveillance) and creating a Legal Advisory Group, an Agency Liaison Group and the State Liaison Committee. The Senior Deputy Comptroller was a member of the Agency Liaison Group during 1979. That interagency group of senior officials is responsible for overall coordination of their respective agencies' staff efforts supporting the council. Deputy Comptroller for Interagency Coordination The responsibility for coordinating interagency activities is administered through the Deputy Comptroller for Interagency Coordination under the overall supervision of Senior Deputy Comptroller. The primary function of the Deputy Comptroller is to assist the Comptroller, the Senior Deputy Comptroller and other OCC staff members in coordinating various interagency activities. The Comptroller is a member of the Board of the Federal Deposit Insurance Corporation (FDIC). The Deputy Comptroller for Interagency Coordination serves as the assistant to the Comptroller in that capacity at the FDIC. The Deputy Comptroller serves as a voting member of various FDIC standing committees, represents the Comptroller in all policy deliberations and briefs the Comptroller prior to each weekly meeting of the FDIC Board. The Deputy Comptroller serves as OCC liaison with the Interagency Coordinating Committee, an informal consultative body made up of the Comptroller, a member of the Federal Reserve Board, the Chairman of the FDIC, the Chairman of the Federal Home Loan Bank Board, the Chairman of the National Credit Union Administration and the Deputy Secretary of the Treasury. The committee met numerous times in 1979 to discuss 21 appropriate changes in ceiling rates on deposits and other matters. The Deputy Comptroller assists the Senior Deputy Comptroller at meetings of the Federal Financial Institutions Examination Council. The division represents OCC on the Reports Task Force of the council, and the Director of Coordination chairs its principal subcommittee, the Subcommittee on Instructions and Accounting Standards. During 1979, considerable progress was made toward achieving identical call report instructions for the three federal banking agencies (FDIC, Federal Reserve Board and OCC). Also, a report of condition was developed for U.S. branches of foreign banks. The Deputy Comptroller also is continually involved in varied internal OCC activities. For example, the division staff worked with the Management Information Systems Committee and assisted the task force which studied regional restructuring. The division also plays an important role in OCC's continuing effort to reduce the reporting burdens on national banks. Communications Division The Communications Division provides information about the banking industry in general and the OCC in particular to the press, Congress and the general pub- 22 lic. The division issues and maintains OCC publications, banking and examining issuances, interpretive letters, and press releases. All OCC submissions to the Federal Register are processed through the division. The Communications Division maintains subscription lists for OCC publications, such as the Comptroller's Manual for National Banks, the Comptroller's Handbook for National Bank Examiners, the Comptroller's Handbook for National Trust Examiners, the EDP Examination Handbook and the Consumer Examination Handbook. In September 1979, the division released the Report to Congress on Foreign Government Treatment of U.S. Commercial Banking Organizations, which was completed by the Department of the Treasury in cooperation with the State Department, the Federal Reserve Board, the FDIC and the OCC. The Director of the Communications Division serves as liaison between the Comptroller and the press. News releases are issued on significant OCC actions and on testimony before Congress by the Comptroller and OCC staff. The Deputy Director, under authority delegated by the Comptroller, makes initial determinations on requests for records of the OCC under the Freedom of Information Act and the Privacy Act of 1974. In 1979, 467 requests were processed. VI. Senior Deputy Comptroller for Bank Supervision The Senior Deputy Comptroller for Bank Supervision formulates, implements and monitors bank supervisory policy. Related responsibilities include remote screening of national banks to detect trends and changes in the banking system which warrant attention, special monitoring of large banks and banks requiring supervisory attention, monitoring supervisory postures to ensure national consistency and participating in the Federal Financial Institutions Examination Council on bank supervisory matters. The Senior Deputy Comptroller for Bank Supervision oversees the Offices of the Chief National Bank Examiner, Deputy Comptroller for Special Surveillance, Deputy Comptroller for Specialized Examinations and Deputy Comptroller for Multinational Banking. Chief National Bank Examiner The Chief National Bank Examiner's Office formulates, implements, monitors and evaluates bank supervisory policy relating to the commercial examination process. The Commercial Examinations Division researches and prepares recommendations on examination and policy issues and maintains the Comptroller's Handbook for National Bank Examiners, which contains examination objectives and procedures. The Bank Supervisory Analysis Division reviews and analyzes commercial examination reports of banks not selected for "special" supervisory review, assists regions in identifying potential problem banks and trends in a particular industry or region and records all civil money penalty referrals received from regional offices, assigning them to appropriate divisions for review. The division also reviews and recommends appropriate action on civil money penalty referrals regarding banks not selected for "special" supervisory review. The Investment Securities Division is the OCC's focal point for technical counsel and assistance on bank-dealer activities and investment securities matters. The Bank Accounting Division is OCC's authoritative source on bank accounting practices and reporting requirements. Additionally, the Chief National Bank Examiner is responsible for the shared national credit program, which provides a uniform nationwide review and analysis of loans to a borrower of $20 million or more that are shared by two or more banks. Deputy Comptroller for Special Surveillance The Deputy Comptroller for Special Surveillance is responsible for the national bank surveillance system (NBSS) and the Special Projects Division. NBSS is a computerized screening system using call report data. It is designed to detect trends warranting supervisory attention in individual banks and in the banking system as a whole. The NBSS Division is responsible for the bank performance report, an analytical report produced for each national bank, and an action control system, which is used to monitor corrective action taken in banks with conditions identified as warranting attention. NBSS also provides training in the use of the bank performance report and related programs. The Special Projects Division centralizes monitoring of banks demonstrating unfavorable characteristics and a weakened condition. All banks assigned a composite uniform interagency rating system rating of 3, 4 or 5 are in the special projects program. The division attempts to ensure nationwide consistency of supervisory postures, to eliminate causes of identified problems and to return the selected banks to a satisfactory condition. Special Projects works closely with the Enforcement and Compliance Division when formal or informal administrative actions are used. The Special Projects Division also operates the regional bank review program. That program, which includes all national banks with assets between $1 and $10 billion, is aimed at developing an increased awareness of the activities and direction of the country's large regional banking associations. The program includes review and analysis of certain information, periodic meetings with regional staff and with senior management of the banks and development of a management information system for OCC internal use. Deputy Comptroller for Specialized Examinations The Deputy Comptroller for Specialized Examinations-formulates, implements and monitors bank super23 visory policy relating to examinations of trust departments and electronic data processing centers. The Deputy Comptroller oversees the maintenance of the electronic data processing and trust examinations handbooks and the review and analysis of trust and electronic data processing examination reports. Special attention is given to data centers and trust departments with identified problems to ensure nationwide consistency of supervisory posture, to eliminate the causes of identified problems and to return the operations to a satisfactory condition. The department also works closely with the Enforcement and Compliance Division when formal or informal administrative actions are necessary. During 1979, efforts were made to improve the efficiency of the specialized examination function by gearing the scope of an examination to the size and/or condition of the department. Specialized and small bank trust examinations and specialized electronic data processing examination procedures were developed. Also during 1979, development of an interagency electronic data processing examination handbook was begun. OCC, accompanied by representatives of the other bank regulatory agencies, also conducted the first examination of national bank fiduciary activities overseas. OCC trust examinations include an examination of the stock transfer function in light of OCC's primary jurisdiction over national banks which act as registered transfer agents. Information on any significant transfer agent deficiencies is provided to the Securities and Exchange Commission (SEC). In 1979, OCC participated in joint examinations of registered stock transfer agent services with the Federal Reserve System, the Federal Deposit Insurance Corporation and the SEC and also coordinated the inspection of the transfer agent for money market mutual funds with the SEC. Deputy Comptroller for Multinational Banking The Multinational Banking Department was created in 1978 in recognition of the importance of the current and future role of the nation's largest banks and those with significant international activity. The Multinational Banking Department is responsible for supervising the 11 largest national banks, including examinations, financial analysis, corporate activity and all phases of supervision. As an extension of the examination process, the department began a quarterly visitation program for multinational banks to obtain more frequent and timely information on the financial condition, activities and plans of these institutions. At the end of 1979, the 11 largest national banks held 42 percent of all national bank assets and 25 percent of all U.S. banking assets. The department also supervises the international activities of all national banks. An office is maintained in London for examining European operations. The Deputy Comptroller for Multinational Banking serves as OCC's liaison with bank regulators through- 24 out the world. In that role, he represents the OCC at meetings of the Cooke Committee, a group of bank regulators from the Group of Ten countries and other European countries, who meet regularly on an informal basis to discuss common interests. Organizationally, Multinational Banking has four divisions: Multinational Examinations, International Banking Activity Examinations, International Banking Activity Examinations—London, and Multinational Bank Analysis and Supervision. Multinational Examinations develops examination procedures, establishes scope and scheduling of domestic examinations, coordinates overseas examinations with the two international banking divisions and processes examination reports. International Banking Activity Examinations and the London division develop procedures, perform and coordinate international examinations for all national banks and serve as the focal points for developing supervisory positions relating to international banking. Multinational Bank Analysis and Supervision provides financial analysis and support to all divisions of the Multinational Banking Department, including the field examiners. Emphasis is not only on analysis of historic performance but anticipation of future developments and their longer-term implications for the banks. The division also reviews corporate activity applications of multinational banks. All organizations under the Senior Deputy Comptroller for Bank Supervision actively participate in the Federal Financial Institutions Examination Council regarding bank supervision matters in their spheres of responsibility. Examinations OCC is responsible for promoting and ensuring the soundness of the national banking system. Bank examination is OCC's fact-finding arm in discharging this responsibility. On December 31, 1979, OCC employed 2,282 examiners who, during 1979, performed 3,998 commercial examinations, 1,245 trust examinations and 863 electronic data processing examinations. Examinations provide an objective evaluation of a bank's soundness, appraise the quality of management and directors and identify areas requiring corrective action. OCC policy gives top priority for onsite examinations to banks requiring close supervision because of their weak condition, second priority to large banks in sound condition and third priority to small banks in sound condition. The frequency and type of examination performed depend on the bank's priority rating. The different types of examinations relate the scope of an examination to the size and condition of the bank. In most cases, general or full scope examinations are alternated with specialized or limited scope examinations. Onsite examinations are supplemented by analysis of NBSS bank performance reports and a review of bank responses to criticisms and violations of law in the report of examination. VII. Senior Deputy Comptroller for Operations The Senior Deputy Comptroller for Operations is responsible for the overall operational effectiveness and efficiency of OCC. He supervises the 14 regional offices, the Deputy Comptroller for Administration and the Washington Office divisions of Management Services, Finance and Planning, Systems and Data Processing, Human Resources and Equal Employment Opportunity. He serves as Chairman of the Federal Financial Institutions Examination Council's Task Force for Examiner Education. Management Services Division The Finance and Administration Division was reorganized in July 1979 into two divisions: Management Services and Finance and Planning. OCC's administrative activities were thereby consolidated in the Management Services Division, and the financial, budget and planning operations were centralized in the Finance and Planning Division. Under the reorganization, the Management Services Division includes five branches: Facilities Management, Procurement and Contracting, Records and Distribution Services, Research and Administrative Systems and Supply and Printing Services. Facilities Management is responsible for renovating and relocating OCC's offices and coordinating parking, telephones, property and leases. In 1979, Facilities Management managed and coordinated the construction management and space design of the newly acquired third floor space in L'Enfant Plaza. A 100-person capacity conference room was included. The third floor construction allowed for scheduled expansion of units located on other floors. Renovation and remodeling began toward the end of 1979 and is expected to proceed well into the mid-1980's. Procurement and Contracting is responsible for purchasing goods and services for the Washington Office and the 14 regional offices. During 1979, the branch negotiated and awarded the first OCC contract with the Small Business Administration pursuant to Section 8(a) of the Small Business Act. Under this program, the Small Business Administration is authorized to channel government purchases to minority firms by negotiating contracts with federal agencies and then subcontracting to the minority firms. The OCC contract involved providing minority recruitment advertising services. Also in 1979, a task force was assembled to develop an official OCC Procurement Manual. When published in early 1980, the manual will provide uniform policies and procedures regarding acquisition of personal property and nonpersonal services. Records and Distribution Services is responsible for mail and messenger services, bank operations records (central files) and records and forms management. In 1979, this branch submitted a complete set of records control schedules to the National Archives and Records Service for review. The regional records schedules were approved, and Washington Office schedules were expected to be approved and effective in 1980. Additionally, a comprehensive study of the mail and messenger operations was made which should result in many improvements in service in 1980. Research and Administrative Systems is responsible for four support activities: paperwork management, graphic design, OCC library and administrative systems. During 1979, in addition to performing its day-today support functions, the branch concentrated on revision and reissuance of support policies and procedures, paperwork reduction activities and energy reduction studies. Supply and Printing Services provides printing, supply operations and bulk mailings for the Office. Consolidation of mailings allowed the Office a refund of $153,000 from the U.S. Postal Service. The branch has also reduced the cost of express shipments by using the U.S. postal express mail system. In 1979, the branch increased the number of printing impressions by 25 percent. The branch was instrumental in printing the Report to Congress on Foreign Government Treatment of U.S. Commercial Banking Organizations, and other publications. Supply and Printing Services also established a perpetual inventory system for expendable supplies and will periodically inventory these supplies in 1980. This will provide them with a more accurate system to monitor supply levels. Finance and Planning Division The Finance and Planning Division is responsible for promoting maximum use of financial and human resources for OCC. The division has three branches: Planning, Budget Programs and Accounting Programs. Planning is charged with providing functional direction and guidance in design, implementation, mainte25 nance, evaluation and feedback for the Office's planning process. The branch also coordinates and maintains the integration of planning with budgeting. Planning began in 1979 by reviewing data in other OCC management information systems, such as time utilization and examination status reporting, to eliminate duplicative reporting under the planning system. The reduction in number of operating goals from 35 to 16 and the introduction of standard performance targets for Washington, D.C. units eliminated a significant amount of paperwork from unit plan submissions. Throughout the year, a staff member was responsible for the examination status reports section of the Policy Group management information system. Budget Programs develops and recommends expenditure policy and designs cost models in directing the OCC budget operation. The computerized budget monitoring system provides monthly budget performance reports which compare actual versus budgeted expenses. This system was enhanced in 1979 by adding a quarterly listing of significant budget variances which must be explained by unit managers. Another improvement in the budget system was the formulation of a budget change process in which budget units compete for surplus funds identified by the variance reports. For 1979, actual expenses were under budget by 0.7 percent. Accounting Programs directs the Comptroller's fiscal reporting operations. In 1979, refinements and improvements were made to the computer-based financial information system. That system, which relies on the concept of cost center responsibility accounting, is linked directly to the budget monitoring process. The flexibility of this system permits timely preparation of specialized reports and analyses for management. Systems and Data Processing Division Computer processing requirements in 1979 grew by 98 percent over 1978. Costs in 1979 were 15 percent higher than 1978 costs and only 3.3 percent higher than 1977 costs. In the face of having automated data processing requirements double in 1979, the Systems and Data Processing Division was able to contain costs by: • Moving computer work to a more efficient and economical computer system; • Moving computer files to a more economical storage medium; • Negotiating greater discounts from the computer contractor by guaranteeing specific levels of monthly processing; • Negotiating a $55,000 annual telecommunications cost reduction with the computer contractor; • Initiating cost reduction procedures for backing up computer files; • Implementing cost reduction procedures for programmers; and • Implementing a computer procedure to disconnect programmer terminals from the main computer following 20 minutes of inactivity. 26 Major project activities in 1979 included production of OCC's national bank surveillance system which produced quarterly bank performance reports on time for all national banks, all Federal Reserve member banks and all state banks in New York, Virginia and Nevada. A contract was signed to develop the national bank surveillance video display system, which will eventually allow bank examiners to acquire critical national bank data on demand. A new minicomputer system was selected and ordered. The system will support functions such as personnel, payroll and time and attendance. In addition, a time utilization management system for all OCC employees was developed and implemented in late 1979. The statistical data sheet system was developed to produce automated reports on bank examination data. This system was started in late 1979. The fair housing lending system, also initiated in late 1979, can process lending data from national banks and flag potential problem areas of discrimination. The bank organization structure system for tracking specific corporate transactions was also completed in 1979. During 1979, the division participated in a study to determine the feasibility of merging OCC and Federal Deposit Insurance Corporation automated data processing support activities. The completed study was referred to top-level management for consideration. This effort could result in the eventual merging of automated data processing functions for the two agencies. Human Resources Division Exemplary progress in the area of equal employment opportunity (EEO) earned recognition for the Deputy Comptroller for Administration, the EEO officer, the associate director for employee relations and the manager of minority and special emphasis programs. The Secretary of the Treasury presented them the department's EEO Award for 1979. Their development of population-based hiring goals, a computerized recruitment resources information system, an advertising campaign directed at minority and female media, and other EEO programs aided in attracting highly qualified women and minority applicants to OCC. Enactment of the Civil Service Reform Act in 1978 had a significant impact on human resources programs in the areas of employee relations, national recruitment, compensation, staffing and operations, and personnel development. The Human Resources Division initiated several of the programs outlined in the act, and measurable progress was made toward implementing the act's provisions. The Senior Executive Service was established in July, and all OCC senior management officials converted to membership in the program. A performance appraisal system for senior executives was implemented, and similar programs were also developed for competitive and excepted service employees. Policy and procedures were updated for OCC's Incentive Awards Program. Most Washington, D.C. and regional employees began participating in a compressed work schedule experiment in September. An expanded dental insurance plan, an improved physical examination program and a brochure highlighting OCC employee benefits were offered during 1979. Revised travel regulations were also adopted encouraging energy conservation. During 1979, increased emphasis was given to OCC's compensation program. A salary survey was conducted to evaluate OCC salaries relative to those for similar positions in the banking industry and in other regulatory agencies. Position descriptions were reviewed or developed for all professional and managerial jobs, and policies and procedures governing compensation and position evaluation issues were developed. A Cooperative Education Program was established in the Washington, D.C. Office, with seven interns participating in the initial session. Twenty more students will be selected in 1980. At the same time, there were 57 interns in the regional cooperative program. Twenty-one of the program participants were retained as permanent assistant national bank examiners in 1979. In the National Recruitment Program, canvasses were conducted nationwide at colleges and universities, and this was instrumental in the hiring of over 500 assistant examiners. Five regions were included in the time utilization management system during 1979, and two modules of the human resources information system were installed to aid the Staff Analysis Group with personnel management information. The group also completed an analysis of employee turnover to increase management's awareness of the causes of work force attrition. The Personnel Development staff was actively involved in adapting schools and courses for interagency enrollment. Over 3,000 participants attended the 75 Washington, D.C.-based and 39 regional training programs. The Advanced Management Seminar and the Financial Analysis School were started in 1979. Revised career development policies were issued for career development levels I and II. Twentythree people were selected to participate in the Career Development Level II Program. A policy for executive development was developed for approval and issuance in early 1980. These policies provide direction for OCC's management and executive development programs and strengthen prospects for continued professional management of the agency. The Staffing and Operations Group processed a large volume of personnel actions and maintained responsive service to management and employees. Over 150 Washington vacancies were announced and filled through merit competition during 1979. Staffing and Operations also developed a plan for staffing examiner positions through merit promotion. Equal Employment Opportunity Office In early 1979, OCC conducted a comprehensive analysis of the regional examining workforce. That analysis permitted identification of areas of minority/ female underrepresentation. Based on that information, regional long-range hiring goals and 1979 recruitment priorities were established. Regional staffs were asked to work toward these goals and priorities throughout 1979. A system was developed using information provided by the Department of Labor, Department of Health, Education and Welfare, Department of the Interior, U.S. Commission on Civil Rights and a variety of national, state and local agencies and groups. That system, the recruitment resources information system, will be used by those agencies for recruiting. The OCC system, which was made available to other Department of Treasury bureaus, lists over 25,000 minority, women, handicapped and veteran organizations nationwide which have agreed to act as recruitment resources. A minority and women's media program was conducted to attract qualified applicants. Recruitment advertisements were placed in key minority publications and in newspapers at schools selected because of their minority/female enrollments. Competitive and bank examiner (excepted service) announcements were mailed to many federal personnel offices. More recruitment resources are expected to be added to the system regularly. OCC staff members are in frequent contact and meet regularly with personnel staff of the Federal Reserve Board, Federal Home Loan Bank Board and Federal Deposit Insurance Corporation. Those efforts are designed to share recruitment information, encourage job seekers to apply for bank examiner or related positions, and coordinate compliance with other equal employment opportunity (EEO) requirements. In 1979, females represented 50.2 percent of new employees. That represents a 5.8 percent increase over the number of females hired in 1978. A 2-day EEO briefing was presented to regional administrators. The briefing was designed to increase sensitivity to the functions of the program. There were seven formal complaints filed in 1979: four alleged race discrimination, two alleged race/sex discrimination and one alleged age discrimination. One of the alleged race complaints was officially closed. The other five race and sex complaints are at the investigative stage in the complaint processing cycle. The age complaint is at the adjudicative stage. 27 VIM. Senior Deputy Comptroller for Policy The Senior Deputy Comptroller for Policy provides advice and counsel to the Comptroller on all related policy matters. He has been delegated sole decisionmaking responsibility on national bank charter and merger applications and numerous other types of national bank applications pertaining to corporate activities. In addition, he provides staff support to the Comptroller for his activities on the Depository Institutions Deregulation Committee. The Senior Deputy Comptroller for Policy oversees the Research and Economic Programs and the Customer and Community Programs departments. The Research and Economic Programs Department comprises four divisions: Banking Research and Economic Analysis, Strategic Analysis, Bank Organization and Structure and Regulations Analysis. The Customer and Community Programs Department comprises three divisions: Customer, Community and Fair Lending Examinations; Community Development; and Customer Programs. Research and Economic Programs The Department of Research and Economic Programs is directed by the Deputy Comptroller for Research and Economic Programs who is responsible for coordinating the activities of the Bank Organization and Structure, Banking Research and Economic Analysis, Regulations Analysis and Strategic Analysis divisions. The primary functions of the Research and Economic Programs Department are processing corporate applications; monitoring the regulatory decisionmaking process; analyzing the impact of reporting and compliance requirements imposed on national banks; collecting, analyzing and distributing financial and supervisory data reported by national banks; conducting research projects pertaining to financial institutions, markets and the macroeconomic environment; monitoring developments in the financial services industry; and preparing publications of interest to the financial community. Other activities involve providing advice and analysis on regulatory and supervisory issues, assisting in the formulation of OCC policies, preparing speeches and congressional testimony and supporting activities of interagency committees and task forces. The Deputy Comptroller, in addition to coordinating activities of these divisions, also advises senior OCC staff on various issues, assists in policy formulation and provides analysis of economic conditions and their impact on the financial services industry. During 1979, the department made significant contributions to the formulation of public policy—including the Report to Congress on Foreign Government Treatment of U.S. Commercial Banking Organizations, which was jointly prepared by the Strategic Analysis Division and the Banking Research and Economic Analysis Division, and the Deposit Interest Rate Ceilings and Housing Credit, the Report of the President's Inter-Agency Task Force on Regulation Q. The department also developed a comprehensive program for reviewing and revising corporate policies, forms and procedures for implementation in 1980 and continued to pursue systematic analysis of competition among financial institutions, and of regulatory reporting and compliance requirements. Bank Organization and Structure Division The Bank Organization and Structure Division is responsible for processing requests by national banks and individuals to engage in various banking activities. These requests include applications for new banks, branches, customer-bank communications terminals (CBCT's), head office relocations, title changes, operating subsidiaries, federal branches and agencies of foreign banks, mergers, consolidations, capital increases and notices of ownership changes. In addition, the division is responsible for maintaining various bank structure records, such as title, location, number of offices and amount of capital stock of each national bank. During 1979, considerable progress was made in meeting the division's goal of reducing application processing time, improving the quality of analysis and reducing the regulatory reporting and compliance requirements imposed on the industry. The division was reorganized in July to create a more effective organization. Positions of manager for analysis, manager for operations and procedures and manager for policy were established. In addition, an automated management information and tracking system for new banks and branches was developed and implemented by year-end. Processing times for applications have been substantially reduced despite a significant increase in volume. Procedures for the expeditious processing of 29 certain branch, CBCT and relocation applications were adopted. Those procedures allow a regional office to process applications in their entirety, eliminating duplicative Washington Office review. The division has also notified other regulatory agencies and the Department of Justice that it will generally not wait more than 30 days for their competitive factor reports before deciding routine mergers. Finally, an initial review of corporate policies, procedures and forms was undertaken in 1979. The results of that review will be the basis for the Corporate Activities Review and Evaluation (CARE) Program which will entail a comprehensive review and revision of corporate policies, procedures and forms during 1980. Banking Research and Economic Analysis Division The research program of the Banking Research and Economic Analysis Division concentrates on issues of current and potential importance to the bank regulatory and supervisory mission of OCC. The division's significant programs include conducting a wide variety of research projects; sending representatives to selected professional conferences and meetings; maintaining a liaison with research economists in other federal agencies; supplying lecturers or panel members to appropriate professional and academic functions; conducting seminars on topics of current interest to OCC and the banking industry; bringing noted banking experts to OCC through a visiting scholar program for brief periods to work with the permanent staff on topics of special interest; collecting, analyzing and making available a wide range of financial and supervisory data reported by national banks; and performing statistical surveys to support the operations of other divisions. During 1979, the division's major activities included preparing testimony and briefing materials for congressional hearings on a variety of banking issues such as Regulation Q, the prohibition of interest on checking accounts, usury ceilings, bank underwriting of municipal revenue bonds and the annual oversight hearings on the condition of the banking system. The division also had a significant input into the development of public policy statements by the Comptroller of the Currency such as his address on the need for capital investments at the joint meeting of the American Economic Association and American Finance Association in December. A series of research papers was prepared on deposit rate ceilings, branching restrictions and restrictions on U.S. banking abroad in connection with separate interagency task forces. The division contributed to a major report, Deposit Interest Rate Ceilings and Housing Credit, the Report of the President's Inter-Agency Task Force on Regulation Q, which was released by the Department of the Treasury in fall 1979, and to a second, the interagency report on the McFadden Act, which is expected to be released in 1980. During the year, a significant consolidation of data collection and processing was carried out with the Federal Deposit Insurance Corporation (FDIC). That action reduced expenses and manpower requirements 30 and set a new standard of interagency cooperation. The quarterly financial statements of national banks are now sent directly to FDIC which reviews and corrects them as it previously had for reports of insured nonmember banks. This results in more efficient use of report analysis and eliminates a duplicative computerized processing system. The division maintains oversight responsibility to guarantee high quality and timely data. The development of on-line computer access has resulted in greater data availability. The division's plans for 1980 include conducting basic research on the response of financial markets and institutions to the legislative changes contained in the Depository Institution Deregulation and Monetary Control Act of 1980; supporting OCC's role on the Depository Institutions Deregulation Committee; monitoring the macroeconomic environment for the benefit of OCC senior management and field examination personnel; providing research support and assistance to OCC divisions in the conduct of their tasks; and drafting OCC's rules governing adjustable-rate mortgage instruments. Regulations Analysis Division The Regulations Analysis Division coordinates all OCC activities which impact on the reporting and compliance requirements imposed on national banks and the public. It assures that regulatory decisionmaking includes a thorough consideration of potential alternatives. Regulations Analysis also ensures that effects of regulatory activities are monitored and that any problems are identified and resolved. The division seeks to identify outdated statutory provisions and serves as a contact point for bankers who have suggestions for regulatory improvements. Regulations Analysis is the OCC division responsible for implementing Executive Order 12044 on improving government regulation and Executive Order 12174 on paperwork. In addition, division representatives co-chaired OCC activities associated with the Department of Justice's Task Force on Sex Discrimination. Semiannual agenda, describing in clear language the regulatory actions taken and under consideration, were printed in the Federal Register and sent to all national banks for comment in February and September 1979. Several changes in regulations were adopted in 1979 reflecting the OCC's desire to avoid unnecessary regulatory burdens, particularly for individuals and smaller banks, and the division's efforts to satisfy those desires: • The Change in Bank Control Act was implemented by issuing a revised regulation (12 CFR 15) establishing general requirements for the submission of information to OCC which are less burdensome than those expressly permitted by the statute. • New statutory provisions relating to bank service corporations were implemented by revising the OCC's interpretive ruling 12 CFR 7.7390 to require only a fraction of the number of notices permitted. • New statutory provisions limiting management • • • • • • • • official interlocks were implemented through a regulation (12 CFR 26) which required neither recordkeeping nor reporting. OCC's regulation governing recordkeeping and confirmation requirements for national banks effecting securities transactions for customers (12 CFR 12) was amended to reduce the number of banks subject to the full requirements. Increased delegations of authority and expedited processing procedures were adopted by amendments to OCC regulation 12 CFR 4 which are expected to reduce by 20 percent the time involved in deciding 75 percent of the applications received by OCC. An amendment was issued to OCC's interpretative ruling on real estate owned by national banks other than for use in the conduct of their business (12 CFR 7.3025) to make the accounting requirements consistent with generally accepted accounting principles and to delete the previously required annual appraisal of lowvalued properties. A new regulation was adopted to improve OCC's monitoring and enforcement of fair housing laws (12 CFR 27). Over 200 pages of the Code of Federal Regulations (12 CFR 1) containing specific investment securities rulings were eliminated. The common trust fund survey which affected approximately 1,800 national banks was eliminated. Annual reporting to shareholders was made more flexible by permitting interested shareholders to conveniently obtain basic financial information at little cost to the national banks (12 CFR 18). Certain required reports by bank insiders were eliminated and replaced with dissimilar reports on the same general subject required by the Financial Institution Regulatory and Interest Rate Control Act. Strategic Analysis Division The Strategic Analysis Division is responsible for monitoring developments in the financial services industry and evaluating their impact on the banking system and OCC operations. Division staff members act as internal consultants in assessing and interpreting financial and technological trends for the benefit of the examiner staff and senior agency officials charged with setting policy. Much of 1979 was devoted to organizing and recruiting an entirely new staff for the division which, by the end of the year, included seven professional and three clerical staff members. Most analysts in the division have graduate degrees in business or finance and practical experience in banking or related fields. Throughout the year, staff members provided advice and information on a wide range of topics bearing on the safety and soundness of the banking system. These included capital adequacy, the role of banks in the commercial paper market, international supervision and support systems, use of subordinated debt, electronic funds transfer and activities of foreign banks in the U.S. The major activity of the division in 1979 was the launching of a comprehensive inquiry into the issue of foreign acquisitions of U.S. banks. Research efforts were directed not only at gathering basic factual data but also at considering the implications of such acquisitions for banking competition and the performance and supervision of banks. This unprecedented indepth review is expected to be completed during 1980. With four more professionals to be recruited during the first half of 1980, the division will be developing procedures to augment its environmental scanning efforts, and staff members will be assigned to monitor developments in specific areas such as payment systems and telecommunications, expansion of foreign banks both abroad and in the U.S. and financial innovations in the U.S. banking industry. Before the end of the year, a pilot Visiting Banker Program will be established, and the possibility of creating a staff position for bank examiners on a rotational basis will be explored. Such specialized expertise will contribute to the division's ability to relate changes in the larger financial environment to the banking industry and to the work of OCC. The division will continue, as in 1979, to prepare and contribute to briefings, position papers, speeches and congressional testimony for senior agency officials. In addition, the division will continue to work with members of the examiner staff throughout OCC to identify other specific areas and projects in which it can provide technical advice and support. Customer and Community Programs The Office of Customer and Community Programs, established in the 1978-1979 reorganization of OCC, is responsible for OCC's activities in the areas of consumer protection, community lending and civil rights. The office is headed by the Deputy Comptroller for Customer and Community Programs and includes the position of Special Assistant for Civil Rights as well as three divisions: Customer, Community and Fair Lending Examinations, Community Development, and Customer Programs. During 1979, the office undertook a number of efforts to expand and substantively improve the OCC's activities in consumer affairs, community investment and civil rights. These efforts were focused on enforcement of statutes and regulations, examiner training, banker education and liaison, policy development and liaison with other agencies and outside groups in areas of mutual concern and responsibility. Customer, Community and Fair Lending Examinations Division The Customer, Community and Fair Lending Examinations Division, originally established in 1974 as the Consumer Affairs Division, is responsible for the coordination of all examination-related activities in the areas of consumer protection, community reinvestment and fair lending. Its activities include monitoring the training of consumer examiners, developing examina31 tion procedures and tools, coordinating resolution of consumer complaints and tracking and evaluating national bank compliance. The consumer compliance examination was created in 1977 to improve the ability of examiners to monitor national bank compliance with consumer protection laws. Under this program, every national bank receives periodic examinations conducted by examiners who have had special training at two-week schools. A primary thrust of the past year was to provide the examiners and the banks with a better understanding and sensitivity about consumer, community and fair lending issues and regulations. The results of the efforts in this direction have been gratifying by demonstrating that much of the compliance problem in these areas can be solved through better training and education. Efforts included: • Establishment of an ongoing training program for senior level commissioned examiners; • Participation with the other federal financial regulatory agencies on an interagency task force to develop a consumer examination school for basic training of new consumer examiners; • Assistance to banking trade groups in the planning and development of banker education programs and materials; • Revision and updating of the Comptroller's Handbook for Consumer Examinations and distribution to all examiners and all national banks; • Publication of the Fair Housinq Home Loan Data System, Regulation 27 booklet that describes the new regulation, and distribution to all examiners and national banks; and • Preparation of a fair housing home loan data system slide presentation and showing of it to banking groups, other agencies and consumer groups. The division has also provided assistance to several banking trade groups in the planning and development of banker education programs and materials. The American Bankers Association (ABA) sponsored a 1-week National Compliance School for bank compliance officers and a National Compliance Conference for senior level bank managers. OCC staff participated as instructors in both programs, as did representatives from other federal financial regulatory agencies. OCC staff also participated in other programs such as the Bank Administration Institute's "Managing Compliance with Consumer Regulations" workshops. OCC staff guidance was provided on three major bank compliance manuals: Planning Guide for Consumer Compliance (ABA); Real Estate Lending Manual (ABA); and The Most Common Violations Found in Consumer Compliance - Revised (Consumer Bankers Association). Additionally, the Consumer Bankers Association published the OCC's Computational Procedures for Verifying Annual Percentage Rates, revised March 1979, and made it available to member and nonmember banks. The division continually updates the field examiners and national banks on new and changing legislation and regulations. In 1979 banking circulars were issued 32 on the fair housing home loan data system and the Community Reinvestment Act. Another important thrust of the past year was to streamline the consumer examination procedures and provide guidance on priorities in order to accommodate statutory changes and additions. The Comptroller's Handbook for Consumer Examinations was revised to reflect the changes in consumer laws since the handbook's publication in 1977. New sections were added covering the Fair Debt Collections Practices Act, the Community Reinvestment Act and the Flood Disaster Protection Act. Specialized examination procedures were implemented in 1979 to use examination resources more efficiently by narrowing the focus of some examination areas. The specialized procedures always include a full examination of compliance with the Equal Credit Opportunity Act, Fair Housing Act, Community Reinvestment Act, Truth-inLending Act, and any new laws which have become effective since the last examination. Other areas of concentration in a specialized examination will depend on such things as the extent of noncompliance noted in the previous examination and the extent of significant changes in the bank's management and/or operations. To assure the development of a highly skilled and committed corps of consumer examiners, a consumer career path was established which provides for specialization by both Assistant and National Bank Examiners. The career path provides emphasis in the consumer examination program while allowing career progression and maintenance of commercial examining proficiency. All Assistant National Bank Examiners receive 2 weeks of consumer training and spend at least 6 months performing consumer examinations. After the initial 6-month consumer assignment, examiners may select the consumer career path. The consumer examiner will continue to perform consumer examinations along with commercial examinations, gaining sufficient experience and expertise in both to be qualified to become a commissioned National Bank Examiner. A consumer examiner can progress through the career path to the level of Regional Director for Customer and Community Programs. This position was established in 1979 to coordinate the regional activities related to customer and community programs. The newly created position of Regional Director upgrades the previous Regional Consumer Specialist position by increasing the authority and responsibility of that position. The complaint resolution function is operated in the Washington Office and the 14 regional offices. Either an attorney or a paralegal, upon receipt of a written complaint, immediately notifies the consumer in writing acknowledging receipt of the complaint. The bank against which the complaint has been made is then contacted by letter and asked for information and documentation. If necessary, an examiner will be assigned to visit the bank to investigate the matter further. The consumer is notified in writing of the results of the investigation. Since late 1978, most complaints received in the Washington Office have been referred to the regional offices. The only exceptions are complaints re- ferred by Congress and complaints which appeal the resolution decisions of the regional offices. During 1979, 12,650 complaints were received by the OCC, representing a 12 percent increase over 1978. However, this increase was considerably smaller than in past years. Also, the average resolution time taken to resolve a complaint has consistently decreased over the past 3 years. All complaints are entered into an automated system, the consumer complaint information system (CCIS), which categorizes complaint information by region and bank, type of complaint and resolution. Monthly CCIS reports are used by Washington and regional personnel to identify banks with concentrations of complaints or types of complaints and to monitor unresolved complaints. This information is also forwarded to consumer examiners in the field as an examination tool to indicate potential problems in banks. In 1979, the OCC continued to distribute its consumer complaint pamphlet to individual consumers and to national banks which requested them for display in their lobbies. The pamphlet, first introduced in 1978, was designed to educate consumers about their rights and responsibilities and to provide for easy access to the OCC through the attached postage paid self-addressed complaint form. The form is designed to enable a consumer to describe the nature of the complaint, and it asks for pertinent information about the bank and the consumer. The OCC solicited comments from banks, consumer groups, and state and local government agencies on a proposed complaint pamphlet prior to issuing the final pamphlet. The Comptroller, in a banking circular to all national banks, announced the availability of the complaint pamphlet and urged national banks to display the pamphlets in their lobbies. A consumer complaint survey was conducted during September 1979. The purpose of the survey was to determine the OCC's degree of success in resolving complaints both efficiently and effectively. Comments were solicited from complainants through a survey questionnaire. A total of 437 questionnaires were mailed, and 202 responses were received (a 46 percent response rate). Of those responding, 58 percent were satisfied with the resolution of their complaints, 79 percent felt that their complaints were answered in a timely manner, 85 percent felt that OCC personnel with whom they dealt were courteous and 75 percent of the respondents said they would contact OCC again if they had another problem with a national bank. Community Development Division The Community Development Division was established to encourage public/private interaction and participation in community economic development. The division provides technical assistance, rather than supervisory review, to national banks interested in developing community reinvestment programs. Additionally, the division promotes interaction among banks, community groups, local and state governments and developers involved in community development efforts. The activities of the division include preparing re source material to assist bankers in community investment strategies, identifying current obstacles to bank involvement in community development, educating bankers about community involvement opportunities and developing innovative approaches for bank participation in local community development. Two of the primary emphases of the division's work in 1979 were to develop a base of knowledge about urban and rural credit needs and to identify those banks that have undertaken innovative approaches to meeting community credit needs. Two projects were initiated in 1979 and will be completed in 1980. The first project will result in a set of detailed case studies describing bank involvement in urban economic development activities. The second project will result in case studies of rural credit needs. In both projects, the division's work is aimed at providing banks with examples of community development projects that they can use as models as well as at providing guidance to banks on how to structure community development involvement. The guidance covers the potential pitfalls as well as the potential benefits of such involvement. The division also provides staff support to the Commercial Reinvestment Task Force which was established as an interagency group in 1978 and which is chaired by the Comptroller of the Currency. Working jointly, the staffs of the Community Development Division and the Neighborhood Reinvestment Corporation developed a model for neighborhood commercial reinvestment. This model will be tested during 1980 with the objective of developing a replicable approach for neighborhood commercial reinvestment. In December 1979, the division sponsored a roundtable discussion on industrial development, chaired by the Comptroller. In attendance were senior management officials from 45 large national banks. The meeting focused on bank assistance to local economic development efforts through special bank departments which would provide facility relocation and expansion services to industrial companies. The meeting emphasized the positive role banks play in providing guidance to businesses interested in locating or expanding in those banks' communities. The discussion also explored the long-term benefits that banks can anticipate by contributing to the economic vitality of their communities through business expansion and job creation. A report that summarizes the topics discussed at the roundtable will be published in 1980. One of the first accomplishments of the division in preparing resource materials for banks was the publication of a Program Guidebook to Help Meet Community Credit Needs. The guidebook is designed to assist both bankers and bank examiners to meet their local community credit needs, as required by the Community Reinvestment Act. It describes 40 federal, state and local government development programs in which a bank may participate. Included in the guidebook are several marketing programs that may be used to promote bank credit services. Names, addresses and telephone numbers of contact persons are also provided. The guidebook was so well-received that a second printing was ordered. The division also produced a brochure that de33 scribes the activities of the division and the capabilities of the staff. This brochure is being distributed to produce an awareness of the kinds of assistance that the division provides. Technical assistance to banks is an important activity of the division. As community development specialists rather than regulators, the staff is able to provide bankers with advice on options for community development involvement, guidance on structuring activities that meet their communities' credit needs, and information on further sources of assistance and federal program resources. Over the past year, the division also advised the Customer, Community and Fair Lending Examinations Division on changes in examiner training and examination guidelines that would make the community lending portion of the consumer examination more substantive and meaningful. Customer Programs Division The Customer Programs Division was established to provide policy advice on all consumer, community and civil rights functions and to maintain liaison with the banking public and with consumer, civil rights and community groups. The activities of the division include providing policy guidance on the enforcement of laws and regulations, conducting research to support more effective monitoring and enforcement and presenting testimony on legislative proposals. One of the major areas of the division's activity in 1979 was the Community Reinvestment Act (CRA). The division worked closely with the other federal financial regulatory agencies to develop uniform procedures and guidance for examiners and financial institutions. In early 1979, the agencies adopted a preliminary CRA performance rating system. CRA protest procedures written in plain English were drafted and will be published in 1980. Procedures for evaluating corporate applications with respect to CRA performance were developed. The division also worked closely with the Bank Organization and Structure Division of OCC in the review of corporate applications that had CRA issues to decide whether the issues were significant enough to warrant conditioning the approval or denying the application. Because the division was not fully staffed in 1979, fair lending activities were focused on institutionbuilding under the direction of the Senior Deputy Comptroller for Policy and the Deputy Comptroller for Customer and Community Programs. Institutionbuilding efforts included organizational and programmatic design, recruitment, training and sensitization, and, perhaps most importantly, active demonstrable support by the most senior OCC officials. The program design for the Customer Programs Division calls for policy initiation, oversight and monitoring, regulatory reform, outreach to public interest and banking groups, internal advocacy of the interests of those whom consumer and civil rights laws seek to protect, and special educational programs. 34 Special Assistant for Civil Rights The position of Special Assistant for Civil Rights was created in 1979 to monitor, coordinate and strengthen OCC programs and activities involving fair lending and civil rights. The Special Assistant provides input to the divisions of Customer and Community Programs and to other offices in OCC on civil rights issues. The Special Assistant also acts as liaison with civil rights groups. During the first half of 1979, the Special Assistant's primary task was the initial development of the fair housing home loan data system (FHHLDS) regulation. The Special Assistant oversaw development of the system, managing research activities designed to develop a methodology for using home loan data to detect possible discriminatory lending practices. Development of a methodology included specification of data requirements, data analysis procedures and interpretation of results. The Special Assistant was also responsible for the drafting and publication of the regulation which sets forth the scope and requirements of the system for national banks. Community Reinvestment Act The OCC is required by the Community Reinvestment Act, 12 USC 2904 etseq., to include in its annual report to Congress a description of its CRA enforcement efforts for the past calendar year. CRA mandates that the agency must assess each bank's record of helping to meet the credit needs of its entire community including low and moderate income neighborhoods, to take such record into account in any evaluation of an application for a deposit facility and to encourage banks to help meet the credit of their communities. In November 1978, the OCC, along with the other federal financial regulatory agencies, issued a regulation (12 CFR 25) to implement CRA. Uniform interagency examination procedures were also issued in November 1978. Soon after the regulation and examination procedures were issued, a number of questions were raised about their implementation. In response to this, the agencies published a set of questions and answers which addressed the most common problems. Their purpose was to provide guidance and useful information to banks in meeting the objectives of CRA. In early 1979, the agencies adopted a preliminary CRA bank performance rating system. A numerical rating of one to five is assigned to each CRA assessment as part of the examination. The OCC also sought ways to help educate bankers and the public about CRA. In early 1979, the agency held a series of CRA workshops in which representatives from civil rights, consumer, community and banking groups were brought together to discuss CRArelated issues. The representatives exchanged information about experiences with CRA, and both sides gained new insights. Report of Regulatory Activity In October 1979, the OCC published the fair housing home loan data system regulation, 12 CFR 27. The regulation became effective on January 1, 1980. The regulation establishes certain recordkeeping requirements for home loan applications received by national banks. All national banks which receive 50 or more home loan applications a year must keep monthly records concerning home loan application activity. Every national bank is required to obtain specified information on each home loan application and retain it in the bank's loan file. Included in this regulation is a substitute monitoring program under Regulation B, 12 CFR 202.13(d), which requires national banks to obtain, as part of every home loan application, the applicant's race/national origin and sex. Additional records may be required of national banks upon request of the Comptroller of the Currency if preliminary investigations of submitted data indicate questionable practices. The recordkeeping requirements coupled with the OCC's new computer data analysis system will, when fully operational, supply an examiner with an analysis of a national bank's home lending practices prior to a scheduled examination. This analysis will save examination time by directing the examiner to particular loan files which the system identifies as requiring closer scrutiny. The Joint Statement of Notice of Truth in Lending Enforcement Policy, which was issued in December 1978, became effective on January 4, 1979. This policy was implemented in conjunction with the other agencies which participated in its development. The policy addresses the most common substantive violations of Regulation Z and is designed to correct the conditions resulting from such violations. Soon after the enforcement policy became effective, the agencies began to experience difficulties in their implementation efforts. An interagency task force was established to resolve the issues, and to coordinate uniform implementation of the policy. In August and September 1979, the OCC notified affected national banks to tem- porarily discontinue file searches and reimbursements pending final determination by the Federal Financial Institutions Examination Council of certain issues. On October 19, 1979, the agencies published in the Federal Register proposed amendments to the enforcement policy. Legislative and judicial developments have delayed final action on the enforcement policy. The Electronic Fund Transfer Act (EFTA), enacted in 1978, became effective, in part, on March 30, 1979. The two sections of the EFTA which became effective in 1979 relate to the issuance of access devices and consumer liability for unauthorized electronic fund transfers. The Federal Reserve Board issued Regulation E implementing these two sections. The balance of the EFTA will become effective on May 10, 1980. The OCC has enforcement responsibilities for this regulation, and the financial regulatory agencies will issue uniform examination procedures in 1980. In 1979, the Federal Trade Commission (FTC) approved in substance an amendment to "holder-in-duecourse" rule which extends its coverage to creditors. The FTC published the rule in the Federal Register for public comment on only the technical language of the rule. The Federal Reserve Board is required to adopt a rule governing banks that is substantially similar to the FTC rule unless the Board finds that such acts or practices of banks are not unfair or deceptive or that adoption would interfere with monetary policy. The OCC, in cooperation with the Federal Reserve Board, is conducting a study of banks' practices in this area, which will help provide a factual basis for the decision the board must make on adopting a similar rule applicable to banks. Interagency staff work on the interagency Equal Credit Opportunity/Fair Housing Enforcement Policy continued during 1979. A field survey of the guidelines was conducted to identify potential implementation problems. 35 IX. Chief Counsel The Chief Counsel advises the Comptroller of the Currency on legal matters arising in the administration of laws, rulings and regulations governing national banks. He oversees the Enforcement and Compliance, Legal Advisory Services, Legislative Counsel, Litigation and Securities Disclosure divisions as well as the regional counsels. Litigation Division At the beginning of 1979, 70 lawsuits were pending. During the year, 21 new lawsuits were filed, and 24 cases were closed. Attempts to impose liability on the Comptroller for allegedly negligent regulation of problem banks were unsuccessful. In the In Re Franklin National Bank Securities Litigation, 478 F.Supp. 210 (E.D. N.Y. 1979), the court held that the National Bank Act creates no actionable duty to a bank on the Comptroller's part and that the plaintiffs failed to show that the Comptroller's regulation of the bank had been "grossly arbitrary and capricious" or had so exceeded its regulatory authority as to cause the Comptroller to assume a duty to the bank as a matter of law. Moreover, the court held that even had such a duty been established, there could be no liability for its breach under the Federal Tort Claims Act because regulation and examination of banks fall within the "discretionary function" exception to the act. This ruling was largely duplicated in Emch v. United States, et al., 470 F.Supp. 206 (E.D. Wis. 1979), appeal pending. The Comptroller's authority to promulgate regulations defining and prohibiting unsafe and unsound banking practices under 12 USC 1818(n) was upheld by the U.S. Court of Appeals in IBAA v. Heimann, 613 F.2d 1164 (D.C. Cir. 1979), petition for certioiari filed. In that case, the court sustained 12 CFR 2, the Comptroller's regulation prohibiting insiders of national banks from benefiting personally by receiving income from the sale of credit life insurance to bank borrowers. The court also found that the regulation did not conflict with other statutes regulating the insurance business and that the promulgation of the regulation fully complied with the requirements of the Administrative Procedures Act. A related case, First National Bank of LaMarque v. Smith, 610 F.2d 1258 (5th Cir. 1980), upheld the Comptroller's issuance of an order, prior to the promulgation of 12 CFR 2, directing certain banks to cease allowing officers to receive income from the sale of credit life insurance. The order was found to be within the authority of the Comptroller under 12 USC 1818(b) and to be a reasonable and proper exercise of that authority. In a footnote, the court noted that the sale of insurance by national banks could, under certain circumstances, create conflicts between state insurance laws and federal banking laws, but the court found it unnecessary to resolve those questions at that time. The controversy over the branch banking powers of national banks continued. Disagreeing with the Comptroller's Interpretive Ruling 7.7380 (12 CFR 7.7380), the U.S. District Court for the District of Columbia held that loan production offices, where loan applications are solicited and preliminarily processed, are "branches" under 12 USC 36(f) and, hence, subject to state law limitations. IBAA v. Heimann, Civil No. 78-811 (D. D.C. March 30, 1979), appeal pending. In State Bank of Fargo v. Merchants National Bank and Trust Co., 593 F.2d 341 (8th Cir. 1979), the court held that although automatic teller machines were "branches" under the McFadden Act, national banks could lawfully use such machines because the relevant state law permitted state banks to use automated tellers when such authority was granted to "federally chartered financial institutions" which included federal savings and loan associations and federal credit unions. Finally, in State of Washington v. Heimann, et al., and Community Banks of Washington v. Heimann, et al., Civil Action Nos. C-79-141 and C-79-142 (consolidated) (W.D. Wash.), appeal pending, the Comptroller's approval of applications by several national banks to acquire branches owned by each other was upheld under a state law which permitted branching through acquiring existing banks or branches. The case also involved allegations of antitrust law violations. In this connection, the automatic stay provision of the Bank Merger Act, 12 USC 1828(c)(7)(A), was held inapplicable to private antitrust actions. The incidental powers of national banks received a restrictive interpretation from the U.S. Court of Appeals for the Ninth Circuit in N.R.C.A. v. Valley National Bank, 604 F.2d 32 (9th Cir. 1979). That decision affirmed the finding of the trial court that data processing services offered by a national bank to retailers, which included generation of reports from retail sales data provided by the retailer solely for the purpose of obtaining such services, was beyond the incidental powers of national banks under 12 USC 24. Both 37 courts reasoned that a service is properly "incidental" only when it is offered or performed in connection with the exercise of an express power. Thus, it was said, since the retail reports at issue were not generated due to some need arising from the offering of an "express power" service, such as supporting accounts receivable financing or working capital loans, the services were not properly "incidental." The Comptroller's Office believes the decision is incorrect because 12 USC 24 has no express or implied requirement that banks restrict their business to "express power" services. Moreover, a compelled tie between the offering of data processing services and other banking services would contravene the policy of the anti-tying statutes, 12 USC 1972 et seq. Supreme Court review of this case was not sought because of its procedural status. The confidentiality of the reports of examination prepared by the Office received contrasting treatment. In Gunter v. Comptroller of the Currency, Civil No. C78792 A, the U.S. District Court for the Northern District of Georgia held that such reports are exempt from mandatory disclosure under the Freedom of Information Act and that under 12 CFR 4.19 the Comptroller retains discretion over whether to authorize release. However, another court held that when the Comptroller is a party to a proceeding involving a closed bank, production of entire reports would be compelled over a claim of privilege by OCC, provided there is a sufficient showing of need by the party seeking discovery. In Re Franklin National Bank Securities Litigation, 478 F.Supp. 577 (E.D. N.Y. 1979). The latter decision may be criticized on several grounds, including its failure to recognize a distinction between matters of fact and opinion, its failure to address the need of financial regulatory agencies to assure regulated banks that the information they provide will remain confidential and its potential to deter the candid expression of opinions by national bank examiners. Finally, an action seeking judicial review of guidelines for enforcement of the Truth-in-Lending Act and Regulation Z was dismissed for lack of ripeness because the financial regulatory agencies had not implemented the guidelines through specific enforcement proceedings. American Bankers Association v. Board of Governors of the Federal Reserve System, et ai, Civil Action No. 79-2066 (D. D.C., January 29, 1980). Securities Disclosure Division Approximately 340 national banks have a class of securities registered with the Comptroller under the Securities Exchange Act of 1934. The principal function of the Securities Disclosure Division is to review registration statements, annual and special meeting proxy materials, periodic reports, statements of ownership and materials required to be filed in connection with tender offers and election contests for those banks. Reports of beneficial ownership and changes in beneficial ownership are recorded, and a public file of the 1934 act filings is maintained. During 1979, the division proposed and adopted amendments to 12 CFR 11, "Securities Exchange Act Rules," concerning proxy material disclosure and ben 38 eficial ownership of securities. The amendments were designed to make the Comptroller's regulations under the 1934 act substantially similar to rules of the Securities and Exchange Commission (SEC). Seven regional conferences were presented in Cleveland, Chicago, Atlanta, Richmond, New York, Dallas and Hershey, Pa., primarily for the benefit of national banks having a class of securities registered with the Comptroller under the 1934 act. The conferences were designed to assist banks in complying with the reporting requirements of the act and to inform them of proposed changes in 12 CFR 11 and various SEC regulations which will affect banks. The conferences also focused on recent amendments to, and the process of compliance with, the requirements of the Comptroller's "Securities Offering Disclosure Rules," 12 CFR 16, which applies to the offering and sale of securities by national banks; "Recordkeeping and Confirmation Requirements for Securities Transactions," 12 CFR 12; and "Change in Bank Control," 12 CFR 15. The division assisted the Trust Operations Division by participating in a seminar for trust examiners and by advising on amendments to 12 CFR 9, "Fiduciary Powers of National Banks and Collective Investment Funds," relating to variable amount master notes, securities handling procedures and use by trust departments of material inside information available to the bank as a result of its commercial banking activities. The division also participated in drafting 12 CFR 12 in response to recommendations in the SEC report on bank securities activities. This regulation addresses recordkeeping and confirmation requirements for national banks engaged in the purchase or sale of securities on order of a customer. The division suspended trading in stock of two national banks pending public dissemination of information which might affect the market activity in, and the prices of, the banks' stocks. The division assisted the SEC in several enforcement actions against national banks and, in some instances, their parent holding companies alleging violations of the federal securities laws. The division also participated in numerous meetings and discussions with the SEC on such matters as access to, and disclosure of, information contained in bank examination reports, activities of trust departments and the 1934 act filings of bank holding companies which are parents of national banks. Working closely with the Investment Securities Division, the division completed the first private investigation by the Comptroller's Office of the activities of a registered bank municipal securities dealer under the 1934 act. An administrative action was initiated against the bank and persons who had acted in the capacities of municipal representatives and municipal principals. Generally, the Office alleged that the bank and the persons engaged in unsafe and unsound banking practices and committed violations of the antifraud provisions of the federal securities laws in connection with adjusted price trades of municipal, U.S. government-and government agency securities. Further, it was alleged that the bank and the associated persons failed to reasonably supervise its employees and vio- lated numerous rules of the Municipal Securities Rulemaking Board. In this connection, the division filed a motion for public hearing and public proceedings under 12 CFR 19, asserting that it would be in the public interest. Settlement negotiations with the respondents were proceeding at year-end. The division has been primarily responsible for the review and approval of compensation and incentive compensation plans filed under 12 CFR 13 since November 1979. Approximately 35 such plans have been filed by national banks, and numerous requests for information and sample plans have been received. The division also assisted the Bank Organization and Structure Division's capital increase task force in developing an information manual and a policy statement pertaining to all forms of compensation plans for insiders and shareholders of national banks. The division was also responsible for reviewing subordinated debt instruments issued under 12 CFR 14.5 by national banks as a means of financing their operations. Authorization to proceed with the issuance of subordinated debt instruments was given upon satisfactory compliance by the issuer with the policy requirements of the Comptroller for the form and content of the instruments. In the administration of 12 CFR 16, the division processed approximately 120 offering circulars filed by national banks in connection with the public offering and sale of their equity or debt securities. In addition, the division responded to numerous submissions under the exemptive provisions of the regulation. Regional counsels have been assisted by the division in reviewing offering circulars of organizing national banks. A comprehensive, review of 12 CFR 16 was undertaken by the division in 1979. Based on staff experience interpreting the requirements of Part 16 and the suggestions of bankers and other professionals, the division proposed substantial revisions in the regulation. The amendments proposed to incorporate the definition of "beneficial ownership" set forth in 12 CFR 11; to exempt securities offerings made in connection with any reorganization, merger, consolidation or acquisition of assets from the offering circular requirements; to eliminate entirely the exemption for certain small offerings; and to permit a substantially abbreviated offering circular for certain other offerings. Following receipt of comments from interested members of the public, the division prepared Part 16 in final form for publication. During 1979, the division was designated as legal counsel to the Bank Organization and Structure Division (BOSD) for matters requiring interpretation of the Change in Bank Control Act of 1978 (12 USC 1817(j)) and 12 CFR 15 promulgated thereunder. In this assignment, the division worked closely with BOSD in the resolution of various legal and administrative questions arising under this act. In addition, the division reviewed and developed revisions of existing regulations implementing the act. Legislative Counsel Division The principal responsibilities of the Legislative Counsel Division relate to the legal aspects of legisla tion. The subject matter covers virtually every area of the Office's jurisdiction and almost every legislative measure of interest to national banks. In addition, the division deals with matters of intergovernmental and operational interest. In connection with those general responsibilities, the division maintains such information as status of bills, hearings and reports on bills, press information and primary legislative documents and files on pertinent laws passed in the current and immediately preceding Congresses. Division attorneys prepare testimony given before congressional committees and letters of comment on pending bills sent to members of Congress and congressional committees. The attorneys draft legislation and write memoranda and briefing papers on various legislative proposals and congressional oversight. Division attorneys are in frequent contact with members of Congress and their staffs, personnel in the Department of the Treasury, Office of Management and Budget and other federal and state agencies, Office staff in the regions and in Washington, and public representatives desiring information on banking legislation. They also attend congressional hearings and participate in meetings with the Treasury Department and other agencies to consult on, and keep abreast of, legislation. In addition, division attorneys speak to various groups, including bar associations, bank auditors, foreign bankers and Office staff on legal and legislative matters. The following are legislative activities of the first session of the 96th Congress (1979) which were significant for the Comptroller's Office: • Right to Financial Privacy Act Amendment (P.L. 96-3; March 7, 1979) — Repealed a provision of Title XI of the Financial Institutions Regulatory and Interest Rate Control Act of 1978 that had been scheduled to become effective March 10, 1979. That section would have required financial institutions to notify all customers—including inactive and dormant account holders—of certain rights, contrary to congressional intent to require notice only to current customers. • Ethics in Government Act Amendment (P.L. 9628; June 22, 1979) — Clarified the postemployment conflict of interest provisions of Title V of the Ethics in Government Act of 1978. The 1978 law prohibited certain high-ranking employees, including those in positions listed in the executive schedule and others designated by the Office of Government Ethics, from aiding or assisting in matters which had been pending under the employee's official responsibility during his or her last year in government service for a 2-year period. The 1979 amendment makes clear that the ban on aiding and assisting applies only to an individual's physical presence at a formal or informal appearance. Furthermore, the subject involved must be a particular matter in which the individual participated "personally and substantially." The 1978 act also prohibited certain former high-ranking government employees from repre39 senting anyone in a formal or informal appearance, or making any oral or written communications with the intent to influence for a period of 1 year, in connection with a matter pending before the former employee's agency or in which the agency had a direct or substantial interest. The 1979 amendment bars the Director of the Office of Government Ethics from designating federal employees below GS-17 as subject to that restriction. The amendment also exempts from the "no contact" provisions service with the following public or nonprofit institutions or organizations: (1) state and local governments and their agencies and instrumentalities, (2) accredited, degree-granting institutions of higher education and (3) hospitals and medical research organizations. Violations of the provisions of the act may be punished by a fine of up to $10,000 or imprisonment for up to 2 years, or both. The employment restrictions, as amended, went into effect on July 1, 1979. • Federal Trade Commission Act Amendment (P.L. 96-37; July 23, 1979) — Terminated the jurisdictional authority of the Federal Trade Commission (FTC) over savings and loan associations and established separate rulemaking authority in the Federal Home Loan Bank Board (FHLBB) to regulate deceptive acts or practices by those institutions. This law exempted savings and loan associations from the FTC's cease and desist authority and investigative authority to the same extent that banks were already exempted. The FHLBB was given regulatory authority over savings and loan institutions substantially identical to that previously conferred on the Federal Reserve Board for banks. The law also mandates the FHLBB to establish a division of consumer affairs to resolve complaints and to enforce trade practice regulations as to savings and loan associations. • International Banking Act Amendment (P.L. 9664; September 14, 1979) — Extended the time for foreign banks to obtain required deposit insurance for existing branches in the United States. The amendment extended the deadline from September 17, 1979, to January 1, 1980, allowing the Federal Deposit Insurance Corporation to complete examinations of foreign branches which had applied for deposit insurance pursuant to the requirements of the International Banking Act of 1978. • Temporary Usury Preemption (P.L. 96-104; November 5, 1979) — Temporarily preempted state usury lending limits on business or agricultural loans of over $25,000 made by financial institutions in states with constitutional provisions invalidating contracts for a higher interest rate than 10 percent. The law authorized business or agricultural loans for $25,000 or more at an interest rate of up to 5 percent over the Federal Reserve discount rate on 90-day commercial 40 paper. The preemption was to expire on July 1, 1981, or earlier if a state's voters rejected the federal preemption in 1980. • Transaction Accounts, Temporary Usury Preemption and New Jersey NOW Accounts (P.L. 96-161; December 28, 1979) — Provided a temporary extension of authority through March 31, 1980, for the automatic transfer of funds from savings accounts in commercial banks, the establishment of remote service units by savings and loan associations and the use of share drafts by credit unions. The law temporarily overrode usury ceilings for any loan, mortgage or advance secured by a first lien on residential real property or by a first lien on stock in a residential cooperative housing corporation where the loan was used to acquire such stock. This federal preemption of mortgage usury ceilings was to be effective through March 31, 1980, and was to apply to any loan closed prior to December 29, 1981, if a commitment was made during the preemption period. A state could impose or restore usury limits during the preemption period. The law also overrode state usury limits affecting bank obligations, including deposit accounts. It temporarily overrode such limitations on business or agricultural loans of $25,000 or more by permitting interest rates on such loans of up to 5 percent over the Federal Reserve's discount rate on 90-day commercial paper. In states with statutory usury ceilings, the latter preemption was to be effective until July 1, 1980. In states with constitutional usury limitations, the preemption was to be effective until July 1, 1981. A state could impose or restore usury limits during the preemption period, either by statute or by voter approval of a constitutional provision. The law repealed P.L. 96-104, which had earlier preempted usury ceilings in certain states on business or agricultural loans in excess of $25,000. The law also provided permanent NOW account authority to depository institutions in New Jersey. Legal Advisory Services Division The Legal Advisory Services Division provides general legal advice in oral and written form and produces interpretations and rulings concerning all federal and applicable state laws and regulations that affect national banks or the Comptroller's Office. Inquiries come from supervisory and examining personnel in the Comptroller's Washington Office and in the field; from bankers and bank counsels; from congressmen; from members of other executive departments and agencies, trade organizations and consumer groups; and from others with a particular interest or problem which involves a national bank. The division frequently sends representatives to meetings with other federal authorities to discuss topics and develop programs of mutual interest. During 1979, the division participated in drafting a number of proposed and final rulings and regulations published in the Federal Register. Interpretive rulings adopted in final form covered such topics as the legal lending limit on loans to foreign governments and their related entities (12 CFR 7.1330, 44 Federal Register 22712), requirements for personal property leasing by national banks (12 CFR 7.3400, 44 Federal Register 22388), accounting methods pertaining to other real estate owned by national banks (12 CFR 7.3025, 44 Federal Register 46428), bank service corporations (12 CFR 7.7390, 44 Federal Register 23812) and loans secured by real estate (12 CFR 7.2010, 7.2015, 7.2040, 7.2400, 44 Fee/era/ Register 51795). Final regulations adopted in 1979 related to the Change in Bank Control Act (12 CFR 15, 44 Federal Register 7119), management official interlocks (12 CFR 26, 44 Federal Register 42152), federal branches and agencies of foreign banks (12 CFR 28, 44 Federal Register 65381), establishment of a fair housing home loan data system (12 CFR 27, 44 Federal Register 63084), and implementation of the civil money penalty provisions and broadened cease-and-desist powers conferred on the Comptroller's Office by Titles I and VIII of the Financial Institutions Regulatory and Interest Rate Control Act of 1978 (FIRA) (12 CFR 19, 44 Federal Register 19374). Attorneys in the division also spent considerable time assisting the Federal Reserve Board staff in drafting the final version of Regulation O (12 CFR 215) and answering related inquiries on duties and limitations imposed on national banks and their directors, officers and 10-percent shareholders by Titles I, VIII and IX of FIRA. In addition to interpretive rulings and regulations published in the Federal Register, significant letter rulings issued by the division are released monthly and published by various loose-leaf reporting services. There was an increase in 1979 in questions about usury because of the dramatic rise in interest rates and the growing use of the federal alternative rate in 12 USC 85. Other major areas of concern included bank mergers and dissenting shareholders' rights, incidental banking powers issues under 12 USC 24(7), conflicts between federal and various state laws as applied to national banks, consumer protection and civil rights laws and programs, Regulation Q and GlassSteagall Act questions. Division attorneys worked on a number of assignments for the Federal Financial Institutions Examination Council since the Comptroller's Chief Counsel is Chairman of the council's Legal Advisory Group. Attorneys also worked on various contracts and leases for the Comptroller's Office, including data processing, audit and construction contracts and real estate leases. Processing Freedom of Information Act requests and applications by national banks to establish charitable trusts continued to consume a significant amount of time. A number of special projects were undertaken by members of the division; they included a legal study of McFadden Act branching reform alternatives and a description of the legal environment surrounding the foreign acquisition of U.S. banks. Two staff members served as special assistants to the Chief Counsel for a 6-month period. The division's paralegal unit functions primarily to handle complaints received from consumers, congressional offices and consumer groups. Those inquiries relate to a wide range of topics such as credit denials, national banks' fiduciary duties, billing disputes and interest rates on loans. The paralegal unit received 4,498 consumer inquiries during 1979. The unit resolved 1,042 complaints and referred most of the others to the Comptroller's regional offices for response. A few referrals were made to other regulatory authorities. Some 320 assignments were pending at the end of 1979. Enforcement and Compliance Division During 1979, the Enforcement and Compliance Division with the assistance of other Washington and regional personnel developed procedures to implement the additional enforcement powers conferred by the Financial Institutions Regulatory and Interest Rate Control Act of 1978. Procedures were established for reviewing and assessing civil money penalties against national banks and associated individuals for violating banking laws and cease and desist orders. The division participated in investigations leading to dismissals of bank officials, referred potential violations of law to prosecuting and investigating agencies, prosecuted a formal removal action against a bank official and initiated other administrative remedies, including civil money penalty assessments. During 1979, the division concluded two civil money penalty assessments, 67 formal administrative actions authorized by 12 USC 1818 and 24 memoranda of understanding. The total of 93 formal and informal administrative actions represented an increase of 22 percent over the preceding year. Each action is summarized in Appendix C. The division continued its practice of rendering advice and assistance to investigatory agencies, U.S. attorneys and the Department of Justice on bank fraud and related matters. During 1979, division personnel rendered direct trial assistance in eight bank fraud prosecutions brought by U.S. attorneys. The division also conducted three seminars on fraud detection and prevention for senior national bank examiners and representatives of other regulatory agencies. Division personnel also participated in various programs throughout the United States dealing with the investigation and prosecution of bank fraud. During 1979, the division frequently assisted the Special Projects Division and regional personnel in determining the appropriate remedial and administrative actions for national banks requiring special supervisory attention. 41 X. Financial Operations of the Office of the Comptroller of the Currency Total revenue of the Office of the Comptroller of the Currency for 1979 was $104.4 million, an increase of 9 percent over 1978, which compares to a 9 percent increase the previous year.^Assessment receipts, which account for 91 percent of total revenue, amounted to $94.6 million, an increase of $6.6 million, due principally to an increase in national bank assets. Revenue from trust examinations totaled $3 million. Revenue from applications for new branches declined by $30,000. Revenue from conversion investigation increased by $342,000. Fees for mergers and consolidations increased by $142,000. Revenue from bank examination reports declined by $104,000. Interest earned on investments increased by $1.4 million, an increase of 43 percent; this increase was due mainly to the higher interest rates earned on Treasury bills. Revenue from sale of publications increased $105,000. Total expenses amounted to $101.3 million in 1979 compared to $92.7 million in 1978, a 9.3 percent increase over 1978. Salaries, personnel benefits and travel expenses amounted to $83.3 million, or 83 percent of total expenses for the year. Those three expenses amounted to $78.4 million in 1978, or 84.5 percent of total expenses. Salary and benefit expense increased by $5 million, or 7.5 percent from 1978. Travel expenses totaled $12.1 million, an increase of $500,000 over 1978. The remaining expenses totaled $17.5 million, an increase of $3.1 million from the previous year. The most significant changes occurred in rent, which increased $818,000, education and career development, which increased $839,000, and data processing, which increased $410,000. The equity account is in reality a reserve for contingencies. Financial operations in 1979 increased that reserve by the $3 million excess of revenue over expenses to $36.5 million at year-end. That represents a 4-month reserve for operating expenses, based on the level of expenses during the last 3 months of 1979. The equity account has been administratively restricted in the amount of $2,829,000, as explained in the note to the financial statements. 43 Table 12 Comptroller of the Currency balance sheets December 31 1979 1978 ASSETS Current assets: Cash Obligations of U.S. government (Note 2) Accrued interest on investments Accounts receivable Travel advances Prepaid expenses and other assets 1,098,624 25,188,101 327,715 1,013,022 1,096,608 140,389 $ 169,908 17,977,313 326,288 494,969 894,855 53,286 Long-term obligations of U.S. government (Note 2) 15,142,831 19,916,619 18,171,757 Fixed assets and leasehold improvements (Note 2). Furniture, equipment and software Leasehold improvements 5,521,573 5,778,033 5,059,843 5,144,674 11,299,606 3,537,942 10,204,517 2,726,271 Total current assets Less accumulated depreciation and amortization . . Total assets LIABILITIES AND COMPTROLLER'S EQUITY Current liabilities: Accounts payable and accrued expenses Accrued travel and salaries Total current liabilities Long-term liabilities: Accumulated annual leave Closed Receivership Funds (Note 3) Total liabilities Comptroller's equity: Administratively restricted (Note 3) Unrestricted Commitments and contingencies (Notes 4 and 5): Total liabilities and Comptroller's equity . See notes at end of tables. 44 28,864,459 7,761,664 7,478,246 $51,768,954 $45,566,622 $ 3,993,081 3,822,118 $ 1,716,150 3,281,767 7,815,199 4,997,917 4,758,576 2,706,279 15,280,054 4,425,810 2,706,051 12,129,778 2,829,000 33,659,900 2,670,000 30,766,844 36,488,900 33,436,844 $51,768,954 $45,566,622 Table 13 Comptroller of the Currency statements of revenues, expenses and Comptroller's equity Year ended December 31 1979 1978 Revenues (Note 1): Semiannual assessments Examinations and investigations Investment income Publication sales Other Expenses: Salaries Retirement and other employee benefits (Note 4) Travel and per diem Rent and maintenance (Note 4) Communications Moving and shipping Employee education and training Data processing Printing, reproduction and subscriptions Office machine repairs and rentals Depreciation and amortization Supplies Consulting services Conferences Remodeling Other Excess of revenue over expenses Comptroller's equity at beginning of year Comptroller's equity at end of year $ 94,606,960 4,629,902 4,810,307 240,003 96,440 104,383,612 $ 87,993,876 4,045,553 3,361,575 134,940 188,958 95,724,902 65,586,363 6,122,668 12,140,430 5,093,697 1,505,468 1,354,171 2,932,400 2,168,247 1,057,156 612,138 829,105 794,932 389,298 161,737 236,410 347,336 101,331,556 3,052,056 33,436,844 $ 36,488,900 60,893,478 5,807,972 11,650,723 4,274,810 1,547,045 991,625 2,093,678 1,758,138 1,062,180 536,057 800,675 377,329 236,811 138,086 339,585 215,616 92,723,808 3,001,094 30,435,750 $ 33,436,844 See notes at end of tables. 45 Table 14 Comptroller of the Currency statements of changes in financial position Year ended December 31 1979 1978 Financial resources were provided by: Excess of revenues over expenses Charges not affecting working capital in the period: Additions to accumulated annual leave Depreciation and amortization Amortization of premium and discount on long-term U.S. government obligations, net Net (gain) loss on sale of fixed assets $3,052,056 $3,001,094 890,548 829,105 1,153,788 800,675 30,020 (628) Working capital provided by operations for the period Long-term U.S. government obligations transferred to current assets Proceeds from sale of fixed assets Net closed receivership fund receipts Total Financial resources were used for: Purchase of long-term investments Purchase of fixed assets Payment of accrued leave Total Increase in working capital 29,198 1,249 4,986,004 4,801,101 2,998,906 5,106 228 7,805,341 4,994,386 1,117,001 557,782 1,674,783 $6,130,558 210,000 630,165 532,717 1,372,882 $3,621,504 8,047 335 Analysis of Changes in Working Capital Increase (decrease) in current assets: Cash Obligations of U.S. government . . . Accrued interest on investments . . Accounts receivable Travel advances Prepaid expenses and other assets (Increase) decrease in current liabilities: Accounts payable and accrued expenses Accrued travel and salaries Increase in working capital See notes on next page. 46 928,716 7,210,788 1,427 518,053 201,753 87,103 $(1,266,784) 4,641,281 (18,186) (231,824) 169,219 (260,523) 8,947,840 3,033,183 (2,276,931) (540,351) (2,817,282) 85,207 503,114 588,321 $3,621,504 $ $6,130,558 Notes to Financial Statements December 31, 1979 and 1978 Note 1—Organization The Comptroller of the Currency (Comptroller's Office) was created by an Act of Congress for the purpose of establishing and regulating a national banking system. The National Currency Act of 1863, rewritten and re-enacted as the National Banking Act of 1864, created the Comptroller's Office and provided for its supervisory functions and the chartering of banks. No funds derived from taxes or federal appropriations are allocated to or used by the Comptroller's Office in any of its operations. The revenue of the Comptroller's Office is derived principally from assessments and fees paid by the national banks and interest on investments in U.S. government obligations. Assessments paid by national banks are not construed to be government funds. The Comptroller's Office is exempt from federal income taxes. equity. An analysis of allocable indirect expenses has not been made. As a part of the Depository Institutions Deregulation and Monetary Control Act of 1980 enacted March 31, 1980, the procedure for terminating the Closed Receivership Funds was established. Any unclaimed assets remaining after application of this procedure will revert to the general funds of the Comptroller. Note 4—Commitments The Comptroller's Office occupies office space in Washington, D.C., under a lease agreement which provided for an initial 5-year term with five consecutive 5-year renewal options. During 1978, the first of these options, expiring in 1984, was exercised. However, renewed rental rates have not been agreed upon and the parties-in-interest are in the process of negotiating a final settlement. In addition, regional and sub-regional offices lease space under agreements which expire at various dates through 1992. Minimum rental commitments under leases in effect at December 31, 1979, are as follows: Note 2—Significant Accounting Policies The accounting policies of the Comptroller of the Currency conform to generally accepted accounting principles. The financial statements are prepared on the accrual basis of accounting. Obligations of the U.S. government are valued at amortized cost. For the current portion of obligations of the U.S. government, this approximates market value. The market value of the long-term U.S. government obligations owned at December 3 1 , 1979 and 1978, was $13,613,000 and $16,656,000, respectively. It is the intention of the Comptroller's Office to hold these securities until their maturity, which ranges from 1980 through 1984. Therefore, no valuation reserve has been provided for in either 1979 or 1978. Premiums and discounts on investments in U.S. government obligations are amortized ratably over the terms of the obligations. Furniture, equipment and software are depreciated on a straight-line basis over the estimated useful lives of the assets, which range from 5 to 10 years. Leasehold improvements are amortized over the terms of the related leases (including renewal options) or the estimated useful lives, whichever is shorter. Expenditures for maintenance and repairs are charged to earnings as incurred. Significant renovations of assets are capitalized. Certain of the leases provide that annual rentals may be adjusted to provide for increases in taxes and other related expenses. Total rental expense under operating leases was $4,745,634 and $3,913,700 for the years ended December 31, 1979 and 1978, respectively. The Comptroller's Office contributes to the Civil Service retirement plan for the benefit of all its eligible employees. Contributions aggregated $4,472,000 and $4,133,000 in 1979 and 1978, respectively. The plan is participatory, with 7 percent of salary being contributed by each party. The accompanying balance sheets include a liability for annual leave, accumulated within specified limits, which if not taken by employees prior to retirement is paid at that date. Note 3—Closed Receivership Funds Prior to the assumption of closed national bank receivership functions by the Federal Deposit Insurance Corporation in 1936, the Comptroller of the Currency appointed individual receivers for all closed national banks. After settling the affairs of the closed banks and issuing final distributions to the creditors of the banks (principally depositors), the receivers transferred to the custody of the Comptroller's Office all remaining funds which represented distributions which were undeliverable or had not been presented for payment. Closed Receivership Funds in the accompanying balance sheets represent the potential claims for such funds by the original creditors of the receiverships. Since inception of the receivership function, unclaimed funds have been invested in U.S. government securities. The income from investments has been applied as an offset to expenses incurred by the Comptroller's Office in performing this function and accordingly has been recorded as revenue in the statements of revenues, expenses and Comptroller's equity. Through December 31, 1979, income has exceeded direct expenses by approximately $2,829,000 (including $159,000 in 1979 and 1978), which excess amount is included in the Comptroller's Note 5—Contingencies Various banks in the District of Columbia have deposited securities with the Comptroller's Office as collateral for those banks entering into and administering trust activities. These securities, having a par or stated value of $13,993,000, are not assets of the Comptroller's Office and accordingly are not included in the accompanying financial statements. The Comptroller's Office is a defendant, together with other bank supervisory agencies and other persons, in litigation generally related to the closing of certain national banks. In the opinion of the Comptroller's legal staff, the Comptroller's Office will be able to defend successfully against these complaints, and no liability is expected to result therefrom. During 1979, the Office of Personnel Management (OPM) submitted an order directing the Comptroller's Office to pay back wages, representing uncompensated overtime, due under the Fair Labor Standards Act (FLSA) to certain examiners in the Eleventh National Bank Region. The Comptroller's Office believes the order was based on erroneous interpretation and application of FLSA standards pertaining to, inter alia, the exempt status of certain examiners 1980 1981 1982 1983 1984 1985 and after $.5,265,000 5,046,000 4,608,000 4,391,000 2,325,000 2,338,000 $23,973,000 47 and travel time regulations. While the Comptroller's Office concedes that a liability exists in the Eleventh National Bank Region (and perhaps the other regions), the amount of this liability cannot reliably be estimated at this time. Moreover, it is uncertain whether such liability will be payable from funds of the Comptroller's Office or from funds appropriated by Congress for claims against the United States. Liability, if any, resulting from this action is not expected to have a material effect on the financial position or operations of the Comptroller's Office. OPINION OF INDEPENDENT ACCOUNTANT To the Comptroller of the Currency In our opinion, the accompanying balance sheets, the related statements of revenues, expenses and Comptroller's equity and of changes in financial position present fairly the financial position of the Comptroller of the Currency at December 31, 1979 and 1978, and the results of its operations and the changes in its financial position for the years then ended, in conformity with generally accepted accounting principles consistently applied. Our examinations of these statements were made in accordance with generally accepted auditing standards and accordingly included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances, including confirmation of securities owned at December 31, 1979 and 1978, by correspondence with the custodians. Price Waterhouse & Co. Washington, D.C. April 11, 1980 48 APPENDIX A Merger Decisions, 1979 Merger Decisions, 1979 /. Mergers consummated, involving two or more operating banks Jan. 1, 1979: Page Barnett Bank of Jacksonville, National Association, Jacksonville, Fla. Barnett Bank of Murray Hill, Jacksonville, Fla. Barnett Bank of San Jose, Jacksonville, Fla. Barnett Bank of Regency, Jacksonville, Fla. Barnett Bank of North Jacksonville, Jacksonville, Fla. Merger 55 Jan. 1, 1979: Bay State National Bank, Lawrence, Mass. Citizens Bank and Trust Company of Peabody, Peabody, Mass. Merger 56 Jan. 1, 1979: Fidelity American Bank, NA, Lynchburg, Va. Fidelity American Bank, NA, Halifax, Va. Fidelity American Bank, NA, Roanoke Valley, Roanoke County, Va. Fidelity American Bank, Chatham, Va. Fidelity American Bank, Natural Bridge, Natural Bridge Station, Va. Fidelity American Bank, Buena Vista, Buena Vista, Va. Merger 57 Jan. 1, 1979: The First American National Bank of St. Cloud, St. Cloud, Minn. The First State Bank of Rice, Rice, Minn. Merger 58 Jan. 1, 1979: First Merchants National Bank, Neptune Township, N.J. Midlantic National Bank/Raritan Valley, Edison Township, N.J. Merger 59 Jan. 31, 1979: Atlantic First National Bank of Gainesville, Gainesville, Fla. Atlantic Bank of Gainesville, Gainesville, Fla. Merger 60 Feb. 20, 1979: Dominion National Bank of the Peninsula, York County, Va. Dominion National Bank of Tidewater, Norfolk, Va. Merger 61 Feb. 28, 1979: Southern National Bank of North Carolina, Lumberton, N.C. Goldsboro Branch of North Carolina National Bank, Charlotte, N.C. Purchase 62 Mar. 5, 1979: Old National Bank of Washington, Spokane, Wash. Four Branches of Rainier National Bank, Seattle, Wash. Purchase 63 Mar. 5, 1979: Old National Bank of Washington, Spokane, Wash. Two Branches of Pacific National Bank of Washington, Seattle, Wash. Purchase 68 Mar. 5, 1979: Pacific National Bank of Washington, Seattle, Wash. Three Branches of Old National Bank of Washington, Spokane, Wash. Purchase 73 Mar. 5, 1979: Rainier National Bank, Seattle, Wash. Four Branches of First National Bank in Spokane, Spokane, Wash. One Branch of Old National Bank of Washington, Spokane, Wash. Purchase Mar. 31, 1979: Atlantic First National Bank of Daytona Beach, Daytona Beach, Fla. Atlantic Bank of West Daytona Beach, Daytona Beach, Fla. Merger Apr. 1, 1979: Royal Trust Bank of Miami, N.A., Miami, Fla. Royal Trust Bank of South Dade, N.A., Unincorporated Area of Dade County (P.O. Miami) Merger Apr. 16, 1979: The Central Trust Company, National Association, Cincinnati, Ohio The Central Trust Company of Montgomery County, National Association, Dayton, Ohio Merger Apr. 30, 1979: Bankers Trust Company of Albany, National Association, Albany, N.Y. Bankers Trust Company of Central New York, Utica, N.Y. Merger Apr. 30, 1979: The Central Trust Company of Northeastern Ohio, National Association, Canton, Ohio The Central Trust Company of Wayne County, Wooster, Ohio Merger May 7, 1979: Warrick National Bank of Boonville, Boonville, Ind. The Colonial National Bank, Ohio Township (P.O. Tennyson), Ind. Merger May 21, 1979: The Third National Bank and Trust Company of Dayton, Ohio, Dayton, Ohio The Citizens First National Bank of Greene County, Xenia, Ohio Merger May 22, 1979: First National City Bank of Alliance, Alliance, Ohio First National Bank of Sebring, Sebring, Ohio Merger May 30, 1979: The First National Bank of Maryland, Baltimore, Md. The Sharpsburg Bank of Washington County, Sharpsburg, Md. Merger May 31, 1979: Virginia National Bank, Norfolk, Va. New Bank of Roanoke, Roanoke, Va. Merger June 1, 1979: The First National Bank of Shreveport, Shreveport, La. Caddo Trust and Savings Bank, Belcher, La. Merger 78 83 84 84 85 85 86 87 89 90 91 92 51 June 1, 1979: Page Sun First National Bank of Melbourne, Melbourne, Fla. Sun Bank of Cocoa, National Association, Cocoa, Fla. Merger 93 June 29, 1979: First National Bank of Mercer County, Celina, Ohio The Home Banking Company, St. Marys, Ohio Merger 94 June 29, 1979: The Ohio National Bank of Columbus, Columbus, Ohio Akron National Bank, Akron, Ohio The Capital National Bank, Cleveland, Ohio The First National Bank of Springfield, Springfield, Ohio The First National Bank of Newark, Newark, Ohio First National Bank of Coshocton, Coshocton, Ohio The First National Bank of Chillicothe, Chillicothe, Ohio The Western Security Bank, Sandusky, Ohio The Citizens National Bank in Zanesville, Zanesville, Ohio The Niles Bank Company, Niles, Ohio The First National Bank of Delaware, Delaware, Ohio The First National Bank of Jackson, Jackson, Ohio The National Bank of Portsmouth, Portsmouth, Ohio The Central National Bank of Cambridge, Cambridge, Ohio The Hocking Valley National Bank of Lancaster, Lancaster, Ohio The Ohio Bank and Trust Company, New Philadelphia, Ohio The Citizens National Bank of Ironton, Ironton, Ohio The Medina County Bank, Medina, Ohio The First National Bank of Cadiz, Cadiz, Ohio The First National Bank of Tiffin, Tiffin, Ohio The Knox County Savings Bank, Mount Vernon, Ohio The Community Bank, Napoleon, Ohio The Farmers and Merchants Bank of Logan, Logan, Ohio The First National Bank of Marysville, Marysville, Ohio The First National Bank of London, London, Ohio The First National Bank of Washington Court House, Washington Court House, Ohio The Kenton Savings Bank, Kenton, Ohio National Bank of Loveland, Loveland, Ohio The Perry County Bank, New Lexington, Ohio The First National Bank of Wilmington, Wilmington, Ohio The Second National Bank of Circleville, Circleville, Ohio The Cummings Bank Company, Carrollton, Ohio The Citizens Banking Company, Perrysburg, Ohio The Peoples National Bank of Greenfield, Greenfield, Ohio The Logan County Bank, Bellefontaine, Ohio The Peoples Savings Bank Company, Delta, Ohio The Ohio State Bank of Dayton, Dayton, Ohio The Geauga County National Bank of Chardon, Chardon, Ohio The Adams Bank, Millersburg, Ohio The First National Bank at East Palestine, East Palestine, Ohio Merger 95 June 30, 1979: The Central National Bank of Richmond, Richmond, Va. Fidelity American Bank, NA, Richmond, Henrico County, Va. Cavalier Central Bank & Trust Company, Hopewell, Va. Merger 96 June 30, 1979: First & Merchants National Bank, Richmond, Va. The First National Bank of Danville, Danville, Va. Merger 97 June 30, 1979: National Community Bank of New Jersey, Rutherford, N.J. Arcadia National Bank, Secaucus, N.J. Merger 97 July 1, 1979: Southeast First National Bank of Miami, Miami, Fla. Southeast First National Bank of Miami Springs, Miami Springs, Fla. Southeast National Bank of Coral Way, Miami, Fla. 52 Southeast Bank of Dadeland, Unincorporated Area of Page Dade County, Fla. Southeast National Bank of Tamiami, Unincorporated Areas of Dade County, Fla. Southeast Bank of Westland, Hialeah, Fla. Merger 98 July 2, 1979: The Farmers National Bank of Cynthiana, Cynthiana, Ky. Union Bank of Berry, Berry, Ky. Purchase 99 July 2, 1979: The First National Bank of Farmville, Farmville, Va. The Bank of Buckingham, Dillwyn, Va. Merger 100 July 2, 1979: National Bank and Trust Company, Charlottesville, Va. New Bank of Culpeper, Culpeper, Va. Merger 100 July 14, 1979: Wells Fargo Bank, National Association, San Francisco, Calif. First Central Coast Bank, San Luis Obispo, Calif. Merger 101 July 30, 1979: Society National Bank of Cleveland, Cleveland, Ohio Society Bank of Painesville, Ohio Merger 102 Aug. 27, 1979: Heritage Bank, N.A. - Flushing, Flushing, Ohio The Eastern Ohio Bank, Union Township, Ohio Merger 102 Aug. 31, 1979: The Planters National Bank and Trust Company, Rocky Mount, N.C. Liberty Bank & Trust Company, Durham, N.C. Purchase 103 Sept. 14, 1979: The National Bank of South Carolina, Sumter, S.C. Bank of North Charleston, North Charleston, S.C. Purchase 104 Sept. 28, 1979: First National Bank of Nevada, Reno, Nev. Bank of Nevada, Las Vegas, Nev. Consolidation 105 Sept. 28, 1979: The Peoples National Bank and Trust Company, Dover, Ohio The Gnadenhutten Bank, Gnadenhutten, Ohio Merger 105 Sept. 30, 1979: First National Bank of Hollywood, Hollywood, Fla. First National Bank of Hallandale, Hallandale, Fla. Hollywood National Bank, Hollywood, Fla. First National Bank of Miramar, Miramar, Fla. Merger 106 Sept. 30, 1979: Southern National Bank of North Carolina, Lumberton, N.C. Carolina State Bank, Gastonia, N.C. Merger 107 Oct. 1, 1979: Bank of Jackson, N.A., Jackson, Miss. Fidelity Bank, Utica, Miss. Purchase 108 Oct. 1, 1979: The Barnstable County National Bank of Hyannis, Barnstable, Mass. Chatham Trust Company, Chatham, Mass. Merger 109 Oct. 4, 1979: The Central Trust Company, National Association, Cincinnati, Ohio The Citizens National Bank of Middleport, Ohio Merger 110 Oct. 4, 1979: The Central Trust Company, National Association, Cincinnati, Ohio The First National Bank of Gallipolis, Gallipolis, Ohio Page Merger 111 Oct. 15, 1979: The Merchants National Bank of Fort Smith, Fort Smith, Ark. Continental Bank and Trust Company, Barling, Ark. Merger 112 Oct. 31, 1979: The First National Bank in Sioux Falls, Sioux Falls, S. Dak. Dakota State Bank of Dell Rapids, Dell Rapids, S. Dak. Purchase 113 Oct. 31, 1979: Mid-American National Bank and Trust Company, Northwood, Ohio Farmers and Merchants Bank Company, Arlington, Ohio Merger 113 Nov. 1, 1979: The First National Bank of Maryland, Baltimore, Md. The National Bank of Perryville, Perryville, Md. Merger 114 Nov. 9, 1979: Central Fidelity Bank, N.A., Richmond, Va. City Savings Bank and Trust Company, Petersburg, Va. The Citizens National Bank of Emporia, Emporia, Va. Merger 115 Nov. 23, 1979: The First National Bank in Bryan, Bryan, Ohio The Farmers State Bank of Stryker, Stryker, Ohio Merger 116 Nov. 30, 1979: Century First National Bank in St. Petersburg, St. Petersburg, Fla. Century Bank of Pinellas County, St. Petersburg, Fla. Merger 117 Nov. 30, 1979: First & Merchants National Bank, Richmond, Va. The Services National Bank, Arlington, Va. Merger 117 Nov. 30, 1979: Indian Head National Bank of Nashua, Nashua, N.H. Indian Head National Bank of Derry, Derry, N.H. Merger 118 Nov. 30, 1979: The National Bank and Trust Company of Gloucester County, Woodbury, N.J. The National Bank of Manuta, Sewell, N.J. Merger 119 Dec. 1, 1979: The Lake County National Bank of Painesville, Painesville, Ohio The Commercial Bank, Ashtabula, Ohio Merger 120 Dec. 1, 1979: The New Farmers National Bank of Glasgow, Glasgow, Ky. The Peoples Bank, Cave City, Ky. Merger 121 Dec. 1, 1979: Sun First National Bank of Lake Wales, Lake Wales, Fla. Sun First National Bank of Polk County, Auburndale, Fla. Merger Dec. 3, 1979: National Central Bank, Lancaster, Pa. Lebanon County Trust Company, Lebanon, Pa. Merger Dec. 3, 1979: North Carolina National Bank, Charlotte, N.C. The Bank of Asheville, Asheville, N.C. Merger Dec. 7, 1979: American National Bank and Trust Company of Chicago, Chicago, III. Mercantile National Bank of Chicago, Chicago, III. Purchase Dec. 14, 1979: Northwestern National Bank of Sioux Falls, Sioux Falls, S. Dak. Springfield State Bank, Springfield, S. Dak. Merger Dec. 28, 1979: First National Bank of Catawba County, Hickory, N.C. Western Carolina Bank and Trust Company, Asheville, N.C. Purchase Dec. 28, 1979: The Oneida National Bank and Trust Company of Central New York, Utica, N.Y. The Little Falls National Bank, Little Falls, N.Y. Merger Dec. 31, 1979: Deposit Guaranty National Bank, Jackson, Miss. Bank of Inverness, Inverness, Miss. Merger Dec. 31, 1979: The Huntington National Bank of Columbus, Columbus, Ohio The Huntington Bank of Toledo, Toledo, Ohio The Huntington Portage National Bank of Kent, Kent, Ohio The Huntington First National Bank of Lima, Lima, Ohio The Huntington Bank of Wood County, Bowling Green, Ohio The Huntington First National Bank of Medina County, Wadsworth, Ohio The Huntington Lagonda National Bank of Springfield, Springfield, Ohio The Huntington Bank of Chillicothe, Chillicothe, Ohio The Huntington First National Bank of Kenton, Kenton, Ohio The Huntington Bank of Washington Court House, Washington Court House, Ohio The Huntington National Bank of Bellefontaine, Bellefontaine, Ohio The Huntington National Bank of Franklin, Franklin, Ohio The Huntington Bank of Woodville, Woodville, Ohio The Huntington Bank of Ashland, Ashland, Ohio The Huntington National Bank of London, London, Ohio The Huntington National Bank, Columbus, Ohio Merger Page 122 123 124 125 126 127 128 129 130 //. Mergers consummated, involving a single operating bank Jan. 2, 1979: City National Bank, Fort Worth, Tex. 5600 Lancaster National Bank, Fort Worth, Tex. Merger Jan. 30, 1979: National Lumberman's Bank and Trust Company, Muskegon, Mich. NLB National Bank of Muskegon, Muskegon, Mich. Merger Feb. 9, 1979: First Waco Bank, National Association, Waco, Tex. The First National Bank of Waco, Waco, Tex. Merger 131 131 Mar. 1, 1979: The Lufkin National Bank, Lufkin, Tex. New Lufkin National Bank, Lufkin, Tex. Merger Mar. 16, 1979: National Bank of Commerce of Dallas, Dallas, Tex. New National Bank of Commerce of Dallas, Dallas, Tex. Merger Mar. 29, 1979: Gulf Bank, National Association, Houston, Tex. Gulf Freeway National Bank, Houston, Tex. Merger 133 134 134 132 53 Apr. 13, 1979: Page First National Bank of Clermont County, Bethel, Ohio First Bank of Clermont County, N.A. Merger 135 Apr. 30, 1979: The Huron County Banking Company, National Association, Norwalk, Ohio H.C.B. National Bank of Norwalk, Norwalk, Ohio Consolidation 136 May 1, 1979: The First National Bank of Piano, Piano, Tex. 1409 Avenue K National Bank, Piano, Tex. Merger 136 May 15, 1979: Citizens Bank, National Association, Denison, Tex. The Citizens National Bank of Denison, Denison, Tex. Merger 137 June 30, 1979: Anaheim National Bank, Anaheim, Calif. ANB National Bank, Anaheim, Calif. Merger 138 June 30, 1979: City National Bank & Trust Co. of Rockford, Rockford, III. City Bank, National Association, Rockford, III. Merger 138 July 9, 1979: First National Bank of Evergreen Park, Evergreen Park, III. FNEP National Bank, Evergreen Park, III. Merger 139 54 Aug. 29, 1979: The First National Bank of Galion, Galion, Ohio Galion National Bank, Galion, Ohio Consolidation Sept. 12, 1979: Citizens National Bank of Limestone County, Athens, Ala. Limestone Bank, N.A., Athens, Ala. Merger Sept. 19, 1979: Lewisville Bank, N.A., Lewisville, Tex. Lewisville National Bank, Lewisville, Tex. Merger Sept. 20, 1979: The National City Bank of Marion, Marion, Ohio New Marion National Bank, Marion, Ohio Consolidation Nov. 29, 1979: The Citizens National Bank, Bryan, Ohio New Bryan National Bank, Bryan, Ohio Consolidation Dec. 31, 1979: Belleville National Savings Bank, Belleville, III. Belleville National Bank, Belleville, III. Merger Dec. 31, 1979: First National Bank in Conroe, Conroe, Tex. West Davis National Bank, Conroe, Tex. Merger 140 140 141 142 142 143 144 Mergers consummated, involving two or more operating banks BARNETT BANK OF JACKSONVILLE, NATIONAL ASSOCIATION, Jacksonville, Fla., and Barnett Bank of Murray Hill, Jacksonville, Fla., and Barnett Bank of San Jose, Jacksonville, Fla., and Barnett Bank of Regency, Jacksonville, Fla., and Barnett Bank of North Jacksonville, Jacksonville, Fla. Banking offices Names of banks and type of transaction Total assets Barnett Bank of Murray Hill, Jacksonville, Fla., with and Barnett Bank of North Jacksonville, Jacksonville, Fla., with and Barnett Bank of Regency, Jacksonville, Fla., with and Barnett Bank of San Jose, Jacksonville, Fla., with and Barnett Bank of Jacksonville, National Association, Jacksonville, Fla. (9049), which had merged January 1, 1979, under charter and title of the latter bank (9049). The merged bank at date of merger had COMPTROLLER'S DECISION Application has been made to the Office of the Comptroller of the Currency seeking prior permission to merge Barnett Bank of Murray Hill, Jacksonville, Fla., Barnett Bank of North Jacksonville, Jacksonville, Fla., Barnett Bank of Regency, Jacksonville, Fla., and Barnett Bank of San Jose, Jacksonville, Fla. (collectively, "Merging Banks"), into Barnett Bank of Jacksonville, National Association; Jacksonville, Fla. ("Charter Bank"), under the charter and title of Barnett Bank of "Jacksonville, National Association." The subject application rests on an agreement executed between the proponent banks and is incorporated herein by reference, the same as if fully set forth. Charter Bank was granted National Banking Association charter number 9049 by this Office on March 2, 1908, and as of June 30, 1978, had total commercial bank deposits of $284.7 million. Merging Banks were established ate novo as statechartered commercial banking institutions by their parent bank holding company, Barnett Banks of Florida, Inc., Jacksonville, Fla., a registered multibank holding company. As of June 30, 1978, Merging Banks had total deposits of approximately $138.6 million. Inasmuch as all five of the proponent banks are wholly owned subsidiaries of the same bank holding company, there is no meaningful competition existent In To be operation operated $ 67,274,000 19,838,000 32,885,000 40,663,000 374,795,000 505,532,000 16 among them, nor is there any potential for increased future competition. The proposed merger essentially represents a corporate reorganization whereby Barnett Banks of Florida, Inc., is consolidating its commercial banking interests located within Duval County. This application was filed prior to the November 6, 1978, effective date of the Comptroller's Community Reinvestment Act regulations, 12 CFR 25. However, pursuant to the Community Reinvestment Act, Public Law No. 95-128, available information relevant to the banks' records of meeting community credit needs was reviewed, revealing no evidence to suggest that the applicants are not meeting the credit needs of their community, including low and moderate income neighborhoods. Accordingly, applying the statutory criteria, it is the conclusion of the Office of the Comptroller of the Currency that this application is not adverse to the public interest and should be, and hereby is, approved. November 29, 1978 SUMMARY OF REPORT BY ATTORNEY GENERAL The merging banks are all wholly owned subsidiaries of the same bank holding company. As such, their proposed merger is essentially a corporate reorganization and would have no effect on competition. 55 BAY STATE NATIONAL BANK, Lawrence, Mass., and Citizens Bank and Trust Company of Peabody, Peabody, Mass. Banking offices Names of banks and type of transaction Total assets Citizens Bank and Trust Company of Peabody, Peabody, Mass., with and Bay State National Bank, Lawrence, Mass. (1014), which had merged January 1, 1979, under charter and title of the latter bank (1014). The merged bank at date of merger had $ 7,565,000 115,058,000 127,636,000 In To be operation operated 2 10 12 COMPTROLLER'S DECISION Pursuant to the statutory requirements of the Bank Merger Act (12 USC 1828(c)), an application has been filed with the Office of the Comptroller of the Currency that requires the prior written consent of this Office to the proposed merger of Citizens Bank and Trust Company of Peabody, Peabody, Mass. ("Merging Bank"), into Bay State National Bank, Lawrence, Mass. ("Charter Bank"). The subject application is based on an agreement executed between the proponent banks and is incorporated herein by reference, the same as if fully set forth. Charter Bank is a commercial banking subsidiary of Massachusetts Bay Bancorp, Inc., Lawrence, Mass., a registered multibank holding company that on December 31, 1977, had consolidated deposits of $156.6 million. Charter Bank has operated under National Banking Association charter number 1014 since granted by this Office on May 15, 1865. As of December 31, 1977, Charter Bank had total deposits of slightly in excess of $106 million and operated 10 banking offices. Merging Bank, a state-chartered commercial bank, at calendar year-end 1977, operated two banking offices and had total deposits of almost $6 million. The proponent banks are represented in Essex County, north of Boston. The closest offices of Charter Bank and Merging Bank are approximately 10 miles apart, and the main offices of the proponents are about 18 miles apart. There are numerous offices of other commercial banks within the intervening area, and neither of the participating banks appears to obtain any significant volume of loan and/or deposit business from areas served by the other. It is therefore 56 concluded that approval of this application would result in no substantially adverse effect on competition. Charter Bank should be in a position to expand and improve on existing banking services offered to Merging Bank's customers and introduce additional banking services into the Peabody area. Considerations relating to convenience and needs do not appear to be inconsistent with approval of the application. The financial managerial resources of both of the proponents are generally satisfactory, and the future prospects of both banks should be favorably enhanced as a result of approval of the application. This application was filed prior to the November 6, 1978, effective date of the Comptroller's Community Reinvestment Act regulations, 12 CFR 25. However, pursuant to the Community Reinvestment Act, Public Law No. 95-128, available information relevant to the bank's record of meeting its community credit needs was reviewed, revealing no evidence to suggest that the applicants are not meeting the credit needs of their community including low and moderate income neighborhoods. Accordingly, applying the statutory criteria, it is the conclusion of this Office that the application is not adverse to the public interest and is approved. November 30, 1978 SUMMARY OF REPORT BY ATTORNEY GENERAL We have reviewed this proposed transaction and conclude that it would not have a significantly adverse effect upon competition. FIDELITY AMERICAN BANK, NA, Lynchburg, Va., and Fidelity American Bank, NA, Halifax, Halifax, Va., and Fidelity American Bank, NA, Roanoke Valley, Roanoke County, Va., and Fidelity American Bank, Chatham, Va., and Fidelity American Bank, Natural Bridge, Natural Bridge Station, Va., and Fidelity American Bank, Buena Vista, Buena Vista, Va. Names of banks and type of transaction Total assets Fidelity American Bank, Buena Vista, Buena Vista, Va., with and Fidelity American Bank, Chatham, Va., with and Fidelity American Bank, NA, Halifax, Halifax County, Va. (16313), with and Fidelity American Bank, Natural Bridge, Natural Bridge Station, Va., with and Fidelity American Bank, NA, Roanoke Valley, Roanoke County, Va. (16192), with and Fidelity American Bank, NA, Lynchburg, Va. (1522), which had merged January 1, 1979, under charter and title of the latter bank (1522). The merged bank at date of merger had COMPTROLLER'S DECISION The Office of the Comptroller of the Currency is in receipt of an application, pursuant to the Bank Merger Act (12 USC 1828(c)), requesting prior permission to merge Fidelity American Bank, Buena Vista, Buena Vista, Va. ("Buena Vista Bank"); Fidelity American Bank, Chatham, Va. ("Chatham Bank"); Fidelity American Bank, NA, Halifax, Unincorporated Area of Halifax County, Va. ("Halifax Bank"); Fidelity American Bank, Natural Bridge, Natural Bridge Station, Va. ("Natural Bridge Bank"); and Fidelity American Bank, NA, Roanoke Valley, Roanoke County, Va. ("Roanoke Bank"), into Fidelity American Bank, NA, Lyncburg, Va. ("Charter Bank"), under the charter and title of "Fidelity American Bank, NA." The subject application rests on an agreement executed between the proponent banks, and is incorporated herein by reference, the same as if fully set forth. Charter Bank has operated as a National Banking Association since August 11, 1865, when it was granted charter number 1522 by this Office. As of June 30, 1978, Charter Bank had total commercial bank deposits of $421.5 million. Buena Vista Bank was established as a state banking institution in 1906, and as of June 30, 1978, had total commercial bank deposits of $7.6 million. Chatham Bank commenced operations as a statechartered bank in 1878, and held total deposits of $17.4 million on June 30, 1978. Halifax Bank received its charter as a National Banking Association on April 26, 1974, when it was granted charter number 16313 by this Office. As of June 30, 1978, Halifax Bank had total commercial bank deposits of $25.9 million. Natural Bridge Bank was chartered as a state banking institution in 1921 and as of June 30, 1978, had total deposits of $8.9 million. $ 8,773,000 20,768,000 32,788,000 10,003,000 21,415,000 603,655,000 694,367,000 Banking offices In To be operation operated 2 1 2 1 4 24 34 Roanoke Bank was granted National Banking Association charter number 16192 by this Office on September 26, 1973, and held total commercial bank deposits of $17.2 million on June 30, 1978. All six of the banks involved in the proposed merger are banking subsidiaries of Fidelity American Bankshares, Inc., Lynchburg, a registered multibank holding company. Due to their common ownership and control, approval of this merger would not produce an adverse impact on any relevant area of consideration. This application is regarded essentially as a corporate reorganization whereby Fidelity American Bankshares, Inc., is consolidating a portion of its banking interests. This application was filed prior to the November 6, 1978, effective date of the Comptroller's Community Reinvestment Act regulations, 12 CFR 25. However, pursuant to the Community Reinvestment Act, Public Law No. 95-128, available information relevant to the banks' records of meeting their community credit needs was reviewed, revealing no evidence to suggest that the applicants are not meeting the credit needs of their communities, including low and moderate income neighborhoods. It is therefore the opinion of the Office of the Comptroller of the Currency that this merger is not adverse to the public interest and should be, and hereby is, approved. November 29, 1978 SUMMARY OF REPORT BY ATTORNEY GENERAL The merging banks are all wholly owned subsidiaries of the same bank holding company. As such, their proposed merger is essentially a corporate reorganization and would have no effect on competition. 57 THE FIRST AMERICAN NATIONAL BANK OF ST. CLOUD, St. Cloud, Minn., and The First State Bank of Rice, Rice, Minn. Banking offices Names of banks and type of transaction Total assets The First State Bank of Rice, Rice, Minn., with and The First American National Bank of St. Cloud, St. Cloud, Minn. (11818), which had merged January 1, 1980, under the charter and title of latter bank (11818). The merged bank at date of merger had COMPTROLLER'S DECISION This is the Comptroller's decision on an application to merge The First State Bank of Rice, Rice, Minn. ("State Bank"), into The First American National Bank of St. Cloud, St. Cloud, Minn. ("First"). The application was accepted for filing on April 5, 1979, and is based on a written agreement executed by the proponents on January 31, 1979. State Bank operates from a single office approximately 15 miles from St. Cloud. It reported total deposits of $2.8 million on December 31, 1978. First also operates from a single office in St. Cloud and reported total deposits of $87.5 million on December 31, 1978. It is a subsidiary of the Otto Bremer Foundation, a registered bank holding company. The Otto Bremer Foundation is the third largest banking organization in the state with 2.8 percent of the state's commercial bank deposits. The applicants contend that First competes in a banking market which is approximated by the St. Cloud Standard Metropolitan Statistical Area ("SMSA"). First is the only subsidiary of the Otto Bremer Foundation operating within this market. It is the largest of 24 banking organizations operating in this market with 19 percent of the market's commercial bank deposits.* Consummation of the merger would increase its share of market deposits by less than 1 percent. The Federal Reserve System has delineated a more limited definition of the relevant banking market, approximated by the eastern half of Stearns County, the western half of Sherburne County and all of Benton County. Within this market, First is the largest of 19 banking organizations with 21 percent of commercial bank deposits. Consummation of the proposal would increase its share of this market's deposits by less than 1 percent. Because of its size, State Bank serves only its small community and nearby rural areas. State Bank's market is entirely included in either the Federal Reserve or * Market data is as of December 31, 1977, unless otherwise indicated. Market totals do not include deposits of Granite City National Bank, St. Cloud, which opened in 1978, or deposits of a branch of Santiago State Bank, which are not reported separately. 58 $ In To be operation operated 2,733,000 116,480,000 119,059,000 the SMSA definition of First's banking market. First reports that it has extended 13 direct loans totaling $1.4 million in this area (2.6 percent of its total loans), and it also undoubtedly receives some deposits from the area. Consummation of the proposal would eliminate some existing competition but because of the large number of commercial banks competing in the relevant market, including the two largest banking organizations in the state, and the small market share of State Bank, the effect on competition would not be adverse. First could not now establish a branch (detached facility) in Rice due to the head office protection provisions of Minnesota banking law. Since detached facilities are not protected, consummation of the merger would open the community to branching by other commercial banks. First's financial and managerial resources are satisfactory and its future prospects are favorable. State Bank's financial and managerial resources are limited. Its future prospects are uncertain due to substantial operating problems and its small size. First will provide additionar banking services to the present customers of State Bank if the merger is consummated. These services include automated tellers and data processing, larger loans and additional lending expertise. The continuing bank will also be a single source of banking services that is convenient to both home and work for those customers who commute from Rice to St. Cloud. Consummation of the merger will result in increased convenience and satisfaction of additional needs for the consumer of banking services in Rice. A review of the record of this application and other information available to this Office as a result of its regulatory reponsibilities revealed no evidence that First's record of helping to meet the credit needs of its entire community, including low and moderate income communities, is less than satisfactory. This decision is the prior written approval required by the Bank Merger Act, 12 USC 1828(c), for the applicants to proceed with the merger. November 21, 1979 SUMMARY OF REPORT BY ATTORNEY GENERAL We have reviewed this proposed transaction and conclude that it would not have any adverse effect upon competition. FIRST MERCHANTS NATIONAL BANK, Neptune Township, N.J., and Midlantic National Bank/Raritan Valley, Edison Township, N.J. Banking offices Names of banks and type of transaction Total assets* First Merchants National Bank, Neptune Township, N.J. (13363), with and Midlantic National Bank/Raritan Valley, Edison Township, N.J. (15430), which had merged January 1, 1979, under charter of the latter bank (15430) and title "First Merchants National Bank." The merged bank at date of merger had COMPTROLLER'S DECISION Pursuant to 12 USC 1828(c), the Bank Merger Act, an application has been filed with the Office of the Comptroller of the Currency requesting prior permission to merge First Merchants National Bank, Neptune Township, N.J. ("First Merchants"), the Merging Bank, into Midlantic National Bank/Raritan Valley, Edison Township, N.J. ("Midlantic National"), the Charter Bank, under the charter of Midlantic National Bank/Raritan Valley, and with the title "First Merchants National Bank." The subject application rests on an agreement executed between the proponent banks and is incorporated herein by reference, the same as if fully set forth. Midlantic National has operated under National Banking Association charter number 15430 since the charter was granted by this Office on November 16, 1964. As of June 30, 1978, Midlantic National had total commercial bank deposits of $56.1 million and operated eight banking offices within Northern Middlesex County. Additionally, the Charter Bank is a wholly owned subsidiary of Midlantic Banks, Inc., West Orange, N.J. ("MBI"), a registered multibank holding company whose six banking subsidiaries controlled total deposits aggregating $1.8 billion as of calendar year-end 1977. First Merchants was organized as a state-chartered bank in 1910 and converted to a National Banking Association with charter number 13363 on August 10, 1929. As of June 30, 1978, First Merchants had total commercial bank deposits of $270.3 million and operated 20 banking offices within Monmouth County. The closest offices of the two subject banks, Midlantic National's Sayreville Branch and the Holmdel Branch of First Merchants, are approximately 9 miles apart. Additionally, the closest office of any other MBI subsidiary bank to a First Merchants' banking office is approximately 6 miles distant and is also in Middlesex County. Within the intervening area between these closest offices, there are numerous banking alternatives conveniently available to the banking public. Furthermore, First Merchants is subject to the competitive impact of banking offices of other larger commercial banking organizations in its market area. It is therefore concluded that the proposed merger would not eliminate any meaningful degree of existing competition between the Merging Bank and the Charter Bank of MBI. New Jersey state banking statutes permit de novo * Asset figures are as of call dates immediately before and after transaction. $305,659,000 63,377,000 305,878,000 In To be operation operated 20 28 branch expansion by commercial banks into any municipality within the state (except for those municipalities with a population of less than 10,000 inhabitants and where the principal banking office of a commercial bank is domiciled). The instant proposal would thus have the effect of foreclosing the development of any competition between the subject proponents in the future. However, First Merchants has historically concentrated its efforts within Monmouth County, and it does not appear likely that the Merging Bank would employ de novo expansion into any area currently served by MBI. Furthermore, the likelihood that MBI would enter Monmouth County de novo appears remote inasmuch as the county is not considered particularly attractive for this mode of entry. Accordingly, this foreclosure is not regarded as competitively significant, and thus overall, approval of this application would not have a substantially adverse effect on competition. Midlantic National and First Merchants both currently offer a full range of commercial banking services to their customers. With the additional capabilities of Midlantic National in conjunction with its corporate parent, new and expanded banking services would be made available to present customers of First Merchants in such areas as international banking, full trust services, automobile leasing and a substantially larger legal lending limit. The banking public should be better served. Considerations relating to convenience and needs benefits are regarded as a positive factor in considering approval of this proposal. The financial and managerial resources of both the Charter Bank and the Merging Bank are regarded as satisfactory and should favorably enhance the future prospects of the resulting bank. The financial and managerial resources of MBI are considered generally satisfactory. This application was filed prior to the November 6, 1978, effective date of the Comptroller's Community Reinvestment Act regulations, 12 CFR 25. However, pursuant to the Community Reinvestment Act, Public Law No. 95128, available information relevant to the banks' records of meeting community credit needs was reviewed, revealing no evidence to suggest that the applicants are not meeting the needs, including those of low and moderate income neighborhoods. Accordingly, applying the statutory criteria, it is the conclusion of the Office of the Comptroller of the Currency that this application is not adverse to the public interest and is approved. November 29, 1978 59 SUMMARY OF REPORT BY ATTORNEY GENERAL Monmouth County is located in the eastern-central portion of New Jersey. According to the application, the economy of the county is based primarily on tourism, manufacturing and agriculture. The county has experienced moderate population growth in recent years and for the period 1970-76 ranked 10th among New Jersey's 21 counties in the rate of population growth. None of Midlantic's subsidiary banks operate an office in Monmouth County, the only county in which Bank operates offices. However, two Midlantic subsidiaries, Applicant and Midlantic National Bank/Cranbury, Cranbury, operate offices in Middlesex County which is adjacent to Monmouth County. The closest offices of a subsidiary of Midlantic and an office of Bank are approximately 6 miles apart, and there are offices of some other banks in the intervening area. However, there appears to be some competition between Midlantic's subsidiaries and Bank, whose offices are dispersed throughout Monmouth County, which would be eliminated by the proposed merger. Thus, Midlantic's subsidiaries derived from Monmouth County approximately $4.7 million in real estate loans, $7.3 million in commercial loans and $4.7 million in installment loans. Banking is concentrated in Monmouth County; the four largest banking organizations in the county control approximately 70 percent of total county commercial bank deposits. Bank is the third largest of the 16 commercial banks in the county in terms of total deposits, controlling approximately 16 percent of county bank deposits. Midlantic could be permitted to enter Monmouth County de novo, and it could acquire one of the smaller banks operating there. Midlantic, one of the largest bank holding companies in New Jersey, has expanded into new areas in recent years both by branching through its subsidiaries and by acquisition, and it appears capable of entering Monmouth County by branching or by "toehold" acquisition. In addition, Bank could be permitted to enter, either de novo or through consolidation with smaller institutions, areas in which Midlantic subsidiaries presently operate, and appears capable of doing so. This merger continues a growing tend toward statewide concentration. In recent months three other consolidations of significant size have been proposed. First National State Bancorporation, the largest commercial banking organization in New Jersey, has proposed to acquire First National State Bank of South Jersey, the fifteenth largest banking organization in the state with total deposits of $520 million. Fidelity Union Bancorp, the fourth largest banking organization, recently acquired Burlington County Trust Company, Moorestown, with total deposits of $167 million. Finally, the proposed merger of the $683 million National State Bank and the $650 million Garden State National Bank would create the fifth largest commercial banking organization in the state. In sum, these consolidations together with the instant acquisition, if approved, will increase the share of statewide total deposits held by the five largest commercial banking organizations from 31.9 percent to 37.2 percent. Given the fact that as recently as 1970 the five-bank concentration ratio stood at only 22 percent, it is apparent that an accelerating trend toward concentration is developing in New Jersey. It appears that the proposed transaction will eliminate some existing competition between the parties as well as the potential for increased competition between them in the future and will contribute to the trend toward increasing concentration among the largest New Jersey banking organizations. Overall, we conclude that the proposed transaction would have an adverse effect on competition. ATLANTIC FIRST NATIONAL BANK OF GAINESVILLE, Gainesville, Fla., and Atlantic Bank of Gainesville, Gainesville, Fla. Banking offices Names of banks and type of transaction Total assets Atlantic Bank of Gainesville, Gainesville, Fla., with and Atlantic First National Bank of Gainesville, Gainesville, Fla. (3894), which had merged January 31, 1979, under charter and title of the latter bank (3894). The merged bank at date of merger had COMPTROLLER'S DECISION Application has been made to the Office of the Comptroller of the Currency requesting prior permission to merge Atlantic Bank of Gainesville, Gainesville, Fla. ("Merging Bank"), into Atlantic First National Bank of Gainesville, Gainesville, Fla. ("Charter Bank"), under the charter and title of "Atlantic First National Bank of Gainesville." The subject application rests on an agreement executed between the proponent banks 60 In To be operation operated $ 16,137,000 103,221,000 119,358,000 and is incorporated herein by reference, the same as if fully set forth. Charter Bank was granted National Banking Association charter number 3894 by this Office on June 1, 1888, and as of March 31, 1978, had total deposits of $89.9 million. Merging Bank commenced commercial banking operations in 1972 and as of March 31, 1978, had total deposits of $16.3 million. Both Charter Bank and Merging Bank are banking subsidiaries of Atlantic Bancorporation, Jacksonville, Fla., a registered miltibank holding company that controls 24 banks with deposits aggregating $1.3 billion. Inasmuch as the two proponent banks are commonly owned and controlled, approval of this merger would not produce an adverse impact upon any relevant area of consideration. The subject application essentially represents a corporate reorganization whereby Atlantic Bancorporation is realigning and consolidating a portion of its banking interests. The application is therefore deemed to be not adverse to the public interest and should be, and hereby is, approved. October 27, 1978 SUMMARY OF REPORT BY ATTORNEY GENERAL The merging banks are all wholly owned subsidiaries of the same bank holding company. As such, their proposed mergers are essentially corporate reorganizations and would have no effect on competition. DOMINION NATIONAL BANK OF TIDEWATER, Norfolk, Va., and Dominion National Bank of the Peninsula, York County, Va. Banking offices Names of banks and type of transaction Total assets* Dominion National Bank of the Peninsula, York County, Va. (16159), with and Dominion National Bank of Tidewater, Norfolk, Va. (15461), which had merged February 20, 1979, under charter and title of the latter bank (15461). The merged bank at date of merger had COMPTROLLER'S DECISION Application has been made to the Office of the Comptroller of the Currency requesting prior permission to merge Dominion National Bank of the Peninsula, York County, Va. ("Merging Bank"), into Dominion National Bank of Tidewater, Norfolk, Va. ("Charter Bank"), under the charter and title of Dominion National Bank of Tidewater. The subject application rests on an agreement executed between the proponent banks and is incorporated herein by reference, the same as if fully set forth. Charter Bank has operated as a National Banking Association since December 30, 1964, when it was granted charter number 15461 by this Office. As of June 30, 1978, Charter Bank had total commercial bank deposits of $115 million. Merging Bank was granted National Banking Association charter number 16159 by this Office on July 18, 1973, and had total commercial bank deposits of $6.6 million as of June 30, 1978. Both Charter Bank and Merging Bank are banking subsidiaries of Dominion Bankshares Corporation, Roanoke, Va., a registered multibank holding company. * Asset figures are as of call dates immediately before and after transaction. $ 8,061,000 125,608,000 133,801,000 In To be operation operated 4 15 19 Inasmuch as the proponent banks are commonly owned and controlled, approval of this merger would not produce an adverse impact upon any relevant area of consideration. This application was filed prior to the November 6, 1978, effective date of the Comptroller's Community Reinvestment Act regulations, 12 CFR 25. However, pursuant to the Community Reinvestment Act, Public Law No. 95-128, available information relevant to the banks' record of meeting community credit needs was reviewed, revealing no evidence to suggest that the applicants are not meeting the credit needs of their communities, including low and moderate income neighborhoods. The subject application must be regarded essentially as a corporate reorganization whereby Dominion Bankshares Corporation is realigning and consolidating a portion of its banking interests. The application is therefore deemed to be not adverse to the public interest and should be, and hereby is, approved. January 9, 1979 SUMMARY OF REPORT BY ATTORNEY GENERAL The merging banks are both wholly owned subsidiaries of the same bank holding company. As such, their proposed merger is essentially a corporate reorganization and would have no effect on competition. 61 SOUTHERN NATIONAL BANK OF NORTH CAROLINA, Lumberton, N.C., and Goldsboro Branch of North Carolina National Bank, Charlotte, N.C. Banking offices Names of banks and type of transaction Total assets* Goldsboro Branch of North Carolina National Bank, Charlotte, N.C. (13761), with was purchased February 28, 1979, by Southern National Bank of North Carolina, Lumberton, N.C. (10610), which had After the purchase was effected, the receiving bank had COMPTROLLER'S DECISION The Office of the Comptroller of the Currency has accepted an application filed pursuant to 12 USC 1828(c)), the Bank Merger Act, by Southern National Bank of North Carolina, Lumberton, N.C. ("SNB"), the purchasing bank, to purchase the assets and assume the liabilities of Goldsboro Branch of North Carolina National Bank, Charlotte, N.C. ("NCNB"), the selling bank. This application is based on an agreement executed between the proponent banks and is incorporated herein by reference, the same as if fully set forth. This Office granted National Banking Association charter number 10610 to SNB on September 8, 1914. As of June 30, 1978, SNB had total deposits of approximately $363.8 million (2.5 percent of total deposits in North Carolina) and operated its head office and 62 branches, the preponderance of which are within the eastern one-half of the state. Additionally, SNB is the commercial banking subsidiary of Southern National Corporation, Lumberton, a registered bank holding company. NCNB has operated as a National Banking Association since August 26, 1933, when this Office granted charter number 13761 to the bank. The second largest commercial bank headquartered in North Carolina with over 17 percent of total state deposits, NCNB is the commercial banking subsidiary of NCNB Corporation, Charlotte, a registered bank holding company. On June 30, 1978, NCNB had total domestic deposits of approximately $2.5 billion, $6.5 million of which were in the Goldsboro Branch. NCNB maintains more than 160 banking offices throughout North Carolina. Goldsboro is in Wayne County in the east-central part of the state, approximately 50 miles southwest of Raleigh and 90 miles north of Wilmington. The nearest office of SNB to Goldsboro is in Wilson (Wilson County), slightly more than 25 miles to the north. The Goldsboro Branch of NCNB ranks as the fifth largest of seven commercial banks operating in Wayne County, representing 8.2 percent of total commercial bank deposits in the county. SNB is not currently represented in Wayne County, and its initial introduction into the Goldsboro area will present a new alternative to the banking public and should stimulate the competitive atmosphere of the area, thereby better serving the interests of the banking public. * Asset figures are for entire bank as of call dates immediately before and after transaction. 62 $3,655,551,000 448,762,000 444,447,000 In To be operation operated 1 64 65 By action dated May 11, 1978, the Board of Governors of the Federal Reserve System denied an application filed pursuant to 12 USC 1843(c)(8), the Bank Holding Company Act, for NCNB Corporation to retain TranSouth Financial Corporation, Florence, S.C. ("TFC"). NCNB Corporation originally acquired its interest in TFC in July 1969. Pursuant to the provisions of Section 4 of the Bank Holding Company Act, NCNB Corporation had until December 31, 1980, to divest itself of interest in TFC or to apply and secure the Board's approval to retain such interest. The Board denied this application, based primarily on its conclusion that approval of the application would eliminate "a significant amount of existing competition in each of the five markets when both Bank (NCNB) and TranSouth (TFC) had offices." Subsequently, NCNB Corporation filed an amended application with the Board for the retention of TFC, wherein the bank holding company proposed to divest 25 of TFC's 26 offices, and the Goldsboro Branch of NCNB. NCNB Corporation's amended application for the retention of TFC was approved by the Board on October 27, 1978, and this application has been filed in compliance with the bank holding company's commitment to the Board to divest the Goldsboro Branch. With respect to the convenience and needs aspects of this proposal, which this Office must consider pursuant to the provisions of 12 USC 1828(c)(5)(B), the overall effect of this proposal will be procompetitive in that it will allow SNB to compete more aggressively by providing new and expanded banking services to the banking public in the Goldsboro area. These services include, but are not limited to, payment of the highest legal interest rates on savings accounts, overdraft checking, automated teller facilities and competitive rates of interest for bank loans. The financial and managerial resources of SNB are satisfactory. The financial and managerial resources of NCNB are regarded as generally satisfactory, and the future prospects of both institutions appear favorable. This application was filed prior to the November 6, 1978, effective date of the Comptroller's Community Reinvestment Act regulations, 12 CFR 25. However, pursuant to the Community Reinvestment Act, Public Law No. 95-128, available information relevant to the banks' records of meeting their communities' needs was reviewed, revealing no evidence to suggest that the proponent institutions are not meeting the credit needs of their communities, including low and moderate income neighborhoods. Accordingly, applying the statutory criteria, it is the opinion of this Office that this application is not adverse to the public interest. It is approved. January 24, 1979 SUMMARY OF REPORT BY ATTORNEY GENERAL We have reviewed this proposed transaction and conclude that it would not have a substantial competitive impact. OLD NATIONAL BANK OF WASHINGTON, Spokane, Wash., and Four Branches of Rainier National Bank, Seattle, Wash. Banking offices f Total • assets* Names of banks and type of transaction Four Branches of Rainier National Bank, Seattle, Wash. (4375), with were purchased March 5, 1979, by Old National Bank of Washington, Spokane, Wash. (4668), which had After the purchase was effected, the receiving bank had In To be operation operated $3,946,054 4 1,103,729 1,109,042 76 79 Transfer of the fifth branch (Factoria) has been suspended pending litigation. COMPTROLLER'S DECISION An application was filed with the Office of the Comptroller of the Currency according to the requirements set forth in the Bank Merger Act, 12 USC 1828(c), by Old National Bank of Washington, Spokane, Wash. ("ONB") for approval to purchase the assets and assume the liabilities of five branch offices of Rainier National Bank, Seattle, Wash. ("RNB"). The application is based on a written agreement executed by the proponent banks on November 30, 1977. This application and three other purchase and assumption applications filed in February 1978, involving ONB, RNB, Pacific National Bank of Washington, Seattle, and First National Bank in Spokane, were challenged by several protestants including the Supervisor of Banking for the state of Washington. In response to several requests, a public hearing on all four applications was held in Seattle on April 19-20, 1978, before the Regional Administrator of National Banks, Thirteenth National Bank Region (Portland). At the public administrative hearing, both the proponent and opponents of the application were represented by counsel and were given the opportunity to make opening statements, present the testimony of witnesses and physical exhibits and make closing statements. A reporter was present at the hearing and prepared a transcript thereof for inclusion in the administrative record. On the basis of the administrative record, this opinion is now issued.1 * Asset figures are for entire bank as of call dates immediately before and after transaction. t Office figures are for beginning and end of day and reflect all transactions occurring that day. 1 It is the policy of the Office of the Comptroller of the Currency to issue a formal opinion in connection with decisions of general import or involving novel issues. This application raises important questions concerning the authority of national banks in Washington to establish branch offices. Background ONB maintains a main office and 77 branches and has deposits of $888.3 million, representing 6.6 percent of Washington's total commercial bank deposits.2 ONB is a subsidiary of Old National Bancorporation, Spokane, Wash. ("ONBC"), which is the only registered multibank holding company that is headquartered in the state. ONBC controls two banks (ONB and First National Bank in Spokane). With total deposits of approximately $950.9 million, representing 7.1 percent of the total state commercial bank deposits, ONBC is the fifth largest of 95 commercial banking organizations operating in the state. With the exception of directors' qualifying shares, RNB is a wholly owned commercial banking subsidiary of Rainier Bancorporation, Seattle, Wash. ("RB"). RB is a registered bank holding company and is the second largest commercial banking organization headquartered in the state. RB has total deposits of $2.6 billion, representing 19.3 percent of the state's total commercial bank deposits. All five of RNB's branches which will be acquired by ONB are within the greater Seattle metropolitan area in King County. However, one of them, RNB's Factoria branch, is in an unincorporated area. Presently, ONB operates 29 banking offices in the county with deposits of approximately $400.7 million, representing 8.5 percent of the county's total commercial bank deposits. RNB operates a main office and 57 branches in King County having deposits of $1.1 billion, representing 22.3 percent of the county's total commercial bank deposits. The transfer of RNB's five branch offices to ONB will effect less than 1 percent of the total commercial bank deposits in King County, and will not produce any change in the relative rankings of RNB and 2 All deposit and branch figures are as of June 30, 1978, unless otherwise noted. 63 ONB as the second and fourth largest banking organizations, respectively, in the county. Issues The protestants have presented the general argument that the Comptroller of the Currency may not authorize the proponent banks to consummate their agreement and operate the acquired branch offices as their own. This challenge is more specifically based on the protestants1 following arguments: 1. The proposed acquisitions are anticompetitive, violate antitrust laws and, therefore, may not be approved. 2. The proposed transactions are not "merger transactions" contemplated by the Bank Merger Act, 12 USC 1828(c), which may be approved by the Comptroller pursuant to that Act. 3. The proposed acquisitions are inconsistent with the spirit and intent of the Community Reinvestment Act. 4. The proposed branch acquisitions would violate federal branching laws (12 USC 36(b) and (c)) since they are inconsistent with the state's branching laws applicable to state-chartered commercial banks and trust companies (Wash. Rev. Code Ann. (RCW) 30.04.280 and 30.40.020) which: a) only allow commercial state banks and trust companies to acquire one branch of another bank and implicitly proscribe multibranch acquisitions; b) do not affirmatively authorize commercial state banks and trust companies to branch by an exchange or trade of branches; c) contemplate a "taking over or acquiring" of an entire bank and its branches and not just one or some of the branches; and d) do not authorize commercial state banks and trust companies to branch by acquisition in an unincorporated city or town which is not its principal place of business. Bank Merger Act Considerations The protestants have argued that this transaction is anticompetitive, violates antitrust laws, and, therefore, may not be approved. This challenge has been considered as a part of this Office's analysis of the competitive effects of the proposed transaction pursuant to the Bank Merger Act. The Bank Merger Act, 12 USC 1828(c)(5), requires this Office to consider whether the proposed merger transaction will substantially lessen competition or tend to" create or result in a monopoly or restraint of trade; whether any perceived anticompetitive effects of the proposed transaction are clearly outweighed in the public interest by the probable effects the transaction will have in meeting the convenience and needs of the communities served; the financial and managerial resources and future prospects of the institutions; and the convenience and needs of the communities. Commenting on the competitive aspect of this transaction as required under the Bank Merger Act (12 USC 1828(c)(4)), the U.S. Department of Justice, the Federal Deposit Insurance Corporation and the Federal Reserve Board have each concluded that the pro 64 posed transaction presents no competitive impediments in the relevant market areas to the approval of this application. We agree with this conclusion and, indeed, find that the transaction will enhance competition in the relevant market areas and is, therefore, in the public interest. We further conclude that consummation of this transaction will enhance the convenience and needs of these areas. We have considered the financial and managerial resources of the proponent banks, as well as their future prospects, and find these factors also to be favorable. Related to this analysis under the Bank Merger Act is the protestants' claim that the proposed transaction is not a "merger transaction" which is subject to the Comptroller's approval under the Act. The protestants have argued that the transaction is, in effect, a "branch swap," "trade," "exchange" or "relocation" which does not constitute a conventional consolidation or merger pursuant to 12 USC 215, 215a or 1828(c). It is the opinion of this Office that such contentions are incorrect and that the acquisitions in question are "merger transactions" subject to the Comptroller's approval under the Bank Merger Act. The agreement executed between ONB and RNB specifically provides for the transfer of certain assets and the assumption of certain liabilities. Assets have been defined to include real estate and the building in which the branch is located (if owned by the selling bank); any leasehold and leasehold improvements; furniture; fixtures, equipment and supplies (owned by or leased by the selling bank); and the loan portfolio (with certain stipulated exceptions). The agreement also provides that the purchasing bank will assume the following liabilities: deposit accounts (with the consent of depositors), collection services, safe deposit rental agreements, obligations under maintenance and service contracts and leases falling due or becoming performable subsequent to the closing date of the agreement. The Bank Merger Act 12 USC 1828(c)(2), provides that "(n)o insured bank shall . . . acquire the assets of, or assume liability to pay any deposits made in, any other insured bank except with the prior written approval o f . . . (the Comptroller of the Currency)." It also specifically states that such a transaction is "referred to hereafter in this subsection as a 'merger transaction'." (see 12 USC 1828(c)(3)). The Act does not purport to prescribe the consideration, the method of acquisition or the specific formula for asset or liability transfer. The fact that the targeted assets and liabilities are within a particular branch office does not, in our opinion, vitiate an otherwise valid "merger transaction." Accordingly, based on the provisions of both the Bank Merger Act and the agreement executed between the proponent banks, we conclude that this transaction meets the legal requirements of a "merger transaction." As such, it may, therefore, be approved by the Comptroller according to the standards set forth in the Bank Merger Act. Community Reinvestment Act This application was filed for consideration prior to the November 6, 1978, effective date of the Comptroller's Community Reinvestment Act regulations now codified in 12 CFR 25. However, consistent with the spirit of the Community Reinvestment Act (Public Law 95-128), available information relevant to the banks' records of meeting their communities' needs has been reviewed. Those records do not reveal such evidence to suggest that the proponent banks are not generally meeting the credit needs of their communities, including low and moderate income sectors. Construction of State Branching Laws The protestants have argued that the proposed branch transfers are inconsistent with the provisions of applicable state commercial bank branching statutes and should, therefore, be denied under federal law. This Office does not concur in that opinion. The federal statute governing the branching powers of national banks, 12 USC 36(c),3 permits the Comptroller to authorize a national bank to establish new branches in the manner that state law permits state banks to do so.4 Thus, in evaluating this application, the Comptroller must be satisfied that it conforms with the applicable restrictions imposed by Washington law on the establishment of branches by any state banks. However, federal law does not restrict the words "state banks" to state-chartered commercial banks. Section 36(h) provides that: The words . . . "State banks" . . . as used in this section, shall be held to include trust companies, savings banks, or such other corporations or institutions carrying on the banking business under the authority of State laws. (Emphasis added) The inclusion of savings banks and trust companies within the definition of "state banks" in Section 36 indicates that Congress foresaw the problem of a state according unequal branching powers to various financial institutions, thereby putting certain types of institutions at a competitive disadvantage. The congressional solution to this problem was to ensure that national banks be given the ability to establish branches in the man- 3 That section provides, in part, that: (a) national banking association may, with the approval of the Comptroller of the Currency, establish . . . new branches . . . at any point within the State in which said association is situated, if such establishment . . . (is) at the time authorized to state banks by the statute law of the State in question by language specifically granting such authority affirmatively and not merely by implication or recognition . . . 4 See First National Bank in Plant City v. Dickinson, 396 U.S. 122 (1969); First National Bank of Logan v. Walker Bank & Trust Co., 385 U.S. 252 (1966); Camden Trust Co. v. Gidney, 301 F.2d 521 (D.C. Cir.), cert, denied, 369 U.S. 886 (1962). ner and locations that the most favored "state banks" could.5 Accordingly, mutual savings banks, as "savings banks" and competitors of national banks operating in Washington, are "state banks . . . carrying on the banking business . . . " 6 within the meaning of 12 USC 36(h), and, therefore, national banks may establish and operate branches wherever mutual savings banks are permitted to do so.7 5 The importance of this fundamental concept is now underscored by the increasingly blurred lines of differentiation between commercial banks and other financial institutions in terms of the level of competition in the banking business. For instance, recent progressive changes have endowed savings banks with the ability to market many banking services similar to those offered by commercial banks. Such a development compels a broad approach to the state branching statutes which should be references in deciding various national bank branching questions in view of the policy of competitive equality underlying 12 USC 36, as well as the sweep of the triggering definition of "state banks" chosen by Congress. In our view, the language of Section 36 clearly authorizes reliance on the broad branching authority of state savings banks in Washington. Moreover, the financial services environment in that state, in particular, lend even greater support to this position. This Office has heretofore relied upon savings bank branching statutes in Massachusetts in approving certain branches for national banks in that state. 6 "Banking" according to RCW 30.04.010 means "the soliciting, receiving or accepting of money or its equivalent on deposit as a regular business." That mutual savings banks are engaged in banking is made evident by RCW 32.08.140 which provides that every mutual savings bank shall have the power "(t)o receive deposits of money That mutual savings banks are "institutions carrying on the banking business" (12 USC 36(h)) is further evidenced by various provisions of Washington law which permit them, in common with other banks, to become members of the Federal Reserve System and to be insured by the Federal Deposit Insurance Corporation (RCW 30.32.010); which permit them to exercise trust powers (RCW 32.08.210); which authorize them, upon a depositor's instructions, to effect withdrawals from his account by drafts payable according to the depositor's instructions (RCW 32.12.025); and which authorize the FDIC to act as receiver or liquidator for FDIC-insured mutual savings banks (RCW 32.24.090). Accordingly, it is evident that mutual savings banks are "state banks" within the meaning of 12 USC 36(c) and (h). 7 The District Court in Hart v. Peoples National Bank, No. C75-416S (W.D. Wash. Feb. 18, 1976), did not dispute the contention that mutual savings banks are "state banks" within the meaning of 12 USC 36(h). However, it did rely on State Chartered Banks in Washington v. Peoples National Bank, 291 F.Supp. 180 (W.D. Wash. 1966) in holding that a bank wishing to branch under the authority given to mutual savings banks "must satisfy all the provisons of that statute and show that it (the national bank) engages itself exclusively as a mutual savings bank." This Office believes that both of those decisions are in error in two respects: First, both courts failed to consider that 12 USC 36, permitting the establishment of branches by national banks, is enabling legislation, not restricting legislation; that is; it was not intended to restrict national banks, but, rather, it was intended to benefit national banks by granting them new powers to enable them to compete with state-chartered institutions. 65 The state branching statute applicable to Washington's mutual savings banks, RCW 32.04.030,8 authorizes branching in any county of the state and contains none of the allegedly restrictive language of RCW 30.40.020 which the protestants have relied on in challenging this application. Accordingly, the resulting establishment of branches in this transaction is authorized by 12 USC 36(c), based upon the authority of the class of "state banks" found in RCW 32.04.030, and approval of these branches is consistent with the substantive requirements of this statute applicable to national banks. Reliance on the state's branching laws applicable to mutual savings banks pursuant to 12 USC 36(c) and (h) would appear to obviate the need, in this case, to consider the state's commercial bank branching statute,9 or the protestants' arguments which focus on that statute. Nevertheless, we find that the proposed transfer of branches, except for the transfer of RNB's Factoria branch, is also clearly authorized by RCW 30.40.020 and may be approved by the Comptroller thereunder. RCW 30.40.020, which deals with the branching powers of commercial state banks and trust companies, provides in part: Branches authorized—Restrictions. A bank or trust company having a paid-in capital of not less than five hundred thousand dollars may, with the approval of the supervisor, establish and operate branches in any city or town within the state. A bank or trust company having a paidin capital of not less than two hundred thousand dollars may, with the approval of the supervisor, establish and operate branches within the limits of the county in which its principal place of business is located. Footnote 7 continued Secondly, both decisions failed to distinguish between those portions of a branching statute which can be complied with by some national banks, just as they can be complied with by some state-chartered institutions, and those portions of a statute which no national bank can comply with. National banks, as a class, cannot comply with all of the conditions of any state branching statute; for example, all state branching statutes require the approval of state banking supervisors while national banks are not subject to supervision by the states. (See First National Bank of Fairbanks v. Camp, 465 F.2d 586 (D.C. Cir. 1972), cert, denied, 409 U.S. 1124 (1973)). Nor can national banks, as a class, ever comply with all of the provisions of state law applicable to any given class of state-chartered institutions. The question of whether a national bank may establish a branch pursuant to the power to do so granted to state mutual savings banks is now pending in the United States Court of Appeals for the Ninth Circuit in Hart v. Peoples National Bank, No. 76-2182. 8 RCW 32.04.030 reads as follows: Offices—Branches. (1) A savings bank shall not do business or be located in the same room with, or in a room connecting with, any other bank, or a trust company that receives deposits of money or commercial paper, or a national banking association. (2) No savings bank, or any officer or director thereof, shall receive deposits or transact any of its usual business at any place other than its principal place of business or an authorized branch. (3) A savings bank, with the approval of the supervisor, may establish and operate branches but only upon the conditions and subject to the limitations following: 9 (a) If its guaranty fund is not less than the aggregate paid-in capital which would be required by law as a prerequisite to the establishment and operation of an equal number of branches in like locations by a bank. (b) Branches may be established in any county of the state; and (c) A branch shall not be established at a place at which the supervisor would not permit a proposed new savings bank to engage in business, by reason of any consideration contemplated by RCW 32.08.040, 32.08.050 and 32.08.060, the provisions of which, insofar as applicable, including those relating to appeals, shall extend to applications to establish branches. RCW 30.40.020. 66 No bank or trust company shall establish or operate any branch, except a branch in a foreign country, in any city or town outside the city or town in which its principal place of business is located in which any bank, trust company or national banking association regularly transacts a banking or trust business, except by taking over or acquiring an existing bank, trust company or national banking association or the branch of any bank, trust company or national banking association operating in such city or town. The protestants (most notably, the supervisor of banking) claim that authorization to take or acquire "the branch of any bank" in a city or town outside the city or town in which its principal place of business is located only allows a commercial state bank or trust company to acquire one branch of another bank and implicitly proscribes multibranch acquisitions. Similarly, these protestants also argue from a purely interpretive point of view that RCW 30.40.020 does not affirmatively authorize state commercial banks and trust companies to branch by exchanging branches and requires the acquisition of an entire bank and not just one or some of its branches. This Office finds these interpretations of the statute to be in error. Because of the absence of relevant case law in the state on these questions, the Comptroller is authorized to independently interpret and apply this statute in evaluating ONB's branch/merger application, free from the control of the opinions of the state supervisor:10 (Where state) . . . courts have not construed the section, the Comptroller is free to do so and is, 10 First National Bank of Fairbanks v. Camp, 465 F.2d at 597. See also, Leuthold v. Camp, 273 F.Supp. 695 (D. Mont. 1967), aff'd per curiam, 405 F.2d 499 (9th Cir. 1969); Union Savings Bank of Patchogue v. Saxon, 335 F.2d 718 (D.C. Cir. 1964); South Dakota v. The Nat'l. Bank of South Dakota, 219 F.Supp. 842 (S.D. S.D. 1963), aff'd, 335 F.2d 444 (8th Cir.), cert, denied, 379 U.S. 970 (1965). furthermore, free to adopt any reasonable construction that the statute setting forth the standard may bear. Since that statute in effect is adopted by Section 36 of the federal law, it is tantamount to a federal administrative official construing a federal statute which he is charged to administer and enforce.11 In construing RCW 30.40.020, this Office is guided by the state's rules of statutory construction. Those rules direct that the provisions of the code should be liberally construed12 and that words importing number (i.e., singular and plural) and gender (i.e., masculine or feminine) do not necessarily restrict a statute's meaning to the specific number or gender used. 13 Consequently, we find that the term "the branch" may be construed to mean "branches," thereby allowing a bank's acquisition of one or more branches of another bank. Indeed, the facts of Seattle-First National Bank v. Spokane County, 196 Wash. 419, 83 P.2d 359 (1938) (merger of banks resulting in the acquisition and operation of the target bank's branches by the surviving bank), and United States v. Marine Bancorporation, 418 U.S. 602 (1974) (merger of banks resulting in the acquisition and operation of the target bank's branches by the surviving bank permitting it to expand into cities and towns with pre-existing banking organizations) lend support to this Office's interpretation of state law on this question. Furthermore, bearing in mind the state's rules of statutory construction and absent any statutory language or case law limiting the manner of "taking over or acquiring" a reasonable reading of the text of this statute leads us to conclude that, contrary to the protestants' contentions, the plain meaning of its words authorizes a transfer of branches by merger, in that the method of "taking over or acquiring" may be determined by the parties to the agreement since the legislature has chosen not to dictate the method or mode of payment, whether by cash, stock or other consideration. The fact that a branch may be acquired in consideration for the sale of a branch to another bank in a manner which, on its face, resembles an exchange or trade, does not vitiate the general authority of a bank to branch by acquisition in a city or town which is not its principal place of business. Moreover, we find that RCW 30.40.020, by not limiting the type of acquisition permitted or excepting or excluding the functional exchange of branches, does affirmatively authorize the method of branching under consideration since, unless so restricted by the statute, it permits " . . . (a) u Clermont Nat'l Bank v. Citizensbank, N.A., 329 F.Supp 1331, 1341-42 (S.D. Ohio 1971). 12 Wash. Rev. Code Ann. 1.12.010 reads as follows: The provisions of this code shall be liberally construed, and shall not be limited by any rule of strict construction. 13 Wash. Rev. Code Ann. 1.12.050 states: Words importing the singular number may also be applied to the plural of persons and things; words importing the plural may be applied to the singular; and words importing the masculine gender may be extended to females also. bank or trust company having a paid-in capital of not less than five hundred thousand dollars . . . (to) establish and operate branches in any city or town within the state."14 Therefore, the sale and transfer of branches15 which the protestants have chosen to label as a "swap" or "exchange" is, in our opinion, affirmatively authorized by RCW 30.40.020. Likewise, nothing in the statute authorizing the "taking over or acquiring (of) an existing bank . . . or the branch of . . . (a) bank" indicates that the acquisition must be of the entire bank and not just one of its branches. Indeed, the plain meaning of the statute's language suggests that one bank may branch by acquiring "the branch" of another bank. Any interpretation of the statute which precludes all types of acquisitions except total mergers or consolidations would severely limit the significance and intent of the statute and, in view of the statute's language, conflict with the rule t h a t " . . . a statute ought, upon the whole, to be so construed that, if it can be prevented, no clause, sentence, or word shall be superfluous, void or insignificant."16 Finally, even though the words "city" or "town," as used in RCW 30.40.020, have been judicially interpreted to refer to incorporated areas, it is this Office's opinion that national banks in Washington may still branch in unincorporated cities or towns pursuant to 12 USC 36(c) since state savings banks, which are in direct competition with national banks in the state, are authorized to do so.17 In accordance with the above opinion, we find that the proposed acquisition of branches is affirmatively authorized by RCW 32.04.030 and 30.40.020, and, therefore, is permitted by 12 USC 36(b) and (c). 14 Cf. Seattle-First Nat'l Bank v. Spokane County, 83 P.2d at 363. 15 Although the agreement contemplates a simultaneous transfer of all of the branches in question, the applicants stated at the hearing that, depending on the renegotiation of a sales price, the failure or inability to transfer certain branches would not necessarily prevent the consummation of the transaction. 16 Washington Market Company v. Hoffman, 101 U.S. 112, 115-16 (1879); United States v. Campos-Serrano, 404 U.S. 293, 301 (1971). 17 This issue arises since RNB's Factoria branch is in an unincorporated area. On December 21, 1978, the Supreme Court of Washington, in Hart v. Peoples National Bank, et ai, No. 45594, interpreted the terms "city" or "town," as used in RCW 30.40.020, to be incorporated cities or towns, thus restricting branching by state-chartered commercial banks to such areas. The Washington Supreme Court had no occasion to address the broader branching authority of state savings banks under RCW 32.04.030. Our approval, however, of the transfer of this particular branch is, as previously discussed, based on the fact that 12 USC 36(c) references state branching laws applicable to any state bank which is defined in 12 USC 36(h) to include "savings banks." Nevertheless, this Office has decided to suspend the consummation of the transfer of this branch pending a decision by the United States Court of Appeals for the Ninth Circuit in Hart v. Peoples National Bank, et ai, No. 76-2182, where this issue has been raised. 67 Conclusion We have carefully considered the application pursuant to the Bank Merger Act, 12 USC 1828(c), and in light of the questions raised by the protestants. We conclude that the proposed transactions will have no adverse effect on competition, will be in the public interest, and will otherwise satisfy the requirements of the Bank Merger Act. We also conclude that the transactions will violate no other provisions of state or federal law. Accordingly, the application of ONB to purchase the assets and assume the liabilities of five branch offices of RNB is approved. However, since RNB's Factoria branch is in an unincorporated area, consummation of its transfer to ONB is suspended pending a determination by the U.S. Court of Appeals for the Ninth Circuit of whether a national bank may establish a branch in an unincorporated area pursuant to the power to do so granted to state mutual savings banks. February 1, 1979 SUMMARY OF REPORT BY ATTORNEY GENERAL We have reviewed these proposed transactions and conclude that they would not have a substantial competitive impact. OLD NATIONAL BANK OF WASHINGTON, Spokane, Wash., and Two Branches of Pacific National Bank of Washington, Seattle, Wash. Banking offices^ Names of banks and type of transaction Total assets* Two Branches of Pacific National Bank of Washington, Seattle, Wash. (3417), with were purchased March 5, 1979, by Old National Bank of Washington, Spokane, Wash. (4668), which had. . After the purchase was effected, the receiving bank had In To be operation operated $1,593,412 2 1,103,729 1,109,042 74 79 (Transfer of the third branch (Federal Way South) has been suspended pending litigation.) COMPTROLLER'S DECISION An application was filed on February 17, 1978, with the Office of the Comptroller of the Currency according to the requirements of the Bank Merger Act, 12 USC 1828(c), by Old National Bank of Washington, Spokane, Wash. ("ONB"), for approval to purchase the assets and assume the liabilities of three branch offices of Pacific National Bank of Washington, Seattle, Wash. ("PNB"). The application is based on a written agreement executed by the proponent banks on November 30, 1977. This application and three other purchase and assumption applications filed in February 1978 involving ONB, PNB, Rainier National Bank, Seattle, and First National Bank in Spokane were challenged by several protestants including the supervisor of banking for the state. In response to several requests, a public hearing on all four applications was held in Seattle on April 19-20, 1978, before the Regional Administrator of National Banks, Thirteenth National Bank Region (Portland). At the public administrative hearing, both the proponent and opponents of the applications were represented by counsel and were given the opportunity to make opening statements, present the testimony of witnesses and physical exhibits and make closing statements. A reporter was present at the hearing and prepared a transcript for inclusion in the administrative * Asset figures are for entire bank as of call dates immediately before and after transaction. t Office figures are for beginning and end of day and reflect all transactions occurring that day. 68 record. On the basis of the administrative record, this opinion is now issued.1 Background ONB is a national bank with deposits of $888.3 million, representing 6.6 percent of Washington's total commercial bank deposits.2 It maintains a main office and 77 branches. ONB is a subsidiary of Old National Bancorporation, Spokane ("ONBC"), which is the only registered multibank holding company headquartered in the state. ONBC controls two banks: ONB and First National Bank in Spokane. With total deposits of $950.9 million, representing 7.1 percent of the total state commercial bank deposits, ONBC is the fifth largest of 95 commercial banking organizations. PNB is a national bank with deposits of $1.1 billion, maintaining a main office and 70 branches. It is the third largest commercial bank in Washington, controlling 8.5 percent of the total commercial bank deposits. PNB is a subsidiary of Western Bancorporation, Los Angeles, Calif. ("WB"), a registered multibank holding company. As of December 31, 1977, WB controlled 22 banks with consolidated deposits of approximately $18.7 billion. Two of the three branches which would be transfer1 It is the policy of the Office of the Comptroller of the Currency to issue a formal opinion in connection with decisions of general import or involving novel issues. This application raises important questions concerning the authority of national banks in the state to establish branch offices. 2 All deposit and branch figures are as of June 30, 1978, unless otherwise noted. red to ONB from PNB are in the Tacoma banking market which includes virtually all of Pierce County. One is in Tacoma's central business district, and the other is in South Tacoma. The third office to be transferred is in an unincorporated retail and industrial area known as Federal Way, King County. PNB operates 23 banking offices within Pierce County with $296 million in deposits, representing 31.9 percent of the total commercial bank deposits in the county. ONB, however, operates no offices within Pierce County. Its entry into the Tacoma area through this transaction would result in its acquisition of 2 percent of the total commercial bank deposits in the county. In King County, ONB has 14 banking offices which hold deposits of $116.2 million, representing 2.5 percent of the total commercial bank deposits in the county. It is the sixth largest of 23 commercial banking organizations operating in the county. PNB operates 29 of its banking offices there. These offices have total deposits of $400.7 million, representing 8.5 percent of the total commercial bank deposits in the county. PNB is the fourth largest banking organization operating in King County. The transfer of PNB's Federal Way South office to ONB would not alter either of the proponent banks' relative positions in the county in terms of deposits held. Issues The protestants have presented the general argument that the Comptroller of the Currency may not authorize the proponent banks to consummate their agreement and operate the acquired branch offices as their own. This challenge is more specifically based on the protestants' following arguments: 1. The proposed acquisitions are anticompetitive, violate antitrust laws and, therefore, may not be approved. 2. The proposed transactions are not "merger transactions" contemplated by the Bank Merger Act (12 USC 1828(c)) which may be approved by the Comptroller pursuant to that Act. 3. The proposed acquisitions are inconsistent with the spirit and intent of the Community Reinvestment Act. 4. The proposed branch acquisitions would violate federal branching laws (12 USC 36(b) and (c)) since they are inconsistent with the state's branching laws applicable to state-chartered commercial banks and trust companies (Wash. Rev. Code Ann. (RCW) 30.04.280 and 30.40.020) which: (a) only allow commercial state banks and trust companies to acquire one branch of another bank and implicitly proscribe multibranch acquisitions; (b) do not affirmatively authorize commercial state banks and trust companies to branch by an exchange or trade of branches; (c) contemplate a "taking over or acquiring" of an entire bank and its branches and not just one or some of the branches; and (d) do not authorize commercial state banks and trust companies to branch by acquisition in an unin corporated city or town which is not its principal place of business. Bank Merger Act Considerations The protestants have argued that this transaction is anticompetitive, violates antitrust laws, and, therefore, may not be approved. This challenge has been considered as a part of this Office's analysis of the competitive effects of the proposed transaction pursuant to the Bank Merger Act. The Bank Merger Act requires this Office to consider whether the proposed merger transaction will substantially lessen competition or tend to create or result in a monopoly or restraint of trade; whether any perceived anticompetitive effects of the proposed transaction are clearly outweighed in the public interest by the probable effects the transaction will have in meeting the convenience and needs of the communities served; financial and managerial resources and future prospects of the institutions; and the convenience and needs of the communities. (See 12 USC 1828(c)(5). Commenting on the competitive aspect of this transaction as required under the Bank Merger Act (12 USC 1828(c)(4)), the U.S. Department of Justice, the Federal Deposit Insurance Corporation, and the Federal Reserve Board have each concluded that the proposed transaction presents no competitive impediments in the relevant market areas to the approval of this application. We agree with this conclusion and, indeed, find that the transaction will enhance competition in the relevant market areas and is, therefore, in the public interest. We further conclude that consummation of this transaction will enhance the convenience and needs of these areas. We have considered the financial and managerial resources of the proponent banks, as well as their future prospects, and find these factors also to be favorable. Related to this analysis under the Bank Merger Act is the protestants' claim that the proposed transaction is not a "merger transaction" which is subject to the Comptroller's approval under the Act. The protestants have argued that the transaction is, in effect, a "branch swap," "trade," "exchange," or "relocation" which does not constitute a conventional consolidation or merger pursuant to 12 USC 215, 215a or 1828(c). It is the opinion of this Office that such contentions are incorrect and that the acquisitions in question are "merger transactions" subject to the Comptroller's approval under the Bank Merger Act. The agreement executed between ONB and PNB specifically provides for the transfer of certain assets and the assumption of certain liabilities. Assets have been defined to include real estate and the building in which the branch is located (if owned by the selling bank); any leasehold and leasehold improvements; furniture; fixtures, equipment and supplies (owned by, or leased by the selling bank); and the loan portfolio, with certain stipulated exceptions. The agreement also provides that the purchasing bank will assume the following liabilities: deposit accounts, with the consent of depositors, collection services; safe deposit rental agreements; obligations under maintenance and serv69 ice contracts; and leases falling due or becoming performable subsequent to the closing date of the agreement. The Bank Merger Act provides that "(n)o insured bank shall . . . acquire the assets of, or assume liability to pay any deposits made in, any other insured bank except with the prior written approval of . . . (the Comptroller of the Currency)." (See 12 USC 1828(c)(2)). It also specifically states that such a transaction is "referred to hereafter in this subsection as a 'merger transaction' " (See 12 USC 1828(c)(3)). The Act does not purport to prescribe the consideration, the method of acquisition, or the specific formula for asset or liability transfer. The fact that the targeted assets and liabilities are situated within a particular branch office does not, in out opinion, vitiate an otherwise valid "merger transaction." Accordingly, based upon the provisions of both the Bank Merger Act and the agreement executed between the proponent banks, we conclude that this transaction meets the legal requirements of a "merger transaction." As such, it may, therefore, be.approved by the Comptroller according to the standards set forth in the Bank Merger Act. Community Reinvestment Act This application was filed for consideration prior to the November 6, 1978 effective date of the Comptroller's Community Reinvestment Act regulations, 12 CFR 25. However, consistent with the spirit of the Community Reinvestment Act, Public Law 95-128, available information relevant to the banks' records of meeting their communities' needs has been reviewed. Those records do not reveal such evidence to suggest that the proponent banks are not generally meeting the credit needs of their communities, including low and moderate income sectors. Construction of State Branching Laws The protestants have argued that the proposed branch transfers are inconsistent with the provisions of applicable state commercial bank branching statutes and should, therefore, be denied under federal law. This Office does not concur in that opinion. The federal statute governing the branching powers of national banks, 12 USC 36(c),3 permits the Comptroller to authorize a national bank to establish new branches in the manner that state law permits state banks to do so.4 Thus, in evaluating this application, the Comptroller must be satisfied that it conforms with 3 That section provides, in part, that [a] national banking association may, with the approval of the Comptroller of the Currency, establish . . . new branches . . . at any point within the State in which said association is situated, if such establishment . . . [is] at the time authorized to state banks by the statute law of the State in question by language specifically granting such authority affirmatively and not merely by implication or recognition . . . 4 See First National Bank in Plant City v. Dickinson, 396 U.S. 122 (1969); First National Bank of Logan v. Walker Bank & Trust Co., 385 U.S. 252 (1966); Camden Trust Co. v. Gidney, 301 F.2d 521 (D.C. Cir.), cert, denied, 369 U.S. 886 (1962). 70 the applicable restrictions imposed by Washington law on establishment of branches by any state banks. However, federal law does not restrict the words "state banks" to state-chartered commercial banks. Section 36(h) provides that: The words . . . "State banks" . . . as used in this section, shall be held to include trust companies, savings banks, or such other corporations or institutions carrying on the banking business under the authority of State laws. [Emphasis added] The inclusion of savings banks and trust companies within the definition of "state banks" in Section 36 indicates that Congress foresaw the problem of a state according unequal branching powers to various financial institutions, thereby putting certain types of institutions at a competitive disadvantage. The congressional solution to this problem was to ensure that national banks be given the ability to establish branches in the manner and locations that the most favored "state banks" could.5 Accordingly, mutual savings banks, as "savings banks" and competitors of national banks operating in Washington, are "state banks . . . carrying on the banking business . . . " 6 within the meaning of 12 USC 36(h), and, therefore, national banks may establish 5 The importance of this fundamental concept is now underscored by the increasingly blurred lines of differentiation between commercial banks and other financial institutions in terms of the level of competition in the banking business. For instance, recent progressive changes have endowed savings banks with the ability to market many banking services similar to those offered by commercial banks. Such a development compels a broad approach to the state branching statutes which should be referenced in deciding various national bank branching questions in view of the policy of competitive equality underlying 12 USC 36, as well as the sweep of the triggering definition of "state banks" chosen by Congress. In our view, the language of Section 36 clearly authorizes reliance on the broad branching authority of state savings banks in Washington. Moreover, the financial services environment in that state, in particular, lend even greater support to this position. This Office has heretofore relied on savings bank branching statutes in Massachusetts in approving certain branches for national banks in that state. 6 "Banking" according to RCW 30.04.010 means "the soliciting, receiving or accepting of money or its equivalent on deposit as a regular business." That mutual savings banks are engaged in banking is made evident by RCW 32.08.140 which provides that every mutual savings bank shall have the power "(t)o receive deposits of money That mutual savings banks are "institutions carrying on the banking business" (12 USC 36(h)) is further evidenced by various provisions of Washington law which permit them, in common with other banks, to become members of the Federal Reserve System and to be insured by the Federal Deposit Insurance Corporation (RCW 30.32.010); which permit them to exercise trust powers (RCW 32.08.210); which authorize them, upon a depositor's instructions, to effect withdrawals from his account by drafts payable according to the depositor's instructions (RCW 32.12.025); and which authorize the FDIC to act as receiver or liquidator for FDIC-insured mutual savings banks (RCW 32.24.090). Accordingly, it is evident that mutual savings banks are "state banks" within the meaning of 12 USC 36(c) and (h). and operate branches wherever mutual savings banks are permitted to do so.7 The state branching statute applicable to Washington's mutual savings banks, RCW 32.04.030,8 7 The District Court in Hart v. Peoples National Bank, No. C75-416S (W.D. Wash. Feb. 18, 1976) did not dispute the contention that mutual savings banks are "state banks" within the meaning of 12 USC 36(h). However, it did rely on State Chartered Banks in Washington v. Peoples National Bank, 291 F.Supp. 180 (W.D. Wash. 1966) in holding that a bank wishing to branch under the authority given to mutual savings banks "must satisfy all the provisions of that statute and show that it (the national bank) engages itself exclusively as a mutual savings bank." This Office believes that both of those decisions are in error in two respects: First, both courts failed to consider that 12 USC 36, permitting the establishment of branches by national banks, is enabling legislation, not restricting legislation; that is, it was not intended to restrict national banks but rather, it was intended to benefit national banks by granting them new powers to enable them to compete with state-chartered institutions. Second, both decisions failed to distinguish between those portions of a branching statute which can be complied with by some national banks, just as they can be complied with by some state-chartered institutions, and those portions of a statute which no national bank can comply with. National banks, as a class, cannot comply with all of the conditions of any state branching statute; for example, all state branching statutes require the approval of state banking supervisors while national banks are not subject to supervision by the states. (See First National Bank of Fairbanks v. Camp, 465 F.2d 586 (D.C. Cir. 1972), cert, denied, 409 U.S. 1124 (1973)). Nor can national banks, as a class, ever comply with all of the provisions of state law applicable to any given class or state-chartered institutions. The question of whether a national bank may establish a branch pursuant to the power to do so granted to state mutual savings banks is now pending in the U.S. Court of Appeals for the Ninth Circuit in Hart v. Peoples National Bank, No. 76-2182. 8 RCW 32.04.030 reads as follows: Offices—Branches. (1) A savings bank shall not do business or be located in the same room with, or in a room connecting with, any other bank, or a trust company that receives deposits of money or commercial paper, or a national banking association. (2) No savings bank, or any officer or director thereof, shall receive deposits or transact any of its usual business at any place other than its principal place of business or an authorized branch. (3) A savings bank, with the approval of the supervisor, may establish and operate branches but only upon the conditions and subject to the limitations following: If its guaranty fund is not less than the aggregate paid-in capital which would be required by law as a prerequisite to the establishment and operation of an equal number of branches in like locations by a bank. (b) Branches may be established in any county of the state; and (c) A branch shall not be established at a place at which the supervisor would not permit a proposed new savings bank to engage in business, by reason of any consideration contemplated by RCW 32.08.040, 32.08.050 and 32.08.060, the provisions of which, insofar as applicable, including those relating to appeals, shall extend to applications to establish branches. authorizes branching in any county of the state and contains none of the allegedly restrictive language of RCW 30.40.020 which the protestants have relied upon in challenging this application. Accordingly, the resulting establishment of branches in this transaction is authorized by 12 USC 36(c), based upon the authority of the class of "state banks" found in RCW 32.04.030, and approval of these branches is consistent with the substantive requirements of this statute applicable to national banks. Reliance on the state's branching laws applicable to mutual savings banks pursuant to 12 USC 36(c) and (h) would appear to obviate the need in this case to consider the state's commercial bank branching statute,9 or the protestants1 arguments which focus on that statute. Nevertheless, we find that the proposed transfer of branches, except for the transfer of PNB's Federal Way branch, is also clearly authorized by RCW 30.40.020 and may be approved by the Comptroller thereunder. RCW 30.40.020, which deals with the branching powers of commercial state banks and trust companies, provides, in part: Branches authorized—Restrictions. A bank or trust company having a paid-in capital of not less than five hundred thousand dollars may, with the approval of the supervisor, establish and operate branches in any city or town within the state. A bank or trust company having a paidin capital of not less than two hundred thousand dollars may, with the approval of the supervisor, establish and operate branches within the limits of the county in which its principal place of business is located. No bank or trust company shall establish or operate any branch, except a branch in a foreign country, in any city or town outside the city or town in which its principal place of business is located in which any bank, trust company or national banking association regularly transacts a banking or trust business, except by taking over or acquiring an existing bank, trust company or national banking association or the branch of any bank, trust company or national banking association operating in such city or town. The protestants (most notably, the supervisor of banking) claim that authorization to take or acquire "the branch of any bank" in a city or town outside the city or town in which its principal place of business is located only allows a commercial state bank or trust company to acquire one branch of another bank and implicitly proscribes multibranch acquisitions. Similarly, these protestants also argue, from a purely interpretive point of view, that RCW 30.40.020 does not affirmatively authorize state commercial banks and trust companies to branch by exchanging branches and requires acquisition of an entire bank and not just one or 9 RCW 30.40.020. 71 some of its branches. This Office finds these interpretations of the statute to be in error. Because of the absence of relevant case law in the state on these questions, the Comptroller is authorized to independently interpret and apply this statute in evaluating ONB's branch/merger application, free from the control of the opinions of the state supervisor:10 (Where state) . . . courts have not construed the section, the Comptroller is free to do so and is, furthermore, free to adopt any reasonable construction that the statute setting forth the standard may bear. Since that statute in effect is adopted by Section 36 of the federal law, it is tantamount to a federal administrative official construing a federal statute which he is charged to administer and enforce.11 In construing RCW 30.40.020, this Office is guided by the state's rules of statutory construction. Those rules direct that the provisions of the code should be liberally construed,12 and that words importing number (i.e., singular and plural) and gender (i.e., masculine or feminine) do not necessarily restrict a statute's meaning to the specific number or gender used. 13 Consequently, we find that the term " the branch" may be construed to mean "branches," thereby allowing a bank's acquisition of one or more branches of another bank. Indeed, the facts of Seattle-First National Bank v. Spokane County, 196 Wash. 419, 83 P.2d 359 (1938) (merger of banks resulting in the acquisition and operation of the target bank's branches by the surviving bank), and United States v. Marine Bancorporation, 418 U.S. 602 (1974) (merger of banks resulting in the acquisition and operation of the target bank's branches by the surviving bank permitting it to expand into cities and towns with pre-existing banking organizations) lend support to this Office's interpretation of state law on this question. Furthermore, bearing in mind the state's rules of statutory construction, and absent any statutory language or case law limiting the manner of "taking over or acquiring," a reasonable reading of the text of this statute leads us to conclude that, contrary to the prot10 estants' contentions, the plain meaning of its words authorize a transfer of branches by merger, in that the method of "taking over or acquiring" may be determined by the parties to the agreement since the legislature has chosen not to dictate the method or mode of payment, whether by cash, stock, or other consideration. The fact that a branch may be acquired in consideration for the sale of a branch to another bank in a manner which, on its face, resembles an exchange or trade, does not vitiate the general authority of a bank to branch by acquisition in a city or town which is not its principal place of business. Moreover, we find that RCW 30.40.020, by not limiting the type of acquisition permitted, or excepting or excluding the functional exchange of branches, does affirmatively authorize the method of branching under consideration since, unless so restricted by the statute, it permits " . . . (a) bank or trust company having a paid-in capital of not less than five hundred thousand dollars . . . (to) establish and operate branches in any city or town within the state."14 Therefore, the sale and transfer of branches15 which the protestants have chosen to label as a "swap" or "exchange" is, in our opinion, affirmatively authorized by RCW 30.40.020. Likewise, nothing in the statute authorizing the "taking over or acquiring (of) an existing bank . . . or the branch of . . . (a) bank" indicates that the acquisition must be of the entire bank and not just one of its branches. Indeed, the plain meaning of the statute's language suggests that one bank may branch by acquiring "the branch" of another bank. Any interpretation of the statute which precludes all types of acquisitions except total mergers or consolidations would severely limit the significance and intent of the statute and, in view of the statute's language, conflict with the rule t h a t " . . . a statute ought, upon the whole, to be so construed that, if it can be prevented, no clause, sentence, or word shall be superfluous, void or insignificant."16 Finally, even though the words "city" or "town," as used in RCW 30.40.020, have been judicially interpreted to refer to incorporated areas, it is this Office's opinion that national banks in Washington may still branch in unincorporated cities or towns pursuant to 12 USC 36(c) since state savings banks, which are in direct competition with national banks in the state, are authorized to do so.17 First National Bank of Fairbanks v. Camp, 465 F.2d at 597. See also, Leuthold v. Camp, 273 F.Supp. 695 (D. Mont. 1967), aff'd per curiam, 405 F.2d 499 (9th Cir. 1969); Union Savings Bank of Patchogue v. Saxon, 335 F.2d 718 (D.C. Cir. 1964); South Dakota v. The Nat'l. Bank of South Dakota, 14 Cf. Seattle-First Nat'l Bank v. Spokane County, 83 P.2d at 219 F.Supp. 842 (S.D. S.D. 1963), aff'd, 335 F.2d 444 (8th 363. Cir.), cert, denied, 379 U.S. 970 (1965). 15 11 Although the agreement contemplates a simultaneous Clermont Nat'l Bank v. Citizenbank, N.A., 329 F.Supp. transfer of all of the branches in qu3stion, the applicants 1331, 1341-42 (S.D. Ohio 1971). stated at the hearing that, depending on the renegotiation of 12 Wash. Rev. Code Ann. 1.12.010 reads as follows: a sales price, the failure or inability to transfer certain The provisions of this code shall be liberally construed, branches would not necessarily prevent the consummation and shall not be limited by any rule of strict construction. of the transaction. 13 16 Wash. Rev. Code Ann. 1.12.050 states: Washington Market Company v. Hoffman, 101 U.S. 112, 115-16 (1879); United States v. Campos-Serrano, 404 U.S. Words importing the singular number may also be ap293, 301 (1971). plied to the plural of persons and things; words import17 This issue arises since PNB's Federal Way branch is in an ing the plural may be applied to the singular; and words unincorporated area. On December 21, 1978, the Supreme importing the masculine gender may be extended to feCourt of Washington, in Hart v. Peoples National Bank, et ai, males also. 72 In accordance with the above opinion, we find that the proposed acquisition of branches is affirmatively authorized by RCW 32.04.030 and 30.40.020, and, therefore, is permitted by 12 USC 36(b) and (c). Conclusion We have carefully considered the application pursuant to the Bank Merger Act, 12 USC 1828(c), and in No. 45594, interpreted the terms "city" or "town," as used in RCW 30.40.020, to be incorporated cities or towns, thus restricting branching by state-chartered commercial banks to such areas. The Washington Supreme Court had no occasion to address the broader branching authority of state savings banks under RCW 32.04.030. Our approval, however, of the transfer of this particular branch is, as previously discussed, based on the fact that 12 USC 36(c) references state branching laws applicable to any state bank which is defined in 12 USC 36(h) to include "savings banks." Nevertheless, this Office has decided to suspend the consummation of the transfer of this branch pending a decision by the United States Court of Appeals for the Ninth Circuit in Hart v. light of the questions raised by the protestants. We conclude that the proposed transactions will have no adverse effect on competition, will be in the public interest, and will otherwise satisfy the requirements of the Bank Merger Act. We also conclude that the transactions will violate no other provisions of state or federal law. Accordingly, the application of ONB to purchase the assets and assume the liabilities of three branch offices of PNB is approved. However, since PNB's Federal Way South branch is in an unincorporated area, consummation of its transfer to ONB is suspended pending a determination by the United States Court of Appeals for the Ninth Circuit of whether a national bank may establish a branch in an unincorporated area pursuant to the power to do so granted to state mutual savings banks. February 1, 1979 SUMMARY OF REPORT BY ATTORNEY GENERAL We have reviewed these proposed transactions and Peoples National Bank, et al., No. 76-2182, where this issue conclude that they would not have a substantial competitive impact. has been raised. PACIFIC NATIONAL BANK OF WASHINGTON, Seattle, Wash., and Three Branches of Old National Bank of Washington, Spokane, Wash. Banking offices^ Names of banks and type of transaction Total assets* Three Branches of Old National Bank of Washington, Spokane, Wash. (4668), with were purchased March 5, 1979, by Pacific National Bank of Washington, Seattle, Wash. (3417), which had After the purchase was effected, the receiving bank had COMPTROLLER'S DECISION An application was filed on February 17, 1978, with the Office of the Comptroller of the Currency according to the requirements set forth in the Bank Merger Act, 12 USC 1828(c), by Pacific National Bank of Washington, Seattle, Wash. ("PNB"), for approval to purchase the assets and assume the liabilities of three branch offices of Old National Bank of Washington, Spokane, Wash. ("ONB"). The application is based on a written agreement executed by the proponent banks on November 30, 1977. This application and three other purchase and assumption applications filed in February 1978 involving ONB, PNB, Rainier National Bank, Seattle, and First National Bank in Spokane were challenged by several protestants including the supervisor of banking for the state. In response to several requests, a public hearing on all four applications was held in Seattle on April 19-20, 1978, before the Regional Administrator of National Banks, Thirteenth National Bank Region (Portland). At the public administrative hearing, both the propo In To be operation operated $1,103,729 3 1,593,412 1,579,982 73 74 nent and opponents of the applications were represented by counsel and were given the opportunity to make opening statements, present the testimony of witnesses and physical exhibits and make closing statements. A reporter was present at the hearing and prepared a transcript for inclusion in the administrative record. On the basis of the administrative record, this opinion is now issued.1 Background PNB is a national bank with deposits of approximately $1.1 billion, maintaining a main office and 70 * Asset figures are for entire bank as of call dates immediately before and after transaction. t Office figures are for beginning and end of day and reflect all transactions occurring that day. 1 It is the policy of the Office of the Comptroller of the Currency to issue a formal opinion in connection with decisions of general import or involving novel issues. This application raises important questions concerning the authority of national banks in the state to establish branch offices. 73 branches. 2 It is the third largest commercial bank in Washington, controlling 8.5 percent of the total commercial bank deposits. PNB is a commercial banking subsidiary of Western Bancorporation, Los Angeles, Calif. ("WB"), a registered multibank holding company. As of December 31, 1977, WB controlled 22 banks with consolidated deposits of approximately $18.7 billion. ONB maintains a main office and 77 branches and has deposits of $888.3 million, representing 6.6 percent of Washington's total commercial bank deposits. ONB is a subsidiary of Old National Bancorporation, Spokane ("ONBC"), which is the only registered multibank holding company headquartered in the state. ONBC controls two banks: ONB and First National Bank in Spokane. With total deposits of approximately $950.9 million that represent 7.1 percent of the total state commercial bank deposits, ONBC is the fifth largest of 95 commercial banking organizations. Two of the three branches, 510 Third Avenue and No. 3 Triangle Shopping Center, which will be transferred from ONB to PNB under the agreement, are in the Longview metropolitan area of Cowlitz County. ONB operates seven banking offices in Cowlitz County having combined deposits of approximately $48 million and representing 27 percent of the total county commercial bank deposits. PNB maintains two offices in the county which collectively hold $17 million in deposits representing 9.6 percent of the total county commercial bank deposits. Currently, there are two commercial banks headquartered in Longview, Cowlitz County. Four additional commercial banks operate branch offices in the county. One of these is Seattle-First National Bank, Seattle, which is the largest commercial bank in Washington. If the proposed purchase and assumption is executed, PNB will operate four branches in the county and hold approximately 11.6 percent of the total county deposits. However, it would not significantly change its relative position in the county in terms of the percentage of commercial bank deposits held. The remaining ONB branch office which will be transferred to PNB is in a major retail district of the Spokane metropolitan area. Currently, there are 10 banking organizations competing in Spokane County. Of these, Seattle-First National Bank is the largest, holding approximately 38.5 percent of Spokane County deposits. ONB is the second largest commercial bank in Spokane County. It operates a main office and 23 branches there having $290.7 million in deposits representing 28.1 percent of the total commercial bank deposits in the county. PNB maintains two branches in the county which collectively hold $24 million in deposits representing 2.3 percent of the total county commercial bank deposits. If the proposed transfer is consummated, PNB's share of Spokane County deposits will increase by approximately 1 percent, while ONB's share will decrease by that amount. 2 All deposit and branch figures are as of June 30, 1978, unless otherwise noted. 74 Issues The protestants have presented the general argument that the Comptroller of the Currency may not authorize the proponent banks to consummate their agreement and operate the acquired branch offices as their own. This challenge is more specifically based on the protestants1 following arguments: 1. The proposed acquisitions are anticompetitive, violate antitrust laws and therefore, may not be approved. 2. The proposed transactions are not "merger transactions" contemplated by the Bank Merger Act (12 USC 1828(c)) which may be approved by the Comptroller pursuant to that Act. 3. The proposed acquisitions are inconsistent with the spirit and intent of the Community Reinvestment Act. 4. The proposed branch acquisitions would violate federal branching laws (12 USC 36(b) and (c)) since they are inconsistent with the state's branching laws applicable to state-chartered commercial banks and trust companies (Wash. Rev. Code Ann. (RCW) 30.04.280 and 30.40.020) which: (a) only allow commercial state banks and trust companies to acquire one branch of another bank and implicitly proscribe multibranch acquisitions; (b) do not affirmatively authorize commercial state banks and trust companies to branch by an exchange or trade of branches; and (c) contemplate a "taking over or acquiring" of an entire bank and its branches and not just one or some of the branches. Bank Merger Act Considerations The protestants have argued that this transaction is anticompetitive, violates antitrust laws, and, therefore, may not be approved. This challenge has been considered as a part of this Office's analysis of the competitive effects of the proposed transaction pursuant to the Bank Merger Act. The Bank Merger Act requires this Office to consider whether the proposed merger transaction will substantially lessen competition or tend to create or result in a monopoly or restraint of trade; whether any perceived anticompetitive effects of the proposed transaction are clearly outweighed in the public interest by the probable effects the transaction will have in meeting the convenience and needs of the communities served; financial and managerial resources and future prospects of the institutions; and the convenience and needs of the communities. (See 12 USC 1828(c)(5)). Commenting on the competitive aspect of this transaction as required under the Bank Merger Act (12 USC 1828(c)(4)), the United States Department of Justice, the Federal Deposit Insurance Corporation, and the Federal Reserve Board have each concluded that the proposed transaction presents no competitive impediments in the relevant market areas to the approval of this application. We agree with this conclusion and, indeed, find that the transaction will enhance competition in the relevant market areas and is, therefore, in the public interest. We further conclude that consum- mation of this transaction will enhance the convenience and needs of these areas. We have considered the financial and managerial resources of the proponent banks, as well as their future prospects, and find these factors also to be favorable. Related to this analysis under the Bank Merger Act is the protestants' claim that the proposed transaction is not a "merger transaction" which is subject to the Comptroller's approval under the Act. The protestants have argued that the transaction is, in effect, a "branch swap," "trade," "exchange," or "relocation" which does not constitute a conventional consolidation or merger pursuant to 12 USC 215, 215a or 1828(c). It is the opinion of this Office that such contentions are incorrect and that the acquisitions in question are "merger transactions" subject to the Comptroller's approval under the Bank Merger Act. The agreement executed between ONB and PNB specifically provides for the transfer of certain assets and the assumption of certain liabilities. Assets have been defined to include real estate and the building in which the branch is located (if owned by the selling bank); any leasehold and leasehold improvements; furniture; fixtures, equipment and supplies (owned by, or leased by the selling bank); and the loan portfolio, with certain stipulated exceptions. The agreement also provides that the purchasing bank will assume the following liabilities: deposit accounts, with the consent of depositors; collection services; safe deposit rental agreements; obligations under maintenance and service contracts; and leases falling due or becoming performable subsequent to the closing date of the agreement. The Bank Merger Act provides that "[n]o insured bank shall . . . acquire the assets of, or assume liability to pay any deposits made in, any other insured bank except with the prior written approval of . . . [the Comptroller of the Currency]." (See 12 USC 1828(c)(2)). It also specifically states that such a transaction is "referred to hereafter in this subsection as a 'merger transaction.' " (See 12 USC 1828(c)(3)). The Act does not purport to prescribe the consideration, the method of acquisition, or the specific formula for asset or liability transfer. The fact that the targeted assets and liabilities are situated within a particular branch office does not, in our opinion, vitiate an otherwise valid "merger transaction." Accordingly, based upon the provisions of both the Bank Merger Act and the agreement executed between the proponent banks, we conclude that this transaction meets the legal requirements of a "merger transaction." As such, it may, therefore, be approved by the Comptroller according to the standards set forth in the Bank Merger Act. Community Reinvestment Act This application was filed for consideration prior to the November 6, 1978, effective date of the Comptroller's Community Reinvestment Act regulations, in 12 CFR 25. However, consistent with the spirit of the Community Reinvestment Act, Public Law 95128, available information relevant to the banks' rec ords of meeting their communities' needs has been reviewed. Those records do not reveal such evidence to suggest that the proponent banks are not generally meeting the credit needs of their communities, including low and moderate income sectors. Construction of State Branching Laws The protestants have argued that the proposed branch transfers are inconsistent with the provisions of applicable state commercial bank branching statutes and should, therefore, be denied under federal law. This Office does not concur in that opinion. The federal statute governing the branching powers of national banks, 12 USC 36(c),3 permits the Comptroller to authorize a national bank to establish new branches in the manner that state law permits state banks to do so.4 Thus, in evaluating this application, the Comptroller must be satisfied that it conforms with the applicable restrictions imposed by Washington law on establishment of branches by any state banks. However, federal law does not restrict the words "state banks" to state-chartered commercial banks. Section 36(h) provides that: The words . . . "State banks" . . . as used in this section, shall be held to include trust companies, savings banks, or such other corporations or institutions carrying on the banking business under the authority of State laws. [Emphasis added] The inclusion of savings banks and trust companies within the definition of "state banks" in Section 36 indicates that Congress foresaw the problem of a state according unequal branching powers to various financial institutions, thereby putting certain types of institutions at a competitive disadvantage. The congressional solution to this problem was to ensure that national banks be given the ability to establish branches in the manner and locations that the most favored "state banks" could.5 3 That section provides, in part, that: [a] national banking association may, with the approval of the Comptroller of the Currency, establish . . . new branches . . . at any point within the State in which said association is situated, if such establishment . . . [is] at the time authorized to state banks by the statute law of the State in question by language specifically granting such authority affirmatively and not merely by implication of recognition . . . . 4 See First National Bank in Plant City v. Dickinson, 396 U.S. 122 (1969); First National Bank of Logan v. Walker Bank & Trust Co., 385 U.S. 252 (1966); Camden Trust Co. v. Gidney, 301 F.2d 521 (D.C. Cir.), cert, denied, 369 U.S. 886 (1962). 5 The importance of this fundamental concept is now underscored by the increasingly blurred lines of differentiation between commercial banks and other financial institutions in terms of the level of competition in the banking business. For instance, recent progressive changes have endowed savings banks with the ability to market many banking services similar to those offered by commercial banks. Such a development compels a broad approach to the state branching statutes which should be referenced in deciding various national bank branching questions in view of the policy of com75 Accordingly, mutual savings banks, as "savings banks" and competitors of national banks operating in the state of Washington, are "state banks . . . carrying on the banking business . . ." 6 within the meaning of 12 USC 36(h), and, therefore, national banks may establish and operate branches wherever mutual savings banks are permitted to do so.7 petitive equality underlying 12 USC 36, as well as the sweep of the triggering definition of "state banks" chosen by Congress. In our view, the language of Section 36 clearly authorizes reliance on the broad branching authority of state savings banks in Washington. Moreover, the financial services environment in that state, in particular, lends even greater support to this position. This Office has heretofore relied on savings bank branching statutes in Massachusetts in approving certain branches for national banks in that state. 6 "Banking" according to RCW 30.04.010 means "the soliciting, receiving or accepting of money or its equivalent on deposit as a regular business." That mutual savings banks are engaged in banking is made evident by RCW 32.08.140 which provides that every mutual savings bank shall have the power "[t]o receive deposits of money That mutual savings banks are "institutions carrying on the banking business" (12 USC 36(h)) is further evidenced by various provisions of Washington law which permit them, in common with other banks, to become members of the Federal Reserve System and to be insured by the Federal Deposit Insurance Corporation (RCW 30.32.010); which permit them to exercise trust powers (RCW 32.08.210); which authorize them, upon a depositor's instructions, to effect withdrawals from his account by drafts payable according to the depositor's instructions (RCW 32.12.025); and which authorize the FDIC to act as receiver or liquidator for FDIC-insured mutual savings banks (RCW 32.24.090). Accordingly, it is evident that mutual savings banks are "state banks" within the meaning of 12 USC 36(c) and (h). 7 The District Court in Hart v. Peoples National Bank, No. C75-416S (W.D. Wash. Feb. 18, 1976) did not dispute the contention that mutual savings banks are "state banks" within the meaning of 12 USC 36(h). However, it did rely on State Chartered Banks in Washington v. Peoples National Bank, 291 F. Supp. 180 (W.D. Wash. 1966) in holding that a bank wishing to branch under the authority given to mutual savings banks "must satisfy all the provisions of that statute and show that it (the national bank) engages itself exclusively as a mutual savings bank." This Office believes that both of those decisions are in error in two respects: First, both courts failed to consider that 12 USC 36, permitting the establishment of branches by national banks, is enabling legislation, not restricting legislation; that is, it was not intended to restrict national banks but rather, it was intended to benefit national banks by granting them new powers to enable them to compete with state-chartered institutions. Second, both decisions failed to distinguish between those portions of a branching statute which can be complied with by some national banks, just as they can be complied with by some state-chartered institutions, and those portions of a statute which no national bank can comply with. National banks, as a class, cannot comply with all of state banking supervisors while national banks are not subject to supervision by the states. (See First National Bank of Fairbanks v. Camp, 465 F.2d 586 (D.C. Cir. 1972), cert, denied, 409 U.S. 1124 (1973)). Nor can national banks, as a class, ever comply with all of the provisions of state law applicable to any given class of state-chartered institutions. 76 The state branching statute applicable to Washington's mutual savings banks, RCW 32.04.030,8 authorizes branching in any county of the state and contains none of the allegedly restrictive language of RCW 30.40.020 which the protestants have relied upon in challenging this application. Accordingly, the resulting establishment of branches in this transaction is authorized by 12 USC 36(c), based upon the authority of the class of "state banks" found in RCW 32.04.030, and approval of these branches is consistent with the substantive requirements of this statute applicable to national banks. Reliance on the state's branching laws applicable to mutual savings banks pursuant to 12 USC 36(c) and (h) would appear to obviate the need in this case to consider the state's commercial bank branching statute,9 or the protestants' arguments which focus on that statute. Nevertheless, we find that the proposed transfer of branches is also clearly authorized by RCW 30.40.020 and may be approved by the Comptroller thereunder. RCW 30.40.020, which deals with the branching powers of commercial state banks and trust companies, provides, in part: Branches authorized—Restrictions. A bank or trust company having a paid-in capital of not less than five hundred thousand dollars may, with the approval of the supervisor, establish and operate branches in any city or town with the The question of whether a national bank may establish a branch pursuant to the power to do so granted to state mutual savings bank is now pending in the U.S. Court of Appeals for the Ninth Circuit in Hart v. Peoples National Bank, No. 76-2182. 8 RCW 32.04.030 reads as follows: Offices—Branches (1) A savings bank shall not do business or be located in the same room with, or in a room connecting with, any other bank, or a trust company that receives deposits of money or commercial paper, or a national banking association. (2) No savings bank, or any officer or director thereof, shall receive deposits or transact any of its usual business at any place other than its principal place of business or an authorized branch. (3) A savings bank, with the approval of the supervisor, may establish and operate branches but only upon the conditions and subject to the limitations following: 9 (a) If its guaranty fund is not less than the aggregate paid-in capital which would be required by law as a prerequisite to the establishment and operation of an equal number of branches in like locations by a bank. (b) Branches may be established in any county of the state; and (c) A branch shall not be established at a place at which the supervisor would not permit a proposed new savings bank to engage in business, by reason of any consideration contemplated by RCW 32.08.040, 32.08.050 and 32.08.060, the provisions of which, insofar as applicable, including those relating to appeals, shall extend to applications to establish branches. RCW 30.40.020. state. A bank or trust company having a paid-in capital of not less than two hundred thousand dollars may, with the approval of the supervisor, establish and operate branches within the limits of the county in which its principal place of business is located. No bank or trust company shall establish or operate any branch, except a branch in a foreign country, in any city or town outside the city or town in which its principal place of business is located in which any bank, trust company or national banking association regularly transacts a banking or trust business, except by taking over or acquiring an existing bank, trust company or national banking association or the branch of any bank, trust company or national banking association operating in such city or town. The protestants (most notably, the supervisor of banking) claim that authorization to take or acquire "the branch of any bank" in a city or town outside the city or town in which its principal place of business is located only allows a commercial state bank or trust company to acquire one branch of another bank and implicitly proscribes multibranch acquisitions. Similarly, these protestants also argue, from a purely interpretive point of view, that RCW 30.40.020 does not affirmatively authorize state commercial banks and/or trust companies to branch by exchanging branches and requires acquisition of an entire bank and not just one or some of its branches. This Office finds these interpretations of the statute to be in error. Because of the absence of relevant case law in the state on these questions, the Comptroller is authorized to independently interpret and apply this statute in evaluating PNB's branch/merger application, free from the control of the opinions of the state supervisor:10 [Where state] . . . courts have not construed the section, the Comptroller is free to do so and is, furthermore, free to adopt any reasonable construction that the statute setting forth the standard may bear. Since that statute in effect is adopted by Section 36 of the federal law, it is tantamount to a federal administrative official construing a federal statute which he is charged to administer and enforce.11 liberally construed,12 and that words importing number (i.e., singular and plural) and gender (i.e., masculine or feminine) do not necessarily restrict a statute's meaning to the specific number or gender used. 13 Consequently, we find that the term "the branch" may be construed to mean "branches," thereby allowing a bank's acquisition of one or more branches of another bank. Indeed, the facts of Seattle-First National Bank v. Spokane County, 196 Wash. 419, 83 P.2d 359 (1938) (merger of banks resulting in the acquisition and operation of the target bank's branches by the surviving bank), and United States v. Marine Bancorporation, 418 U.S. 602 (1974) (merger of banks resulting in the acquisition and operation of the target bank's branches by the surviving bank permitting it to expand into cities and towns with pre-existing banking organizations) lend support to this Office's interpretation of state law on this question. Furthermore, bearing in mind the state's rules of statutory construction, and absent any statutory language or case law limiting the manner of "taking over or acquiring," a reasonable reading of the text of this statute leads us to conclude that, contrary to the protestants' contentions, the plain meaning of its words authorize a transfer of branches by merger, in that the method of "taking over or acquiring" may be determined by the parties to the agreement since the legislature has chosen not to dictate the method or mode of payment, whether by cash, stock, or other consideration. The fact that a branch may be acquired in consideration for the sale of a branch to another bank in a manner which, on its face, resembles an exchange or trade, does not vitiate the general authority of a bank to branch by acquisition in a city or town which is not its principal place of business. Moreover, we find that RCW 30.40.020, by not limiting the type of acquisition permitted, or excepting or excluding the functional exchange of branches, does affirmatively authorize the method of branching under consideration since, unless so restricted by the statute, it permits " . . . [a] bank or trust company having a paid-in capital of not less than five hundred thousand dollars . . . [to] establish and operate branches in any city or town within the state."14 Therefore, the sale and transfer of branches15 12 Wash. Rev. Code Ann. 1.12.010 reads as follows: The provisions of this code shall be liberally construed, and shall not be limited by any rule of strict construction. 13 Wash. Rev. Code Ann. 1.12.050 states: In construing RCW 30.40.020, this Office is guided Words importing the singular number may also be apby the state's rules of statutory construction. Those plied to the plural of persons and things; words importrules direct that the provisions of the code should be ing the plural may be applied to the singular; and words importing the masculine gender may be extended to fe10 males also. First National Bank of Fairbanks v. Camp, 465 F.2d at 597. 14 Cf. Seattle-First National Bank v. Spokane County, 83 P.2d See also Leuthold v. Camp, 273 F. Supp. 695 (D. Mont. 1967), aff'd per curiam, 405 F. 2d 499 (9th Cir. 1969); Union at 363. Savings Bank of Patchogue v. Saxon, 335 F.2d 718 (D.C. 15 Although the agreement contemplates a simultaneous Cir. 1964); South Dakota v. The National Bank of South Da- transfer of ail of the branches in question, the applicants kota, 219 F. Supp. 842 (S.D. S.D. 1963), aff'd, 335 F.2d 444 stated at the hearing that, depending on the renegotiation of (8th Cir.), cert, denied, 379 U.S. 970 (1965). a sales price, the failure or inability to transfer certain 11 Clermont National Bank v. Citizensbank, N.A. 329 F. Supp. branches would not necessarily prevent the consummation of the transaction. 1331, 1341-42 (S.D. Ohio 1971). 77 which the protestants have chosen to label as a "swap" or "exchange" is, in our opinion, affirmatively authorized by RCW 30.40.020. Likewise, nothing in the statute authorizing the "taking over or acquiring [of] an existing bank . . . or the branch of . . . [a] bank" indicates that the acquisition must be of the entire bank and not just one of its branches. Indeed, the plain meaning of the statute's language suggests that one bank may branch by acquiring "the branch" of another bank. Any interpretation of the statute which precludes all types of acquisitions except total mergers or consolidations would severely limit the significance and intent of the statute and, in view of the statute's language, conflict with the rule t h a t " . . . a statute ought, upon the whole, to be so construed that, if it can be prevented, no clause, sentence, or word shall be superfluous, void or insignificant."16 In accordance with the above opinion, we find that 16 Washington Market Company v. Hoffman, 101 U.S. 112, 115-16 (1879); United States v. Campos-Serrano, 404 U.S. 293, 301 (1971). the proposed acquisition of branches is affirmatively authorized by RCW 32.04.030 and 30.40.020, and, therefore, is permitted by 12 USC 36(b) and (c). Conclusion We have carefully considered the application pursuant to the Bank Merger Act, 12 USC 1828(c), and in light of the questions raised by the protestants. We conclude that the proposed transactions will have no adverse effect on competition, will be in the public interest, and will otherwise satisfy the requirements of the Bank Merger Act. We also conclude that the transactions will violate no other provisions of state or federal law. Accordingly, the application of PNB to purchase the assets and assume the liabilities of three branch offices of ONB is approved. February 1, 1979 SUMMARY OF REPORT BY ATTORNEY GENERAL We have reviewed these proposed transactions and conclude that they would not have a substantial competitive impact. RAINIER NATIONAL BANK, Seattle, Wash., and Four Branches of First National Bank in Spokane, Spokane, Wash., and One Branch of Old National Bank of Washington, Spokane, Wash. Banking offices^ Names of banks and type of transaction Total assets* Four Branches of First National Bank in Spokane, Spokane, Wash. (13331), with and One Branch of Old National Bank of Washington, Spokane, Wash. (4668), with were purchased March 5, 1979, by Rainier National Bank, Seattle, Wash. (4375), which had After the purchase was effected, the receiving bank had COMPTROLLER'S DECISION An application was filed on February 24, 1978, with the Office of the Comptroller of the Currency according to the Bank Merger Act, 12 USC 1828(c), by Rainier National Bank, Seattle, Wash. ("RNB"), for approval to purchase the assets and assume the liabilities of four branch offices of First National Bank of Spokane, Spokane, Wash. ("FNB") and one branch office of Old National Bank of Washington, Spokane ("ONB"). The application is based on a written agreement executed by the proponent banks on November 30, 1977. This application and three other purchase and assumption applications filed in February 1978 involving RNB, FNB, ONB, and Pacific National Bank of Washington, Seattle, were challenged by several protestants, including the supervisor of banking for the state. In response to several requests, a public hearing on all four applications was held in Seattle on April 19-20, 1978, before the regional administrator of national banks, Thirteenth National Bank Region (Portland). At the public administrative hearing, both the proponent and opponents of the applications were represented by counsel and were given the opportunity to 78 $ 77,017 1,103,729 3,885,782 4,193,175 In To be operation operated 4 1 123 124 make opening statements, present the testimony of witnesses and physical exhibits and make closing statements. A reporter was present at the hearing and prepared a transcript for inclusion in the administrative record. On the basis of the administrative record, this opinion is now issued.1 Background With the exception of directors' qualifying shares, RNB is a wholly owned commercial banking subsidiary of Rainier Bancorporation, Seattle, Wash. ("RB"). RB is a registered bank holding company and is the second largest commercial banking organization headquar* Asset figures are for entire bank as of call dates immediately before and after transaction. t Office figures are for beginning and end of day and reflect all transactions occurring that day. 1 It is the policy of the Office of the Comptroller of the Currency to issue a formal opinion in connection with decisions of general import or involving novel issues. This application raises important questions concerning the authority of national banks in Washington to establish branch offices. tered in Washington. RB has total deposits of $2.6 billion, representing 19.3 percent of the total commercial bank deposits in the state.2 ONB is a national bank with deposits of $888.3 million, representing 6.6 percent of Washington's total commercial bank deposits. It maintains a main office and 71 branches. ONB is a subsidiary of Old National Bancorporation, Spokane ("ONBC"), which is the only registered multibank holding company headquartered in the state. ONBC controls two banks (ONB and First National Bank in Spokane). With total deposits of approximately $950.9 million representing 7.1 percent of the total state commercial bank deposits, ONBC is the fifth largest of 95 commercial banking organizations in the state. FNB maintains a main office and five branches in the state and has deposits of $62.6 million, representing less than 1 percent of Washington's total commercial bank deposits. FNB is also a subsidiary of ONBC. All five branches which will be transferred under the agreement are in the Spokane metropolitan area. RNB is the seventh largest of nine commercial banking organizations operating in Spokane County with two branches having $21.9 million in deposits, representing 2.1 percent of the county's total commercial bank deposits. ONB is the second largest commercial bank in Spokane County. It operates a main office and 23 branches there having $290.7 million in deposits, representing 28.1 percent of the total commercial bank deposits. FNB maintains its main office and all five of its branches in Spokane County. It holds approximately 5.5 percent of the total county commercial bank deposits. Spokane is the third largest commercial banking market in the state. Eight commercial banks operate 69 banking offices in the county. In addition, three mutual savings banks operate 15 offices, and five savings and loan associations operate 10 offices in the county. Seattle-First National Bank, the largest commercial bank in Washington, controls 38.5 percent of the total commercial bank deposits in Spokane County. If the agreement between RNB, ONB and FNB is executed, RNB will enjoy a modest increase in its Spokane County business and will enter the Spokane metropolitan area for the first time. Although RNB does have two offices in Spokane County (Deer Park and Medical Lake), neither of these offices are actually in the Spokane metropolitan area. Issues The protestants have presented the general argument that the Comptroller of the Currency may not authorize the proponent banks to consummate their agreement and operate the acquired branch offices as their own. This challenge is more specifically based on the protestants' following arguments: 1. The proposed acquisitions are anticompetitive, 2 All deposit and branch figures are as of June 30, 1978, unless otherwise noted. violate antitrust laws and, therefore, may not be approved. 2. The proposed transactions are not "merger transactions" contemplated by the Bank Merger Act (12 USC 1828(c)) which may be approved by the Comptroller pursuant to that Act. 3. The proposed acquisitions are inconsistent with the spirit and intent of the Community Reinvestment Act. 4. The proposed branch acquisitions would violate federal branching laws (12 USC 36(b) and (c)) since they are inconsistent with the state's branching laws applicable to state-chartered commercial banks and trust companies (Wash. Rev. Code Ann. RCW 30.04.280 and 30.40.020) which: (a) only allow commercial state banks and trust companies to acquire one branch of another bank and implicitly proscribe multibranch acquisitions; (b) do-not affirmatively authorize commercial state banks and trust companies to branch by an exchange or trade of branches; and (c) contemplate a "taking over or acquiring" of an entire bank and its branches and not just one or some of the branches. Bank Merger Act Consideration The protestants have argued that this transaction is anticompetitive, violates antitrust laws and, therefore, may not be approved. This challenge has been considered as a part of this Office's analysis of the competitive effects of the proposed transaction pursuant to the Bank Merger Act. The Bank Merger Act requires this Office to consider whether the proposed merger transaction will substantially lessen competition or tend to create or result in a monopoly of restraint of trade; whether any perceived anticompetitive effects of the proposed transaction are clearly outweighed in the public interest by the probable effects the transaction will have in meeting the convenience and needs of the communities served; financial and managerial resources and future prospects of the institutions; and the convenience and needs of the communities. (See 12 USC 1828(c)(5). Commenting on the competitive aspect of this transaction as required under the Bank Merger Act (12 USC 1828(c)(4)), the U.S. Department of Justice, the Federal Deposit Insurance Corporation and the Federal Reserve Board have each concluded that the proposed transaction presents no competitive impediments in the relevant market areas to the approval of this application. We agree with this conclusion and, indeed, find that the transaction will enhance competition in the relevant market areas and is, therefore, in the public interest. We further conclude that consummation of this transaction will enhance the convenience and needs of these areas. We have considered the financial and managerial resources of the proponent banks, as well as their future prospects, and find these factors also to be favorable. Related to this analysis under the Bank Merger Act is the protestants' claim that the proposed transaction is not a "merger transaction" which is subject to the 79 Comptroller's approval under the Act. The protestants have argued that the transaction is, in effect, a "branch swap," "trade," "exchange" or "relocation" which does not constitute a conventional consolidation or merger pursuant to 12 USC 215, 215a or 1828(c). It is the opinion of this Office that such contentions are incorrect and that the acquisitions in question are "merger transactions" subject to the Comptroller's approval under the Bank Merger Act. The agreement executed between ONB and PNB specifically provides for the transfer of certain assets and the assumption of certain liabilities. Assets have been defined to include real estate and the building in which the branch is located (if owned by the selling bank); any leasehold and leasehold improvements; furniture; fixtures, equipment and supplies (owned by or leased by the selling bank); and the loan portfolio, with certain stipulated exceptions. The agreement also provides that the purchasing bank will assume the following liabilities: deposit accounts, with the consent of depositors; collection services; safe deposit rental agreements; obligations under maintenance and service contracts; and leases falling due or becoming performable subsequent to the closing date of the agreement. The Bank Merger Act provides that "[n]o insured bank shall . . . acquire the assets of, or assume liability to pay any deposits made in, any other insured bank except with the prior written approval of . . . [the Comptroller of the Currency]." (See 12 USC 1828(c)(2)). It also specifically states that such a transaction is "referred to hereafter in this subsection as a 'merger transaction.' " (See 12 USC 1828(c)(3)). The Act does not purport to prescribe the consideration, the method of acquisition or the specific formula for asset or liability transfer. The fact that the targeted assets and liabilities are situated within a particular branch office does not, in our opinion, vitiate an otherwise valid "merger transaction." Accordingly, based upon the provisions of both the Bank Merger Act and the agreement executed between the proponent banks, we conclude that this transaction meets the legal requirements of a "merger transaction." As such, it may, therefore, be approved by the Comptroller according to the standards set forth in the Bank Merger Act. The Community Reinvestment Act This application was filed for consideration prior to the November 6, 1978, effective date of the Comptroller's Community Reinvestment Act regulations, 12 CFR 25. However, consistent with the spirit of the Community Reinvestment Act, Public Law 95-128, available information relevant to the banks' records of meeting their communities' needs has been reviewed. Those records do not reveal such evidence to suggest that the proponent banks are not generally meeting the credit needs of their communities, including low and moderate income sectors. Construction of State Branching Laws The protestants have argued that the proposed branch transfers are inconsistent with the provisions of applicable state commercial bank branching statutes 80 and should, therefore, be denied under federal law. This Office does not concur in that opinion. The federal statute governing the branching powers of a national bank, 12 USC 36(c),3 permits the Comptroller to authorize a national bank to establish new branches in the manner that state law permits state banks to do so.4 Thus, in evaluating this application, the Comptroller must be satisfied that it conforms with the applicable restrictions imposed by Washington law on establishment of branches by any state banks. However, federal law does not restrict the words "state banks" to state-chartered commercial banks. Section 36(h) provides that: The words . . . "State banks" . . . as used in this section, shall be held to include trust companies, savings banks, or such other corporations or institutions carrying on the banking business under the authority of State laws. [Emphasis added] The inclusion of savings banks and trust companies within the definition of "state banks" in Section 36 indicates that Congress foresaw the problem of a state according unequal branching powers to various financial institutions, thereby putting certain types of institutions at a competitive disadvantage. The congressional solution to this problem was to ensure that national banks be given the ability to establish branches in the manner and locations that the most favored "state banks" could.5 Accordingly, mutual savings banks as "savings banks" and competitors of national banks operating in 3 That section provides, in part, that: [a] national banking association may, with the approval of the Comptroller of the Currency, establish . . . new branches . . . at any point within the State in which said association is situated, if such establishment . . . [is] at the time authorized to state banks by the statute law of the State in question by language specifically granting such authority affirmatively and not merely by implication or recognition . . . . 4 See First National Bank in Plant City v. Dickinson, 396 U.S. 122 (1969); First National Bank of Logan v. Walker Bank & Trust Co., 385 U.S. 252 (1966); Camden Trust Co. v. Gidney, 301 F.2d 521 (D.C. Cir.), cert, denied, 369 U.S. 886 (1962). 5 The importance of this fundamental concept is now underscored by the increasingly blurred lines of differentiation between commercial banks and other financial institutions in terms of the level of competition in the banking business. For instance, recent progressive changes have endowed savings banks with the ability to market many banking services similar to those offered by commercial banks. Such a development compels a broad approach to the state branching statutes which should be referenced in deciding various national bank branching questions in view of the policy of competitive equality underlying 12 USC 36, as well as the sweep of the triggering definition of "state banks" chosen by Congress. In our view, the language of Section 36 clearly authorizes reliance on the broad branching authority of state savings banks in Washington. Moreover, the financial services environment in that state, in particular, lend even greater support to this position. This Office has heretofore relied on savings bank branching statutes in Massachusetts in approving certain branches for national banks in that state. Washington, are "state banks . . . carrying on the banking business . . . " 6 within the meaning of 12 USC 36(h), and, therefore, national banks may establish and operate branches wherever mutual savings banks are permitted to do so.7 The state branching statute applicable to Washington's mutual savings banks, RCW 32.04.030,8 6 "Banking" according to RCW 30.04.010 means "the soliciting, receiving or accepting of money or its equivalent on deposit as a regular business." That mutual savings banks are engaged in banking is made evident by RCW 32.08.140 which provides that every mutual savings bank shall have the power "[t]o receive deposits of money That mutual savings banks are "institutions carrying on the banking business" (12 USC 36(h)) is further evidenced by various provisions of Washington law which permit them, in common with other banks, to become members of the Federal Reserve System and to be insured by the Federal Deposit Insurance Corporation (RCW 30.32.010); which permit them to exercise trust powers (RCW 32.08.210); which authorize them, on a depositor's instructions, to effect withdrawals from his account by drafts payable according to the depositor's instructions (RCW 32.12.025); and which authorize the FDIC to act as receiver or liquidator for FDIC-insured mutual savings banks (RCW 32.24.090). Accordingly, it is evident that mutual savings banks are "state banks" within the meaning of 12 USC 36(c) and (h). 7 The District Court in Hart v. Peoples National Bank, No. C75-416S (W.D. Wash., Feb. 18, 1976) did not dispute the contention that mutual savings banks are "state banks" within the meaning of 12 USC 36(h). However, it did rely on State Chartered Banks in Washington v. Peoples National Bank, 291 F. Supp. 180 (W.D. Wash. 1966) in holding that a bank wishing to branch under the authority given to mutual savings banks "must satisfy all the provisions of that statute and show that it [the national bank] engages itself exclusively as a mutual savings bank." This Office contends that both those decisions are in error in two respects: First, both courts failed to consider that 12 USC 36, permitting the establishment of branches by national banks, is enabling legislation not restricting legislation; that is, it was not intended to restrict national banks. Rather, it was intended to benefit national banks by granting them new powers to enable them to compete with state-chartered institutions. Second, both decisions failed to distinguish between those portions of a branching statute which can be complied with by some state-chartered institutions, and those portions of a statute which no national bank can comply with. National banks, as a class, cannot comply with all of the conditions of any state branching statute; for example, all state branching statutes require the approval of state banking supervisors while national banks are not subject to supervision by the states. (See First National Bank of Fairbanks v. Camp, 465 F.2d 586 (D.C. Cir. 1972), cert, denied, 409 U.S. 1124 (1973)). Nor can national banks, as a class, ever comply with all of the provisions of state law applicable to any given class of state chartered institutions. The question of whether a national bank may establish a branch pursuant to the power to do so granted to state mutual savings banks is now pending in the U.S. Court of Appeals for the Ninth Circuit in Hart v. Peoples National Bank, No. 76-2182. 8 RCW 32.04.030 reads as follows: Offices—Branches (1) A savings bank shall not do business or be located in the same room with, or in a room connecting authorizes branching in any county of the state and contains none of the allegedly restrictive language of RCW 30.40.020 which the protestants have relied upon in challenging this application. Accordingly, the resulting establishment of branches in this transaction is authorized by 12 USC 36(c), based on the authority of the class of "state banks" found in RCW 32.04.030, and approval of these branches is consistent with the substantive requirements of this statute applicable to national banks. Reliance on the state's branching laws applicable to mutual savings banks pursuant to 12 USC 36(c) and (h) would appear to obviate the need in this case to consider the state's commercial bank branching statute9 or the protestants' arguments which focus on that statute. Nevertheless, we find that the proposed transfer of branches is also clearly authorized by RCW 30.40.020 and may be approved by the Comptroller thereunder. RCW 30.40.020, which deals with the branching powers of commercial state banks and trust companies, provides, in part: Branches authorized—Restrictions. A bank or trust company having a paid-in capital of not less than five hundred thousand dollars may, with the approval of the supervisor, establish and operate branches in any city or town within the state. A bank or trust company having a paidin capital of not less than two hundred thousand dollars may, with the approval of the supervisor, establish and operate branches within the limits of the county in which its principal place of business is located. No bank or trust company shall establish or operate any branch, except a branch in a foreign country, in any city or town outside the city or town 9 with, any other bank, or a trust company that receives deposits of money or commercial paper, or a national banking association. (2) No savings bank, or any officer or director thereof, shall receive deposits or transact any of its usual business at any place other than its principal place of business or an authorized branch. (3) A savings bank, with the approval of the supervisor, may establish and operate branches but only upon the conditions and subject to the limitations following: (a) If its guaranty fund is not less than the aggregate paid-in capital which would be required by law as a prerequisite to the establishment and operation of an equal number of branches in like locations by a bank. (b) Branches may be established in any county of the State; and (c) A branch shall not be established at a place at which the supervisor would not permit a proposed new savings bank to engage in business, by reason of any consideration contemplated by RCW 32.08.040, 32.08.050 and 32.08.060, the provisions of which, insofar as applicable, including those relating to appeals, shall extend to applications to establish branches. RCW 30.40.020. 81 in which its principal place of business is located in which any bank, trust company or national banking association regularly transacts a banking or trust business, except by taking over or acquiring an existing bank, trust company or national banking association or the branch of any bank, trust company or national banking association operating in such city or town. The protestants (most notably, the supervisor of banking) claim that authorization to take or acquire "the branch of any bank" in a city or town outside the city or town in which its principal place of business is located only allows a commercial state bank or trust company to acquire one branch of another bank and implicitly proscribes multibranch acquisitions. Similarly, these protestants also argue, from a purely interpretive point of view, that RCW 30.40.020 does not affirmatively authorize state commercial banks and/or trust companies to branch by exchanging branches and requires acquisition of an entire bank and not just one or some of its branches. This Office finds these interpretations of the statute to be in error. Because of the absence of relevant case law in the state on these questions, the Comptroller is authorized to independently interpret and apply this statute in evaluating RNB's branch/merger application, free from the control of the opinions of the state supervisor:10 [Where state] . . . courts have not construed the section, the Comptroller is free to do so and is, furthermore, free to adopt any reasonable construction that the statute setting forth the standard may bear. Since that statute in effect is adopted by Section 36 of the federal law, it is tantamount to a federal administrative official construing a federal statute which he is charged to administer and enforce.11 In construing RCW 30.40.020, this Office is guided by the state's rules of statutory construction. Those rules direct that the provisions of the code should be liberally construed12 and that words importing number (i.e., singular and plural) and gender (i.e., masculine and feminine) do not necessarily restrict a statute's meaning to the specific number or gender used. 13 10 First National Bank of Fairbanks v. Camp, 465 F.2d at 597. See also Leuthold v. Camp, 273 F. Supp. 695 (D. Mont. 1967), aff'd per curiam, 405 F.2d 499 (9th Cir. 1969); Union Savings Bank of Patchogue v. Saxon, 335 F.2d 718 (D.C. Cir. 1964); South Dakota v. The National Bank of South Dakota, 219 F. Supp. 842 (S.D. S.D. 1963), aff'd, 335 F.2d 444 (8th Cir.), cert, denied, 379 U.S. 970 (1965). 11 Clermont National Bank v. Citizensbank, N.A. 329 F. Supp. 1331, 1341-42 (S.D. Ohio 1971). 12 Wash. Rev. Code Ann. 1.12.010 reads as follows: The provisions of this code shall be liberally construed, and shall not be limited by any rule of strict construction. 13 Wash. Rev. Code Ann. 1.12.050 states: Words importing the singular number may also be applied to the plural of persons and things; words importing the plural may be applied to the singular; and words importing the masculine gender may be extended to females also. 82 Consequently, we find that the term "the branch" may be construed to mean "branches," thereby allowing a bank's acquisition of one or more branches of another bank. Indeed, the facts of Seattle-First National Bank v. Spokane County, 196 Wash. 419, 83 P.2d 359 (1938) (merger of banks resulting in the acquisition and operation of the target bank's branches by the surviving bank, and United States v. Marine Bancorporation, 418 U.S. 602 (1974) (merger of banks resulting in the acquisition and operation of the target bank's branches by the surviving bank permitting it to expand into cities and towns with pre-existing banking organizations) lend support to this Office's interpretation of state law on this question. Furthermore, bearing in mind the state's rules of statutory construction and absent any statutory language or case law limiting the manner of "taking over or acquiring," a reasonable reading of the text of this statute leads us to conclude that, contrary to the protestants' contentions, the plain meaning of its words authorizes a transfer of branches by merger, in that the method of "taking over or acquiring" may be determined by the parties to the agreement since the legislature has chosen not to dictate the method or mode of payment, whether by cash, stock or other consideration. The fact that a branch may be acquired in consideration for the sale of a branch to another bank in a manner which, on its face, resembles an exchange or trade does not vitiate the general authority of a bank to branch by acquisition in a city or town which is not its principal place of business. Moreover, we find that RCW 30.40.020, by not limiting the type of acquisition permitted or excepting or excluding the functional exchange of branches, does affirmatively authorize the method of branching under consideration since, unless so restricted by the statute, it permits " . . . [a] bank or trust company having a paid-in capital of not less than five hundred thousand dollars . . . [to] establish and operate branches in any city or town within the state."14 Therefore, the sale and transfer of branches15 which the protestants have arbitrarily chosen to label as a "swap" or "exchange" is, in our opinion, affirmatively authorized by RCW 30.40.020. Likewise, nothing in the statute authorizing the "taking over or acquiring [of] an existing bank . . . or the branch of . . . [a] bank" indicates that the acquisition must be of the entire bank and not just one of its branches. Indeed, the plain meaning of the statute's language suggests that one bank may branch by acquiring "the branch" of another bank. Any interpretation of the statute which precludes all types of acquisitions except total mergers or consolidations would severely limit the significance and intent of the statute and, in view of the statute's language, conflict with the 14 Cf. Seattle-First Nat'l Bank v. Spokane County, 83 P.2d at 363. 15 Although the agreement contemplates a simultaneous transfer of all the branches in question, the applicants stated at the hearing that, depending on the renegotiation of a sales price, the failure or inability to transfer certain branches would not necessarily prevent the consummation of the transaction. rule t h a t " . . . a statute ought, upon the whole, to be so construed that, if it can be prevented, no clause, sentence, or word shall be superfluous, void or insignificant."16 In accordance with the above opinion, we find that the proposed acquisition of branches is affirmatively authorized by RCW 32.04.030 and 30.40.020, and, therefore, is permitted by 12 USC 36(b) and (c). Conclusion We have carefully considered the application pursuant to the Bank Merger Act, 12 USC 1828(c), and in 16 Washington Market Company v. Hoffman, 101 U.S. 112, 115-16 (1879); United States v. Campos-Serrano, 404 U.S. 293, 301 (1971). light of the questions raised by the protestants. We conclude that the proposed transactions will have no adverse effect on competition, will be in the public interest and will otherwise satisfy the requirements of the Bank Merger Act. We also conclude that the transactions will violate no other provisions of state or federal law. Accordingly, the application of RNB to purchase the assets and assume the liabilities of four branch offices of FNB and one branch of ONB is approved. February 1, 1979 SUMMARY OF REPORT BY ATTORNEY GENERAL We have reviewed these proposed transactions and conclude that they would not have a substantial competitive impact. ATLANTIC FIRST NATIONAL BANK OF DAYTONA BEACH, Daytona Beach, Fla., and Atlantic Bank of West Daytona Beach, Daytona Beach, Fla. Banking offices Names of banks and type of transaction Total assets Atlantic Bank of West Daytona Beach, Daytona Beach, Fla., with and Atlantic First National Bank of Daytona Beach, Daytona Beach, Fla. (12546), which had merged March 31, 1979, under charter and title of the latter bank (12546). The merged bank at date of merger had COMPTROLLER'S DECISION Pursuant to the requirements of 12 USC 1828(c), the Bank Merger Act, an application has been filed with the Office of the Comptroller of the Currency that seeks and requires the prior written consent of this Office to the proposed merger of Atlantic Bank of West Daytona Beach, Daytona Beach, Fla. ("Merging Bank"), into Atlantic First National Bank of Daytona Beach, Daytona Beach, Fla. ("Charter Bank"), under the charter and title of "Atlantic First National Bank of Daytona Beach." The subject application is based on an agreement executed between the proponent banks and is incorporated herein by reference, the same as if fully set forth. Atlantic First National Bank of Daytona Beach, Daytona Beach, Fla. ("Charter Bank"), was granted National Banking Association charter number 12546 by this Office on June 2, 1924. As of June 30, 1978, Charter Bank's total deposits were $75.5 million. Atlantic Bank of West Daytona Beach, Daytona Beach, Fla. ("Merging Bank"), is a state-chartered commercial banking institution. On June 30, 1978, Merging Bank had total deposits of $14.5 million. Both of the proponent banks are commercial banking subsidiaries of Atlantic Bancorporation, Jacksonville, Fla. ("Atlantic"), a registered multibank holding company that controlled 27 subsidiary banks with consolidated deposits of $1.3 billion as of December 31, 1977. In To be operation operated $ 17,026,000 83,169,000 100,195,000 This application was filed prior to the November 6, 1978, effective date of the Comptroller's Community Reinvestment Act regulations, 12 CFR 25. However, pursuant to the Community Reinvestment Act, Public Law No. 95-128, available information relevant to the banks' records of meeting community credit needs was reviewed, revealing no evidence to suggest that the applicants are not meeting the credit needs of their community, including low and moderate income neighborhoods. The subject application essentially represents a corporate reorganization whereby Atlantic is consolidating a portion of its banking interests in the Daytona Beach area; as such, it would produce no adverse impact on any relevant area of consideration. Accordingly, the application is deemed to be not adverse to the public interest and is approved. Additionally, Charter Bank is authorized to operate the former banking office of Merging Bank as a branch of the surviving bank. November 29, 1978 SUMMARY OF REPORT BY ATTORNEY GENERAL The merging banks are all wholly owned subsidiaries of the same bank holding company. As such, their proposed mergers are essentially corporate reorganizations and would have no effect on competition. 83 ROYAL TRUST BANK OF MIAMI, N.A., Miami, Fla., and Royal Trust Bank of South Dade, N.A., Unincorporated Area of Dade County (P.O. Miami) Banking offices Names of banks and type of transaction Total assets* Royal Trust Bank of South Dade, N.A., Unincorporated Area of Dade County (P.O. Miami), Fla. (16698), with and Royal Trust Bank of Miami, N.A., Miami, Fla. (15156), which had merged April 1, 1979, under charter and title of the latter bank (15156). The merged bank at date of merger had COMPTROLLER'S DECISION Application has been made to the Comptroller of the Currency requesting prior permission to merge Royal Trust Bank of South Dade, N.A., unincorporated area of Dade County, Fla. ("Dade Bank"), into Royal Trust Bank of Miami, N.A., Miami, Fla. ("Miami Bank"), under the charter and title of "Royal Trust Bank of Miami, N.A." The application rests upon an agreement executed between the proponent banks and is incorporated herein by reference. Miami Bank received its charter as a national bank on September 1, 1972, and had deposits of $114.2 million as of September 30, 1978. Dade Bank was chartered as a national bank on January 4, 1978, and as of September 30, 1978, had total deposits of $3.9 million. . Both Miami Bank and Dade Bank are banking subsidiaries of Royal Trust Bank Corp., Miami, Fla., a reg* Asset figures are as of call dates immediately before and after transaction. $ In To be operation operated 8,488,000 169,021,000 148,636,000 istered multibank holding company. Inasmuch as the proponent banks are commonly owned and controlled, approval of this application would not produce an adverse impact on any relevant area of consideration. A review of the record of this application and other information available to this Office as a result of its regulatory responsibilities revealed no evidence that the banks1 records of helping to meet the credit needs of their communities, including low and moderate income neighborhoods, is less than satisfactory. Accordingly, applying the statutory criteria, it is the conclusion of the Office of the Comptroller of the Currency that this merger is in the public interest and is approved. February 28, 1979 SUMMARY OF REPORT BY ATTORNEY GENERAL The merging banks are both wholly owned subsidiaries of the same bank holding company. As such, their proposed merger is essentially a corporate reorganization and would have no effect on competition. THE CENTRAL TRUST COMPANY, NATIONAL ASSOCIATION, Cincinnati, Ohio, and The Central Trust Company of Montgomery County, National Association, Dayton, Ohio Banking offices Total assets Names of banks and type of transaction The Central Trust Company of Montgomery County, National Association, Dayton, Ohio (16330), with and The Central Trust Company, National Association, Cincinnati, Ohio (16416), which had merged April 16, 1979, under charter and title of the latter bank (16416). The merged bank at date of merger had COMPTROLLER'S DECISION This is the Comptroller's decision on the application to merge The Central Trust Company of Montgomery County, National Association, Dayton, Ohio ("Merging Bank"), into The Central Trust Company, National Association, Cincinnati, Ohio ("Charter Bank"). This application is one part of a process whereby The Central Bancorporation, Inc., Cincinnati, Ohio ("Central"), a registered multibank holding company, is realigning and consolidating a portion of its banking interests. 84 $ 76,904,000 1,033,364,000 1,110,130,000 In To be operation operated 7 45 52 Charter Bank has total deposits of $829.7 million, and Merging Bank has total deposits of $74.9 million. Both banks are wholly owned commercial banking subsidiaries of Central. As such, approval of this application would have no adverse effect on any relevant area of consideration. A review of the record of this application and other information available to this Office as a result of its regulatory responsibilities revealed no evidence that the applicants' records of helping to meet the credit needs of their communities, including low and moderate income neighborhoods, is less than satisfactory. This decision is the prior written approval required by the Bank Merger Act, 12 USC 1828(c), in order for the applicants to proceed with the merger. March 15, 1979 SUMMARY OF REPORT BY ATTORNEY GENERAL The merging banks are all wholly owned subsidiaries of the same bank holding company. As such, the proposed mergers are essentially corporate reorganizations and would have no effect on competition. BANKERS TRUST COMPANY OF ALBANY, NATIONAL ASSOCIATION, Albany, N.Y., and Bankers Trust Company of Central New York, Utica, N.Y. Names of banks and type of transaction Total assets Bankers Trust Company of Central New York, Utica, N.Y., with and Bankers Trust Company of Albany, National Association, Albany, N.Y. (15758), which had merged April 30, 1979, under charter and title of the latter bank (15758). The merged bank at date of merger had COMPTROLLER'S DECISION Application has been made to the Office of the Comptroller of the Currency requesting prior permission to merge Bankers Trust Company of Central New York, Utica, N.Y. ("Merging Bank"), into Bankers Trust Company of Albany, National Association, Albany, N.Y. ("Charter Bank"), under the charter and title of "Bankers Trust Company of Albany, National Association." The subject application rests on an agreement executed between the proponent banks and is incorporated herein by reference, the same as if fully set forth. Charter Bank has operated as a National Banking Association since October 6, 1969, when it was granted charter number 15758 by this Office. As of June 30, 1978, Charter Bank had total commercial bank deposits of $268.1 million. Merging Bank commenced commercial banking operations in 1971 and, as of June 30, 1978, had total deposits of $23.9 million. Charter Bank and Merging Bank are both banking subsidiaries of Bankers Trust New York Corporation, New York, N.Y., a registered multibank holding company. Inasmuch as the two proponent banks are commonly owned and controlled, approval of this applica- $ 19,637,000 309,016,000 Banking offices In To be operation operated 8 28 328,653,000 36 tion would not produce an adverse impact on any relevant area of consideration. This application was filed prior to the November 6, 1978, effective date of the Comptroller's Community Reinvestment Act regulations, 12 CFR 25. However, pursuant to the Community Reinvestment Act, Public Law No. 95-128, available information relevant to the banks' records of meeting community credit needs was reviewed, revealing no evidence to suggest that credit needs of the community are not being met, including low and moderate income neighborhoods. The proposed merger essentially represents a corporate reorganization whereby Bankers Trust New York Corporation is consolidating a portion of its banking interests. The application is therefore deemed to be not adverse to the public interest and should be, and hereby is, approved. February 6, 1979 SUMMARY OF REPORT BY ATTORNEY GENERAL The merging banks are both wholly owned subsidiaries of the same bank holding company. As such, their proposed merger is essentially a corporate reorganization and would have no effect on competition. THE CENTRAL TRUST COMPANY OF NORTHEASTERN OHIO, NATIONAL ASSOCIATION, Canton, Ohio, and The Central Trust Company of Wayne County, Wooster, Ohio Banking offices Names of banks and type of transaction Total assets The Central Trust Company of Wayne County, Wooster, Ohio, with and The Central Trust Company of Northeastern Ohio, National Association, Canton, Ohio (76), which had merged April 30, 1979, under charter and title of the latter bank (76). The merged bank at date of merger had In To be operation operated $ 43,674,000 4 333,903,000 21 377,577,000 25 COMPTROLLER'S DECISION This is the Comptroller's decision on the application to merge The Central Trust Company of Wayne County, Wooster, Ohio ("Merging Bank"), into The Central Trust Company of Northeastern Ohio, National Association, Canton, Ohio ("Charter Bank"). This application is one part of a process whereby The Central Bancorpora85 tion, Inc., Cincinnati, Ohio ("Central"), a registered multibank holding company, is realigning and consolidating a portion of its banking interests. Charter Bank has total deposits of $284 million, and Merging Bank has total deposits of $38.1 million. The merging banks are wholly owned banking subsidiaries of the same bank holding company, Central; approval of this application would have no adverse effect on any relevant area of consideration. A review of the record of this application and other information available to this Office as a result of its regulatory responsibilities revealed no evidence that the applicants' records of helping to meet the credit needs of their communities, including low and moderate income neighborhoods, is less than satisfactory. This decision is the prior written approval required by the Bank Merger Act, 12 USC 1828(c), in order for the applicants to proceed with the merger. March 21, 1979 SUMMARY OF REPORT BY ATTORNEY GENERAL The merging banks are all wholly owned subsidiaries of the same bank holding company. As such, the proposed mergers are essentially corporate reorganizations and would have no effect on competition. WARRICK NATIONAL BANK OF BOONVILLE, Boonville, ln<±, The Colonial National Bank, Ohio Township (P.O. Tennyson), Ind. Banking offices Names of banks and type of transaction Total assets The Colonial National Bank, Ohio Township (P.O. Tennyson), Ind. (8956), with and Warrick National Bank of Boonville, Boonville, Ind. (14218). which had merged May 7, 1979, under charter and title of the latter bank (14218). The merged bank at date of merger had COMPTROLLER'S DECISION Pursuant to the Bank Merger Act, 12 USC 1828(c), an application has been filed with the Office of the Comptroller of the Currency. The application requests prior written consent to the proposed merger of The Colonial National Bank, Ohio Township (P.O. Tennyson), Ind. ("CNB") into Warrick National Bank of Boonville, Boonville, Ind. ("WNB") under the cha. :er and title of "Warrick National Bank of Boonville." This application is based on a written agreement between the proponents. WNB had total deposits of $37.6 million on September 30, 1978, and operates its head office and one branch. CNB had total deposits of $10.9 million on September 30, 1978. In 1971, CNB became a subsidiary of Two Rivers, Inc., Evansville, Ind., and its corporate parent, Property Developers, Inc., Evansville, both registered bank holding companies. Under this ownership, CNB became a supervisory problem bank. A principal portion of CNB's current problems stems from a large parcel of other real estate owned, which was sold under contract in December 1974 to Lemmons and Company (another business interest of principals of Two Rivers, Inc., and Property Developers, Inc.). Subsequently, in December 1976, Lemmons and Company filed bankruptcy, and the two bank holding companies were also drawn into that bankruptcy. As a consequence of substantial adverse publicity concerning CNB's operation and condition, the bank has suffered a loss of depositors' confidence and has sustained a heavy withdrawal of deposits commencing in June 1977. In September 1978, the bankruptcy court authorized the sale of CNB, and it was subsequently sold through 86 In To be operation operated $11,815,000 46,864.000 58,855,000 a public bidding process to an individual (the husband of a WNB director) with the intent of merging CNB and WNB. Additionally, it is noted that CNB's former chief executive officer has resigned, and the bank is now being run in a caretaker fashion by a former junior officer. Although Warrick County, Inc., the location of the two banks involved in this proposed merger, is part of the five-county Evansville SMSA, it is believed that the relevant market area is deemed to be the smaller twocounty area of Warrick and Vanderburgh Counties, as stated and described in the application. The western portion of Warrick County, the area in which CNB is situated, serves as a bedroom community for Evansville, immediately to the west. There are 11 banks operating in the two-county area, and the market is dominated by the three larger Evansville banks which collectively hold almost 83 percent of total deposits. WNB holds only 4.3 percent of market deposits, and CNB holds a mere 1.27 percent of total area deposits. Pro forma, the resulting bank with approximately 5.6 percent of total market shares and would be a very distant fourth largest bank, behind the third largest bank that holds in excess of 18 percent of deposits. Given the overall condition of CNB, which can only be described as a "stagnating" or "possible failing" institution, the bank's competitive abilities are only conjectural, and it is concluded that approval of this merger would result in no substantially adverse effect on competition. The financial and managerial resources of WNB are regarded as satisfactory. The financial and managerial resources of CNB are considered less than satisfactory and largely unknown. Apart from this merger, the only apparent alternative for CNB is a continued period of stagnation, with ultimate likelihood of liquidation. Approval of this merger will be immediately beneficial to the banking customers in CNB's service area. The public's banking needs will be better met by WNB which will operate all of CNB's existing offices as branches. In addition, the resulting bank will be a viable competitor and should be able to provide greater service to its customers. A review of the record of this application and other information available to this Office as a result of its regulatory responsibilities revealed no evidence that the applicants' record of helping to meet the community credit needs, including those of low and moderate income neighborhoods, is less than satisfactory. This application is in the public interest and is approved. WNB is also authorized to operate all former banking offices of CNB as branches. April 3, 1979 SUMMARY OF REPORT BY ATTORNEY GENERAL We have reviewed this proposed transaction and conclude that it would not have any significant effect on competition. THE THIRD NATIONAL BANK AND TRUST COMPANY OF DAYTON, OHIO, Dayton, Ohio, and The Citizens First National Bank of Greene County, Xenia, Ohio Banking offices Names of banks and type of transaction Total assets The Citizens First National Bank of Greene County, Xenia, Ohio (2575), with and The Third National Bank and Trust Company of Dayton, Ohio, Dayton, Ohio (10), which had . . . merged May 21, 1979, under charter of the latter bank (10) and title "The Third National Bank and Trust Company." The merged bank at date of merger had COMPTROLLER'S DECISION This is the Comptroller's decision on an application to merge The Citizens First National Bank of Greene County, Xenia, Ohio ("FNB"), into The Third National Bank and Trust Company of Dayton, Ohio, Dayton, Ohio ("Third"). The application was filed on January 12, 1979, and is based on a written agreement executed by the applicant banks on November 28, 1978, As of June 30, 1978, FNB had total deposits of $37 million and Third had total deposits of $325 million. Third is in Dayton, which is in Montgomery County. FNB is in Xenia, which is in Greene County. Greene County is adjacent to, and east of, Montgomery County. The two counties are part of the Dayton SMSA, which also includes Miami and Preble Counties. The main office of FNB is approximately 15 miles east of Dayton. The closest branches of the two banks are 3.5 miles apart. Winters National Bank in Dayton with $694 million in deposits is the largest bank in Montgomery County and the SMSA. First National Bank in Dayton with $333 million and Third with $325 million in deposits rank second and third. Central Trust Company with $68 million in deposits ranks fourth. In aggregate, the three largest banks held 88 percent of the commercial bank deposits in Montgomery County and 65 percent of the commercial bank deposits in the SMSA. There are 11 commercial banks operating in the county. Third is an independently owned commercial bank while the two larger banks in the county are controlled by holding companies. Winters is a subsidiary of Winters National Corporation, which holds approximately $1.0 billion in deposits, and First National is a subsidiary of National City Corporation, which holds $3.6 million in deposits. Subsidiaries of Central Bancorporation ($1.9 million in deposits) and BancOhio ($1.1 billion in deposits) are also in Montgomery County. These latter $ 47,082 .000 447,876 .000 494,915 .000 In To be operation operated 7 24 31 two banks will soon become branches of the parent's lead banking subsidiaries. These $1 billion-and-over financial institutions are a major competitive factor in the commercial banking markets in Dayton and surrounding areas. Savings and loan associations also have an effect on banking competition in Montgomery County and, in fact, control greater shares of funds on deposit than commercial banks. These depository institutions hold $1.6 billion in deposits while commercial banks hold $1.4 million in deposits. Twenty-one percent of Third's loan portfolio is collateralized by liens on real estate. Therefore, it faces direct competition from savings and loan associations for at least this loan business and the deposits necessary to support these loans. FNB operates in a similar competitive environment in Greene County. Both the first and third largest banks in the county are subsidiaries of holding companies with total deposits in excess of $1 billion. FNB with $37 million in deposits is the second largest bank operating in the county. The largest bank, Miami Deposit Bank ($54 million deposits) is a subsidiary of First National City Corporation, a bank holding company which holds $1.1 billion in deposits. The third largest bank ($35 million in deposits) is a subsidiary of Society Corporation which controls $1.8 billion in deposits. In aggregate, the three largest banks control 62 percent of Greene County's commercial bank deposits. There are seven commercial banks operating in the county. In Greene County, as in Montgomery County, savings and loan institutions hold more deposits than commercial banks. These institutions hold $171 million in deposits while commercial banks hold $167 million in deposits. FNB holds 53 percent of its loans in real estate and consequently competes directly and substantially with the saving and loan institutions in the county. 87 Third conducts some banking business in Greene County. For example, within ZIP code 45385, which is Xenia and environs, Third holds $2.1 million in deposits and $4.8 million in loans. In the same ZIP code area, FNB has $22.5 million in loans. However, the merger of Third and FNB would not change FNB's rank in Greene County or Third's rank in Montgomery County. The resulting bank's rank in the SMSA or any subset which includes both Greene and Montgomery County also would not change. However, in Xenia and Greene County, FNB would be replaced by a strong independent commercial bank able to compete with the two $1 billion-plus holding company subsidiaries located there. In the combined Montgomery and Greene County market, which the Comptroller finds to be the most reasonable market, the resulting bank will be the largest independent bank but will not cause a significant increase in concentration. On the contrary, the resulting bank will be a significant local competitor to the statewide holding company subsidiaries and branches. After reviewing all factors relevant to the issue of competition, the Comptroller finds this merger will reduce some existing competition between applicants, but that this does not rise to the level requiring a finding that the positive factors outweigh the adverse competitive impact. On the contrary, the Comptroller finds that the strengthening of the largest independent commercial bank in the combined Montgomery/Greene County marset will help preserve and enhance competition by maintaining the choice for banking customers of a local institution strong enough to compete with statewide holding companies. The financial and managerial resources of Third are excellent. The financial resources of FNB are satisfactory, but the future is clouded by high turnover in management personnel. The future prospects of the combined bank are good. As a result of this merger, Third intends to make available new and expanded banking services to the present customers of FNB including, but not limited to, an increased legal lending limit, trust and fiduciary services, more advantageous time certificate service, expanded consumer lending services and expanded data processing services. These facts are positive considerations on the issue of convenience and needs. For example, the factor of an increased legal lending limit has particular bearing on the community of Xenia. In 1974, a substantial portion of Xenia was destroyed by a devastating tornado. The community has had a difficult time rebuilding from this catastrophe. A significant portion of the loans held by Third in the Xenia area are commercial loans considerably larger than the $500,000 legal lending limit of FNB. The Comptroller believes that the expanded credit opportunities that would be made available by the presence of Third in this market are an important factor on issue of convenience and needs in this merger. The Comptroller is not aware of any negative factors on this issue with respect to this application. A review of the record of this application and other information available to this Office as a result of its regulatory responsibilities revealed no evidence that the applicants' records of helping to meet the credit needs 88 of their entire communities, including low and moderate income neighborhoods, is less than satisfactory. This opinion is the prior written approval required by the Bank Merger Act, 12 USC 1828(c), in order for the applicants to proceed with the proposed merger. April 20, 1979 SUMMARY OF REPORT BY ATTORNEY GENERAL The relevant geographic markets are Montgomery County (population 574,800) and Greene County (population 133,800) within the four-county Dayton SMSA and Greene County alone. The Dayton SMSA, Ohio's fourth largest metropolitan area, has experienced a 2.5 percent population decline during the 1970's. Greene County is the SMSA's fastest growing area with a 7.0 percent population increase, roughly double the increase of the SMSA's other suburban counties. Dayton is a major manufacturing center. It is the home of National Cash Register Company and GM's recently sold Frigidaire Division. The largest employer in Greene County is the federal government due to the presence of Wright-Patterson Air Force Base in the County's northwest corner. The principal towns in Greene County are Fairbom (population 33,100) near WrightPatterson AFB and Xenia (population 26,000) in the center of the county. Xenia is 15% miles from downtown Dayton by four-lane highway. Dayton's suburbs have spilled into Greene County but have not reached Xenia. Applicant's and Bank's nearest offices are only 2.8 miles apart. The map included with the application shows six Applicant branches and two Bank branches near the Montgomery-Greene County border. Although their distances apart are not provided, it appears that no Bank office is more than 10-12 miles from an office of Applicant. Bank draws 85.7 percent of its deposits, totaling $30.9 million, and 82.1 percent of its loans, totaling $19.5 million, from ZIP codes within Greene County, including several ZIP codes which overlap into Montgomery County. Applicant draws $27.0 million in deposits and $22.1 million in loans from these same overlapping ZIP codes. Because some ZIP codes overlap the county border it is difficult to determine with precision the extent to which each bank draws customers from the other's county. For example, a single ZIP code, 45385, which includes Xenia and the surrounding rural area, accounts for 62.4 percent of Bank's deposits and 53.8 percent of its loans. Applicant draws $2.1 million in deposits from this area and $4.5 million in loans. Moreover, Applicant draws more in deposits and loans from Fairbom, Greene County's largest community, than does Bank. Thus, while Bank may or may not be a significant alternative for most Dayton residents, Applicant is clearly a significant banking alternative for Greene County residents. Accordingly, it appears that the proposed acquisition would eliminate existing competition. A good argument can be made that the market is really much narrower—e.g., eastern Montgomery County and western Greene County. However, for purposes of analyses, and because of the difficulty of developing statistics for less than an entire county, we will use a two-county market. Employing a two-county market, Applicant is the third largest bank with 19.0 percent of deposits and Bank is sixth largest with 2.2 percent. Commercial banking is very concentrated in Montgomery County. The three largest among its 11 commercial banks and their June 30, 1978 market share, are Winters National Bank (44.8 percent), First National Bank (21.9 percent) and Applicant (21.3 percent). Thus, the three largest banks have a combined market share of 88.0 percent, while the fourth largest bank has a 4.5 percent market share. Only one independent bank (in addition to Applicant) in Montgomery County has a significant branch network. Banking is less concentrated in Greene County. The largest bank and Bank each have 19.8 percent of the county's deposits while the third largest has a 17.9 percent share, or 57.5 percent combined. Combining the two markets, the three largest banks (all in Montgomery County) presently hold 78.5 percent of commercial bank deposits and will hold 80.7 percent if the merger is consummated. However, four of the six largest banks in Montgomery County are owned by multibank holding companies, as are two of the three largest banks in Greene County. In all, five of the state's 10 largest banking organizations are represented in one of the two counties. Applicant and Bank are respectively the largest and second largest independent banks in the two-county area. As a result of the new Ohio branching statute, effective on January 1, 1979, which permits de novo branching into adjacent counties and branching by acquisition statewide, Applicant can freely open de novo branches throughout adjacent Greene County. As a large, nearby bank, it could be expected to do so. Previously a bank which wanted to enter new markets in Ohio had to either use the multibank holding company corporate structure to charter a de novo bank or had to acquire an existing bank. It is anticipated that many banks will take advantage of the change to expand de novo. Indeed, we understand that 17 Ohio banks have submitted applications to open 25 de novo offices in adjacent counties since January 1st. Were Applicant to enter Greene County de novo, as the statute now permits, Bank would remain as a possible entry vehicle for banks which can enter only by acquisition. Applicant and Bank are actual competitors in Greene County, although the degree of such competition is difficult to gauge with any precision. In the broader two-county Greene-Montgomery County market where we can measure this competition, it is clear that the merger will eliminate some direct competition. Furthermore, the proposed acquisition would produce an increase in concentration. Overall, we conclude that the proposed acquisition would have an adverse effect on competition. FIRST NATIONAL CITY BANK OF ALLIANCE, Alliance, Ohio, and First National Bank of Sebring, Sebring, Ohio Banking offices Names of banks and type of transaction Total assets First National Bank of Sebring, Sebring, Ohio (14601), with and First National City Bank of Alliance, Alliance, Ohio (3721), which had merged May 22, 1979, under charter and title of the latter bank (3721). The merged bank at date of merger had COMPTROLLER'S DECISION This is the Comptroller's decision on an application to merge First National Bank of Sebring, Sebring, Ohio ("FNB"), into First National City Bank of Alliance, Alliance, Ohio ("Charter Bank"). The application was filed on September 7, 1978, and is based on a written agreement executed by the applicant banks on August 15, 1978. As of June 30, 1978, FNB had total deposits of $8.5 million, and Charter Bank had total deposits of $74.7 million. FNB is the only commercial bank in Sebring. Charter Bank is domiciled in Alliance, which is in the extreme northeastern corner of Stark County, 15 miles northeast of Canton, Ohio. The city limits of Alliance extend east into Mahoning County where FNB is located in Sebring, about 31/2 miles east of Alliance. Sebring is virtually a suburb of Alliance. The smallest geographic market that can be reasonably found is Alliance-Sebring. Within this market, In To be operation operated $10,549,190 83,239,645 93,788,835 Charter Bank holds $64 million in deposits or 19.4 percent of all deposits held in the market and, on this basis, is the largest of 10 competitors. FNB holds 2.3 percent of all deposits and is ninth. A more realistic definition of the market must take into account the fact that three of the four commercial banks headquartered in Canton have branches in Alliance. These banks are The Central Trust Company of Northeastern Ohio with $275 million in deposits, The Harter Bank and Trust Company with $363 million in deposits and The United National Bank with $116 million in deposits. Thus, the Federal Reserve Board has found the Charter and Merging banks to be part of the Canton banking market, where Charter Bank ranks fifth with 6.9 percent of the deposits. Consummation of the merger would not change Charter Bank's rank and would raise its total to 7.7 percent of deposits. The competitive situation is not capable of complete description by numbers alone. The Merging Bank, like 89 many very small institutions, is facing a management succession problem. Although present management is satisfactory, the chief executive officer is 82 years old. The Bank's lending limit is $110,000, and it does not offer trust services, free personal checking accounts, direct issue and handling of bank credit cards, automated teller machines, computerized payroll services, most advantageous compounding of interest on time deposits, highest rates on time deposits and extended banking hours. Citizens of Sebring must now travel to Alliance to find these services, and once in Alliance, the presence of the large Canton banks offer strong competitive alternatives. In light of the foregoing, the Comptroller finds that the proposed merger would eliminate some existing competition but that the major thrust of banking competition for the citizens of Sebring, i.e., between Alliance banks and Canton banks would not be significantly affected. The effect on competition does not rise to a level that would suggest disapproval under the Bank Merger Act, 12 USC 1828(c). The financial and managerial resources of Charter Bank are satisfactory. The financial resources of FNB are satisfactory, but the future of the presently satisfactory management is clouded by the age of the chief executive officer. The future prospects of the combined bank are good. As a result of this merger, Charter Bank intends to make available new and expanded banking services to the present customers of FNB, including but not limited to an increased legal lending limit, trust and fiduciary services, free personal checking accounts, computerized payroll and other computer services and acceptance of customer payment of public utility billings. These facts are positive considerations on the issue of convenience and needs. The Comptroller is not aware of any negative factors on this issue. A review of the record of this application and other information available to this Office as a result of its regulatory responsibilities revealed no evidence that the applicants' record of helping to meet credit needs of the communities, including low and moderate income neighborhoods, is less than satisfactory. This decision is the prior written approval required by the Bank Merger Act, 12 USC 1828(c), in order for the applicants to proceed with the proposed merger. April 19, 1979 SUMMARY OF REPORT BY ATTORNEY GENERAL Both institutions operate in the Alliance-Sebring area which consists of the northeast corner of Stark County and the southwest corner of Mahoning County. Sebring is located 4 miles from Alliance and is part of the Alliance metropolitan area. Alliance serves as the retail center for the surrounding area. While, the application includes the towns of Hartville and Uniontown in the relevant market, it appears that these towns are too remote to be considered as part of the banking market; moreover, each is part of a different metropolitan area. Hartville is 13 miles from Alliance and 17 miles from Sebring and is part of the Canton area. Uniontown is 17 miles from Alliance and 21 miles from Sebring and part of the Akron area. The closest office of Applicant is 4 miles from the only office of Bank. There are no intervening towns or other banks between the two offices. The acquisition would eliminate substantial existing competition between the two institutions. Applicant is the largest bank in the Alliance-Sebring area with approximately 57 percent of total deposits. Bank is the fourth largest of five banks in that area and has 7.4 percent of total deposits. The resulting institution would be the largest in Alliance-Sebring; its share of over 64 percent of total deposits would make it nearly twice as large as the three other banks combined. Banking in the Alliance-Sebring area presently is highly concentrated. The proposed acquisition would increase concentration and make eventual deconcentration less likely by removing Bank as a possible vehicle by which a bank not located in the market could enter and by entrenching the existing dominance of Applicant. Thus, we conclude that the proposed acquisition would have an adverse effect on competition. THE FIRST NATIONAL BANK OF MARYLAND, Baltimore, Md., and The Sharpsburg Bank of Washington County, Sharpsburg, Md. Banking offices Names of banks and type of transaction Total assets The Sharpsburg Bank of Washington County, Sharpsburg, Md., with and The First National Bank of Maryland, Baltimore, Md. (1413), which had merged May 30, 1979, under charter and title of the latter bank (1413). The merged bank at date of merger had COMPTROLLER'S DECISION This is the Comptroller's decision on an application to merge The Sharpsburg Bank of Washington County, Sharpsburg, Md. ("Sharpsburg Bank"), into and under the charter of The First National Bank of Maryland, 90 $ 7,783,000 1,814,834,000 1,821,180,000 In To be operation operated 1 94 95 Baltimore, Md. ("FNB"). The application was filed on February 8, 1979, and is based on a written agreement executed by the applicant banks on November 21, 1978. As of September 30, 1978, FNB had total deposits of $1.3 billion and Sharpsburg Bank had de- posits of $6.6 million. FNB is a wholly owned subsidiary of First Maryland Bancorp, Baltimore, Md., a registered one-bank holding company. Sharpsburg Bank operates a single banking office within Sharpsburg in the southern portion of Washington County in northwestern Maryland. Of the 89 banking offices FNB now operates throughout Maryland, seven are in the northwestern part of the state. FNB has six banking offices within Hagerstown and one office in Hancock, all in northern Washington County. The closest banking office of FNB to Sharpsburg Bank's only office is approximately 20 miles. In view of the geographic distance separating the two banks and with offices of competing banks located in the intervening area, approval of this merger would not have the effect of eliminating any meaningful degree of existing competition. Furthermore, although applicable Maryland statutes allow commercial banks to branch statewide, the Sharpsburg area is not viewed as attractive for de novo entry. Thus, the potential for the development of increased future competition between the two banks appears to be minimal. FNB would continue through the resulting bank as the largest commercial banking organization in Washington County through its control of approximately 30 percent of total county deposits. However, numerous commercial banking alternatives would remain available throughout the county, including banking offices of larger commercial banking organizations. Overall, this merger would not have a substantially adverse effect on competition. The financial and managerial resources of FNB and Sharpsburg Bank are regarded as satisfactory, although Sharpsburg Bank has limited management depth. The future prospects of FNB appear favorable, and the future prospects of Sharpsburg Bank when combined with FNB appear more favorable since the bank's lack of management succession would be alleviated. FNB proposes to offer new and expanded banking services to the present customers of the Sharpsburg Bank, including but not limited to, full trust services, bank credit cards, individual retirement accounts, overdraft checking and an expanded credit limit. These facts are positive considerations on the issue of convenience and needs. A review of the record of this application and other information available to this Office as a result of its regulatory responsibilities revealed no evidence that the bank's record of helping to meet the credit needs of the entire community, including low and moderate income neighborhoods, is less than satisfactory. This decision is the prior written approval required by the Bank Merger Act, 12 USC 1828(c), in order for the applicants to proceed with the proposed merger. April 24, 1979 SUMMARY OF REPORT BY ATTORNEY GENERAL We have reviewed this proposed transaction and conclude that it would not have a significantly adverse effect upon competition. VIRGINIA NATIONAL BANK, Norfolk, Va., and New Bank of Roanoke, Roanoke, Va. Banking offices Names of banks and type of transaction Total assets New Bank of Roanoke, Roanoke, Va., with and Virginia National Bank, Norfolk, Va. (9885), which had merged May 31, 1979, under charter and title of the latter bank (9885). The merged bank at date of merged had COMPTROLLER'S DECISION On February 8, 1979, this Office received an application filed pursuant to the Bank Merger Act, 12 USC 1828(c), from New Bank of Roanoke, Roanoke, Va. ("NBR"), and Virginia National Bank, Norfolk, Va. ("VNB"). The application is based upon a agreement written between the banks dated December 27, 1978. As of September 30, 1978, VNB had total deposits of $1.9 billion, and NBR had total deposits of $10.6 million. NBR is a commercial banking subsidiary of NB Corporation, Charlottesville, Va., a registered multibank holding company. VNB serves as the lead bank for Virginia National Bankshares, Inc., Norfolk, the second largest registered multibank holding company in the state. $ 8,142,000 2,403,982,000 2,411,025,000 In To be operation operated 3 167 170 The primary service area of VNB is considered to be the portions of the state where it presently operates 164 banking offices. It has offices in the major geographic regions of the state including Northern Virginia, the Tidewater area, Central Virginia, Shenandoah Valley, Lynchburg-Danville-Martinsville area and Southwest Virginia including Scott, Washington, Pulaski and Wythe Counties. The defined service area appears to be the major banking markets of the state with the exception of the Roanoke metropolitan area. NBR's primary service area is approximated by the Roanoke SMSA (including the independent cities of Roanoke and Salem and the counties of Roanoke, Craig and Botetourt) in general and the city of Roanoke in particular. There are 39 banking offices of 91 eight banks in the city holding deposits in excess of $1 billion. All banks in Roanoke are affiliated with bank holding companies, and all major holding companies with the noted exception of Virginia National Bankshares, Inc., are represented in Roanoke. There is no significant competition between VNB and NBR. VNB's closest banking office to Roanoke is 35 miles east in Lynchburg, and VNB derives only about $170 thousand (0.009 percent) of its total deposits from the Roanoke banking market. NBR holds only 1 percent of the total deposits in Roanoke, and VNB's position in the state would be unaffected by this merger. Consequently, the competitive effects are not likely to substantially lessen competition in any relevant area or otherwise violate the standards found in 12 USC 1828(c)(5). The financial and managerial resources of both VNB and NBR are satisfactory. The future prospects of the combined bank are good, and NBR's future prospects are favorably enhanced by this proposal. As a result of the merger, VNB intends to provide a considerable number of new and expanded banking services to the present customers of NBR, including but not limited to, extension of VNB's existing elec- tronic funds transfer network into southwestern Virginia, computerized customer services including payrolls, accounts receivable, accounts payable, general ledger and related financial documents for business and upgrading of NBR's existing physical facilities. These facts are positive considerations on the issue of convenience and needs. The Comptroller is not aware of any negative factors on this issue. A review of the record of this application and other information available to this Office as a result of its regulatory responsibilities revealed no evidence that the applicants' records of helping to meet the credit needs of their communities, including low and moderate income neighborhoods, is less than satisfactory. This decision is the prior written approval required by the Bank Merger Act, 12 USC 1828(c), in order for the applicants to proceed with the proposed merger. April 25, 1979 SUMMARY OF REPORT BY ATTORNEY GENERAL We have reviewed this proposed transaction and conclude that it would not have any adverse effect upon competition. THE FIRST NATIONAL BANK OF SHREVEPORT, Shreveport, La., and Caddo Trust and Savings Bank, Belcher, La. Banking offices Names of banks and type of transaction Total assets* Caddo Trust and Savings Bank, Belcher, La., with and The First National Bank of Shreveport, Shreveport, La. (3595), which had merged June 1, 1979, under charter and title of the latter bank (3595). The merged bank at date of merger had COMPTROLLER'S DECISION This is the Comptroller's decision on an application to merge Caddo Trust and Savings Bank, Belcher, La. ("Caddo") into and under the charter of The First National Bank of Shreveport, Shreveport, La. ("FNB"). This application was filed on January 3, 1979, and is based on a written agreement executed by the applicant banks on November 14, 1978. As of June 30, 1978, Caddo had total deposits of $20.6 million and FNB had deposits of $437.5 million. The relevant geographic market appears to be Caddo Parish wherein FNB is the largest commercial bank, and Caddo represents the ninth largest in deposit size of 11 banks in the parish. FNB operates 10 offices in the Shreveport area and one office in Vivian, La., about 30 miles north of Shreveport. Caddo has a total of three offices, all in northern Caddo Parish. The closest office of Caddo to an office of FNB is its Oil City branch, located approximately 9 miles south of * Asset figures are as of call dates immediately before and after transaction. 92 $ 24,427,000 603,106,000 641,339,000 In To be operation operated 3 14 17 Vivian. The resulting bank would continue as the largest in Caddo Parish with 34.4 percent of the total deposits within the parish. The Comptroller finds that the proposed merger would eliminate a small amount of existing competition but that there would remain a sufficient number of alternative sources for banking services in the relevant market. Consequently, the competitive effects are not likely to substantially lessen competition in any relevant market or otherwise violate the standards found in 12 USC 1828(c)(5). The financial and managerial resources of FNB are satisfactory. While Caddo's present condition is satisfactory, its ability to attract successor management and provide expanded financial services is limited. Accordingly, its financial and managerial resources are considered somewhat less than satisfactory. Additionally, its future prospects are limited in view of the stable and sparsely populated northern Caddo parish market within which it operates. The future prospects of the combined bank are considered good. As a result of the merger, FNB intends to make available new and expanded banking services to the present customers of Caddo, including but not limited to, 24-hour automatic teller machines, bank credit cards, additional expertise in agricultural and petroleum lending, more aggressive consumer loan department, trust services, individual retirement accounts, wire transfer, and automation of Caddo's accounts. These facts are positive considerations on the issue of convenience and needs. The Comptroller is not aware of any negative factors in this issue. A review of the record of this application and other information available to this Office as a result of its regulatory responsibilities revealed no evidence that the applicants' records of helping to meet credit needs of the communities, including low and moderate income neighborhoods, is less than satisfactory. This decision is the prior written approval required by the Bank Merger Act, 12 USC 1828(c), in order for the applicant to proceed with the proposed merger. May 1, 1979 SUMMARY OF REPORT BY ATTORNEY GENERAL All three of Bank's offices are located in northern Caddo Parish, in small communities situated from 15 to 25 miles north of Shreveport. The closest offices of the parties (Applicant's office in Vivian and Bank's office in Oil City) are approximately 8 miles apart, and according to the application, only one other bank operates in the northern portion of Caddo Parish. It therefore appears that the proposed acquisition would eliminate existing competition between Applicant and Bank. Banking is highly concentrated in Caddo Parish. As of June 30, 1978, the four largest banks in the parish together held approximately 85 percent of the total deposits held by the 11 banks presently operating there. Applicant is the largest bank in the parish with about 33 percent of the parish's bank deposits, and Bank is the ninth largest with about 1.5 percent. The proposed acquisition, therefore, would increase the Applicant's dominance in the parish and the high level of banking concentration there. We conclude that the proposed acquisition would have an adverse effect on competition. SUN FIRST NATIONAL BANK OF MELBOURNE, Melbourne, Fla., and Sun Bank of Cocoa, National Association, Cocoa, Fla. Banking offices Names of banks and type of transaction Total assets* Sun Bank of Cocoa, National Association, Cocoa, Fla. (14806), with and Sun First National Bank of Melbourne, Melbourne, Fla. (16107), which had merged June 1, 1979, under charter of the latter bank (16107) and title "Sun First National Bank of Brevard County." The merged bank at date of merger had COMPTROLLER'S DECISION Pursuant to the statutory requirements of the Bank Merger Act (12 USC 1828(c)), an application has been filed with the Office of the Comptroller of the Currency that seeks and requires the prior written permission of this Office to effectuate the proposed merger of Sun Bank of Cocoa, National Association, Cocoa, Fla. ("Merging Bank"), into Sun First National Bank of Melbourne, Melbourne, Fla. ("Charter Bank"), under the charter of Sun First National Bank of Melbourne and with the title of "Sun First National Bank of Brevard County." This application is based on an agreement executed between the proponent banks and is incorporated herein by reference, the same as if fully set forth. Merging Bank was granted National Banking Association charter number 14806 by this Office on February 14, 1957. As of September 30, 1978, Merging Bank had total deposits of $41.2 million. Charter Bank, operating under National Banking Association charter number 16107, was chartered by this Office on April 5, 1973. As of September 30, 1978, Charter Bank's total deposits were $52.2 million. $ 46,957,000 62,801,000 115,366,000 In To be operation operated 4 6 10 Both Merging Bank and Charter Bank are commercial banking subsidiaries of Sun Banks of Florida, Inc., Orlando, Fla., a registered multibank holding company that controlled 21 subsidiary banks with consolidated deposits of $1.8 billion on December 31, 1977. Accordingly, given the element of common ownership and control existent between the proponents, this application must be regarded essentially as a corporate reorganization whereby the bank holding company is realigning and consolidating a portion of its banking interests in Brevard County. This application was filed prior to the November 6, 1978, effective date of the Comptroller's Community Reinvestment Act regulations, 12 CFR 25. However, pursuant to the Community Reinvestment Act, Public Law No. 95-128, available information relevant to the banks' records of meeting their community credit needs was reviewed, revealing no evidence to suggest that the applicants are not meeting the credit * Asset figures are as of call dates immediately before and after transaction. 93 needs of their community, including low and moderate income neighborhoods. Accordingly, applying the statutory criteria, this Office concludes that this application is not adverse to the public interest and should be, and hereby is, approved. February 27, 1979 SUMMARY OF REPORT BY ATTORNEY GENERAL The merging banks are both wholly owned subsidiaries of the same bank holding company. As such their proposed merger is essentially a corporate reorganization and would have no effect on competition. FIRST NATIONAL BANK OF MERCER COUNTY, Celina, Ohio, and The Home Banking Company, St. Marys, Ohio Banking offices Names of banks and type of transaction Total assets COMPTROLLER'S DECISION This is the Comptroller's decision on the application to merge The Home Banking Company, St. Marys, Ohio ("Home"), into First National Bank of Mercer County, Celina, Ohio ("FNB"). This application is part of a process whereby The Central Bancorporation, Inc., Cincinnati, Ohio ("Central"), a registered multibank holding company, is realigning and consolidating a portion of its banking interests. A review of the record of this application and other information available to this Office as a result of its regulatory responsibilities revealed no evidence that the applicants' records of helping to meet the credit needs of their communities, including low and moderate income neighborhoods, is less than satisfactory. Home has deposits of $37 million, and FNB has deposits of $79 million. Both banks are subsidiaries if Central, and, therefore, the merger does not raise 94 $ 44,231,000 91,413.000 135,644,000 CO CD The Home Banking Company, St. Marys, Ohio, with .... and First National Bank of Mercer County, Celina, Ohio (5523), which had merged June 29, 1979, under charter of the latter bank (5523) and title "The Central Trust Company of Western Ohio, National Association." The merged bank at date of merger had In To be operation operated 9 competitive issues under the Bank Merger Act, 12 USC 1828(c). Additionally, a review of the financial and managerial resources and future prospects of the existing and proposed institutions and the convenience and needs of the community to be served has disclosed no reason why this application should not be approved. This decision is the prior written approval required by the Bank Merger Act, 12 USC 1828(c), in order for the applicants to proceed with the proposed merger. April 2, 1979 SUMMARY OF REPORT BY ATTORNEY GENERAL The merging banks are all wholly owned subsidiaries of the same bank holding company. As such, the proposed mergers are essentially corporate reorganizations and would have no effect on competition. THE OHIO NATIONAL BANK OF COLUMBUS, Columbus, Ohio, and Akron National Bank, Akron, Ohio, The Capital National Bank, Cleveland, Ohio, The First National Bank of Springfield, Springfield, Ohio, The First National Bank of Newark, Newark, Ohio, First National Bank of Coshocton, Coshocton, Ohio, The First National Bank of Chillicothe, Chillicothe, Ohio, The Western Security Bank, Sandusky, Ohio, The Citizens National Bank in Zanesville, Zanesville, Ohio, The Niles Bank Company, Niles, Ohio, The First National Bank of Delaware, Delaware, Ohio, The First National Bank of Jackson, Jackson, Ohio, The National Bank of Portsmouth, Portsmouth, Ohio, The Central National Bank at Cambridge, Cambridge, Ohio, The Hocking Valley National Bank of Lancaster, Lancaster, Ohio, The Ohio Bank and Trust Company, New Philadelphia, Ohio, The Citizens National Bank of Ironton, Ironton, Ohio, The Medina County Bank, Medina, Ohio, The First National Bank of Cadiz, Cadiz, Ohio, The First National Bank of Tiffin, Tiffin, Ohio, The Knox County Savings Bank, Mount Vernon, Ohio, The Community Bank, Napoleon, Ohio, The Farmers and Merchants Bank of Logan, Logan, Ohio, The First National Bank of Marysville, Marysville, Ohio, The First National Bank of London, London, Ohio, The First National Bank of Washington Court House, Washington Court House, Ohio, The Kenton Savings Bank, Kenton, Ohio, National Bank of Loveland, Loveland, Ohio, The Perry County Bank, New Lexington, Ohio, The First National Bank of Wilmington, Wilmington, Ohio, The Second National Bank of Circleville, Circleville, Ohio, The Cummings Bank Company, Carrollton, Ohio, The Citizens Banking Company, Perrysburg, Ohio, The Peoples National Bank of Greenfield, Greenfield, Ohio, The Logan County Bank, Bellefontaine, Ohio, The Peoples Savings Bank Company, Delta, Ohio, The Ohio State Bank of Dayton, Dayton, Ohio, The Geauga County National Bank of Chardon, Chardon, Ohio, The Adams Bank, Millersburg, Ohio, The First National Bank at East Palestine, East Palestine, Ohio Banking offices Names of banks and type of transaction Total assets Akron National Bank, Akron, Ohio (15609), with and The First National Bank of Cadiz, Cadiz, Ohio (100), with and The Central National Bank at Cambridge, Cambridge, Ohio (13905), with and The Geauga County National Bank of Chardon, Chardon, Ohio (14879), with and The First National Bank of Chillicothe, Chillicothe, Ohio (128), with and The Second National Bank of Circleville, Circleville, Ohio (172), with and The Capital National Bank, Cleveland, Ohio (15423), with and First National Bank of Coshocton, Coshocton, Ohio (6892), with and The First National Bank of Delaware, Delaware, Ohio (243), with and The First National Bank at East Palestine, East Palestine, Ohio (13850), with and The Peoples National Bank of Greenfield, Greenfield, Ohio (10105), with and The Citizens National Bank of Ironton, Ironton, Ohio (4336), with and The First National Bank of Jackson, Jackson, Ohio (1903), with and The Hocking Valley National Bank of Lancaster, Lancaster, Ohio (1241), with and The First National Bank of London, London, Ohio (1064), with and National Bank of Loveland, Loveland, Ohio (15945), with and The First National Bank of Marysville, Marysville, Ohio (14360), with and The First National Bank of Newark, Newark, Ohio (858), with and The National Bank of Portsmouth, Portsmouth, Ohio (13832), with and The First National Bank of Springfield, Springfield, Ohio (238), with and The First National Bank of Tiffin, Tiffin, Ohio (3315), with and The First National Bank of Washington Court House, Washington Court House, Ohio (13490), with and The First National Bank of Wilmington, Wilmington, Ohio (365), with and The Citizens National Bank in Zanesville, Zanesville, Ohio (5760), with and The Logan County Bank, Bellefontaine, Ohio, with and The Cummings Bank Company, Carrollton, Ohio, with and The Ohio State Bank of Dayton, Dayton, Ohio/with and The Peoples Sayings Bank Company, Delta, Ohio, with and The Kenton Savings Bank, Kenton, Ohio, with and The Farmers and Merchants Bank of Logan, Logan, Ohio, with and The Medina County Bank, Medina, Ohio, with and The Adams Bank, Millersburg, Ohio, with and The Knox County Savings Bank, Mount Vernon, Ohio, with and The Community Bank, Napoleon, Ohio, with and The Perry County Bank, New Lexington, Ohio, with and The Ohio Bank and Trust Company, New Philadelphia, Ohio, with and The Niles Bank Company, Niles, Ohio, with and The Citizens Banking Company, Perrysburg, Ohio, with and The Western Security Bank, Sandusky, Ohio, with and The Ohio National Bank of Columbus, Columbus, Ohio (5065), which had merged June 29, 1979, under charter of the latter bank (5065) and title "BancOhio National Bank." The merged bank at date of merger had COMPTROLLER'S DECISION This is the Comptroller's decision on the application to merge 39 sister banks ("Merging Bank"), into The Ohio National Bank of Columbus, Columbus, Ohio ("Charter Bank"). This application is one part of a process whereby BancOhio Corporation, Columbus, Ohio, a In To be operation operated $ 469,814,000 44,731,000 67,170,000 23,718,000 88,343,000 33,881,000 202,207,000 89,464,000 72,499,000 22,194,000 28,511,000 46,540,000 71,347,000 64,377,000 39,409,000 36,576,000 40,608,000 116,140,000 69,553,000 135,536,000 43,042,000 25 1 6 3 4 2 16 2 4 3 3 5 2 5 2 6 2 9 5 7 3 39,096,000 34,973,000 80,003,000 25,572,000 32,787,000 25,115,000 25,464,000 36,603,000 41,611,000 45,224,000 22,542,000 43,016,000 41,660,000 35,911,000 49,682,000 76,885,000 31,217,000 82,006,000 1,686,722,000 3 3 3 4 3 3 3 4 2 6 3 2 3 2 4 5 3 5 45 4,261,749,000 221 registered multibank holding company is realigning and consolidating its banking interests throughout the state. A review of the record of this application and other information available to this Office as a result of its regulatory responsibilities revealed no evidence that the 95 applicants' records of helping to meet the credit needs of their communities, including low and moderate income neighborhoods, is less than satisfactory. In consideration of the element of common ownership and control existent among the proponents, this proposal is regarded as a corporate reorganization. As such, it presents no competitive issues under the Bank Merger Act, 12 USC 1828(c). Additionally, a review of the financial and managerial resources and future prospects of the existing and proposed institutions, and the convenience and needs of the communities to be served has disclosed no reason why this application should not be approved. This decision is the prior written approval required by the Bank Merger Act, 12 USC 1828(c), in order for the applicants to proceed with the proposed merger. April 6, 1979 SUMMARY OF REPORT BY ATTORNEY GENERAL The merging banks are all subsidiaries of the same bank holding company. As such, the proposed merger is essentially a corporate reorganization and would have no effect on competition. THE CENTRAL NATIONAL BANK OF RICHMOND, Richmond, Va., and Fidelity American Bank, NA, Richmond, Henrico County, Va., and Cavalier Central Bank & Trust Company, Hopewell, Va. Banking offices Names of banks and type of transaction Total assets Fidelity American Bank, NA, Richmond, Henrico County, Va. (15315), with and Cavalier Central Bank & Trust Company, Hopewell, Va., with and The Central National Bank of Richmond, Richmond, Va. (10080), which had merged June 30, 1979, under charter and title of the latter bank (10080). The merged bank at date of merger had COMPTROLLER'S DECISION This is the Comptroller's decision on an application to merge Fidelity American Bank, NA, Richmond, Henrico County, Va. ("Henrico Bank"), and Cavalier Central Bank & Trust Company, Hopewell, Va. ("Hopewell Bank"), into and under the charter of The Central National Bank of Richmond, Richmond, Va. ("Richmond Bank'1). The application was filed on March 30, 1979, and is based on a written agreement executed by the applicant banks on February 12, 1979. Hopewell Bank is a state-chartered bank that had total deposits of $8.7 million as of December 31, 1978. Richmond Bank and Henrico Bank are both national banks that had total deposits of $350.5 million and $15.1 million, respectively, as of December 31, 1978. All three banks are wholly owned and controlled by Commonwealth Banks, Inc., Richmond, registered bank holding company. Therefore, this is merely an application for a corporate reorganization. As such, it presents no competitive issues under the Bank Merger Act, 12 USC 1828(c). Additionally, a review of the fi- 96 $ 15,483,000 10,351,000 410,687,000 436,101,000 In To be operation operated 20 2 4 26 nancial and managerial resources and future prospects of the existing and proposed institutions and the convenience and needs of the community to be served has disclosed no reason why this application should not be approved. (See 12 USC 1842(c)(21)). A review of the record of this application and other information available to this Office as a result of its regulatory responsibilities revealed no evidence that the banks' records of helping to meet the credit needs of their communities, including low and moderate income neighborhoods, is less than satisfactory. This decision is the prior written approval required by the Bank Merger Act, 12 USC 1828(c), in order for the applicants to proceed with the proposed merger. May 31, 1979 SUMMARY OF REPORT BY ATTORNEY GENERAL The merging banks are all wholly owned subsidiaries of the same bank holding company. As such, their proposed merger is essentially a corporate reorganization and would have no effect on competition. FIRST & MERCHANTS NATIONAL BANK, Richmond, Va., and The First National Bank of Danville, Danville, Va. Banking offices Names of banks and type of transaction Total assets* The First National Bank of Danville, Danville, Va. (1985), with and First & Merchants National Bank, Richmond, Va. (1111), which had merged June 30, 1979, under charter and title of the latter bank (1111). The merged bank at date of merger had COMPTROLLER'S DECISION This is the Comptroller's decision on an application to merge The First National Bank of Danville, Danville, Va. ("Danville Bank"), into and under the charter of First & Merchants National Bank, Richmond, Va. ("Richmond Bank"). The application was filed on April 5, 1979, and is based on a written agreement executed by the applicant banks on January 24, 1979. Richmond Bank and Danville Bank are both national banks that had total deposits of $1.5 billion and $85 million, respectively, as of December 31, 1978. Both banks are wholly owned and controlled by First and Merchants Corporation, Richmond, a registered bank holding company. Therefore, this is merely an application for a corporate reorganization. As such, it presents no competitive issues under the Bank Merger Act, 12 USC 1828(c). Additionally, a review of the financial and managerial resources and future prospects of the existing and proposed institutions and the convenience and needs of the community to be served has disclosed no reason why this application should not be approved. (See 12 USC 1842(c)(21)). $ 107,989,000 1,897,005,000 In To be operation operated 6 92 2,116,992,000 98 A review of the record of this application and other information available to this Office as a result of its regulatory responsibilities revealed no evidence that the banks' records of helping to meet the credit needs of their communities, including low and moderate income neighborhoods, is less than satisfactory. This decision is the prior written approval required by the Bank Merger Act, 12 USC 1828(c), in order for the applicants to proceed with the proposed merger. May 25, 1979 SUMMARY OF REPORT BY ATTORNEY GENERAL The merging banks are both wholly owned subsidiaries of the same bank holding company. As such, their proposed merger is essentially a corporate reorganization and would have no effect on competition. * Asset figures are as of call dates immediately before and after transaction. NATIONAL COMMUNITY BANK OF NEW JERSEY, Rutherford, N.J., and Arcadia National Bank, Secaucus, N.J. Banking offices Names of banks and type of transaction Total assets Arcadia National Bank, Secaucus, N.J. (16267), with and National Community Bank of New Jersey, Rutherford, N.J. (5005), which had merged June 30, 1979, under charter and title of the latter bank (5005). The merged bank at date of merger had COMPTROLLER'S DECISION This is the Comptroller's decision on an application to merge Arcadia National Bank, Secaucus, N.J. ("Secaucus Bank"), into and under the charter of National Community Bank of New Jersey, Rutherford, N.J. ("Rutherford Bank"). The application was filed on April 10, 1979, and is based on a written agreement executed by the applicant banks on March 28, 1979. As of December 31, 1978, Rutherford Bank had total deposits of $796.5 million, and Secaucus Bank had deposits of $18.9 million. Rutherford Bank operates 48 banking offices in the northern portion of New Jersey: 26 in Bergen County, $ 22,484,000 953,304,000 976,705,000 In To be operation operated 1 49 50 including its main office; 13 in Morris County, seven in Sussex County and one in both Passaic and Warren Counties. Secaucus Bank operates a single banking office within the town of Secaucus in Hudson County. (An approved but unopened branch office is also planned for Secaucus.) The main office of Rutherford Bank is approximately 4 miles from Secaucus Bank. The closest branch office of Rutherford Bank to Secaucus Bank's only office is some 3 miles distant in contiguous Bergen County. Within the intervening area between these closest offices is situated the Hackensack River, a natural geographic barrier, which effectively separates the market areas of the two banks. As 97 a result, Rutherford Bank and Secaucus Bank each serve distinct service areas and compete with numerous other commercial banking alternatives. Furthermore, Secaucus Bank is subject to the competitive banking alternatives. Furthermore, Secaucus Bank is subject to the competitive impact of banking offices of substantially larger commercial banking organizations in its service area. In 1974, Secaucus Bank was chartered as a national bank and commenced operations as an affiliate of Rutherford Bank with all voting stock of the new bank being offered to and purchased by the stockholders of Rutherford Bank. The two banks also share the same board of directors and have common management personnel, and Secaucus Bank continues to qualify as an affiliate of Rutherford Bank as defined by 12 USC 221 (a). The likelihood of increased future competition between the proponent banks appears remote. Accordingly, we find that approval of this application would have no adverse effect on competition. The financial and managerial resources of both Rutherford Bank and Secaucus Bank are satisfactory. The future prospects of the two banks, independently and in combination, appear favorable. After consummation of this merger, the additional capabilities of Rutherford Bank, through the resulting bank, will be made available to the present customers of Secaucus Bank in such areas as international banking, full trust services, electronic data processing and a substantially larger legal lending limit. Accordingly, the banking public would be better served as a result of this proposal. A review of the record of this application and other information available to this Office as a result of its regulatory responsibilities revealed no evidence that the bank's record of helping to meet the credit needs of the entire community including low and moderate income neighborhoods is less than satisfactory. This merger may not be consummated until proof of compliance with 12 USC 215a(2) is submitted. This decision is the prior written approval required by the Bank Merger Act 12 USC 1828(c), in order for the applicants to proceed with the proposed transac-. tion. May 31, 1979 SUMMARY OF REPORT BY ATTORNEY GENERAL We have reviewed this proposed transaction and conclude that it would not have a substantial competitive impact. SOUTHEAST FIRST NATIONAL BANK OF MIAMI, Miami, Fla., and Southeast First National Bank of Miami Springs, Miami Springs, Fla., and Southeast National Bank of Coral Way, Miami, Fla., and Southeast Bank of Dadeland, Unincorporated Area of Dade County, Fla., and Southeast National Bank of Tamiami, Unincorporated Areas of Dade County, Fla., and Southeast Bank of Westland, Hialeah, Fla. Names of banks and type of transaction Total assets Southeast National Bank of Coral Way, Miami (15568), with and Southeast Bank of Dadeland, Unincorporated Area of Dade County, Fla., with and Southeast First National Bank of Miami Springs, Miami Springs, Fla. (14707), with and Southeast National Bank of Tamiami, Unincorporated Area of Dade County, Fla. (16480), with. . and Southeast Bank of Westland, Hialeah, Fla., with and Southeast First National Bank of Miami, Miami, Fla. (15638), which had merged July 1, 1979, under charter and title of the latter bank (15638). The merged bank at date of merger had COMPTROLLER'S DECISION This is the Comptroller's decision on the application to merge five sister banks ("Merging Banks"), into Southeast First National Bank of Miami, Miami, Fla. ("SFNB"). This application is one part of a process whereby Southeast Banking Corporation, Miami, Fla. ("Southeast"), a registered multibank holding company, is realigning and consolidating a portion of its banking interests in the Dade County area. 98 $ 116,936,000 54,842,000 122,732,000 17,562,000 17,491,000 2,180,175,000 2,509,738,000 Banking offices In To be operation operated 3 1 1 1 1 3 10 A review of the record of this application and other information available to this Office as a result of its regulatory responsibilities revealed no evidence that the applicants' record of helping to meet the credit needs of their entire community, including low and moderate income neighborhoods, is less than satisfactory. In consideration of the element of common ownership and control existent among the proponents, this proposal is regarded as a corporate reorganization, and as such, would produce no adverse effect upon any relevant area of consideration. This decision is the prior written approval required by the Bank Merger Act, 12 USC 1828(c), in order for the applicants to proceed with the proposed merger. March 30, 1979 SUMMARY OF REPORT BY ATTORNEY GENERAL The merging banks are all wholly owned subsidiaries of the same bank holding company. As such, their proposed merger is essentially a corporate reorganization and would have no effect on competition. THE FARMERS NATIONAL BANK OF CYNTHIANA, Cynthiana, Ky., and Union Bank of Berry, Berry, Ky. Banking offices Names of banks and type of transaction Total assets* Union Bank of Berry, Berry, Ky., with was purchased July 2, 1979, by The Farmers National Bank of Cynthiana, Cynthiana, Ky. (2560), which had After the purchase was effected, the receiving bank had COMPTROLLER'S DECISION This is the Comptroller's decision on the application of The Farmers National Bank of Cynthiana, Cynthiana, Ky. ("FNB"), to purchase the assets and assume the liabilities of Union Bank of-Berry, Berry, Ky. ("Union Bank"). The application was filed on February 22, 1979, and is based on a written agreement executed by the applicant banks on October 6, 1978. As of December 31, 1978, FNB had total deposits of $26.1 million, and Union Bank had deposits of $3.9 million. FNB operates a main office, one branch office and a limited service drive-in facility within the City of Cynthiana, the county seat of Harrison County. Union Bank operates its single banking office within the City of Berry, which is approximately 13 miles to the northwest of Cynthiana in rural Harrison County. Union Bank's service area is predominantly agricultural, but with a relatively static economy, Union Bank has a history of minimal overall growth. As a result, Union Bank ranks as the smallest of the four commercial banks operating in Harrison County with only 5 percent of total county deposits. FNB would continue through the resulting bank as the second largest bank in Harrison County with approximately 36 percent of total county deposits while the largest bank, also headquartered in Cynthiana, would control some 47 percent. Applicable state banking statutes would permit de novo branch expansion by these banks within Harrison County. However, neither could establish a branch in the home office community of the other due to home office protection. Union Bank applied for a branch office north of the city limits of Cynthiana, but in November 1977, the state banking commissioner declined the application citing the small size of Union Bank. Conversely, the population of the Berry area is not In To be operation operated $ 4,485,000 29,551,000 33,085,000 large enough to support another bank's office without seriously threatening the viability of Union Bank. Accordingly, we find that approval of this application would have no significant adverse effect on competition. The financial and managerial resources of both FNB and Union Bank are regarded as satisfactory. The future prospects of the two banks independently are good but in combination are favorably enhanced. As a result of this proposal, FNB intends to offer new and expanded banking services to customers of Union Bank, including, but not limited to, full trust services, bank credit cards, individual retirement accounts and an increased credit limit. These services will provide greater convenience and fill needs that are not being filled by Union Bank. A review of the record of this application and other information available to this Office as a result of its regulatory responsibilities revealed no evidence that the banks' records of helping to meet the credit needs of the communities, including low and moderate income neighborhoods, is less than satisfactory. This decision is the prior written approval required by the Bank Merger Act, 12 USC 1828(c), in order for the applicants to proceed with the proposed transaction. May 31, 1979 SUMMARY OF REPORT BY ATTORNEY GENERAL We have reviewed this proposed transaction and conclude that it would not have a substantially adverse effect upon competition. * Assets are as of call dates before and after transaction. 99 THE FIRST NATIONAL BANK OF FARMVILLE, Farmville, Va., and The Bank of Buckingham, Dillwyn, Va. Banking offices Names of banks and type of transaction Total assets The Bank of Buckingham, Dillwyn, Va., with and The First National Bank of Farmville, Farmville, Va. (5683), which had merged July 2, 1979, under charter and title of the latter bank (5683). The merged bank at date of merger had COMPTROLLER'S DECISION This is the Comptroller's decision on an application to merge The Bank of Buckingham, Dillwyn, Va. ("Dillwyn Bank"), into and under the charter of The First National Bank of Farmville, Farmville, Va. ("Farmville Bank"). The application was filed on February 1, 1979, and is based on a written agreement executed by the applicant banks on October 25, 1978. Farmville Bank received its charter as a national bank on January 18, 1901, and had total deposits of $44.1 million as of September 30, 1978. Farmville Bank presently operates its main office and four branch offices within Prince Edward County. Dillwyn Bank was chartered as a state bank in 1972, had total deposits of $6.6 million as of September 30, 1978 and operates two banking offices within Buckingham County. Farmville Bank and Dillwyn Bank, whose closest offices are 20 miles apart, each serve distinct service areas. Several commercial banking alternatives, including branch offices of substantially larger banks, are located near offices of both Farmville Bank and Dillwyn Bank. This merger will not alter Farmville Bank's position in the combined market area of Prince Edward and Cumberland Counties, since the resulting bank will rank fifth among the six banking organizations in this area. Moreover, Dillwyn Bank was organized and has been operating under the general supervision of the management of Farmville Bank. Accordingly, we find that approval of this application would have no adverse effect on competition. In To be operation operated $ 8,842,000 52,163,000 61,005,000 The financial and managerial resources of both Farmville Bank and Dillwyn Bank are regarded as satisfactory. The future prospects of the two banks independently are good, but in combination are favorably enhanced. As a result of this merger, Farmville Bank intends to offer new and expanded banking services to the present customers of Dillwyn Bank; these services include full trust services and a larger legal lending limit. Considerations relative to convenience and needs benefits are consistent with approval of this application. A review of the record of this application and other information available to this Office as a result of its regulatory responsibilities revealed no evidence that the banks' records of helping to meet the credit needs of the communities, including low and moderate income neighborhoods, is less than satisfactory. This opinion is the prior written approval required by the Bank Merger Act, 12 USC 1828(c), in order for the applicants to merge under their previously referenced agreement. May 22, 1979 SUMMARY OF REPORT BY ATTORNEY GENERAL We have reviewed this proposed transaction and conclude that it would not have any significant effect on competition. NATIONAL BANK AND TRUST COMPANY, Charlottesville, Va., and New Bank of Culpeper, Culpeper, Va. Banking offices Total assets Names of banks and type of transaction New Bank of Culpeper, Va., with and National Bank and Trust Company, Charlottesville, Va. (10618), which had merged July 2, 1979, under charter and title of the latter bank (10618). The merged bank at date of merger had COMPTROLLER'S DECISION This is the Comptroller's decision on an application to merge New Bank of Culpeper, Culpeper, Va. ("Culpeper Bank"), into and under the charter of National 100 $ 9,178,442 275,415,305 284,593,747 In To be operation operated 3 25 28 Bank and Trust Company, Charlottesville, Va. ("Charlottesville Bank"). The application was filed on May 1, 1979, and is based on a written agreement executed by the applicant banks on April 10, 1979. Charlottesville Bank is a national bank that had total deposits of $246.7 million as of December 31, 1978. Culpeper Bank, a state-chartered bank, had deposits of $7.4 million as of December 31, 1978. Both banks are wholly owned and controlled by NB Corporation, Charlottesville, a registered bank holding company. Therefore, this is merely an application for a corporate reorganization. As such, it presents no competitive issues under the Bank Merger Act, 12 USC 1828(c). Additionally, a review of the financial and managerial resources and future prospects of the existing and proposed institutions and the convenience and needs of the community to be served has disclosed no reason why this application should not be approved. A review of the record of this application and other information available to this Office as a result of its regulatory responsibilities revealed no evidence that the banks' records of helping to meet credit needs of the communities, including low and moderate income neighborhoods, is less than satisfactory. This decision is the prior written approval required by the Bank Merger Act, 12 USC 1828(c), in order for the applicants to proceed with the proposed merger. May 31, 1979 SUMMARY OF REPORT BY ATTORNEY GENERAL The merging banks are both wholly owned subsidiaries of the same bank holding company. As such, their proposed merger is essentially a corporate reorganization and would have no effect on competition. WELLS FARGO BANK, NATIONAL ASSOCIATION, San Francisco, Calif., and First Central Coast Bank, San Luis Obispo, Calif. Banking offices Names of banks and type of transaction Total assets First Central Coast Bank, San Luis Obispo, Calif., with and Wells Fargo Bank, National Association, San Francisco, Calif. (15660), which had merged July 14, 1979, under charter and title of the latter bank (15660). The merged bank at date of merger had COMPTROLLER'S DECISION This is the Comptroller's decision on an application to merge First Central Coast Bank, San Luis Obispo, Calif. ("First") into and under the charter of Wells Fargo Bank, National Association, San Francisco, Calif. ("Wells"). This application was accepted for filing by this Office on February 27, 1979, and is based on an agreement executed between the proponents on September 27, 1978. As of September 30, 1978, Wells had total deposits of $14.1 billion, and First's deposits were $37.5 million. Wells is a wholly owned commercial banking subsidiary of Wells Fargo & Company, a registered bank holding company. The narrowest geographic market appears to be San Luis Obispo County, situated along the Pacific Coast, about midway between Los Angeles and San Francisco. First maintains five offices, all in San Luis Obispo County, where it ranks as the fifth largest bank controlling 8.6 percent of total deposits. Wells, which could branch in San Luis Obispo County, is not currently represented there. There is no meaningful competition existing between the participating institutions because their nearest offices, which operate in different banking markets, are approximately 35 miles apart. The county is dominated by Bank of America which has 49 percent of total county deposits. Bank of America also dominates the state with Wells ranking as a distant third. Wells competes vigorously with Bank of $ 44,541,000 16,605,829,000 16,656,462,000 In To be operation operated 5 385 390 America throughout the state. This type of competition is not now present in San Luis Obispo County. Wells' entry into this county by acquiring the fifth largest bank will promote this type of competition without raising dangers of oligopolistic behavior. This type of merger would not change Wells' ranking in the state. Accordingly, approval of this application would not substantially lessen competition in any relevant market or otherwise violate the standards found in 12 USC 1828(c)(5). As required under 12 USC 1828(c)(5), the Comptroller considered the financial and managerial resources and found that they are satisfactory for Wells. The financial and managerial resources of First are generally satisfactory; except that there is now no clearly identifiable management succession. The future prospects of the combined institution are good and considerably better than those of First. As a result of this merger, Wells will be in a position to expand the banking services currently available to the San Luis Obispo banking public. Additional banking services not currently available through First that will become available through Wells include investment advisory, trust and international services. Also, service expansion would occur in personal residential term real estate loan funding, larger lending limit and bank credit cards. These facts are positive considerations, and the Comptroller is not aware of any nega101 tive factors bearing on convenience and needs considerations. A review of the record of this application and other information available to this Office as a result of its regulatory responsibilities revealed no evidence that the applicants' record of helping to meet credit needs of their communities, including low and moderate income neighborhoods, is less than satisfactory. This decision is the prior written approval required by the Bank Merger Act, 12 USC 1828(c), in order for the applicants to proceed with the proposed merger. June 14, 1979 SUMMARY OF REPORT BY ATTORNEY GENERAL We have reviewed this proposed transaction and conclude that it would not have a significantly adverse effect upon competition. SOCIETY NATIONAL BANK OF CLEVELAND, Cleveland, Ohio, and Society Bank of Painesville, Ohio Banking offices Names of banks and type of transaction Total assets Society Bank of Painesville, Painesville, Ohio, with and Society National Bank of Cleveland, Cleveland, Ohio (14761), which had merged July 30, 1979, under charter and title of the latter bank. The merged bank at date of merger had COMPTROLLER'S DECISION This is the Comptroller's decision on the application to merge Society Bank of Painesville, Painesville, Ohio, into Society National Bank of Cleveland, Cleveland, Ohio. Both banks are subsidiaries of Society Corporation, Cleveland, Ohio, registered multibank holding company. This application is one part of a process whereby Society Corporation will realign and consolidate a portion of its banking interests throughout the state. A review of the record of this application and other information available to this Office as a result of its regulatory responsibilities revealed no evidence that the applicants' records of helping to meet the entire community credit needs, including those of low and moderate income neighborhoods, is less than satisfactory. Because of the common ownership and control of the proponents, this proposal is solely a corporate re- $ 52,747,000 1,495,576,000 1,542,964,000 In operation To be operated 6 81 87 organization. As such, it presents no competitive issues under the Bank Merger Act, 12 USC 1828(c). Additionally, a review of the financial and managerial resources and future prospects of the existing and proposed institutions and the convenience and needs of the community to be served has disclosed no reason why this application should not be approved. This decision is the prior written approval required by the Bank Merger Act, 12 USC 1828(c), in order for the applicants to proceed with the proposed merger. June 29, 1979 SUMMARY OF REPORT BY ATTORNEY GENERAL The merging banks are both wholly owned subsidiaries of the same bank holding company. As such, their proposed merger is essentially a corporate reorganization and would have no effect on competition. HERITAGE BANK, N.A.—FLUSHING, Flushing, Ohio, and The Eastern Ohio Bank, Union Township, Ohio Banking offices Names of banks and type of transaction Total assets* The Eastern Ohio Bank, Union Township, Ohio, with and Heritage Bank, N.A.—Flushing, Flushing, Ohio (12008), which had merged August 27, 1979, under charter and title of the latter bank (12008). The merged bank at date of merger had COMPTROLLER'S DECISION This is the Comptroller's decision on the application to merge The Eastern Ohio Bank, Union Township, Ohio, into Heritage Bank, N.A.—Flushing, Flushing, Ohio. * Asset figures are as of call dates immediately before and after transaction. 102 In To be operation operated $14,013,000 20,681,000 28,525,000 Both banks are subsidiaries of Heritage Bancorporation. This application is part of a process whereby Heritage will realign and consolidate its banking interests in the Flushing area. Because of the common ownership and control of the proponents, this proposal is merely a corporate reorganization. As such, it presents no competitive is- sues under the Bank Merger Act, 12 USC 1828(c). Additionally, a review of the financial and managerial resources and future prospects of the existing and proposed institutions and the convenience and needs of the community to be served has disclosed no reason why this application should not be approved. A review of the record of this application and other information available to this Office as a result of its regulatory responsibilities revealed no evidence that the applicants' records of helping to meet the community credit needs, including those of low and moderate income neighborhoods, is less than satisfactory. This decision is the prior written approval required by the Bank Merger Act, 12 USC 1828(c), in order for the applicants to proceed with the proposed merger. July 27, 1979 SUMMARY OF REPORT BY ATTORNEY GENERAL The merging banks are both wholly owned subsidiaries of the same bank holding company. As such, their proposed merger is essentially a corporate reorganization and would have no effect on competition. THE PLANTERS NATIONAL BANK AND TRUST COMPANY, Rocky Mount, N.C., and Liberty Bank & Trust Company, Durham, N.C. Banking offices Names of banks and type of transaction Total assets* Liberty Bank & Trust Company, Durham, N.C, with was purchased August 31, 1979, by The Planters National Bank and Trust Company, Rocky Mount, N.C. (10608), which had After the purchase was effected, the receiving bank had COMPTROLLER'S DECISION This is the Comptroller's decision on the application of The Planters National Bank and Trust Company, Rocky Mount, N.C. ("Planters Bank"), to purchase the assets and assume the liabilities of Liberty Bank & Trust Company, Durham, N.C. ("Liberty Bank"). The application was filed on May 7, 1979, and is based on a written agreement executed by the applicant banks on February 21, 1979. As of December 31, 1978, Planters Bank had total deposits of $286.7 million, and Liberty Bank had deposits of $13.7 million. Planters Bank currently operates a main office and 34 branch offices, most of which are in the northeastern part of the state. Liberty Bank operates a main office and three branch offices in Durham in northcentral North Carolina. The main offices of the two banks are some 65 miles apart, and the closest offices of Planters Bank to Liberty Bank are approximately 20 miles distant in Raleigh, N.C. In view of the geographic distance separating the proponent banks and with numerous offices of competing commercial banks located in the intervening area, it is concluded that this acquisition would not eliminate any existing competition between Planters Bank and Liberty Bank. North Carolina State Banking statutes allow statewide ate novo branch expansion by commercial banks. Thus, either of the two banks could branch into the areas served by the other. Liberty Bank has shown no desire to expand outside Durham, and it does not appear likely that the bank would employ ate novo expansion into any area currently served by Planters Bank. The likelihood that Planters Bank would enter the Durham area appears remote inasmuch as this market presently has nine commercial banks operating 52 offices, among which are the five largest banks in the In To be operation operated $ 16,224,000 4 314,810,000 350,798,000 35 39 state. Accordingly, the potential for future competition between the proponent banks is minimal. Approval of this application would not have a substantially adverse effect on competition. The financial and managerial resources of both Planters Bank and Liberty Bank are satisfactory. The future prospects of the two banks, independently and in combination, appear favorable. After consummation of this transaction, the additional capabilities of Planters Bank through the resulting bank will be made available to the present customers of Liberty Bank in such areas as full trust services and a substantially larger legal lending limit. Considerations relative to convenience and needs benefits are consistent with approval of this application. A review of the record of this application and other information available to this Office as a result of its regulatory responsibilities revealed no evidence that the banks' records of helping to meet the credit needs of the communities, including low and moderate income neighborhoods, is less than satisfactory. This decision is the prior written approval required by the Bank Merger Act, 12 USC 1828(c), in order for the applicants to proceed with the proposed transaction. July 23, 1979 SUMMARY OF REPORT BY ATTORNEY GENERAL We have reviewed this proposed transaction and conclude that it.would not have a significantly adverse effect upon competition. * Assets are as of call dates immediately before and after transaction. 103 THE NATIONAL BANK OF SOUTH CAROLINA, Sumter, S.C, and Bank of North Charleston, North Charleston, S.C. Banking offices Names of banks and type of transaction Total assets* Bank of North Charleston, North Charleston, S.C, with was purchased September 14, 1979, by The National Bank of South Carolina, Sumter, S.C. (10660), which had After the purchase was effected, the receiving bank had COMPTROLLER'S DECISION This is the Comptroller's decision on an application of The National Bank of South Carolina, Sumter, S.C. ("Sumter"), to purchase the assets and assume the liabilities of the Bank of North Charleston, North Charleston. S.C. ("North Bank"). This application was accepted for filing on July 13, 1979, and is based on an agreement executed between the proponents on June 25, 1979. At the specific request of the South Carolina Commissioner of Banking, this application has been processed pursuant to the emergency provisions of the Bank Merger Act. (See 12 USC 1828(c)(4) and 12 USC 1828(c)(c)). On December 31, 1978, Sumter had total deposits of $129 million, and North Bank had total deposits of $14.8 million. Sumter is the seventh largest bank in South Carolina, with 1.2 percent of total state deposits. It presently has 18 offices in seven metropolitan areas of the state. Sumter also has three approved but unopened offices, one of which is in Summerville, a community about 11 miles from North Charleston. Sumter is not currently represented in either North Charleston or Charleston. North Bank operates one office in North Charleston, two offices in Charleston and one office in Goose Creek. The main offices of the two proponents are almost 90 miles apart, and their closest existing offices are approximately 50 miles apart. Due to the distances between the closest offices and the presence of other banking alternatives, there does not appear to be any meaningful existing competition between Sumter and North Bank. The proposed merger would have little effect on state-wide competition, and Sumter's rank as the seventh largest banking organization would not change. Consummation of this proposal would not result in any adverse competitive effects. * Assets are as of call dates immediately before and after transaction. 104 In To be operation operated $ 14,285,000 4 148,657,000 165,735,000 16 20 The financial and managerial resources of Sumter are satisfactory. The financial and managerial resources of North Bank are unsatisfactory. At the last examination of North Bank, conducted by the Federal Deposit Insurance Corporation (FDIC) on March 3, 1979, the condition of the bank was considered critical. Due to certain operational difficulties that have received considerable adverse publicity, North Bank has been unable to comply with a directive from the FDIC for the immediate injection of additional equity capital. Accordingly, the future prospects of North Bank are uncertain, and absent consummation of this proposal, are extremely limited. As a result of this merger transaction, Sumter intends to provide new and expanded banking services to North Charleston. Sumter will provide a significantly larger legal lending limit, complete trust services, bank credit cards, overdraft protection plan, more favorable interest rates for savings, individual retirement accounts and specialized and sophisticated loan services. These facts are positive considerations on the issue of convenience and needs, and this Office is unaware of any negative factors bearing on this issue. A review of the record of this application and other information available to this Office as a result of its regulatory responsibilities revealed no evidence that Sumter's record of helping to meet the credit needs of the entire community, including low and moderate income neighborhoods, is less than satisfactory. This decision is the prior written approval required by the Bank Merger Act, 12 USC 1828(c), in order for the applicants to proceed with the proposed merger. This proposal may be consummated 5 days after the date of approval by this Office. August 3, 1979 SUMMARY OF REPORT BY ATTORNEY GENERAL We have reviewed this proposed transaction and conclude that it would not have a significantly adverse effect upon competition. FIRST NATIONAL BANK OF NEVADA, Reno, Nev., and Bank of Nevada, Las Vegas, Nev. Banking offices Names of banks and type of transaction Total assets Bank of Nevada, Las Vegas, Nev., with and First National Bank of Nevada, Reno, Nev. (7038), which had consolidated September 28, 1979, under charter and title of the latter bank (7038). The consolidated bank at date of consolidation had COMPTROLLER'S DECISION This is the Comptroller's decision on an application to consolidate Frist National Bank of Nevada, Reno, Nev. ("FNB"), and Bank of Nevada, Las Vegas, Nev. ("Bank"). The application was filed on July 9, 1979, and rests on an agreement of March 28, 1979, signed by the participants. Both FNB and Bank are controlled by Western Bancorporation, Los Angeles, Calif. ("Western"), a registered multibank holding company that operates in 12 states. This is a proposed corporate reorganization. The proponent banks are commonly owned and do not compete. It presents no competitive effects under the Bank Merger Act, 12 USC 1828(c). The financial and managerial resources and future prospects of the existing and proposed institutions are satisfactory. The new corporate structure will permit the continuing bank to more effectively serve the convenience and needs of its communities. $ 287,868,000 1,462,525,000 1,750,393,000 In To be operation operated 48 14 62 A review of the record on this application and other information available to the Office of the Comptroller of the Currency as a result of its regulatory responsibilities revealed no evidence that the applicants' records of helping community credit needs, including those of low and moderate income neighborhoods, is less than satisfactory. This is the prior written approval required for the applicants to proceed with the proposal. August 31, 1979 SUMMARY OF REPORT BY ATTORNEY GENERAL The consolidating banks are both wholly owned subsidiaries of the same bank holding company. As such, their proposed consolidation is essentially a corporate reorganization and would have no effect on competition. THE PEOPLES NATIONAL BANK AND TRUST COMPANY, Dover, Ohio, and The Gnadenhutten Bank, Gnadenhutten, Ohio Banking offices Names of banks and type of transaction Total assets The Gnadenhutten Bank, Gnadenhutten, Ohio, with and The Peoples National Bank and Trust Company, Dover, Ohio (4293), which had merged September 28, 1979, under charter and title of the latter bank (4293). The merged bank at date of merger had COMPTROLLER'S DECISION This is the Comptroller's decision on the application to merge The Gnadenhutten Bank, Gnadenhutten, Ohio ("Bank"), into The Peoples National Bank and Trust Company, Dover, Ohio ("Peoples"). This application was filed on May 10, 1979, as is based on an agreement executed by the banks on March 13, 1979. As of December 31, 1978, Peoples had total deposits of $76.5 million, and Bank's total deposits were $10.3 million. Peoples is headquartered in Dover and has three branch offices, all in Tuscarawas County. It is the second largest of eight commercial banks in the County and the smaller of two banks headquartered in Dover. In To be operation operated $ 11,761,000 89,436,000 100,610,000 Peoples is a subsidiary of First Bane Group of Ohio, Inc., Columbus, Ohio, a registered multibank holding company, that ranks as the fifth largest banking organization in Ohio. Bank is in Gnadenhutten, approximately 20 miles southeast of Dover. Bank operates no branch offices and is the fifth largest of eight banks in Tuscarawas County. It controls about 3 percent of the county's deposits. The closest offices of Peoples and Bank are 12 miles apart with offices of other banks in the intervening area. Peoples is the only present banking subsidiary of First Bane Group of Ohio, Inc., operating in the county. Peoples derives about $2.1 million in deposits 105 (2.7 percent of its total deposits) and $3.8 million in loans (6.8 percent of its total loans) from the area served by Bank. Likewise, Bank derives only $310,000 (3.0 percent of its total deposits) in deposits and $322,000 in loans (6.6 percent of its total loans) from the area served by Peoples. With prior approval of this Office, Peoples could legally establish a de novo branch in the area served by Bank. However, due to the rural nature of the area,it does not appear likely that Peoples would use this method of expansion. Consummation of this proposal would not alter Peoples relative ranking in the county and the resulting institution would hold less than 26 percent of the county's commercial bank deposits. The largest bank in the area, The Reeves Banking and Trust Company, Dover, holds almost 46 percent of the county's deposits, and the third largest bank, a subsidiary of BaneOhio Corporation, has almost 13 percent of county deposits. Since there is negligible existing competition between Peoples and Bank, the elimination of this competition as a result of approval of this application would have no substantially adverse impact on competition. The financial and managerial resources of both banks are satisfactory. The future prospects of Bank are limited in view of its small size, rural location and lack of obvious management succession. The future prospects of the combined bank are good. As a result of the merger, Peoples intends to offer new and expanded banking services to Bank's customers. These services include additional types of credit of a significantly larger and more complex nature, money certificates, trust services and equipment lease financing. These facts are positive considerations on the issue of convenience and needs, and the Comptroller is unaware of any negative factors in this issue. A review of the record of this application and other information available to this Office as a result of its regulatory responsibilities revealed no evidence that the applicants' records of helping to meet the credit needs of their entire communities, including low and moderate income neighborhoods, is less than satisfactory. This decision is the prior written approval required by the Bank Merger Act, 12 USC 1828(c), in order for the applicants to proceed with the proposed merger. August 8, 1979 SUMMARY OF REPORT BY ATTORNEY GENERAL We have reviewed this proposed transaction and conclude that it would not have a significantly adverse effect upon competition. FIRST NATIONAL BANK OF HOLLYWOOD, Hollywood, Fla., and First National Bank of Hallandale, Hallandale, Fla., and Hollywood National Bank, Hollywood, Fla., and First National Bank of Miramar, Miramar, Fla. Names of banks and type of transaction Total assets First National Bank of Hallandale, Hallandale, Fla. (15874), with and First National Bank of Miramar, Miramar, Fla. (16233), with and Hollywood National Bank, Hollywood, Fla. (16008), with and First National Bank of Hollywood, Hollywood, Fla. (14530), which had merged September 30, 1979, under charter and title of the latter bank (14530). The merged bank at date of merger had $ 27,205,000 10,779,000 13,093,000 116,909,000 168,735,000 Banking offices In To be operation operated 1 2 2 3 8 COMPTROLLER'S DECISION This is the Comptroller's decision on an application to merge First National Bank of Hallandale, Hallandale, Fla., Hollywood National Bank, Hollywood, Fla., and First National Bank of Miramar, Miramar, Fla. ("Merging Banks"), into and under the charter of First National Bank of Hollywood, Hollywood, Fla. ("Hollywood Bank"). The application was filed on April 11, 1979, and is based on a written agreement executed by the applicant banks on September 18, 1978. Hollywood Bank and Merging Banks are all national banks that had total deposits of $107.7 million and $52.1 million, respectively, as of December 31, 1978. The proponent banks are wholly owned and controlled by Florida Bankshares, Inc., Hollywood, Fla., a 106 registered bank holding company. Therefore, this is merely an application for a corporate reorganization. As such, it presents no competitive issues under the Bank Merger Act, 12 USC 1828(c). Additionally, a review of the financial and managerial resources and future prospects of the existing and proposed institutions, and the convenience and needs of the community to be served has disclosed no reason why this application should not be approved. (See 12 USC 1842(c)(21)). A review of the record of this application and other information available to this Office as a result of its regulatory responsibilities revealed no evidence that the banks' records of helping to meet the credit needs of their communities, including low and moderate income neighborhoods, is less than satisfactory. This decision is the prior written approval required by the Bank Merger Act, 12 USC 1828(c), in order for the applicants to proceed with the proposed merger. June 21, 1979 SUMMARY OF REPORT BY ATTORNEY GENERAL The merging banks are all wholly owned subsidiaries of the same bank holding company. As such, their proposed merger is essentially a corporate reorganization and would have no effect on competition. SOUTHERN NATIONAL BANK OF NORTH CAROLINA, Lumberton, N.C., and Carolina State Bank, Gastonia, N.C. Banking offices Names of banks and type of transaction Total assets* Carolina State Bank, Gastonia, N.C, with and Southern National Bank of North Carolina, Lumberton, N.C. (10610), which had merged September 30, 1979, under the charter and title of latter bank (10610). The merged bank at date of merger had COMPTROLLER'S DECISION This is the Comptroller's decision on an application to merge Carolina State Bank, Gastonia, N.C. ("Bank"), into Southern National Bank of North Carolina, Lumberton, N.C. ("Southern"). This application was filed on June 29, 1979, and rests on an agreement between the participants signed on March 26, 1979. As of December 31, 1978, Southern's total deposits were $396.2 million, and Bank had total deposits of $22.8 million. Bank has a main office and three branches in Gastonia and its immediate area. Southern has 65 offices with none in the city or county of Gastonia. The smallest relevant market would be the city of Gastonia, 1970 census tract 331 and the unincorporated sections of census tracts 318, 327 and 328. In this market, Bank competes with four other commercial banks, three of which are banks located statewide in North Carolina. The fourth competitor, Independence National Bank of Gastonia, holds the largest share of deposits in this market and operates nine of its 26 offices within the market. Bank ranks third in market share with 11.1 percent or approximately $21 million in deposits. Independence holds 53.3 percent of the market deposits or $102 million, and the First Union National Bank of North Carolina of Charlotte is second, holding 25.9 percent or approximately $45 million in deposits. As of June 30, 1978, Southern did not have any deposits in the market. The Board of Governors of the Federal Reserve System in its competitive factor report concluded that the relevant market is the Charlotte SMSA. In this market, Southern's rank is 10th of 20 banks with 1.4 percent of deposits. The merger would raise Southern's share to 3 percent and rank to seventh. The Board of Governors concluded that the proposed merger would have no adverse effect. Southern could legally enter Gastonia by a ate novo branch because North Carolina permits statewide branching. The North Carolina branching law has resulted in a highly competitive banking environment in North Carolina, and this is true of the relevant Gastonia $ 24,902,000 521,707,000 517,474,000 In To be operation operated 4 65 69 market described above. There are 24 banking offices already in this market serving approximately 57,000 persons. The cost of entry by de novo branching and the profits expected from opening the 25th or subsequent banking offices effectively precludes de novo entry for Southern National Bank. Accordingly, the competitive effects of this proposal will not significantly lessen competition in any relevant market or otherwise violate the standards found in the Bank Merger Act, 12 USC 1828(c). The financial and managerial resources of both Bank and Southern are satisfactory. The future prospects of Bank are limited in consideration of its relative small size compared to its significantly larger competitors. The future prospects of Southern and the resultant bank are good. As a consequence of the proposal, Southern will offer new and expanded banking services to the present banking customers of Bank. These services include trust, leasing, mortgage lending and accounts receivable financing. There are positive considerations on the question of convenience and needs. A review of the record on this application and other information available to the Office of the Comptroller of the Currency as a result of its regulatory responsibilities revealed no evidence that Southern's record of helping to meet the credit needs of the entire community, including low and moderate income neighborhoods, is less than satisfactory. This is the prior written approval required for the applicants to proceed with the merger. August 30, 1979 SUMMARY OF REPORT BY ATTORNEY GENERAL We have reviewed this proposed transaction and conclude that it would not have an adverse effect upon competition. * Assets are as of call dates immediately before and after transaction. 107 BANK OF JACKSON, N.A., Jackson, Miss., and Fidelity Bank, Utica, Miss. Banking offices Total assets* Names of banks and type of transaction Fidelity Bank, Utica, Miss., with was purchased October 1, 1979, by Bank of Jackson, N.A., Jackson, Miss. (16810), which had After the purchase was effected, the receiving bank had COMPTROLLER'S DECISION On September 29, 1979, application was made to the Comptroller of the Currency for prior written approval for Bank of Jackson, N.A., Jackson, Miss. ("Assuming Bank"), to purchase certain of the assets and assume certain of the liabilities of Fidelity Bank, Utica, Miss. ("Fidelity"). On September 25, 1979, Fidelity was a statechartered bank operating through its main office and three branch offices with deposits of approximately $30 million. At the close of business on September 27, 1979, Fidelity was closed by the State of Mississippi Banking Department. It was placed in receivership and taken over by the Federal Deposit Insurance Corporation (FDIC) on September 28, 1979. The present application is based on an agreement, which is incorporated herein by reference, by which the FDIC as receiver has agreed to sell certain of Fidelity's assets in consideration of the assumption of certain liabilities by the Assuming Bank. For the reasons stated hereafter, the Assuming Bank's application is approved, and the purchase and assumption transaction may be consummated immediately. Under the Bank Merger Act, 12 USC 1828(c), the Comptroller cannot approve a purchase and assumption transaction which would have certain anticompetitive effects unless it is found that these effects are clearly outweighed in the public interest by the probable effect of the transaction in meeting the convenience and needs of the community to be served. Additionally, the Comptroller is directed to consider the financial and managerial resources and future prospects of the existing and proposed institution and the convenience and needs of the community to be served. When necessary, however, to prevent the evils In To be operation operated $32,765,000 1,600,000 26,260.000 attendant on*'the failure of a bank, the Comptroller can dispense with the standards applicable to usual acquisition transactions and need not consider reports on the competitive consequences of the transaction ordinarily solicited from the Department of Justice and other banking agencies. The Comptroller is authorized in such circumstances to immediately approve an acquisition and to authorize the immediate consummation of the transaction. The proposed transaction will prevent disruption of banking services to the community and potential losses to a number of uninsured depositors. The Assuming Bank has sufficient financial and managerial resources to absorb Fidelity and enhance the banking services it offers in the Utica community. The Comptroller thus finds that the anticompetitive effects of the proposed transaction, if any, are clearly outweighed in the public interest by the probable effect of the proposed transaction in meeting the convenience and needs of the community to be served. For these reasons, the Assuming Bank's application to purchase certain assets and acquire certain liabilities of Fidelity, as set forth in the agreement executed with the FDIC as receiver, is approved. This approval also includes specific approval to operate Fidelity's main office and all branch offices as branches of the Assuming Bank and approval of the transfer to the Assuming Bank of Fidelity's trust business as provided in the agreement. The Comptroller further finds that the failure of Fidelity requires him to act immediately, as contemplated by the Bank Merger Act, to prevent disruption of banking services to the community. The Comptroller thus waives publication of notice, dispenses with solicitation of competitive reports from other agencies and authorizes the transaction to be consummated immediately. September 29, 1979 * Asset figures are as of call dates immediately before and after .transaction. 108 Due to the emergency nature of the situation, no Attorney General's report was requested. THE BARNSTABLE COUNTY NATIONAL BANK OF HYANNIS, Barnstable, Mass., and Chatham Trust Company, Chatham, Mass. Banking offices Total assets Names of banks and type of transaction Chatham Trust Company, Chatham, Mass., with and The Barnstable County National Bank of Hyannis, Barnstable, Mass. (13395), which had merged October 1, 1979, under charter and title of the latter bank (13395). The merged bank at date of merger had COMPTROLLER'S DECISION This is the Comptroller's decision on an application to merge Chatham Trust Company, Chatham, Mass. ("Chatham"), into The Barnstable County National Bank of Hyannis, Barnstable, Mass. ("Barnstable"). This application was filed on April 26, 1979, and is based on a written agreement executed by the proponents on April 9, 1979. As of December 31,1978, Chatham had total deposits of $10.9 million, and Barnstable's total deposits were $30.4 million. Chatham was founded in 1919 and operates from a single office in Chatham. Barnstable operates a head office in Hyannis and three branches in Barnstable County. It is a subsidiary of New England Merchants Company, Inc., Boston, a registered multibank holding company. The relevant geographic market for analysis in this application is Barnstable County. The county is on a peninsula separated from -the rest of the state by Cape Cod Canal. Barnstable's main office is slightly less than 20 miles from the sole office of Chatham. The closest office of Barnstable to Chatham is its Dennis Port Branch, about 10 miles distant. There are offices of other banks in the intervening area. About 2.8 percent of Barnstable's total deposits and 6.2 percent of its loans originate in the area served by Chatham. Chatham obtains 1.3 percent of its total deposits, and 6.7 percent of its total loans come from the area served by Barnstable. Barnstable is the fifth largest of eight commercial banks with 9.1 percent of total county deposits. Chatham is the smallest bank with 3.4 percent of the county's total deposits. Chatham is the smallest bank with 3.4 percent of the county's total deposits. Upon consummation of this proposal, Barnstable would continue as the fifth largest bank in the county. Further, several banking alternatives, including offices of two commercial banks and a branch of a mutual savings In To be operation operated $13,596,000 35,276,000 44,872,000 bank, would remain in Chatham. The elimination of any existing competition between Barnstable and Chatham would not have a substantially adverse effect on competition. The financial and managerial resources of both Barnstable and Chatham are satisfactory. The future prospects of Barnstable are good. The future prospects of Chatham, independent of this merger, are uncertain. The bank is losing its share of market deposits. Chatham's affiliation with Barnstable and its corporate parent should greatly enhance its future prospects. As a result of the merger, Barnstable will provide new and expanded banking services to the Chatham area. The Cape Cod area is a popular retirement location. Chatham is in the process of retiring its trust functions. Barnstable aggressively markets trust services. Over the longer period of time, Barnstable will be better able to serve credit needs and provide more sophisticated management. These facts are positive considerations on the issue of convenience and needs, and this Office is not aware of any negative factors. A review of the record of this application and other information available to this Office as a result of its regulatory responsibilities revealed no evidence that the applicants' records of helping to meet the credit needs of the communities, including low and moderate income neighborhoods, is less than satisfactory. This decision is the prior written approval required by the Bank Merger Act, 12 USC 1828(c), in order for the applicants to proceed with the proposed merger. August 21, 1979 SUMMARY OF REPORT BY ATTORNEY GENERAL We have reviewed this proposed transaction and conclude that it would not have a substantial competitive impact. 109 THE CENTRAL TRUST COMPANY, NATIONAL ASSOCIATION, Cincinnati, Ohio, and The Citizens National Bank of Middleport, Ohio Banking offices Names of banks and type of transaction Total assets* The Citizens National Bank of Middleport, Middleport, Ohio (8441), with and The Central Trust Company, National Association, Cincinnati, Ohio (16416), which had merged October 4, 1979, under charter and title of the latter bank (16416). The merged bank at date of merger had COMPTROLLER'S DECISION This is the Comptroller's decision on an application to merge The Citizens National Bank of Middleport, Middleport, Ohio ("Citizens"), into The Central Trust Company, National Association, Cincinnati, Ohio ("Central"). This application was filed on June 6, 1979, and is based on an agreement executed between the participating banks on May 1, 1979. As of December 31, 1978, Central had total deposits of $834.9 million, and Citizens had total deposits of $10.5 million. Central operates 43 banking offices in Hamilton and Montgomery Counties. It is a subsidiary of Central Bancorporation, Cincinnati, Ohio. Central Bancorporation is the eighth largest commercial banking organization in Ohio, with control of about 4.3 percent of total state deposits. Citizens' only office is in Middleport, Meigs County, Ohio, approximately 125 miles east of Cincinnati. It is the third largest of four banks in the county. Central presently has no loan or deposit customers residing in Meigs County. Citizens derives none of its banking business from any area served by any present subsidiary of The Central Bancorporation, Inc. Consummation of this merger would have no adverse effect on competition. On April 11, 1979, Central filed an application to merge with The First National Bank of Gallipolis, Gallipolis, Ohio ("First"). First is about 18 miles from Citizens in adjacent Gallia County. The respective market areas of First and Citizens appear to be distinct and separate, and the only measurable overlap of the two banks' service areas is in the immediate area of the * Asset figures are as of call dates immediately before and after transactions. 110 $ 14,402,000 1,139,273,000 1,223,681,000 In To be operation operated 1 54 55 small town of Chesire in eastern Gallia County. Deposits derived by First in Citizens' trade area are only 2.8 percent of its total deposits, and Citizens derives only 4.3 percent of its deposits from the area served by First. There is no significant competition between First and Citizens, and approval of either the merger between Central and First or the merger between Central and Citizens would have no adverse impact on competition in the two-county area under consideration in these two separate proposals. The financial and managerial resources of both banks are satisfactory. The future prospects of the resulting bank are good. As a result of the merger, Central will be able to offer new and expanded services to consumers in Meigs County. These services include bank credit cards, preapproved overdraft checking accounts, a larger lending limit and trust services. All of these services are positive benefits, and this Office is unaware of any negative factors affecting the convenience and needs of the community. A review of the-record of this application and other information available to this Office as a result of its regulatory responsibilities revealed no evidence that the applicants' record of helping to meet the credit needs of their communities, including low and moderate income neighborhoods, is less than satisfactory. This decision is the prior written approval required by the Bank Merger Act, 12 USC 1828(c), in order for the applicants to proceed with the proposed merger. September 4, 1979 SUMMARY OF REPORT BY ATTORNEY GENERAL We have reviewed this proposed transaction and conclude that it would not have any adverse effect upon competition. THE CENTRAL TRUST COMPANY, NATIONAL ASSOCIATION, Cincinnati, Ohio, and The First National Bank of Gallipolis, Gallipolis, Ohio Banking offices Names of banks and type of transaction Total assets* The First National Bank of Gallipolis, Gallipolis, Ohio (136), with and The Central Trust Company, National Association, Cincinnati, Ohio (16416), which had merged October 4, 1979, under charter and title of latter bank (16416). The merged bank at date of merger had COMPTROLLER'S DECISION This is the Comptroller's decision on an application to merge The First National Bank of Gallipolis, Gallipolis, Ohio ("First"), into the Central Trust Company, National Association, Cincinnati, Ohio ("Central"). The application was filed on April 11, 1979, and is based on an agreement executed by the participating banks on April 5, 1979. Central reported total deposits of $906 million on March 31, 1979. It operates 36 offices in Hamilton County and seven in Montgomery County. It is the largest subsidiary of Central Bancorporation, Cincinnati, Ohio. Central Bancorporation is the eighth largest commercial banking organization in Ohio, with control of about 4.3 percent of total state deposits. First reported total deposits of $22 million on March 31, 1979. It operates two offices in Gallia County and is the smallest of three banks in the county. Central has no loan or deposit customers residing in Gallia County. First derives none of its banking business from any area served by present subsidiaries of Central Bancorporation, Inc. Consummation of this merger would have no adverse effect on competition. Central filed an application to merge with The Citizens National Bank of Middleport, Middleport, Ohio ("Citizens"), on June 6, 1979. Citizens' only office is 18 miles from Gallipolis in adjacent Meigs County. The market areas of First and Citizens are distinct and separate, and the only measurable overlap of the two banks' service areas is in the immediate vicinity of the small town of Chesire, Ohio, in eastern Gallia County. First obtains only 2.8 percent of its total deposits in Citizens' market area, and Citizens obtains only 4.3 percent of its deposits from the area served by First. There is no significant competition between First and $ 26,636,000 1,139,273,000 1,223,681,000 In To be operation operated 2 52 54 Citizens. Approval of. the merger of Central and First and the merger of Central and Citizens would have no adverse impact on competition in the two-county area under consideration in these two proposals. The financial and managerial resources and the future prospects of both First and Central are satisfactory. Consummation of the merger will enhance the future prospects of Central. If the proposal is completed, Central will be able to offer additional banking services not now offered by First to the residents of Gallia County. These services include a variety of deposit accounts, trust services, larger loans and expertise in specialized areas of lending. These services will be more conveniently available and will satisfy additional needs of the consumer of banking services in the county. A review of the record of this application and other information available to this Office as a result of its regulatory responsibilities revealed no evidence that the applicants' records of helping to meet the credit needs of their communities, including low and moderate income neighborhoods, is less than satisfactory. This decision is the prior written approval required by the Bank Merger Act, 12 USC 1828(c), in order for the applicants to proceed with the proposed merger. September 4, 1979 SUMMARY OF REPORT BY ATTORNEY GENERAL We have reviewed this proposed transaction and conclude that it would not have a substantial competitive impact. * Asset figures are as of call dates immediately before and after transaction. 111 THE MERCHANTS NATIONAL BANK OF FORT SMITH, Fort Smith, Ark., and Continental Bank and Trust Company, Barling, Ark. Banking offices Names of banks and type of transaction Total assets Continental Bank and Trust Company, Barling, Ark., with and The Merchants National Bank of Fort Smith, Fort Smith, Ark. (7240), which had merged October 15, 1979, under charter and title of latter bank (7240). The merged bank at date of merger had COMPTROLLER'S DECISION This is the Comptroller's decision on an application to merge Continental Bank and Trust Company, Barling, Ark. ("Continental"), into and under the charter of The Merchants National Bank of Fort Smith, Fort Smith, Ark. ("Merchants"). The application was accepted for filing on June 12, 1979, and is based on a written agreement executed by the proponents on April 12, 1979. Merchants is a national bank that had total deposits of $89.1 million as of December 31, 1978. It operates a main office, two branch offices and a partial service facility in the City of Fort Smith. Continental, a state-chartered bank, had total deposits of $3.7 million at year-end 1978. It presently operates a single banking office in Barling, a town located approximately 6 miles east of Fort Smith. Continental has received approval from the Arkansas State Bank Board to open an office in Fort Smith, but it has been stayed pending resolution of litigation brought by other banks objecting to the state approval. If consummated, this merger will moot the pending litigation. Merchants and Continental are both located in the Fort Smith banking market, approximated by Crawford and Sebastian Counties in Arkansas plus Sequoyah and the northern half of LeFlore Counties in Oklahoma. Merchants ranks as the third largest of 21 commercial banks therein and controls about 14 percent of market deposits. Consummation of this proposal would increase its share of market deposits by less than one percent and would not alter its rank in the market. The two largest banks, with market shares of approximately 25 and 21 percent, are also headquartered in Fort Smith and will be in direct competition with the resulting bank. Due to its size, Continental serves an area limited to the Town of Barling and the adjoining eastern part of 112 $ In To be operation operated 4,269,060 112,768,738 116,606,992 Fort Smith. As the closest offices of the proponents are some 6 miles apart, the instant proposal would eliminate some existing competition. However, there are several offices of other banks in the intervening area, and given the small market share of Continental, the effect on competition would not be adverse. As required under 12 USC 1828(c)(5), the Comptroller considered the financial and managerial resources and found that they are satisfactory for both banks. The future prospects of Continental are limited due to its small size. Since it was established in 1971, Continental has been unable to develop a significant deposit base. The future prospects of Continental are limited due to its small size. Since it was established in 1971, Continental has been unable to develop a significant deposit base. The future prospects of the combined bank are good. As a result of this merger, Merchants would offer new and expanded banking services to the present customers of Continental. Considerations relative to convenience and needs are consistent with approval of this application. A review of the record of this application and other information available to this Office as a result of its regulatory responsibilities revealed no evidence that the banks1 records of helping to meet community credit needs, including those of low and moderate income communities, is less than satisfactory. This decision is the prior written approval required by the Bank Merger Act, 12 USC 1828(c), for the applicants to proceed with the merger. September 12, 1979 SUMMARY OF REPORT BY ATTORNEY GENERAL We have reviewed this proposed transaction and conclude that it would not have a significantly adverse effect upon competition. THE FIRST NATIONAL BANK OF SIOUX FALLS, Sioux Falls, S. Dak., and Dakota State Bank of Dell Rapids, Dell Rapids, S. Dak. Banking offices Names of banks and type of transaction Total assets* Dakota State Bank of Dell Rapids, Dell Rapids, S. Dak., with was purchased October 31, 1979, by The First National Bank in Sioux Falls, Sioux Falls, S. Dak. (3393), which had After the purchase was effected, the receiving bank had COMPTROLLER'S DECISION This is the Comptroller's decision on the application of The First National Bank in Sioux Falls, Sioux Falls, S. Dak. ("FNB"), to purchase the assets and assume the liabilities of Dakota State Bank of Dell Rapids, Dell Rapids, S. Dak. ("State Bank"). This application was accepted by this Office on June 20, 1979, and is based on an agreement signed by both proponents on March 7, 1979. As of December 31, 1978, FNB had total deposits of $133.9 million, and State Bank had total deposits of $10.8 million. The relevant geographic market for consideration in this proposal is Minnehaha County and the northern portion of Lincoln County, S. Dak. FNB is the fourth largest of 14 commercial banking organizations in this area, controlling 10.4 percent of the market's total commercial bank deposits. State Bank is among the five smallest banks in the area and controls only 0.8 percent of the total commercial bank deposits. The proponents' nearest offices are 20 miles apart, and there are offices of competing institutions in the intervening area. The resulting bank, with 11.2 percent of total deposits, would become the third largest bank in the market. First Bank Systems, Inc., Minneapolis, Minn., and Northwest Bancorporation, Minneapolis, with 36.8 and 25.5 percent, respectively, rank first and second. Consequently the competitive effects are not likely to substantially lessen competition in any relevant market or otherwise violate the standards found in 12 USC 1828(c)(5). The financial and managerial resources of FNB are satisfactory. While State Bank's present condition is generally satisfactory, its ability to attract successor management and provide expanded financial services is limited. Accordingly, its financial and managerial re- In To be operation operated $ 12,072,000 146,073,000 165,873,000 sources are not totally satisfactory. Additionally, its future prospects are limited in view of the relative small size of the bank and the fact that it experiences direct competition from substantially larger competitors, some of which are affiliated with banking organizations that are the largest operating in the state. The future prospects of the resultant bank are good. As a result of this proposal, FNB proposes to bring new and expanded banking services to the banking communities currently served by State Bank. Additionally, state statutes now provide home office protection for State Bank which will be removed and allow other potential entrants to enter Dell Rapids. These facts are positive considerations on the issue of convenience and needs and lend additional weight toward approval of the application. A review of the record of this application and other information available to this Office as a result of its regulatory responsibilities revealed no evidence that FNB's record of helping to meet the credit needs of the entire community, including low and moderate income neighborhoods, is less than satisfactory. This decision is the prior written approval required by the Bank Merger Act, 12 USC 1828(c), in order for the applicants to proceed with the proposed consolidation. September 28, 1979 SUMMARY OF REPORT BY ATTORNEY GENERAL We have reviewed this proposed transaction and conclude that it would not have a substantial competitive impact. * Asset figures are as of call dates immediately before and after transaction. MID-AMERICAN NATIONAL BANK AND TRUST COMPANY, Northwood, Ohio, and Farmers and Merchants Bank Company, Arlington, Ohio Banking offices Total assets Names of banks and type of transaction Farmers and Merchants Bank Company, Arlington, Ohio, with and Mid-American National Bank and Trust Company, Northwood, Ohio (15416), which had merged October 31, 1979, under the charter and title of latter bank (15416). The merged bank at date of merger had COMPTROLLER'S DECISION This is the Comptroller's decision on the application to merge Farmers and Merchants Bank Company, Arlington, Ohio ("Farmers"), into Mid-American Na $ 13,569,000 135,770,000 149,339,000 In To be operation operated 1 16 17 tional Bank and Trust Company, Northwood, Ohio ("National"). This application was filed on June 25, 1979, and is based on an agreement executed by the proponents on June 7, 1979. As of December 31, 113 1978, National had total deposits of $119.4 million, and Farmers' total deposits were $10.3 million. The relevant market in this application is Hancock County, Ohio. The county is mainly rural with an agriculturally based local economy. The Hancock County banking market is highly concentrated with the two largest banks, both headquartered in Findlay, and controlling almost 80 percent of the market's total commercial bank deposits. Six banking organizations operate 13 banking offices in the market. National does not have an office in Hancock County. Farmers is the fifth largest bank in the market and controls only 4.5 percent of the market's total deposits held by commercial banks. National's main office is in Wood County, which adjoins Hancock County on its northern boundary. The main office of National is 50 miles north of Farmer's sole office in Arlington. The closest office of National to Farmers is the North Baltimore Branch (Wood County), approximately 22 miles northwest of Arlington. Findlay, principal city and county seat of Hancock County, is centrally situated in the county directly between North Baltimore and Arlington, effectively separating the service areas of National and Farmers. Consequently, there is only negligible existing competition between the proponents of this proposed merger. Since National currently has no offices in the market, it would merely succeed to Farmer's share of the Hancock County banking market. Moreover, the introduction of this new competition into Hancock County would replace a small competitor with one which is larger and more vigorous. Thus, approval of this application would not have any significant effect on existing competition or otherwise be violative of the standards found in 12 USC 1828(c)(5). The financial and managerial resources of both banks are satisfactory. The future prospects of Farmers due to its small size and de minimus market share are limited. The future prospects of the resulting bank are good. As a consequence of this merger, National intends to improve and expand banking services now provided to the Arlington banking public by Farmers. The additional services and benefits will include trust services, greater management depth and capacity, expanded loan facilities and lending limits, automatic transfer accounts, agency money orders and school savings program. All of the services should have a positive effect on the convenience and needs of the community and lend further weight toward approval of the application. A review of the record in this application and other information available to the Comptroller's Office as a result of its regulatory responsibilities reveals no evidence that National's record of helping to meet the credit needs of the entire community, including low and moderate income neighborhoods, is less than satisfactory. This is the prior written approval required by the Bank Merger Act for the applicants to proceed with the merger. September 27, 1979 SUMMARY OF REPORT BY ATTORNEY GENERAL We have reviewed this proposed transaction and conclude that it would not have a substantial competitive impact. THE FIRST NATIONAL BANK OF MARYLAND, Baltimore, Md., and The National Bank of Perryville, Perryville, Md. Banking offices Names of banks and type of transaction Total assets The National Bank of Perryville, Perryville, Md. (11193), with and The First National Bank of Maryland, Baltimore, Md. (1413), which had merged November 1, 1979, under the charter and title of the latter bank (1413). The merged bank at date of merger had COMPTROLLER'S DECISION This is the Comptroller's decision on an application to merge The National Bank of Perryville, Perryville, Md. ("Perryville Bank"), into and under the charter of The First National Bank of Maryland, Baltimore, Md. ("First".). This application was filed on June 27, 1979. As of March 31, 1979, First had total domestic deposits of $1.4 billion, and Perryville Bank's total deposits were $5.8 million. First is a wholly owned subsidiary of First Maryland Bancorp, the third largest commercial banking organization headquartered in Maryland, controlling slightly more than 11 percent of 114 $ 6,566,000 1,833,793,000 1,839,883,000 In To be operation operated 1 101 102 the deposits held by all commercial bank offices in Maryland. The relevant geographic market for analysis in this application is Cecil County, Md. There are seven banking organizations in the market that operate 16 banking offices with total commercial bank deposits of $122.6 million on June 30, 1978. First does not operate any offices in the market. Perryville Bank is the sixth largest bank in this market and controls only 4.6 percent of the market's total commercial bank deposits. The main office of First is approximately 40 miles from Perryville. First's closest office, in Havre de Grace, is 4 miles from Perryville across the Susquehanna River in Harford County. The two communities are connected by a toll bridge, and there is an interstate highway crossing the Susquehanna River to the north. Perryville Bank derives only 4.5 percent of its total deposits from Havre de Grace, of which approximately 75 percent are accounts of former Perryville residents who have retired to a senior citizens home in Havre de Grace and Havre de Grace residents who work in Perryville or Perry Point. First obtains less than $225,000 in demand and savings deposits from the area served by Perryville Bank. This amount constitutes less than 0.02 percent of First's total demand and savings deposits and less than 4 percent of Perryville Bank's total demand and savings deposits. Perryville Bank derives $305,000, 5.4 percent, of its total demand and savings deposits from geographic areas served by First. Thus, there is only minimal existing competition between First and Perryville Bank. Inasmuch as First currently has no offices in Perryville Bank's market, and there are several banking alternatives in close proximity to Perryville, approval of this application would not substantially lessen competition in any relevant market or violate the standards found in 12 USC 1828(c)(5). Pursuant to Maryland branch banking laws, First could enter Cecil County by a de novo establishment. However, in consideration of the economic climate of Cecil County, the availability of banking alternatives that are conveniently located, and the absence of any evidence that any of the banking needs of the Cecil County banking public are unmet it does not appear that First would choose to enter Cecil County with a new office within the foreseeable future. Consequently, First does not now have a significant present or prospective beneficial effect on banking competition in Cecil County. The financial and managerial resources of both Perryville Bank and First are generally satisfactory. The future prospects of both banks are satisfactory; however, the future prospects of Perryville Bank are believed to be more favorable in conjunction with First. Consummation of the merger will allow the resulting bank to provide expanded bank services to the customers of Perryville Bank, including a significantly larger legal lending limit, bank credit cards and trust services. These factors are positive considerations on the issue of convenience and needs. A review of the record of this application and other information available to the Office of the Comptroller of the Currency as a result of its regulatory responsibilities revealed no evidence that applicants' record of helping to meet the credit needs of their entire community including low and moderate income neighborhoods is less than satisfactory. This is the required prior written approval for the applicants to proceed with the proposed merger. October 1, 1979 The Attorney General's report was not received. CENTRAL FIDELITY BANK, N.A., Richmond, Va., and City Savings Bank and Trust Company, Petersburg, Va., and The Citizens National Bank of Emporia, Emporia, Va. Banking offices Names of banks and type of transaction Total assets The Citizens National Bank of Emporia, Emporia, Va. (12240), with and City Savings Bank and Trust Company, Petersburg, Va., with and Central Fidelity Bank, N.A., Richmond, Va. (10080), which had merged November 9, 1979, under the charter and title of latter bank (10080). The merged bank at date of merger had COMPTROLLER'S DECISION This is the Comptroller's decision on an application to merge The Citizens National Bank of Emporia, Emporia, Va., and City Savings Bank and Trust Company, Petersburg, Va., into Central Fidelity Bank, N.A., Richmond, Va. All three banks are wholly owned, except for directors' qualifying shares, and controlled by Commonwealth Banks, Inc., Richmond, a registered multibank holding company. This proposed corporate reorganization presents no competitive issues under the Bank Merger Act, 12 USC 1828(c). The financial and managerial resources and future prospects of the existing and proposed institutions are satisfactory. The new corporate structure will permit the continuing bank to serve the convenience and needs of its communities more efficiently. $ 36,710,000 41,249,000 395,873,000 473,832,000 In To be operation operated 5 5 26 36 A review of the record of this application and other information available to this Office as a result of its regulatory responsibilities revealed no evidence that the applicants' records of helping to meet the credit needs of the communities, including low and moderate income neighborhoods, is less than satisfactory. This decision is the prior written approval required by the Bank Merger Act, 12 USC 1828(c), in order for the applicants to proceed with the proposed merger. September 7, 1979 SUMMARY OF REPORT BY ATTORNEY GENERAL The merging banks are all wholly owned subsidiaries of the same bank holding company. As such, their proposed merger is essentially a corporate reorganization and would have no effect on competition. 115 THE FIRST NATIONAL BANK IN BRYAN, Bryan, Ohio, and The Farmers State Bank of Stryker, Stryker, Ohio Banking offices Names of banks and type of transaction Total assets The Farmers State Bank of Stryker, Stryker, Ohio, with and The First National Bank in Bryan, Bryan, Ohio (13899), which had merged November 23, 1979, under the charter of the latter (13899) and title "First National Bank of Northwest Ohio." The merged bank at date of merger had COMPTROLLER'S DECISION This is the Comptroller's decision on an application to merge The Farmers State Bank of Stryker, Stryker, Ohio ("Farmers"), into The First National Bank in Bryan, Bryan, Ohio ("First"). This application was filed on July 3 1 , 1979, and is based on an agreement signed by the proponents on July 20, 1979. As of June 30, 1979, Farmers had total deposits of $6.5 million, and First had total deposits of $31.3 million. The relevant geographic market for analyzing the competitive effect of this proposal is Williams County and Milford, Farmer, Washington and Tiffin Townships in northern Defiance County. Farmers operates from a single office and is the smallest bank in this market with 3 percent of total market commercial bank deposits. First is the second largest of seven banks with 16 percent of total market commercial bank deposits. Both of its offices are in Bryan. The closest offices of the two banks are in separate towns approximately 5 miles apart. If the merger is consummated, First would continue to rank as the second largest bank behind Citizens National Bank, Bryan, which controls 40 percent of the market's commercial bank deposits. National City Corporation, Cleveland, Ohio, has applied for permission to acquire control of the Citizens National Bank. National City Corporation is a bank holding company that controls nine banks with total deposits of $2.9 billion. It is the third largest commercial banking organization in Ohio with approximately 6 percent of total state commercial bank deposits. Although consummation of this merger would eliminate some competition between First and Farmers, the resulting bank would have less than one-half the amount of deposits controlled by the largest bank in 116 $ 7,298,000 37,941,000 In To be operation operated 1 2 44,959,000 the market. The resulting bank would be better able to compete with this larger bank which may soon become a subsidiary of one of the largest banking organizations in the state. Consummation of this merger would not have a substantially adverse effect on competition. The financial and managerial resources of both First and Farmers are satisfactory. Farmers is the smallest bank in its market and its ability to provide expanded financial services and attract successor management is limited. Consequently, its future prospects are limited. The future prospects of the resultant bank are good. The resulting bank will expand Farmers' banking services and offer new services. The resulting bank will have expanded loan and deposit services and will have a substantially greater lending limit than Farmers. It will also increase banking hours and make major improvements in Farmers' banking facilities. The resulting bank will be better able to conveniently serve additional needs of its community. A review of the record of this application and other information available to this Office as a result of its regulatory responsibilities revealed no evidence that First's record of helping to meet the credit needs of the entire community, including low and moderate income neighborhoods, is less than satisfactory. This decision is the prior written approval required for consummation of the merger (12 USC 1828(c)). October 23, 1979 SUMMARY OF REPORT BY ATTORNEY GENERAL We have reviewed this proposed transaction and conclude that it would not have a substantial competitive impact. CENTURY FIRST NATIONAL BANK IN ST. PETERSBURG, St. Petersburg, Fla., and Century Bank of Pinellas County, St. Petersburg, Fla. Banking offices Names of banks and type of transaction Total assets* Century Bank of Pinellas County, St. Petersburg, Fla., with Century First National Bank in St. Petersburg, St. Petersburg, Fla. (14367), which had merged November 30, 1979, under the charter of latter bank (14367) and title of "Century First National Bank of Pinellas County." The merged bank at date of merger had COMPTROLLER'S DECISION This is the Comptroller's decision on an application to merge Century Bank of Pinellas County, St. Petersburg, Fla. ("Century"), into and under the charter of Century First National Bank in St. Petersburg, St. Petersburg, Fla. ("CFNB"), and with the title of "Century First National Bank of Pinellas County." The application was filed on May 8, 1979, and is based on a written agreement executed by the applicant banks on March 19, 1979. CFNB is a national bank that had total deposits of $163.8 million as of March 31, 1979. Century, a statechartered bank, had deposits of $17.5 million as of March 31, 1979. Both banks are wholly owned and controlled by Century Banks, Inc., Fort Lauderdale, Fla., a registered bank holding company. Therefore, this is merely an application for a corporate reorganization. As such, it presents no competitive issues under the Bank Merger Act, 12 USC 1828(c). Additionally, a review of the financial and managerial resources and future prospects of the existing and proposed institutions, and the In To be operation operated $ 19,670,000 213,214,000 282,925,000 convenience and needs of the community to be served has disclosed no reason why this application should not be approved. (See 12 USC 1842(c)(21)). A review of the record of this application and other information available to this Office as a result of its regulatory responsibilities revealed no evidence that the bank's record of helping to meet the credit needs of its entire community including low and moderate income neighborhoods is less than satisfactory. This decision is the prior written approval required by the Bank Merger Act, 12 USC 1828(c), in order for the applicants to proceed with the proposed merger. August 17, 1979 SUMMARY OF REPORT BY ATTORNEY GENERAL The merging banks are both wholly owned subsidiaries of the same bank holding company. As such, their proposed merger is essentially a corporate reorganization and would have no effect on competition. * Asset figures are as of call dates immediately before and after transaction. FIRST & MERCHANTS NATIONAL BANK, Richmond, Va., and The Services National Bank. Arlington, Va. Banking offices Names of banks and type of transaction Total assets The Services National Bank, Arlington, Va. (16277), with and First & Merchants National Bank, Richmond, Va. (1111), which had merged November 30, 1979, under the charter and title of latter bank (1111). The merged bank at date of merger had COMPTROLLER'S DECISION This is the Comptroller's decision on an application to merge The Services National Bank, Arlington, Va. ("Services"), into and under the charter of First & Merchants National Bank, Richmond, Va. ("F&M"). This application was filed on August 15, 1979, and is based on an agreement executed by the proponents dated June 20, 1979. As of March 31, 1979, Services had total deposits of $12.3 million, and F&M's total deposits were $1.4 billion. F&M is the lead bank for First & Merchants Corporation, a registered bank holding company. The relevant geographic market for competitive analysis in this proposal is the area contained within a $ 13,597,000 2,143,256,000 2,156,853,000 In To be operation operated 1 99 100 1 mile radius of Services' sole office. Services' only office is in the Crystal City office building, retail store and residential complex which is in the extreme southeastern edge of Arlington County, Va., adjacent to the independent city of Alexandria. Within a 1 mile radius of Services' location, there are seven banking organizations with commercial bank deposits of $76.5 million and 10 banking offices. The three largest banks in the market are affiliates of major state-wide banking organizations, each having total deposits in excess of $1 billion. Services ranks as the fifth largest bank in its market and controls 13.6 percent of the total commercial bank deposits within the market. F&M operates one office in the market, which ranks as the seventh 117 largest banking office and holds 6.3 percent of total commercial bank deposits. The bank resulting from approval of this application would rank as the third largest in the market and would control about 20 percent of the market's commercial bank deposits. The closest office of F&M to Services is F&M's ArmyNavy branch, 0.6 miles north of Services' location. The F&M Army-Navy branch has total deposits of $4.8 million and is separated from Services by an interstate highway, with eight competing bank offices in the intervening area. Only two other F&M offices are within 5 miles of Services' site, and these offices are not in direct competition with Services. Accordingly, there is no meaningful competition between any office of F&M and Services. Under Virginia branching statutes, F&M could legally establish a de novo office in Services' market. It does not appear likely that F&M would choose this form of market expansion in consideration of present real estate development concentration in other parts of Arlington County, the existing interstate highway system with established traffic patterns, and the availability of numerous banking alternatives both inside the market and the larger Washington, D.C., metropolitan area. Thus, the foreclosure of the potential for future competition between F&M and Services is not a bar to approval of this application. The financial and managerial resources of F&M are generally satisfactory. Services has experienced heavy managerial and teller turnover during its 5-year corporate existence. Additionally, Services has a high loan/deposits ratio, and almost 40 percent of its deposits are in highly volatile, high-rate, certificates of deposit. Because of Services' single location in Crystal City, the bank has been unable to more effectively compete for available business, and Services' earnings have been low. Accordingly, the financial and managerial resources of Services are less than satisfactory, and the future prospects of the bank, absent this proposal, are not considered good. The future prospects of F&M and of the resultant bank are considered to be far more favorable. As a result of this proposal, F&M can make available to the present customers of Services a variety of specialized and sophisticated banking services and provide a more highly skilled and diversified banking staff. F&M will provide Services' present customers with the availability of transacting their banking business at 14 branches in Northern Virginia and 96 branches throughout Virginia. Present Services' customers will also realize the provision of trust services, international banking services and additional lending capacity. These are positive considerations on the issue of convenience and needs and lend additional weight for approval of the application. A review of the record of this application and other information available to this Office as a result of its regulatory responsibilities revealed no evidence that the applicants' records of helping to meet the credit needs of their communities, including low and moderate income neighborhoods, is less than satisfactory. This is the required prior written approval for the applicants to proceed with the proposed merger. October 22, 1979 SUMMARY OF REPORT BY ATTORNEY GENERAL We have reviewed this proposed transaction and conclude that it would not have a significantly adverse effect upon competition. INDIAN HEAD NATIONAL BANK OF NASHUA, Nashua, N.H., and Indian Head National Bank of Derry, Derry, N.H. Banking offices Names of banks and type of transaction Total assets Indian Head National Bank of Derry, Derry, N.H. (8038), with and Indian Head National Bank of Nashua, Nashua, N.H. (15563), which had merged November 30, 1979, under the charter and title of latter bank (15563). The merged bank at date of merger had COMPTROLLER'S DECISION This is the Comptroller's decision on an application to merge Indian Head National Bank of Derry, Derry, N.H. ("Derry"), into Indian Head National Bank of Nashua, Nashua, N.H. ("Nashua"). This application was filed on July 25, 1979, and rests on an agreement signed by the proponents on February 22, 1979. As of March 31, 1979, Nashua's and Derry's total deposits were $150.7 million and $33 million, respectively. Both participants are subsidiaries of Indian Head Banks, Inc., a registered bank holding company. 118 In To be operation operated $ 43,963,000 188,010,000 231,973,000 11 This is a proposed corporate reorganization. It presents no competitive issues under the Bank Merger Act, 12 USC 1828(c). The financial and managerial resources of the proponents are generally satisfactory. The future prospects of the existing and proposed institutions are satisfactory. The new corporate structure will permit the continuing bank to serve the convenience and needs of its communities more efficiently. A review of the record of this application and the information available to this Office as a result of its regulatory responsibilities revealed no evidence that the applicant's record of helping to meet the credit needs of the entire community including low and moderate income neighborhoods is less than satisfactory. This decision is the prior written approval required for the applicants to proceed with the merger. October 26, 1979 SUMMARY OF REPORT BY ATTORNEY GENERAL The merging banks are both wholly owned subsidiaries of the same bank holding company. As such, their proposed merger is essentially a corporate reorganization and would have no effect on competition. THE NATIONAL BANK AND TRUST COMPANY OF GLOUCESTER COUNTY, Woodbury, N.J., and The National Bank of Manuta, Sewell, NJ. Banking offices Names of banks and type of transaction Total assets* The National Bank of Manuta, Sewell, N.J. (12917), with and The National Bank and Trust Company of Gloucester County, Woodbury, N.J. (1199), which had merged November 30, 1979, under the charter and title of latter bank (1199). The merged bank at date of merger had COMPTROLLER'S DECISION This is the Comptroller's decision on an application to merge The National Bank of Manuta, Sewell, N.J. ("Sewell Bank") into and under the charter of The National Bank and Trust Company of Gloucester County, Woodbury, N.J. ("Woodbury Bank"). The application was filed on September 15, 1978, and is based on a written agreement executed by the applicant banks on August 9, 1978. As of June 30, 1978, Woodbury Bank had total deposits of $159.4 million, and Sewell Bank had deposits of $43.1 million. Woodbury Bank is a wholly owned subsidiary of Community Bancshares Corporation of Woodbury, N.J., a registered one-bank holding company. Woodbury Bank presently operates its main office and 12 branch offices within Gloucester County. Sewell Bank operates all of its three banking offices within the same county. The narrowest relevant geographic market appears to be Gloucester County. Within this market, Woodbury is the largest commercial bank with 29.8 percent of market deposits, and Sewell is the fourth largest with 8.1 percent. The resulting bank would continue as the largest with 37.9 percent of the total county deposits. Gloucester County is in the southwest portion of New Jersey across the Delaware River from Philadelphia and has an estimated population of 196,000. The population increased an estimated 10 percent from 1970 to 1975. The application indicates that more than 45 percent of the residents work outside the county. It is well known that many commuters bank at their place of work as an alternative or in addition to their place of residence. Taking this factor into account suggests that the relevant geographic market should include the Philadelphia and Camden, N.J., areas. This is the market found appropriate by the Federal Reserve Board in its advisory opinion to this Office. In this market, 52 banking organizations operate 776 offices and a number of them have deposits in excess of $1 billion. Banks in the applicant's geographic position feel the In To be operation operated $ 51,488,000 3 198,307,000 13 244,815,000 16 power of these urban commercial banks in their markets through the effect on commuters. The applicant banks' main offices are 6 miles apart and their closest offices are 3 miles apart; however, there are other commercial banks with offices between applicants' offices. Both banks are subject to competitive pressures from the Gloucester County offices of much larger New Jersey commercial banks headquartered outside the county. The Comptroller finds that the proposed merger would eliminate some existing competition but that there would remain a large number of alternative sources for banking services in all relevant markets. Consequently, the competitive effects are not likely to substantially lessen competition in any relevant market or otherwise violate the standards found in 12 USC 1828(c)(5). The financial and managerial resources of Woodbury Bank are satisfactory. The financial and managerial resources of the Sewell Bank are less than satisfactory. The future prospects of the combined bank are good and considerably better than the future prospects of the Sewell Bank. As a result of this merger, Woodbury Bank intends to make available new and expanded banking services to the present customers of Sewell Bank, including, but not limited to, trust department services, bank credit cards, overdraft checking and an expanded credit limit. These facts are positive considerations on the issue of convenience and needs. The Comptroller is not aware of any negative factors on this issue. This application was filed prior to the November 6, 1978, effective date of the Comptroller's Community Reinvestment Act Regulations, 12 CFR 25. However, pursuant to the Community Reinvestment Act, Public Law No. 95-128, available information relevant to the banks' record of meeting their community credit needs was reviewed, revealing no evidence to suggest that * Assets are as of call dates immediately before and after transaction. 119 the applicants are not meeting the credit needs of their communities, including low and moderate income neighborhoods. This opinion is the prior written approval required by the Bank Merger Act, 12 USC 1828(c), in order for the applicants to merge under their previously referenced agreement. August 29, 1979 SUMMARY OF REPORT BY ATTORNEY GENERAL Both institutions operate in Gloucester County in the southwestern portion of New Jersey across the Delaware River from Philadelphia. The county has experienced rapid population growth which is expected to continue. Much of the county remains rural in character although it is also a suburban residential area for Philadelphia and Camden. According to the application, Applicant's service area almost completely overlaps the service area of Bank. At least three of Applicant's branches are located within 3 miles of Bank's main office, and three of Applicant's branches are within 5 miles of Bank's northern-most branch. While offices of several other banks are located in the immediate vicinity, Applicant is the dominant banking institution in Gloucester County. Thus, it is obvious that the proposed merger would combine two sizeable direct competitors and would eliminate substantial existing competition between them. Seventeen banking institutions operate 61 offices in Gloucester County, with the four largest institutions controlling approximately 65.6 percent of total deposits. Applicant is the largest commercial bank in the county with approximately 30 percent of total deposits. Bank ranks fourth with 8.1 percent of total deposits in the county. If the merger were consummated the resulting bank would control 38 percent of total deposits in the county and would increase the four-firm concentration ratio in the county 72.6 percent. Applicant attempts to justify the merger by citing the need for capital investment in electronic fund transfers ("EFT") mechanisms, particularly automated teller machines, in order to maintain its market position in the current market. It suggests that only by combining the smaller institutions presently in the market will any local institutions be able to assume the capital costs necessary for EFT development. This suggestion runs completely contrary to the studies of EFT that have been done to date. The National Commission on Electronic Fund Transfers, after a careful review of all the existing literature in the field, concluded that EFT equipment, particularly automated teller machines, was certainly within the reach of middle and small financial institutions. In fact, much of the evidence suggests that access to EFT equipment can actually enhance the ability of smaller local banks to compete with statewide institutions because they would no longer have to rely on costly investments in new branches in order to compete effectively. See EFT in The United States; Final Report of the National Commission on Electronic Fund Transfers, October 28, 1977, Chapter 7. In sum, the proposed merger would eliminate substantial existing competition between the two institutions and would increase concentration in Gloucester County. We therefore conclude that, overall, the merger would have an adverse effect on competition. THE LAKE COUNTY NATIONAL BANK OF PAINESVILLE, Painesville, Ohio, and The Commercial Bank, Ashtabula, Ohio Banking offices Names of banks and type of transaction Total assets* The Commercial Bank, Ashtabula, Ohio, with and The Lake County National Bank of Painesville, Painesville, Ohio (14686), which had merged December 1, 1979, under charter and title of latter bank (14686). The merged bank at date of meraer had COMPTROLLER'S DECISION This is the Comptroller's decision on an application to merge The Commercial Bank, Ashtabula, Ohio ("Bank"), into The Lake County National Bank of Painesville, Painesville, Ohio ("Lake Bank"). This application was filed on June 7, 1979, and rests on an agreement between the proponents dated February 15, 1979. As of December 31, 1978, Bank had total deposits of $22.9 million, and Lake Bank's total de* Asset figures are as of call dates immediately before and after transaction. 120 $ 28,454,000 349,920,000 375,602,000 In To be operation operated 5 18 23 posits were $304.8 million. Lake Bank has a total of 19 banking offices, and Bank operates five offices. The relevant geographic market area for Bank is the northern part of Ashtabula County where its banking offices are located. Bank is the third largest of four banks in Ashtabula County with 9.3 percent of total deposits. The relevant geographic market area for Lake Bank is Lake County where Lake Bank ranks as the largest of six banks and controls 59 percent of the area's deposits. The nearest offices of the proponents are Lake Bank's two Madison offices and Bank's Genea office, slightly less than 7 miles apart. The area between these offices is almost entirely farm land which acts as an effective barrier. There is only minimal existing competition between Bank and Lake Bank. Lake Bank derives only a negligible 0.59 percent of its total deposits from the area served by Bank, and Bank derives virtually no deposits from the area served by Lake Bank. Approval of this application would have no significantly adverse effect on competition in either Ashtabula or Lake County or otherwise be violative of the standards found in 12 USC 1828(c)(5). The financial and managerial resources of both Bank and Lake Bank are satisfactory. The future prospects of Bank are somewhat limited in view of its relatively small size and the fact that it faces direct competition from substantially larger bank holding company affiliated banks. The future prospects of the combined bank are good. As a result of this merger, Lake Bank will be in a position to offer new and expanded banking services to Bank's customers, including bank credit cards, auto- matic transfers from savings to checking accounts, automated teller machines and trust services. These are positive considerations on the issue of convenience and needs. A review of the record of this application and other information available to the Comptroller as a result of regulatory responsibilities revealed no evidence that Lake Bank's record of helping to meet the credit needs of the entire community including low and moderate income neighborhoods is less than satisfactory. This decision is the prior written approval required in order for the applicants to proceed with the proposal. October 31, 1979 SUMMARY OF REPORT BY ATTORNEY GENERAL We have reviewed this proposed transaction and conclude that it would not have a significantly adverse effect upon competition. THE NEW FARMERS NATIONAL BANK OF GLASGOW, Glasgow, Ky., and The Peoples Bank, Cave City, Ky. Banking offices Names of banks and type of transaction Total assets The Peoples Bank, Cave City, Ky., with and The New Farmers National Bank of Glasgow, Glasgow, Ky. (13651), which had merged December 1, 1979, under the charter and title of latter bank (13651). The merged bank at date of merger had COMPTROLLER'S DECISION This is the Comptroller's decision on an application to merge The Peoples Bank, Cave City, Ky. ("Peoples"), into and under the charter of The New Farmers National Bank of Glasgow, Glasgow, Ky. ("New Farmers"). The application was filed on May 9, 1979, and is based on a written agreement executed by the applicant banks on December 14, 1978. New Farmers is a national bank that had total deposits of $56.9 million on December 31, 1978. It operates a main office and two branches in Glasgow, the county seat of Barren County, and one office in Hiseville. Peoples, a state-chartered bank, had total deposits of $9.8 million on December 31, 1978. It operates a single banking office within Cave City which is in the northwestern corner of Barren County. New Farmers competes in a banking market consisting of Barren and Hart Counties and the eastern half of Metcalfe County, Ky. New Farmers is the second largest of nine commercial banks operating in this market with 28 percent of the market's commercial bank deposits. Peoples, with its market area entirely included within New Farmers' market, is the third smallest bank with less than 5 percent of the market's total deposits. The resulting bank, with 33 percent of market deposits, would be the largest bank in this market. Citizens Bank In To be operation operated $10,987,000 71,142,000 82,129,000 and Trust Company of Glasgow (deposits - $65 million), currently the largest bank in the market, holds almost 32 percent of total market deposits and would continue in direct competition with the resulting bank. Eight commercial banks would remain as alternative sources of banking services in the market. Due to its size, Peoples serves only the immediate Cave City area and an adjoining portion of southern Hart County. Cave City addresses account for 66 percent of its individual, partnership and corporate demand deposit accounts. Citizens Bank and Trust Company of Glasgow operates a branch directly across the street from Peoples in Cave City. New Farmers' closest branch, the Hiseville is approximately seven miles east of Cave City. The area between these offices is sparsely populated, rural and predominantly agricultural. Therefore, consummation of this merger would not eliminate any meaningful existing competition between the two banks. New Farmers could establish a branch office in Cave City. However, because of its small population, Cave City is not attractive for ate novo entry by a third commercial bank. Conversely, Peoples has shown neither the desire nor the capacity to expand outside of Cave City and it is unlikely to do so in the foreseeable future. Accordingly, consummation of this merger will not substantially lessen competition or otherwise violate the standards found in 12 USC 1828(c)(5). 121 The financial resources of both New Farmers and Peoples are satisfactory. The managerial resources of both New Farmers are satisfactory while those of Peoples are limited. The bank has only two officers. One is in poor health and the other is approaching retirement age. Because of its small size, its ability to attract capable successor management is limited. The bank's future prospects are limited. New Farmers possesses the necessary financial and managerial resources to serve Peoples' market area and its future prospects are favorable. As a result of this merger, New Farmers intends to offer new and expanded banking services to the present customers of Peoples, including but not limited to, bank credit cards, expanded trust services, additional expertise in agricultural lending, floor plan loans, Christmas Club accounts and a substantially greater lending limit. It will be able to more conveniently satisfy the banking needs of the Cave City community. A review of the record of this application and other information available to this Office as a result of its regulatory responsibilities revealed no evidence that the banks' records of helping to meet the credit needs of the communities, including low and moderate income communities, is less than satisfactory. This decision is the prior written approval required by the Bank Merger Act, 12 USC 1828(c), for the applicants to proceed with the merger. October 15, 1979 SUMMARY OF REPORT BY ATTORNEY GENERAL Bank is located only 7 miles from Applicant's branch in Hiseville and 11 miles from Applicant's Glasgow branches. There are no banks in the intervening area, although the two other banks located in Barren each maintain offices in Glasgow. It therefore appears that the proposed merger will eliminate a substantial amount of existing competition between Applicant and Bank. Banking is highly concentrated in Barren County. There are only four commercial banks in the county, holding 47.7 percent, 42.7 percent, 7.1 percent and 2.5 percent of county deposits. The combination of Applicant, the second largest bank in the county with a 42.7 percent share of deposits with Bank, the third largest with a 7.1 percent share, would make Applicant the largest bank in the county, would result in the two largest banks controlling approximately 90 percent of county deposits, and would reduce from four to three the number of banks operating in the county. Moreover, the increase in concentration is particularly significant here because under Kentucky law, banks may not expand de novo (either by branching or by establishing multibank holding companies) outside of their home office counties. Barren County is, therefore, closed to entry by existing Kentucky banks, thus eliminating them as possible sources of deconcentration in Barren County. In sum, the proposed acquisition would have an adverse effect upon competition. SUN FIRST NATIONAL BANK OF LAKE WALES, Lake Wales, Fla., and Sun First National Bank of Polk County, Auburndale, Fla. Banking offices Names of banks and type of transaction Total assets* Sun First National Bank of Lake Wales, Lake Wales, Fla. (14923), with and Sun First National Bank of Polk County, Auburndale, Fla. (16786), which had merged December 1, 1979, under the charter and title of latter bank (16786). The merged bank at date of merger had COMPTROLLER'S DECISION This is the Comptroller's decision on an application to merge Sun First National Bank of Lake Wales, Lake Wales, Fla. ("Lake Wales"), into and under the charter of Sun First National Bank of Polk County, Auburndale, Fla. ("Auburndale"). The application was filed on August 2, 1979, and is based on a written agreement executed by the applicant banks on July 17, 1979. Lake Wales and Auburndale are national banks that had total deposits of $38.0 million and $31.8 million, respectively, as of June 30, 1979. * Assets are as of call dates immediately before and after transaction. 122 In To be operation operated $45,057,000 37,328,000 83,925,000 The two banks are wholly owned, with exception of directors' qualifying shares, and controlled by Sun Banks of Florida, Inc., Orlando, Fla., a registered bank holding company. Consummation of this corporate reorganization would have no effect on competition. A review of the financial and managerial resources and future prospects of the existing and proposed institutions, and the convenience and needs of the community to be served has disclosed no reason why this application should not be approved. A review of the record of this application and other information available to this Office as a result of its regulatory responsibilities revealed no evidence that the banks' records of helping to meet the credit needs of their communities, including low and moderate income neighborhoods, is less than satisfactory. This decision is the prior written approval required by the Bank Merger Act, 12 USC 1828(c), for the applicants to proceed with the merger. October 15, 1979 SUMMARY OF REPORT BY ATTORNEY GENERAL The merging banks are both wholly owned subsidiaries of the same bank holding company. As such, their proposed merger is essentially a corporate reorganization and would have no effect on competition. NATIONAL CENTRAL BANK, Lancaster, Pa., and Lebanon County Trust Company, Lebanon, Pa. Banking offices Names of banks and type of transaction Total assets Lebanon County Trust Company, Lebanon, Pa., with and National Central Bank, Lancaster, Pa. (694), which had merged December 3, 1979, under charter and title of latter bank (694). The merged bank at date of merger had COMPTROLLER'S DECISION This is the Comptroller's decision on an application to merge Lebanon County Trust Company, Lebanon, Pa. ("Lebanon"), into and under the charter of National Central Bank, Lancaster, Pa. ("National Central"). The application was accepted for filing on June 19, 1979, and is based on a written agreement executed by the proponents on February 27, 1979. National Central, a wholly owned subsidiary of National Central Financial Corporation, Lancaster, Pa., a one-bank holding company, had total deposits of $1.3 billion on December 31, 1978. It operates 57 banking offices: 15 in Lancaster County, 16 in Berks County, 12 in York County, nine in Dauphin County, three in Chester County and two in Lebanon County. Lebanon had total deposits of $53.2 million on December 31, 1978. It operates three offices in Lebanon County, two in the City of Lebanon and one in Mount Gretna. It has no offices outside Lebanon County. The relevant market for consideration in this proposal is Lebanon County. Lebanon ranks as the fifth largest of 11 commercial banks in this market, controlling approximately 11 percent of the market's commercial bank deposits. National Central, with two branches in this market, represents the ninth largest bank with less than 5 percent of total market deposits. If this merger is consummated, the resulting bank will rank as the second largest bank in this market with approximately 16 percent of total commercial bank deposits. The largest bank in the market, headquartered in Lebanon, would continue to hold in excess of 20 percent of the market's deposits. Additionally, the third and fourth largest banks in the market, each with approximately 13 percent of total market deposits, are branch offices belonging to larger regional commercial banks headquartered outside Lebanon County in Harrisburg and Reading, Pa. The closest offices of Lebanon and National Central are some 11 miles apart. The intervening area between these offices is predominantly rural and sparsely populated. There are numerous banking of $ 64,990,000 1,643,036,000 1,708,026,000 In To be operation operated 3 60 63 fices of competing commercial banks in close proximity to Lebanon, including the branch offices of commercial banks headquartered outside Lebanon County. Therefore, the proposed merger would not eliminate any meaningful existing competition between the two banks. Applicable state banking statutes permit branching by a commercial bank within its home office county and all counties immediately contiguous. Thus, the proponent banks could branch into areas served by the other. However, Lebanon has shown no desire to expand outside the Lebanon market area, and it does not appear likely that the bank would expand cfe novo into areas served by National Central. Conversely, the likelihood that National Central would enter the Lebanon area appears remote since the area is already served by eight commercial banking organizations and is not attractive for de novo entry. Accordingly, the potential for future competition between the proponent banks is minimal. Overall, approval of this application would not have a substantially adverse effect on competition. The financial and managerial resources of both National Central and Lebanon are satisfactory. The future prospects of the two banks, independently and in combination, are favorable. After consummation of this transaction, the additional capabilities of National Central will be made available to the present customers of Lebanon in such areas as full trust services, overdraft checking, international banking, equipment lease financing and expanded lending limit. These facts are positive considerations on the issue of convenience and needs, and the Comptroller is unaware of any negative factors in this issue. A review of the record of this application and other information available to this Office as a result of its regulatory responsibilities revealed no evidence that the banks' records of helping to meet the credit needs of the communities, including low and moderate income communities, is less than satisfactory. 123 This decision is the prior written approval required by the Bank Merger Act, 12 USC 1828(c), for the applicants to proceed with the merger. October 25, 1979 SUMMARY OF REPORT BY ATTORNEY GENERAL Lebanon County (1975 population 105,723) is located in southcentral Pennsylvania. The city of Lebanon (the county seat and a hub of commerce, industry and finance) is approximately 80 miles northwest of Philadelphia, 27 miles west of Reading and 23 miles east of Harrisburg. The county's economy is based on a diversified mix of farming (53 percent of the land in the county is pasture or cropland) and industries such as primary metals and apparel/textile products (employing 22.5 percent and 18.5 percent of the county's industrial workers, respectively). During the last several years, the county has experienced moderate growth. Population rose 6.1 percent from the 1970 level to 1975, and per capita personal income increased 46.2 percent from the 1969 level to 1974, (1959-1969 increase: 39.4 percent. The economic outlook for both the county and the city of Lebanon area appears favorable. The nearest office of Applicant to Bank is its office in Richland, Lebanon County, located 12 miles east of Bank's main office in the city of Lebanon. Although offices of other banks are closer to Bank than Applicant's Richland office, it appears that the proposed merger would eliminate direct competition between Applicant and Bank. Eleven commercial banks currently operate offices in Lebanon County; seven of these are headquartered in Lebanon County. As of June 30, 1978, Bank held the fifth largest share (11.08 percent) and Applicant held the ninth largest share (4.52 percent) of the total deposits held in Lebanon County banking offices. Six banks in the county each account for less than 10 percent of the total deposits. If the proposed transaction is consummated, the resulting bank will hold the second largest share (15.6 percent) of total deposits held in county banking offices. Concentration among the four largest banks in the county—in terms of total county deposits—would increase from 58.85 percent to 62.47 percent. Under Pennsylvania law, both Applicant and Bank could be permitted to establish additional ate novo offices in Lebanon County. The proposed merger, therefore, will eliminate the potential for increased future competition between them. Overall, in our view, the proposed transaction would have an adverse effect on competition. NORTH CAROLINA NATIONAL BANK, Charlotte, N.C., and The Bank of Asheville, Asheville, N.C. Banking offices Names of banks and type of transaction Total assets The Bank of Asheville, Asheville, N.C, with and North Carolina National Bank, Charlotte, N.C. (13761), which had merged December 3, 1979, under the charter and title of the latter bank (13761). The merged bank at date of merger had COMPTROLLER'S DECISION This is the Comptroller's decision on an application to merge The Bank of Asheville, Asheville, N.C. ("Bank"), into and under the charter of North Carolina National Bank, Charlotte, N.C. ("NCNB"). This application was filed on September 14, 1979, and rests on an agreement executed by the proponents on June 20, 1979. As of March 31, 1979, NCNB had total deposits of $3.8 billion and ranked as the second largest commercial banking organization headquartered in North Carolina. NCNB is a banking subsidiary of NCNB Corporation, Charlotte, a registered bank holding company. On March 31, 1979, Bank had total deposits of $87.2 million. The relevant geographic market for analysis in this proposal is Buncombe County, N.C. Within this market there are six banking organizations that operate a total of 41 offices and have total market deposits of $433.7 124 $ 103,418,000 5,264,166,000 5,485,502,000 In To be operation operated 9 162 171 million. With the exception of NCNB, the five largest banks in the state have offices in the market. The largest bank in the market and in the state is Wachovia Bank & Trust Co., Winston-Salem, N.C, which controls 41.6 percent of total market commercial bank deposits. The second largest bank in the market and third largest in the state is First Union National Bank, Charlotte, with 21.4 percent of total commercial bank deposits in the market. Bank ranks as the third largest bank in its market and has 18.7 percent of the commercial bank deposits. Northwestern Bank, North Wilkesboro, N.C, ranks as the fourth largest bank in both the market and state. Northwestern Bank controls 11.2 percent of commercial bank deposits held by all banks in the market. First-Citizens Bank & Trust Co., Raleigh, N.C, is the fifth largest bank in the market and state and has 4.5 percent of market deposits. The smallest bank in the market, Western Carolina Bank, Asheville, currently controls only 2.6 percent of total market deposits. Western Carolina Bank has filed an application with this Office to merge with First National Bank of Catawba County, Hickory, N.C. If the merger is approved, First National Bank of Catawba County will have total deposits in excess of $250 million and will operate 22 offices in eight western North Carolina counties, including Buncombe County. As noted above, NCNB has no present offices in the market. Inasmuch as the smallest bank in the market is currently a merger partner with another bank, and all other banks in the market, except for Bank, are offices of major state-wide branch banking systems, Bank is the only independent bank in its market that is currently available for acquisition. The closest offices of NCNB and Bank are 24 miles apart. Since Bank is not a competitor outside Buncombe County and NCNB is not a competitor within that county, there is no existing competition between the proponents. Accordingly, approval of this application would not substantially lessen competition within the market. Pursuant to applicable North Carolina branch banking statutes, NCNB could legally establish a de novo office within Bank's market. NCNB has not expanded into a new market since 1974, and it has never attempted to enter Buncombe County with a de novo office. In consideration of the number of financial institutions currently serving Bank's market and the relatively low income level and slow economic growth rate of the market, it does not appear likely that NCNB would choose to enter Bank's market via de novo expansion within the forseeable future. Thus, the elimination of any potential for competition developing between NCNB and Bank is not considered great and presents no bar to approval of this application. The financial and managerial resources of NCNB and Bank are generally satisfactory. The future prospects of Bank are uncertain when considered in light of its relatively small size and the fact that it faces direct competition from substantially larger competitors, some of which are affiliated with banking organizations that are the largest operating in the State. The future prospects of NCNB and the resultant bank are good. As a result of this proposal, present customers of Bank should benefit from the introduction of NCNB into their market and the stimulated bank competitive atmosphere that will result. NCNB will also offer new and expanded banking services including, but not limited to, FHA-insured and VA-guaranteed mortgage loans, more and larger commercial loans, small business loans, dealer financing for consumer purchases, agricultural loans, international banking services, automated teller machines and trust services. These are all positive considerations on the issue of convenience and needs. A review of the record of this application and other information available to this Office as a result of its regulatory responsibilities revealed no evidence that NCNB's record of helping to meet the credit needs of its entire community, including low and moderate income neighborhoods, is less than satisfactory. This is the required prior written approval for the applicants to proceed with the merger. November 2, 1979 The Attorney General's report was not received. AMERICAN NATIONAL BANK AND TRUST COMPANY OF CHICAGO, Chicago, III., and Mercantile National Bank of Chicago, Chicago, III. Banking offices Names of banks and type of transaction Total assets* Mercantile National Bank of Chicago, Chicago, III. (14419), with was purchased December 7, 1979, by American National Bank and Trust Company of Chicago, Chicago, III. (13216), which had After the purchase was effected, the receiving bank had COMPTROLLER'S DECISION This is the Comptroller's decision on the application of American National Bank and Trust Company of Chicago, Chicago, III. ("American"), to purchase certain of the assets and assume certain of the liabilities of Mercantile National Bank of Chicago, Chicago, III. ("Mercantile"). This application was filed on September 17, 1979, and is based upon an agreement executed by the proponents on August 8, 1979. As of May 31, 1979, American had total deposits of $1.7 billion, and Mercantile's total deposits were $62.3 million. American is a wholly owned subsidiary of Walter E. Heller International Corporation, Chicago, a registered one-bank holding and multinational finance company. $ In To be operation operated 64,846,797 2,219,591,000 2,518,247,000 American competes in a banking market which is approximated by the Chicago Standard Metropolitan Statistical Area ("SMSA"). In this market, there are over 425 commercial banking organizations operating more than 625 banking offices. American is the fifth largest banking organization in this market with approximately 2.3 percent of the market's commercial bank deposits. Mercantile operates in a market entirely included in American's banking market. If the proposed purchase transaction is consummated, American will continue to rank as the fifth largest commercial banking organiza* Asset figures for the acquiring bank are as of call d&tes immediately before and after transaction. 125 tion in the Chicago SMSA and will increase its share of market deposits by a mere 0.1 percent. The four larger banks in the market represent substantial commercial banking organizations, and collectively, they control some 51 percent of the SMSA's commercial bank deposits. American and Mercantile both operate a main office and one branch office facility within the Chicago metropolitan area. American is in downtown Chicago near the heart of the city's financial district. Mercantile is on the southwestern edge of downtown Chicago in an area recently rejuvenated, resulting in an improved business environment. While the main offices of the two banks are within several blocks of each other, there are numerous banking offices of competing commercial banks in and around the area between the proponents offices, including offices of the larger Chicago commercial banks. Moreover, given the size disparity between the two banks, combined with the present overall condition of Mercantile, it is evident that there is minimal existing competition between American and Mercantile. Consequently, approval of this application would not substantially lessen competition in any relevant market. The financial and managerial resources of American are satisfactory. The financial and managerial resources of Mercantile are unsatisfactory. At the last examination of Mercantile, conducted by this Office on May 31, 1979, the condition of the bank was considered critical. Mercantile has been under caretaker management since the death of its chairman and pres- ident in October 1978. This has further exacerbated substantial operating problems facing the bank. Accordingly, the future prospects of Mercantile are uncertain and absent consummation of this proposal are extremely limited. American and Mercantile both currently offer a full range of commercial banking services to their customers. While this proposal will not result in the immediate introduction of any new or expanded banking services, the resulting bank would be a more meaningful competitor within the Chicago area, and as a result, the banking public would be better served. The Comptroller is unaware of any negative factors on the issue of convenience and needs. A review of the record of this application and other information available to this Office as a result of its regulatory responsibilities revealed no evidence that the applicants' records of helping to meet credit needs of the communities, including low and moderate income neighborhoods, is less than satisfactory. This merger may not be consummated until proof of compliance with 12 USC 215a(2) is submitted to the Comptroller. This decision is the prior written approval required by the Bank Merger Act, 12 USC 1828(c), in order for the applicants to proceed with the proposed transaction. October 26, 1979 The Attorney General's report was not received. NORTHWESTERN NATIONAL BANK OF SIOUX FALLS, Sioux Falls, S. Dak., and Springfield State Bank, Springfield, S. Dak. Banking offices Names of banks and type of transaction Total assets Springfield State Bank, Springfield, S. Dak., with and Northwestern National Bank of Sioux Falls, Sioux Falls, S. Dak. (10592), which had merged December 14, 1979, under the charter and title of latter bank (10592). The merged bank at date of merger had COMPTROLLER'S DECISION This is the Comptroller's decision on an application to merge Springfield State Bank, Springfield, S. Dak. ("Bank"), into and under the charter of Northwestern National Bank of Sioux Falls, Sioux Falls, S. Dak. ("Northwestern"). This application was filed on August 21, 1979, and is based on an agreement signed by the participants on May 10 and May 15, 1979. On December 31, 1978, Bank had total deposits of $5.8 million, and Northwestern had total deposits of $320.5 million. Northwestern is a subsidiary of Northwest Bancorporation, Minneapolis, Minn. ("Bancorp"), a registered multibank holding company with total deposits of $1.8 billion. Bancorp has 83 subsidiaries that operate in seven states. Bancorporation is the largest of 119 banking organizations in the state with approximately 23 percent of the commercial bank deposits. Consum 126 $ 6,984,000 418,613,000 425,704,000 In To be operation operated 1 16 17 mation of this proposal would not significantly increase its share of bank deposits in South Dakota. The relevant geographic market for analysis of the competitive effects of this proposal is Bon Homme County in southeastern South Dakota. The county has about 9,000 residents. Within this market, there are five commercial banks with a total of $37 million in deposits. The two largest banks in the market control almost 72 percent of the market's total deposits. Bank, the third largest bank in the market with 15.8 percent of market deposits operates a single office. The closest offices of the two banks are over 79 miles apart, and Northwestern derives no loan or deposit accounts from Bon Homme County. Consummation of this proposal would constitute Bancorp's initial entry into Bon Homme County, and this entrance should stimulate the competitive atmosphere within the relevant geographic market. Northwestern is prohibited by South Dakota law from establishing branches in Springfield other than by merger or consolidation. Bancorp could establish a new bank in Springfield. However, there are now five banks serving the needs of Bon Homme County's 9,000 residents. There have been no new banking offices established in the county in the last 5 years. The county does not appear to be attractive for ate novo entry, and it is unlikely that Bancorp would choose to do so in the foreseeable future. Accordingly, the competitive effects are not likely to substantially lessen competition in any relevant market. Northwestern's financial and managerial resources are satisfactory. Bank's present condition is satisfactory, but because of small size, its ability to attract successor management and provide expanded and sophisticated banking services is limited. Therefore, its financial and managerial resources and its future prospects as an independent institution are also limited. The future prospects of the resultant bank are good. Northwestern proposes to offer new and expanded banking services to the Bon Homme banking market. These services include a significantly larger legal lend- ing limit, pre-approved lines of credit connected to personal checking accounts, individual retirement accounts, Keogh Plans, Treasury bill certificates and increased availability of home mortgages. These facts are positive considerations on the issue of convenience needs and lend additional weight toward approval of the application. A review of the record of this application and other information available to this Office as a result of its regulatory responsibilities revealed no evidence that Northwestern's record of helping to meet the credit needs of its entire community, including low and moderate income neighborhoods, is less than satisfactory. This decision is the required prior written approval of the Bank Merger Act, 12 USC 1828(c), in order for the applicants to proceed with the merger. October 26, 1979 SUMMARY OF REPORT BY ATTORNEY GENERAL We have reviewed this proposed transaction and conclude that it would not have an adverse effect on competition. FIRST NATIONAL BANK OF CATAWBA COUNTY, Hickory, N.C., and Western Carolina Bank and Trust Company, Asheville, N.C. Banking offices Names of banks and type of transaction Total assets* Western Carolina Bank and Trust Company, Asheville, N.C, with was purchased December 28, 1979, by First National Bank of Catawba County, Hickory, N.C. (4597), which had After the purchase was effected, the receiving bank had COMPTROLLER'S DECISION This is the Comptroller's decision on an application by First National Bank of Catawba County, Hickory, N.C. ("FNB"), to purchase the assets and assume the liabilities of Western Carolina Bank & Trust Company, Asheville, N.C. ("Western"). This application was filed on October 10, 1979, and is based on an agreement executed by the participants on August 22, 1979. As of June 30, 1979, FNB had total commercial bank deposits of $237.9 million, and Western's total deposits were $21 million. The relevant market for analysis in this application is the five North Carolina counties where Western has at least one banking office. These counties are Buncombe (where Western is headquartered and operates two branches), Haywood, Henderson, Transylvania and Burke. Within this market, there are eight banking •organizations that have total commercial bank deposits of $790.6 million and operate a total of 75 offices. The largest bank in this market is also the largest bank in North Carolina, Wachovia Bank and Trust Company of Winston-Salem. Wachovia has total commercial bank deposits of $241 million in the market, or In To be operation operated $ 22,591,000 8 276,607,000 315,981,000 15 23 almost 31 percent of total market deposits. The three largest banks in the market—Wachovia, First Union National Bank and Northwestern Bank, respectively— control slightly less than 80 percent of the market's deposits. Western ranks as the sixth largest bank in its market and controls a modest 3 percent of the total deposits. FNB has no offices in any of the five counties where Western operates. FNB has a total of 15 offices: 12 in Catawba County (of which six are in Hickory), one Alexander County and two in Ashe County. The closest offices of the proponents are approximately 20 miles apart, and there are numerous offices of competitor banks in the intervening area. Additionally, McDowell County, where neither FNB or Western operates an office, is between the proponents' closest offices. Based on these facts, there is no meaningful existing competition between the proponents. Pursuant to applicable North Carolina banking statutes and with prior regulatory approval, the propo* Asset figures are as of call dates immediately before and after transaction. 127 nents could establish a de novo office in each other's market. The likelihood of this event appears remote when the present structure of FNB's and Western's respective markets is considered together with the relatively small size of Western in comparison to its major competitors. The financial and managerial resources of FNB are satisfactory. While Western's present condition is generally satisfactory, its relatively small size inhibits its ability to attract successor management and to provide expanded financial services. Accordingly, its financial and managerial resources are not totally satisfactory. Additionally, its future prospects are also limited in view of its relative small size and the fact that it experiences direct competition from substantially larger competitors, some of which are affiliated with banking organizations that are the largest operating in the state. The future prospects of the resulting bank are good. As a direct result of this transaction, FNB will intro- duce new banking services not now offered by Western. These services include full trust services, consumer credit services, customer services and business development services, international banking services and an increased emphasis on personal banking services. These are positive considerations on the issue of convenience and needs. A review of the record of this application and other information available to this Office as a result of its regulatory responsibilities revealed no evidence that FNB's record of helping to meet the credit needs of the entire community, including low and moderate income neighborhoods, is less than satisfactory. This decision is the prior written approval required by the Bank Merger Act for the applicants to proceed with with proposal. November 27, 1979 The Attorney General's report was not received. THE ONEIDA NATIONAL BANK AND TRUST COMPANY OF CENTRAL NEW YORK, Utica, N.Y., and The Little Falls National Bank, Little Falls, N.Y. Banking offices Names of banks and type of transaction Total assets The Little Falls National Bank, Little Falls, N.Y. (2406), with and The Oneida National Bank and Trust Company of Central New York, Utica, N.Y. (1392), which had merged December 28, 1979, under the charter and title of latter bank (1392). The merged bank at date of merger had COMPTROLLER'S DECISION This is the Comptroller's decision on an application to merge The Little Falls National Bank, Little Falls, N.Y. ("Bank"), into and under the charter of The Oneida National Bank and Trust Company of Central New York, Utica, N.Y. ("Oneida"). This application was filed on August 9, 1979, and is based on an agreement executed by the proponents on June 18, 1979. Oneida is a national bank that had total deposits of $608.3 million as of June 30, 1979. It operates 33 banking offices in the seven counties of Oneida, Herkimer, Oswego, Onondaga, Wayne, St. Lawrence and Franklin in upstate New York. The preponderence of the population and economic activity within this service area is centered in Utica and Rome. Oneida experiences direct local competition within its market from five multibillion dollar deposit money center banks based in New York City and one based in Buffalo. Since the passage of statewide branching in 1976, these competitors have been aggressively expanding their efforts in Oneida's service area. Bank, with deposits of $16.7 million, operates a single banking office within the Little Falls, which is in the southeastern portion of Herkimer County. Because of its size, Bank serves an area limited to 128 In To be operation operated $ 19,478,000 1 686,295,000 33 704,735,000 34 Little Falls and the immediate surrounding area. Bank generates 82 percent of its total deposits and extends a preponderence of its loans within a 5-mile radius of the city. Because of the sparsely populated and rugged topography of this part of the state, commutation patterns and limited highway access between communities, we believe that this 5-mile radius represents the appropriate definition of Bank's market. Therefore, this is the appropriate market for competitive analysis under the Bank Merger Act. New York state banking statutes permit de novo branch expansion by commercial banks into any municipality within the state (except for those municipalities with a population of less than 50,000 inhabitants and where an independent commercial bank is headquartered). Consequently, Bank enjoys "home office protection," and the only avenue for entry into Little Falls by Oneida is through the acquisition of an existing bank. In its market, Bank competes directly with the Herkimer County Trust Company, Little Falls, who with $41 million in deposits controls approximately 61 percent of the total commercial bank deposits in this market. In addition, keen competition is now provided by the Little Falls office of the Mohawk Valley Savings and Loan Association.* Increased competition for time deposits is important as Bank's present deposit structure is comprised of 83 percent time money. Oneida's closest branch to Bank is located approximately 8 miles distant in Dolgeville. A total of 0.2 percent of Oneida's deposits and 0.7 percent of its total loans are derived from Bank's market. Accordingly, consummation of this merger will eliminate some but not a substantial amount of direct competition. Moreover, the "home office protection" minimizes the potential for any increase in this level of competition by foreclosing Oneida's de novo entry. Even if "home office protection" could be eliminated, the chances of de novo entry in close proximity to Little Falls are remote because of the area's low economic growth and limited site availability due to the rugged topography. The financial and managerial prospects of the two * The New York Banking Department approved the merger of Little Falls Building Savings and Loan Association and ll'ian Savings and Loan Association to form the Mohawk Valley Savings and Loan Association on June 22, 1979. banks independently are favorable and in combination are excellent. (12 USC 1828(c)(5)). A review of the record of this application and other information available to this Office as a result of its regulatory responsibilities revealed no evidence that the applicants' records of helping to meet community credit needs, including those of low and moderate income neighborhoods, is less than satisfactory. After consummation of this merger, the convenience and needs of Bank's present customers will be greatly enhanced. Such benefits include the offering of services not otherwise available such as revolving credit card lines of credit, full trust services, specialized expertise in agricultural lending, overdraft checking, expanded deposit services, computer services and an increased lending limit. These positive considerations on the issue of convenience and needs clearly outweigh any adverse effects that might occur from the elimination of slight direct competition between Bank and Oneida. Accordingly, this merger is in the public interest and was approved November 28, 1979. February 11, 1980 The Attorney General's report was not received. DEPOSIT GUARANTY NATIONAL BANK, Jackson, Miss., and Bank of Inverness, Inverness, Miss. Banking offices Names of banks and type of transaction Total assets Bank of Inverness, Inverness, Miss., with and Deposit Guaranty National Bank, Jackson, Miss. (15548), which had merged December 31, 1979, under the charter and title of latter bank (15548). The merged bank at date of merger had COMPTROLLER'S DECISION This is the Comptroller's decision on the application to merge Bank of Inverness, Inverness, Miss. ("Inverness Bank"), into and under the charter of Deposit Guaranty National Bank, Jackson, Miss. ("DGNB"). The application was accepted for filing on September 12, 1979, and is based on a written agreement executed by the proponents on June 19, 1979. As of June 30, 1979, DGNB had total deposits of $1.1 billion, and Inverness Bank had deposits of $10.9 million. DGNB currently operates a main office and 53 branch offices in nine western Mississippi counties, 23 of which are within the Jackson metropolitan area. Inverness Bank operates a single banking office within the city of Inverness which is situated in Sunflower County in northwestern Mississippi. The main office of DGNB is some 80 miles from Inverness Bank, and its closest branch office is approximately 30 miles distant. In view of the geographic distance separating the proponent banks and the numerous offices of competing commercial banks in the intervening area, this acquisi $ 16,120,000 1,489,201,000 1,505,321,000 In To be operation operated 1 56 57 tion would not eliminate any existing competition between DGNB and Inverness Bank. The financial and managerial resources of both DGNB and Inverness Bank are satisfactory. The future prospects of Inverness Bank are somewhat limited in view of its relatively small size and limited management depth. The future prospects of the resulting bank are good. As a result of the merger, DGNB intends to make available new and expanded banking services to the present customers of Inverness Bank including, but not limited to, trust services, overdraft checking, equipment lease financing, additional expertise in agricultural lending, more aggressive consumer loan department, small business loans and automated teller machines. These are all positive considerations on the issue of convenience and needs. A review of the record of this application and other information available to this Office as a result of its regulatory responsibilities revealed no evidence that the banks' records of helping to meet the credit needs of 129 the communities, including low and moderate income neighborhoods, is less than satisfactory. This decision is the prior written approval required by the Bank Merger Act, 12 USC 1828(c), in order for the applicants to proceed with this merger. November 28, 1979 SUMMARY OF REPORT BY ATTORNEY GENERAL The Attorney General has granted permission for the merger of Bank of Inverness with Deposit Guaranty National Bank under the terms of the judgment entered in U.S. v. Deposit Guaranty National Bank. THE HUNTINGTON NATIONAL BANK OF COLUMBUS, Columbus, Ohio, The Huntington Bank of Toledo, Toledo, Ohio, The Huntington Portage National Bank of Kent, Kent, Ohio, The Huntington First National Bank of Lima, Lima, Ohio, The Huntington Bank of Wood County, Bowling Green, Ohio, The Huntington First National Bank of Medina County, Wadsworth, Ohio, The Huntington Lagonda National Bank of Springfield, Springfield, Ohio, The Huntington Bank of Chillicothe, Chillicothe, Ohio, The Huntington First National Bank of Kenton, Kenton, Ohio, The Huntington Bank of Washington Court House, Washington Court House, Ohio, The Huntington National Bank of Bellefontaine, Bellefontaine, Ohio, The Huntington National Bank of Franklin, Franklin, Ohio, The Huntington Bank of Woodville, Woodville, Ohio, The Huntington Bank of Ashland, Ashland, Ohio, The Huntington National Bank of London, London, Ohio, The Huntington National Bank, Columbus, Ohio Banking offices Names of banks and type of transaction Total assets The Huntington National Bank of Bellefontaine, Bellefontaine, Ohio (13749), with and The Huntington National Bank of Columbus, Columbus, Ohio (7745), with and The Huntington National Bank of Franklin, Franklin, Ohio (5100), with and The Huntington Portage National Bank of Kent, Kent, Ohio (652), with and The Huntington First National Bank of Kenton, Kenton, Ohio (2500), with and The Huntington First National Bank of Lima, Lima, Ohio (13767), with and The Huntington National Bank of London, London, Ohio (10373), with and The Huntington Lagonda National Bank of Springfield, Springfield, Ohio (14105), with and The Huntington First National Bank of Medina County, Wadsworth, Ohio (5828), with and The Huntington Bank of Ashland, Ashland, Ohio, with and The Huntington Bank of Wood County, Bowling Green, Ohio, with and The Huntington Bank of Chillicothe, Chillicothe, Ohio, with and The Huntington Bank of Toledo, Toledo, Ohio, with and The Huntington Bank of Washington Court House, Washington Court House, Ohio, with and The Huntington Bank of Woodville, Woodville, Ohio, with and The Huntington National Bank, Columbus, Ohio (7745), which had merged December 31, 1979, under the charter of the latter bank (7745) and title "The Huntington National Bank." The merged bank at date of merger had COMPTROLLER'S DECISION This is the Comptroller's decision on an application to merge 15 sister banks ("Merging Banks"), into and under the charter of The Huntington National Bank, Columbus, Ohio ("HNB"). This application is one part of a process whereby Huntington Bancshares, Inc., Columbus, Ohio ("Bancshares"), a registered multibank holding company, is realigning and consolidating its banking interests. As a part of this process, Bancshares sponsored a charter application for a new national bank which was preliminarily approved by this Office on June 29, 1979. After the merger, this resultant bank will have total commercial bank deposits of almost $2 billion. Since this merger represents a realignment and consolidation of Bancshares1 banking interests, no adverse competitive issues exist under the Bank Merger Act, 12 USC 1828(c). The financial and managerial resources and future prospects of both the existing and proposed institutions are satisfactory. Additionally, the newly created corporate structure of the resultant bank will permit the 130 $ 45,618,000 1,582,529,000 38,312,000 126,950,000 50,419,000 125,912,000 30,632,000 71,205,000 72,065,000 35,379,000 97,730,000 62,472,000 141,239,000 45,753,000 35,986,000 240,000 2,542,896,000 In To be operation operated 5 38 4 9 2 9 2 5 2 3 6 3 11 2 1 0 102 banking needs of the communities involved to be better served. A review of the record of this application and other information available to this Office as a result of its regulatory responsibilities revealed no evidence that the records of any of the national banking associations is less than satisfactory in helping to meet the credit needs of their entire communities, including low and moderate income neighborhoods. This decision is the prior written approval required by the Bank Merger Act in order for the applicants to proceed with the proposed merger. Additionally, HNB is authorized to operate all former offices of all 15 Merging Banks as branches of HNB. November 27, 1979 SUMMARY OF REPORT BY ATTORNEY GENERAL The merging banks are all wholly owned subsidiaries of the same bank holding company. As such, their proposed merger is essentially a corporate reorganization and would have no effect on competition. //. Mergers consummated, involving a single operating bank. CITY NATIONAL BANK, Fort Worth, Tex., and 5600 Lancaster National Bank, Fort Worth, Tex. Banking offices Names of banks and type of transaction Total assets City National Bank, Fort Worth, Tex. (12696), with and 5600 Lancaster National Bank, Fort Worth, Tex. (12696), which had merged January 2, 1979, under the charter of the latter bank (12696) and title "City National Bank.' The merged bank at date of merger had COMPTROLLER'S DECISION Pursuant to the requirements of 12 USC 1828(c), The Bank Merger Act, an application has been filed with the Office of the Comptroller of the Currency that seeks and requires the prior written consent of this Office to the proposed merger of City National Bank, Fort Worth, Tex. ("CNB"), the Merging Bank, into 5600 Lancaster National Bank, Fort Worth, Tex. ("Charter Bank"), under the charter of 5600 Lancaster National Bank and with the title "City National Bank." The subject application rests on an agreement executed between the proponent banks and is incorporated herein by reference, the same as if fully set forth. CNB was granted National Banking Association charter number 12696 by this Office on April 24, 1925. As of March 31, 1978, CNB had total commercial bank deposits of approximately $60.6 million. By action dated August 4, 1978, the Office of the Comptroller of the Currency granted preliminary approval for the organization of a new National Bank ("Charter Bank"). The sponsors of the new bank application were principals of Republic of Texas Corporation, Dallas, Tex. ("Republic"), a registered multibank holding company that as of December 31, 1977, controlled 12 subsidiary banks with consolidated deposits of almost $5.8 billion. The primary purpose for the organization of Charter Bank is to facilitate the acquisition of the successor by merger to CNB by Republic. $74,227,000 240,000 In To be operation operated 1 0 74,467,000 This application was filed prior to the November 6, 1978, effective date of the Comptroller's Community Reinvestment Act regulations, 12 CFR 25. However, pursuant to the Community Reinvestment Act, Public Law No. 95-128, available information relevant to the bank's record of meeting its community credit needs was reviewed, revealing no evidence to suggest that the applicant is not meeting the credit needs of the community, including low and moderate income neighborhoods. Accordingly, the result of approval of the proposal would merely be to combine an existing commercial bank with a non-operating entity; as such, would produce no adverse impact upon any relevant area of consideration. Applying the statutory criteria, it is deemed that the application is not adverse to the public interest and should be, and hereby is, approved. November 29, 1978 SUMMARY OF REPORT BY ATTORNEY GENERAL The proposed merger is part of a plan through which City National Bank would become a subsidiary of Republic of Texas Corporation, a bank holding company. The instant merger, however, would merely combine an existing bank with a non-operating institution; as such, and without regard to the acquisition of the surviving bank by Republic of Texas Corporation, it would have no effect on competition. NATIONAL LUMBERMAN'S BANK AND TRUST COMPANY, Muskegon, Mich., and NLB National Bank of Muskegon, Muskegon, Mich. Banking offices Names of banks and type of transaction Total assets* National Lumberman's Bank and Trust Company, Muskegon, Mich. (4840) , with and NLB National Bank of Muskegon, Muskegon, Mich. (4840), which had merged January 30, 1979, under charter of the latter bank (4840) and title "National Lumberman's Bank and Trust Company." The merged bank at date of merger had COMPTROLLER'S DECISION 'The Office of the Comptroller of the Currency has accepted an application filed pursuant to the statutory requirements of 12 USC 1828(c), the Bank Merger Act, that requires prior consent to effectuate the proposed merger of National Lumberman's Bank and Trust Com $160,428,000 240,000 162,420,000 In To be operation operated 8 0 8 pany, Muskegon, Mich. ("Merging Bank"), into NLB National Bank of Muskegon (Organizing), Muskegon ("Charter Bank"), under the charter of NLB National Bank of Muskegon, and with the title of National * Asset figures are as of call dates immediately before and after transaction. 131 Lumberman's Bank and Trust Company. The subject proposal rests upon an agreement executed between the proponent banks, and is incorporated herein by reference, the same as if fully set forth. Merging Bank has operated as a National Banking Association since the bank was granted charter number 4840 by this Office on January 16, 1893. As of March 31, 1978, the bank had total commercial bank deposits aggregating approximately $138.2 million. By action dated June 22, 1978, this Office granted preliminary approval to organize a new National Bank to be known as "NLB National Bank of Muskegon" (Charter Bank). The new bank application was sponsored by principals of First Michigan Bank Corporation, Zeeland, Mich., a registered multibank holding company that as of December 31, 1977, had three banking subsidiaries with total deposits of $188.8 million. The primary function of Charter Bank is to serve as the vehicle for the acquisition of the successor by merger to Merging Bank by the bank holding company; and, to date, Charter Bank has no operating history. This application was filed prior to the November 6, 1978, effective date of the Comptroller's Community Reinvestment Act regulations, 12 CFR 25. However, pursuant to the Community Reinvestment Act, Public Law No. 95-128, available information relevant to the bank's record of meeting its community credit needs was reviewed, revealing no evidence to suggest that the applicants are not meeting the credit needs of their community, including low and moderate income neighborhoods. Accordingly, applying the statutory criteria, it is the conclusion of this Office that approval of the subject proposal would have the effect of merely combining an existing commercial bank with a non-operating entity; and as such, would have no adverse impact on any relevant area of consideration. The application is thus deemed to be not adverse to the public interest and should be, and hereby is, approved. December 29, 1978 SUMMARY OF REPORT BY ATTORNEY GENERAL The proposed merger is part of a plan through which National Lumberman's Bank and Trust Company would become a subsidiary of First Michigan Bank Corporation, a bank holding company. The instant merger, however, would merely combine an existing bank with a non-operating institution; as such, and without regard to the acquisition of the surviving bank by First Michigan Bank Corporation, it would have no effect on competition. THE FIRST NATIONAL BANK OF WACO, Waco, Tex., and First Waco Bank, National Association, Waco, Tex. Banking offices Names of banks and type of transaction Total assets The First National Bank of Waco, Waco, Tex. (2189), with and First Waco Bank, National Association, Waco, Tex. (2189), which had merged February 9, 1979, under the charter of the latter bank (2189) and title "The First National Bank of Waco." The merged bank at date of merger had COMPTROLLER'S DECISION Application has been made to the Office of the Comptroller of the Currency requesting prior permission to merge The First National Bank of Waco, Waco, Tex. ("Merging Bank"), into First Waco Bank, National Association (Organizing), Waco, Tex. ("Charter Bank"), under the charter of First Waco Bank, National Association, and with the title of "The First National Bank of Waco." The subject application rests on an agreement executed between the proponent banks and is incorporated herein by reference, the same as if fully set forth. Merging Bank was granted National Banking Association charter number 2189 by this Office on September 24, 1874, and as of June 30, 1978, had total commercial bank deposits of $170.2 million. On May 16, 1978, this Office granted preliminary approval for the organization of Charter Bank, and to date, the new bank has no operating history. Charter 132 In To be operation operated $209,495,000 240,000 209,103,000 Bank was organized by principals of PanNational Group, Inc., El Paso, Tex. ("PanNational Group"), a registered multibank holding company that currently owns 99.1 percent, less directors' qualifying shares, of the outstanding voting shares of Merging Bank. The primary function of Charter Bank is to facilitate the acquisition of the remaining outstanding voting shares of Merging Bank, whereby PanNational Group would own 100 percent, less directors' qualifying shares, of the outstanding voting shares of Merging Bank through the resulting bank. The proposed merger would merely have the effect of combining an existing commercial banking institution with a non-operating entity; as such, would produce no adverse effect upon any relevant area of consideration. This application was filed prior to the November 6, 1978, effective date of the Comptroller's Community Reinvestment Act regulations, 12 CFR 25. However, pursuant to the Community Reinvestment Act, Public Law No. 95-128, available information rele- vant to the bank's record of meeting its community credit needs was reviewed, revealing no evidence to suggest that the applicants are not meeting the credit needs of their community including low and moderate income neighborhoods. Accordingly, applying the statutory criteria, it is the conclusion of the Office of the Comptroller of the Currency that this application is not adverse to the public interest and should be, and hereby is, approved. January 9, 1979 SUMMARY OF REPORT BY ATTORNEY GENERAL The proposed merger is part of a plan through which First National Bank of Waco would become a subsidiary of PanNational Group, Inc., a bank holding company. The instant merger, however, would merely combine an existing bank with a non-operating institution; as such, and without regard to the acquisition of the surviving bank by PanNational Group, Inc., it would have no effect on competition. THE LUFKIN NATIONAL BANK, Lufkin, Tex., and New Lufkin National Bank, Lufkin, Tex. Banking offices Names of banks and type of transaction Total assets The Lufkin National Bank, Lufkin, Tex. (5797), with and New Lufkin National Bank, Lufkin, Tex. (5797), which had merged March 1, 1979, under the charter of the latter bank (5797) and title "The Lufkin National Bank." The merged bank at date of merger had COMPTROLLER'S DECISION Pursuant to the statutory requirements of the Bank Merger Act (12 USC 1828(c)), an application has been filed with the Office of the Comptroller of the Currency that requires prior written consent in order to effectuate the proposed merger of The Lufkin National Bank, Lufkin, Tex. ("Merging Bank"), into New Lufkin National Bank (Organizing) Lufkin, Tex. ("Charter Bank"), under the charter of New Lufkin National Bank, and with the title of "The Lufkin National Bank." The application is based on an agreement executed between the proponent banks and is incorporated herein by reference, the same as if fully set forth. By action dated September 6, 1978, this Office granted preliminary approval for the organization of Charter Bank. Sponsors were principals of First City Bancorporation of Texas, Inc., Houston, Tex. ("FCB"), a registered multibank holding company that controls 29 commercial banking subsidiaries with aggregate deposits of approximately $4.7 billion. To date, Charter Bank has no operating history. Merging Bank was granted National Banking Association charter number 5797 by this Office on May 6, 1901. As of December 31, 1977, Merging Bank, with total deposits of $83.1 million, ranked as the second largest of five commercial banking organizations headquartered within Angelina County, Tex. Approval of the subject application will facilitiate the acquisition of all voting shares of the successor by In To be operation operated $97,742,000 120,000 97,742,000 merger to The Lufkin National Bank by FCB, and will merely combine a non-operating entity with an existing commercial banking institution. Accordingly, approval of the proposal will produce no adverse impact upon any relevant area of consideration. This application was filed prior to the November 6, 1978, effective date of the Comptroller's Community Reinvestment Act regulations, 12 CFR 25. However, pursuant to the Community Reinvestment Act, Public Law No. 95-128, available information relevant to the bank's record of meeting its community credit needs was reviewed, revealing no evidence to suggest that the applicant is not meeting the credit needs of its community including low and moderate income neighborhoods. Application of the statutory criteria indicates that this application is not adverse to the public interest, and the application should be, and hereby is, approved. January 16, 1979 SUMMARY OF REPORT BY ATTORNEY GENERAL The proposed merger is part of a plan through which Lufkin National Bank would become a subsidiary of First City Bancorporation of Texas, Inc., a bank holding company. The instant merger, however, would merely combine an existing bank with a non-operating institution; as such, and without regard to the acquisition of the surviving bank by First City Bancorporation of Texas, Inc., it would have no effect on competition. 133 NATIONAL BANK OF COMMERCE OF DALLAS, Dallas, Tex., and New National Bank Commerce of Dallas, Dallas, Tex. Banking offices Names of banks and type of transaction Total assets National Bank of Commerce of Dallas, Dallas, Tex. (3985), with and New National Bank of Commerce of Dallas, Dallas, Tex. (3985), which had merged March 16, 1979, under the charter of the latter bank (3985) and title "National Bank of Commerce of Dallas." The merged bank at date of merger had COMPTROLLER'S DECISION Application has been made to the Office of the Comptroller of the Currency requesting prior permission to merge National Bank of Commerce of Dallas, Dallas, Tex. ("Merging Bank"), into New National Bank of Commerce of Dallas (Organizing), Dallas ("Charter Bank"), under the charter of New National Bank of Commerce of Dallas and with the title of "National Bank of Commerce of Dallas." The subject application rests on an agreement executed between the proponent banks and is incorporated herein by reference, the same as if fully set forth. Merging Bank was granted National Banking Association charter number 3985 by this Office on March 8, 1889, and had total commercial bank deposits of $249.5 million as of September 30, 1978. On October 20, 1978, this Office granted preliminary approval for the organization of Charter Bank; to date, the bank has no operating history. The primary function of Charter Bank is to act as the acquisition vehicle for Commerce Southwest Inc., Dallas ("Commerce Southwest"), to acquire 100 percent, less directors' qualifying shares, of the successor by merger to National Bank of Commerce of Dallas. On December 22, 1978, the Board of Governors of the Federal Reserve System, pursuant to the Bank Holding Company Act of 1956, approved the application by Commerce Southwest to become a bank holding company through the aforementioned acquisition. In To be operation operated $329,848,000 266,000 329,856,000 This merger would merely have the effect of combining an existing commercial bank with a non-operating entity, and, as such, would produce no adverse effect upon any relevant area of consideration. Furthermore, the resulting bank will have an additional $250,000 in equity capital. A review of the record of this application and other information available to this Office as a result of its regulatory responsibilities revealed no evidence that the bank's record of helping to meet the credit needs of its entire community, including low and moderate income neighborhoods, is less than satisfactory. Accordingly, applying the statutory criteria, it is the conclusion of the Office of the Comptroller of the Currency that this application is in the public interest, and is approved. February 14, 1979 SUMMARY OF REPORT BY ATTORNEY GENERAL The proposed merger is part of a plan through which National Bank of Commerce of Dallas would become a subsidiary of Commerce Southwest, Inc., a bank holding company. The instant merger, however, would merely combine an existing bank with a non-operating institution; as such, and without regard to the acquisition of the surviving bank by Commerce Southwest, Inc., it would have no effect on competition. GULF FREEWAY NATIONAL BANK, Houston, Tex., and Gulf Bank, National Association, Houston, Tex. Banking offices Names of banks and type of transaction Total assets Gulf Freeway National Bank, Houston, Tex. (14890), with and Gulf Bank, National Association, Houston, Tex. (14890), which had merged March 29, 1979, under the charter of the latter (14890) and title "Gulf Freeway National Bank." The merged bank at date of merger had COMPTROLLER'S DECISION This is the Comptroller's decision on an application to merge the Gulf Freeway National Bank, Houston, Tex. ("Gulf Freeway Bank") and Gulf Bank, National Association, Houston ("Gulf Bank"). This application is one 134 In To be operation operated $22,898,000 245,000 23,143,000 part of a process whereby Southwest Bancshares, a registered multibank holding company, will acquire 100 percent, less directors' shares, of Gulf Freeway Bank. As part of this process, Southwest Bancshares sponsored an application for a new national bank charter for Gulf Bank which was preliminarily approved by the Comptroller on October 20, 1978. To date, Gulf Bank has no operating history. On October 24, 1978, the Federal Reserve Board approved Southwest Bancshares' application under the Bank Holding Company Act, 12 USC 1841, et seq., to acquire 100 percent, less directors' qualifying shares, of the successor by merger to Gulf Freeway Bank. This merger is therefore a vehicle for a bank holding company acquisition and merely combines a corporate shell with an existing bank. As such, it presents no issues under the Bank Merger Act. A review of the record of this application and other information available to this Office as a result of its regulatory responsibilities revealed no evidence that the applicant's record of helping to meet the credit needs of the entire community, including low and moderate income neighborhoods, is less than satisfactory. This decision is the prior written approval required by the Bank Merger Act, 12 USC 1828(c), in order for the applicants to proceed with the proposed merger. February 26, 1979 SUMMARY OF REPORT BY ATTORNEY GENERAL The proposed merger is part of a plan through which Gulf Freeway National Bank would become a subsidiary of Southwest Bancshares, Inc., a bank holding company. The instant merger, however, would merely combine an existing bank with a non-operating institution; as such, and without regard to the acquisition of the surviving bank by Southwest Bancshares, Inc., it would have no effect on competition. FIRST NATIONAL BANK OF CLERMONT COUNTY, Bethel, Ohio, and First Bank of Clermont County, N.A. Banking offices Names of banks and type of transaction Total assets First National Bank of Clermont County, Bethel, Ohio (5627), with and First Bank of Clermont County, N.A., Bethel, Ohio (5627), which had merged April 13, 1979, under charter of the latter bank (5627) and title "First National Bank of Clermont County." The merged bank at date of merger had COMPTROLLER'S DECISION This is the Comptroller's decision on an application to merge First National Bank of Clermont County, Bethel, Ohio, ("FNB") and First Bank of Clermont County, N.A. (Organizing), Bethel, Ohio ("1st"). This application is one part of a process whereby Society Corporation, a registered multibank holding company, will acquire 100 percent, less directors' qualifying shares, of FNB. As part of this process, Society Corporation sponsored an application for a new national bank charter for 1st which was preliminarily approved by the Comptroller on January 17, 1979. To date, 1st has no operating history. On February 7, 1979, the Federal.Reserve Board approved Society Corporation's application under the Bank Holding Company Act, 12 USC 1841, et seq., to acquire 100 percent, less directors' qualifying shares, of the successor by merger to FNB. This merger is therefore a vehicle for a bank holding company acquisition and merely combines a corporate shell with an existing bank. As such, it presents no issues under the Bank Merger Act. $29,233,000 60,000 29,293,000 In To be operation operated 6 0 6 A review of the record of this application and other information available to this Office as a result of its regulatory responsibilities revealed no evidence that the applicant's record of helping to meet the credit needs of the entire community, including low and moderate income neighborhoods, is less than satisfactory. This decision is the prior written approval required by the Bank Merger Act, 12 USC 1828(c), in order for the applicants to proceed with the proposed merger. March 14, 1979 SUMMARY OF REPORT BY ATTORNEY GENERAL The proposed merger is part of a plan through which First National Bank of Clermont County would become a subsidiary of Society Corporation, a bank holding company. The instant merger, however, would merely combine an existing bank with a non-operating institution; as such, and without regard to the acquisition of the surviving bank by Society Corporation, it would have no effect on competition. 135 THE HURON COUNTY BANKING COMPANY, NATIONAL ASSOCIATION, Norwalk, Ohio, and H.C.B. National Bank of Norwalk, Norwalk, Ohio Banking offices Total assets Names of banks and type of transaction H.C.B. National Bank of Norwalk, Norwalk, Ohio, with and The Huron County Banking Company, National Association (16419), which had consolidated April 30, 1979, under charter of the latter bank (16419) and title "The Huron County Banking Company, National Association." The consolidated bank at date of consolidation had COMPTROLLER'S DECISION This is the Comptroller's decision on an application to consolidate The Huron County Banking Company, National Association, Norwalk, Ohio ("Huron Bank") and H.C.B. National Bank of Norwalk (Organizing), Norwalk, Ohio ("H.C.B."). This application is one part of a process whereby National City Corporation, a registered multibank holding company, will acquire 100 percent, less directors' shares, of Huron Bank. As part of this process, National City Corporation sponsored an application for a new national bank charter for H.C.B. which was preliminarily approved by the Comptroller on December 15, 1978. To date, H.C.B. has no operating history. On March 23, 1979, the Federal Reserve Board approved National City Corporation application under the Bank Holding Company Act, 12 USC 1841, et seq., to acquire 100 percent, less directors' qualifying shares, of the successor by merger to Huron Bank. This merger is, therefore, a vehicle for a bank holding company acquisition and merely combines a corporate shell with an existing bank. As such, it presents no competitive issues under the Bank Merger Act, 12 USC 1828(c). Additionally, a review of the financial and managerial resources and future prospects of the ex- In To be operation operated $ 10,800,000 89,959,000 100,759,000 isting and proposed institutions and the convenience and needs of the community to be served has disclosed no reason why this application should not be approved. (See 12 USC 1842(c)(21). A review of the record of this application and other information available to this Office as a result of its regulatory responsibilities revealed no evidence that the applicant's record of helping to meet the credit needs of the community, including low and moderate income neighborhoods, is less than satisfactory. This decision is the prior written approval required by the Bank Merger Act, 12 USC 1828(c), in order for the applicants to proceed with the proposed merger. March 29, 1979 SUMMARY OF REPORT BY ATTORNEY GENERAL The proposed consolidation is part of a plan through which Huron County Banking Company, National Association, would become a subsidiary of National City Corporation, a bank holding company. The instant transaction, however, would merely combine an existing bank with a non-operating institution; as such, and without regard to the acquisition of the surviving bank by National City Corporation, it would have no effect on competition. THE FIRST NATIONAL BANK OF PLANO, Piano, Tex., and 1409 Avenue K National Bank, Piano, Tex. Banking offices Names of banks and type of transaction Total assets The First National Bank of Piano, Piano, Tex. (13511), with and 1409 Avenue K National Bank, Piano, Tex. (13511), which had merged May 1, 1979, under the charter of the latter bank (13511) and title "The First National Bank of Piano." The merged bank at date of merger had COMPTROLLER'S DECISION This is the Comptroller's decision on an application to merge The First National Bank of Piano, Piano, Tex. ("First National Bank") and 1409 Avenue K National Bank, Piano, Tex. ("1409 Avenue K Bank"). This application is one part of a process whereby Republic of Texas Corporation, Dallas, Tex., a registered multibank holding company, will acquire 100 percent, less directors' shares, of First National Bank. As part of this process, Republic of Texas Corporation sponsored an 136 In To be operation operated $53,656,000 240,000 53,896,000 application for a new national bank charter for 1409 Avenue K Bank which was preliminarily approved by the Comptroller on September 26, 1978. To date, 1409 Avenue K Bank has no operating history. On January 26, 1979, the Federal Reserve Board approved Republic of Texas Corporation's application under the Bank Holding Company Act, 12 USC 1841, etseq., to acquire 100 percent, less directors' qualifying shares, of the successor by merger to First National Bank. This merger is therefore a vehicle for a bank holding company acquisition and merely combines a corporate shell with an existing bank. As such, it presents no competitive issues under the Bank Merger Act, 12 USC 1828(c). Additionally, a review of the financial and managerial resources and future prospects of the existing and proposed institutions and the convenience and needs of the community to be served has disclosed no reason why this application should not be approved. A review of the record of this application and other information available to this Office as a result of its regulatory responsibilities revealed no evidence that the applicant's record of helping to meet the credit needs of the entire community, including low and moderate income neighborhoods, is less than satisfactory. This decision is the prior written approval required by the Bank Merger Act, 12 USC 1828(c), in order for the applicants to proceed with the proposed merger. March 30, 1979 SUMMARY OF REPORT BY ATTORNEY GENERAL The proposed merger is part of a plan through which First National Bank of Piano would become a subsidiary of Republic of Texas Corporation, a bank holding company. The instant merger, however, would merely combine an existing bank with a non-operating institution; as such, and without regard to the acquisition of the surviving bank by Republic of Texas Corporation, it would have no effect on competition. THE CITIZENS NATIONAL BANK OF DENISON, Denison, Tex., and Citizens Bank, National Association, Denison, Tex. Banking offices Names of banks and type of transaction Total assets The Citizens National Bank of Denison, Denison, Tex. (12728), with and Citizens Bank, National Association (Organizing), Denison, Tex. (12728), which had merged May 15, 1979, under the charter of the latter bank (12728) and title "The Citizens National BanK of Denison, Denison, Tex." The merged bank at date of merger had COMPTROLLER'S DECISION This is the Comptroller's decision on an application to merge The Citizens National Bank of Denison, Denison, Tex. ("Citizens") and Citizens Bank, National Association (Organizing), Denison, Tex. ("New Bank"). This application is one part of a process whereby Texas American Bancshares Inc., Fort Worth, Tex., a registered multibank holding company, will acquire 100 percent, less directors' shares, of Citizens. As part of this process, Texas American Bancshares, Inc., sponsored an application for a new national bank charter for New Bank which was preliminarily approved by the Comptroller on November 7, 1978. To date, New Bank has no operating history. On February 12, 1979, the Federal Reserve Board approved Texas American Bancshares, Inc., application under the Bank Holding Company Act, 12 USC 1841, et seq., to acquire 100 percent, less directors' qualifying shares, of the successor by merger to Citizens. This merger is therefore a vehicle for a bank holding company acquisition and merely combines a corporate shell with an existing bank. As such, it presents no issues under the Bank Merger Act. $68,135,000 127,660 68,560,000 in operation To be operated 1 0 1 A review of the record of this application and other information available to this Office as a result of its regulatory responsibilities revealed no evidence that the applicants' record of helping to meet the credit needs of the community, including low and moderate income neighborhoods, is less than satisfactory. This decision is the prior written approval required by the Bank Merger Act, 12 USC 1828(c), in order for the applicants to proceed with the proposed merger. April 13, 1979 SUMMARY OF REPORT BY ATTORNEY GENERAL The proposed merger is part of a plan through which Citizens National Bank of Denison would become a subsidiary of Texas American Bancshares, Inc., a bank holding company. The instant merger, however, would merely combine an existing bank with a nonoperating institution; as such, and without regard to the acquisition of the surviving bank by Texas American Bancshares, Inc., it would have no effect on competition. 137 ANAHEIM NATIONAL BANK, Anaheim, Calif., and ANB National Bank, Anaheim, Calif. Banking offices Total assets* Names of banks and type of transaction Anaheim National Bank, Anaheim, Calif. (16595), with and ANB National Bank, Anaheim, Calif. (16595), which had merged June 30, 1979, under the charter of the latter bank (16595) and title "Anaheim National Bank." The merged bank at date of merger had COMPTROLLER'S DECISION This is the Comptroller's decision on an application to merge Anaheim National Bank, Anaheim, Calif. ("Anaheim Bank") and ANB National Bank, Anaheim, Calif. ("ANB"). This application is one part of a process whereby California Bancorp, Inc., Anaheim, Calif., will acquire 100 percent, less directors' shares, of Anaheim Bank. As part of this process, California Bancorp, Inc., sponsored an application for a new national bank charter for ANB which was preliminarily approved by the Comptroller on March 13, 1979. To date, ANB has no operating history. On March 12, 1979, the Federal Reserve Board, pursuant to the Bank Holding Company Act, 12 USC 1841 et seq., approved the application of California Bancorp, Inc., for the formation of a bank holding company through the acquisition of 100 percent, less directors' qualifying shares, of the successor by merger to Anaheim Bank. This merger merely combines a corporate shell with an existing bank. As such, it presents no competitive issues under the Bank Merger Act, 12 USC 1828(c). Additionally, a review of the financial and managerial resources and future prospects of the existing and proposed institutions and the conven* Asset figures are as of call dates immediately before and after transaction. In To be operation operated $17,151,000 240,000 18,360,000 ience and needs of the community to be served has disclosed no reason why this application should not be approved. (See 12 USC 1842(c)(21)). A review of the record of this application and other information available to this Office as a result of its regulatory responsibilities revealed no evidence that the applicant's record of helping to meet the credit needs of the entire community, including low and moderate income neighborhoods, is less than satisfactory. This merger may not be consummated until proof of compliance with 12 USC 215a(2) is submitted to the Comptroller. This decision is the prior written approval required by the Bank Merger Act, 12 USC 1828(c), in order for the applicants to proceed with the proposed merger. May 31, 1979 SUMMARY OF REPORT BY ATTORNEY GENERAL The proposed merger is part of a plan through which Anaheim National Bank would become a subsidiary of California Bancorp, Inc., a bank holding company. The instant merger, however, would merely combine an existing bank with a non-operating institution; as such, and without regard to the acquisition of the surviving bank by California Bancorp, Inc., it would have no effect on competition. CITY NATIONAL BANK & TRUST CO. OF ROCKFORD, Rockford, III., and City Bank, National Association, Rockford, Banking offices Names of banks and type of transaction Total assets City National Bank & Trust Co. of Rockford, Rockford, III. (14511), with and City Bank, National Association, Rockford, III. (14511), which had merged June 30, 1979, under charter of the latter bank (14511) and title "City National Bank & Trust Co. of Rockford." The merged bank at date of merger had COMPTROLLER'S DECISION This is the Comptroller's decision on an application to merge City National Bank & Trust Co. of Rockford, Rockford, III. ("CNBT"), and City Bank, National Association, Rockford, III. ("City Bank"). This application is one part of a process whereby Rockford City Bancorp, Inc., Rockford, III., will acquire 100 percent, less directors' shares, of CNBT. As part of this process, Rockford City Bancorp, Inc., sponsored an application for a 138 $100,970,000 258,000 100,970,000 In To be operation operated 2 0 2 new national bank charter for City Bank which was preliminarily approved by the Comptroller on October 20, 1978. To date, City Bank has no operating history. On April 19, 1979, the Federal Reserve Board, pursuant to the Bank Holding Company Act, 12 USC 1841, et seq., approved the application of Rockford City Bancorp. Inc., for the formation of a bank holding company through the acquisition of 100 percent, less directors' qualifying shares, of the successor by mer- ger to CNBT. This merger merely combines a corporate shell with an existing bank. As such, it presents no competitive issues under the Bank Merger Act, 12 USC 1828(c). Additionally, a review of the financial and managerial resources and future prospects of the existing and proposed institutions and the convenience and needs of the community to be served has disclosed no reason why this application should not be approved. (See 12 USC 1842(c)(21)). A review of the record of this application and other information available to this Office as a result of its regulatory responsibilities revealed no evidence that the applicant's record of helping to meet the credit needs of the entire community, including low and moderate income neighborhoods, is less than satisfactory. This decision is the prior written approval required by the Bank Merger Act, 12 USC 1828(c), in order for the applicants to proceed with the proposed merger. May 25, 1979 SUMMARY OF REPORT BY ATTORNEY GENERAL The proposed merger is part of a plan through which City National Bank & Trust Co. of Rockford would become a subsidiary of Rockford City Bancorp, Inc., a bank holding company. The instant merger, however, would merely combine an existing bank with a nonoperating institution; as such, and without regard to the acquisition of the surviving bank by Rockford City Bancorp, Inc., it would have no effect on competition. FIRST NATIONAL BANK OF EVERGREEN PARK, Evergreen Park, III., and FNEP National Bank, Evergreen Park, Banking offices Names of banks and type of transaction Total assets First National Bank of Evergreen Park, Evergreen Park, III. (14618), with and FNEP National Bank, Evergreen Park, III. (14618), which had merged July 9, 1979, under charter of the latter bank (14618) and title "First National Bank of Evergreen Park." The merged bank at date of merger had COMPTROLLER'S DECISION This is the Comptroller's decision on an application to merge First National Bank of Evergreen Park, Evergreen Park, III. ("Merging Bank") and FNEP National Bank (Organizing), Evergreen Park, III. ("Charter Bank"). This application is one part of a process whereby First Evergreen Corporation, Evergreen Park, III., a new bank holding company, will acquire 100 percent, less directors' shares, of Merging Bank. As part of this process, First Evergreen Corporation sponsored an application for a new national bank charter for Charter Bank which was preliminarily approved by the Comptroller on January 11, 1978. To date, Charter Bank has no operating history. On August 9, 1978, the Federal Reserve Board approved First Evergreen Corporation application under the Bank Holding Company Act, 12 USC 1841, et seq., to acquire 100 percent, less directors' qualifying shares, of the successor by merger to Merging Bank. This merger is therefore a vehicle for a bank holding company acquisition and merely combines a corpo- $258,474,000 135,000 258,609,000 In To be operation operated 1 0 1 rate shell with an existing bank. As such, it presents no issues under the Bank Merger Act. A review of the record of this application and other information available to this Office as a result of its regulatory responsibilities revealed no evidence that the applicants' records of helping to meet the credit needs of the entire community including low and moderate income neighborhoods is less than satisfactory. This decision is the prior written approval required by the Bank Merger Act, 12 USC 1828(c), in order for the applicants to proceed with the proposed merger. June 6, 1979 SUMMARY OF REPORT BY ATTORNEY GENERAL The proposed merger is part of a plan through which First National Bank of Evergreen Park would become a subsidiary of First Evergreen Corporation, a bank holding company. The instant merger, however, would merely combine an existing frank with a non-operating institution; as such, and without regard to the acquisition of the surviving bank by First Evergreen Corporation, it would have no effect on competition. 139 THE FIRST NATIONAL BANK OF GALION, Galion, Ohio, and Galion National Bank, Galion, Ohio Banking offices Names of banks and type of transaction Total assets The First National Bank of Galion, Galion, Ohio (419), with and Galion National Bank, Galion, Ohio, which had consolidated August 29, 1979, under charter and title of the former (419). The consolidated bank at date of consolidation had COMPTROLLER'S DECISION This is the Comptroller's decision on an application to consolidate The First National Bank of Galion, Galion, Ohio ("First"), and Galion National Bank (Organizing), Galion, Ohio ("Galion"). This proposed consolidation is a part of a process whereby National City Corporation, Cleveland, Ohio, a registered multibank holding company will acquire 100 percent of the stock, less directors' qualifying shares, of First. The Comptroller granted preliminary approval to organize Galion on March 23, 1979. It is being organized by National City Corporation to facilitate acquisition of Galion. On June 8, 1979, the Federal Reserve Board approved National City Corporation's application to acquire 100 percent, less directors' qualifying shares, of the successor by consolidation to First. This merger is therefore a vehicle for a bank holding company acquisition and merely combines a nonoperating bank with an existing bank. As such, it presents no competitive issues under the Bank Merger Act, 12 USC 1828(c). Additionally, a review of the financial and managerial resources and future prospects of the existing and proposed institutions and the convenience and needs of the community to be served has disclosed no rea- In To be operation operated $26,879,000 3,450,000 30,329,000 son why this application should not be approved. (See 12 USC 1828(c)(5). A review of the record of this application and other information available to this Office as a result of its regulatory responsibilities revealed no evidence that the applicant's record of helping to meet the credit needs of the entire community, including low and moderate income neighborhoods, is less than satisfactory. This decision is the prior written approval required by the Bank Merger Act, 12 USC 1828(c), in order for the applicants to proceed with the proposed consolidation. July 30, 1979 SUMMARY OF REPORT BY ATTORNEY GENERAL The proposed consolidation is part of a plan through which First National Bank of Galion would become a subsidiary of National City Corporation, a bank holding company. The instant transaction, however, would merely combine an existing bank with a non-operating institution; as such, and without regard to the acquisition of the surviving bank by National City Corporation, it would have no effect on competition. CITIZENS NATIONAL BANK OF LIMESTONE COUNTY, Athens, Ala., and Limestone Bank, N.A., Athens, Ala. Banking offices Total assets Names of banks and type of transaction Citizens National Bank of Limestone County, Athens, Ala. (16291), with and Limestone Bank, N.A., Athens, Ala. (16291), which had merged Sept. 12, 1979, under charter of the latter bank (16291) and title "Citizens National Bank of Limestone County." The merged bank at date of merger had COMPTROLLER'S DECISION This is the Comptroller's decision on an application to merge Citizens National Bank of Limestone County, Athens, Ala. ("Citizens Bank"), and Limestone Bank, N.A., Athens, Ala. ("Limestone Bank"). This application is one part of a process whereby Alabama Bancorporation, Birmingham, Ala., a registered bank holding company, will acquire 100 percent, less directors' shares, of Citizens Bank. As part of this process, Alabama Bancorporation sponsored an application for a new national bank charter for Limestone Bank which 140 In To be operation operated $15,147,982 120,000 15,151,582 was preliminarily approved by the Comptroller on February 12, 1979. To date, Limestone Bank has no operating history. On April 27, 1979, the Federal Reserve Board, pursuant to the Bank Holding Company Act, 12 USC 1841 et seq., approved the application of Alabama Bancorporation to acquire 100 percent, less directors' qualifying shares, of the successor by merger to Citizens Bank. This merger merely combines a non-operating bank with an existing bank. As such, it presents no competitive issues under the Bank Merger Act, 12 USC 1828(c). Additionally, a review of the financial and managerial resources and future prospects of the existing and proposed institutions and the convenience and needs of the community to be served has disclosed no reason why this application should not be approved. (See 12 USC 1842(c)(21)). A review of the record of this application and other information available to this Office as a result of its regulatory responsibilities revealed no evidence that the bank's record of helping to meet the credit needs of the entire community including low and moderate income neighborhoods is less than satisfactory. This decision is the prior written approval required by the Bank Merger Act, 12 USC 1828(c), in order for the applicants to proceed with the proposed merger. July 31, 1979 SUMMARY OF REPORT BY ATTORNEY GENERAL The proposed merger is part of a plan through which Citizens National Bank of Limestone County would become a subsidiary of Alabama Bancorporation, a bank holding company. The instant merger, however, would merely combine an existing bank with a non-operating institution; as such, and without regard to the acquisition of the surviving bank by Alabama Bancorporation, it would have no effect on competition. LEWISVILLE NATIONAL BANK, Lewisville, Tex., and Lewisville Bank, N.A., Lewisville, Tex. Banking offices Names of banks and type of transaction Total assets Lewisville National Bank, Lewisville, Tex. (15104), with and Lewisville Bank, N.A., Lewisville, Tex. (15104), which had merged September 19, 1979, under charter of the latter bank (15104) and title "Lewisville National Bank." The merged bank at date of merger had COMPTROLLER'S DECISION This is the Comptroller's decision on an application to merge Lewisville National Bank, Lewisville, Tex. ("Lewisville") into Lewisville Bank, N.A., Lewisville, Tex. ("Bank"). This application is part of a process whereby Southwest Bancshares, Inc., Houston, Tex. ("Southwest"), a registered multibank holding company, will acquire 100 percent, less directors' qualifying shares, of the outstanding shares of Lewisville. This Office approved the application to organize Bank on March 23, 1979. It is being organized by Southwest to facilitate the acquisition of Lewisville. On April 18, 1979, the Federal Reserve Board approved Southwest's application to acquire the successor by merger to Lewisville. This merger is a vehicle for a bank holding company acquisition and would combine a bank in organization with an existing bank. It would have no effect on competition. A review of the financial and managerial resources and future prospects of the existing and proposed institutions and the convenience and needs of the community to be In To be operation operated $38,968,000 122,000 39,090,000 served has disclosed no reason why this application should not be approved. The records of this Office reveal no evidence that the applicants' record of helping to meet the credit needs of the entire community, including low and moderate income neighborhoods, is less than satisfactory. This decision is the prior written approval required by the Bank Merger Act, 12 USC 1828(c), in order for the applicants to proceed with the proposed merger. August 17, 1979 SUMMARY OF REPORT BY ATTORNEY GENERAL The proposed merger is part of a plan through which Lewisville National Bank would become a subsidiary of Southwest Bancshares, Inc., a bank holding company. The instant merger, however would merely combine an existing bank with a non-operating institution; as such, and without regard to the acquisition of the surviving bank by Southwest Bancshares, Inc., it would have no effect on competition. 141 THE NATIONAL CITY BANK OF MARION, Marion, Ohio, and New Marion National Bank, Marion, Ohio Banking offices Names of banks and type of transaction Total assets New Marion National Bank, Marion, Ohio (11831), with and The National City Bank of Marion, Marion, Ohio (11831), which had consolidated December 10, 1979, under charter and title of the latter bank. The consolidated bank at date of consolidation had COMPTROLLER'S DECISION This is the Comptroller's decision on an application to consolidate The National City Bank of Marion, Marion, Ohio ("Marion Bank"), and New Marion National Bank (Organizing), Marion, Ohio ("New Bank"). This application was filed on September 20, 1979, and is based on an agreement signed by the participants on September 5, 1979. On June 30, 1979, Marion Bank had total deposits of $108.9 million. This application is one part of a process whereby National City Corporation, Cleveland, Ohio ("Corp"), a registered bank holding company, will acquire 100 percent, less directors' qualifying shares, of Marion Bank. As a part of this process, Corp sponsored an application to charter a new national bank which was preliminarily approved by this Office on August 24, 1979. To date, New Bank has no operating history. This consolidation is therefore a vehicle for a bank holding company acquisition and merely combines a nonoperating entity with an existing commercial bank. As such, it presents no competitive issues under the Bank Merger Act, 12 USC 1828(c). A review of this application and other information available to this Office as a result of its regulatory responsibilities revealed no evidence that the applicant's $ 16,854,000 126,417,000 142,630,000 In To be operation operated 0 10 10 record of helping to meet the credit needs of the community, including low and moderate income neighborhoods, is less than satisfactory. This decision is the prior written approval required by the Bank Merger Act in order for the applicants to proceed with the consolidation. This approval is conditioned on the approval by the Federal Reserve Board of an application filed pursuant to the Bank Holding Company Act, 12 USC 1841 et seq., for Corp to acquire the successor institution by consolidation to Marion Bank. This consolidation may not be consummated prior to the expiration of the 30th day after approval of the bank holding company application. November 9, 1979 SUMMARY OF REPORT BY ATTORNEY GENERAL The proposed consolidation is part of a plan through which National City Bank of Marion would become a subsidiary of National City Corporation, a bank holding company. The instant transaction, however, would merely combine an existing bank with a non-operating institution; as such, and without regard to the acquisition of the surviving bank by National City Corporation, it would have no effect on competition. THE CITIZENS NATIONAL BANK, Bryan, Ohio, and New Bryan National Bank, Bryan, Ohio Banking offices Names of banks and type of transaction Total assets The Citizens National Bank, Bryan, Ohio (13740), with and New Bryan National Bank, Bryan, Ohio (13740), which had consolidated November 29, 1979, under the charter and title of the former. The consolidated bank at date of consolidation had COMPTROLLER'S DECISION This is the Comptroller's decision on an application to consolidate The Citizens National Bank, Bryan, Ohio ("Citizens"), and New Bryan National Bank, Bryan, Ohio ("New Bank"). This application is part of a process whereby National City Corporation, Cleveland, Ohio ("Corporation"), a registered multibank holding company, will acquire 100 percent, less directors' qualifying shares, of Citizens. New Bank is being orga 142 In To be operation operated $ 97,003,000 11,625,000 108,628,000 nized by Corporation solely to facilitate the acquisition of Citizens. On September 28, 1979, the Federal Reserve Board approved Corporation's application under the Bank Holding Company Act, 12 USC 1841, et seq., to acquire 100 percent, less directors' qualifying shares, of the successor by merger to Citizens. This consolidation merely combines a nonoperating bank with an existing bank. It would have no effect on competition. The financial and managerial resources of both banks are satisfactory. Their future prospects, both separately and consolidated, are favorable. After the consolidation, Citizens can draw on the financial and managerial resources of Corporation. This will permit it to more effectively serve the convenience and needs of its community. A review of the record of this application and other information available to this Office as a result of its regulatory responsibilities revealed no evidence that the applicants' records of helping to meet the credit needs of the entire community, including low and moderate income neighborhoods, is less than satisfactory. This decision is the prior written approval required by the Bank Merger Act, 12 USC 1828(c), in order for the applicants to proceed with the proposed merger. October 29, 1979 SUMMARY OF REPORT BY ATTORNEY GENERAL The proposed consolidation is part of a plan through which Citizens National Bank would become a subsidiary of National City Corporation, a bank holding company. The instant transaction, however, would merely combine an existing bank with a non-operating institution; as such, and without regard to the acquisition of the surviving bank by National City Corporation, it would have no effect on competition. BELLEVILLE NATIONAL SAVINGS BANK, Belleville, III., and Belleville National Bank, Belleville, III. Banking offices Names of banks and type of transaction Total assets Belleville National Savings Bank, Belleville, III. (13236), with and Belleville National Bank, Belleville, III. (13236), which had merged December 31, 1979, under the charter and title of latter bank. The merged bank at date of merger had COMPTROLLER'S DECISION This is the Comptroller's decision on an application to merge Belleville National Savings Bank, Belteville, III. ("Belleville"), into and under the charter of Belleville National Bank, Belleville, III. ("Interim Bank"). This application is one part of a process whereby MidContinent Bancshares, Inc., a proposed bank holding company, will acquire 100 percent, less directors' shares, of Belleville. As a part of this process, MidContinent Bancshares sponsored a charter application for a new national bank which was preliminarily approved by this Office on May 21, 1979. To date, Interim Bank has no operating history. On November 9, 1979, the Federal Reserve Board, pursuant to the Bank Holding Company Act, 12 USC 1841, et seq., approved the application of MidContinent Bancshares, Inc., for the formation of a bank holding company through the acquisition of 100 percent, less directors' shares, of the successor by merger to Belleville. This merger merely combines a corporate shell with an existing bank. As such, it presents In To be operation operated $165,811,000 120,000 165,931,000 no competitive issues under the Bank Merger Act, 12 USC 1828(c). A review of the record of this application and other information available to this Office as a result of its regulatory responsibilities revealed no evidence that the banks' records of helping to meet the credit needs of the communities, including low and moderate income neighborhoods, is less than satisfactory. This decision is the prior written approval required by the Bank Merger Act, 12 USC 1828(c), in order for the applicants to proceed with the proposed merger. November 29, 1979 SUMMARY OF REPORT BY ATTORNEY GENERAL The proposed merger is part of a plan through which Belleville National Savings Bank would become a subsidiary of Mid-Continent Bancshares, Inc., a bank holding company. The instant merger, however, would merely combine an existing bank with a non-operating institution; as such, and without regard to the acquisition of the surviving bank by Mid-Continent Bancshares, Inc., it would have no effect on competition. 143 FIRST NATIONAL BANK IN CONROE, Conroe, Tex., and West Davis National Bank, Conroe, Tex. Banking offices Names of banks and type of transaction Total assets First National Bank in Conroe, Conroe, Tex., with and West Davis National Bank (Organizing), Conroe, Tex. (12809), which had merged December 31, 1979, under charter of latter bank (12809) and title of "First National Bank in Conroe." The merged bank at date of merger had COMPTROLLER'S DECISION This is the Comptroller's decision on an application to merge First National Bank in Conroe, Conroe, Tex. ("FNB"), into and under the charter of West Davis National Bank (Organizing), Conroe, Tex. ("Davis"). This application is one part of a process whereby First International Bancshares, Inc., Dallas, Tex. ("Baneshares"), a registered multibank holding company, will acquire 100 percent, less directors' qualifying shares, of FNB. As a part of this process, Bancshares sponsored an application for a new national bank charter for Davis which was preliminarily approved by this Office on July 31, 1979. To date, Davis has no operating history. This merger is therefore a vehicle for a bank holding company acquisition and merely combines a corporate shell with an existing bank. As such, it presents no issue under the Bank Merger Act. This decision is the prior written approval required by the Bank Merger Act in order for the applicants to proceed with the proposed merger. This approval is conditional on the approval by the Federal Reserve Board of an application filed pursuant to the Bank 144 In To be operation operated $104,623,000 120,000 104,743,000 Holding Company Act, 12 USC 1841, et seq., for Bancshares to acquire the successor institution by merger to FNB. This merger may not be consummated prior to the expiration of the 13th day after approval of the bank holding company application. A review of the record of this application and other information available to this Office as a result of its regulatory responsibilities revealed no evidence that the applicant's record of helping to meet the credit needs of the entire community, including low and moderate income neighborhoods, is less than satisfactory. November 16, 1979 SUMMARY OF REPORT BY ATTORNEY GENERAL The proposed merger is part of a plan through which First National Bank in Conroe would become a subsidiary of First International Bancshares, Inc., a bank holding company. The instant merger, however, would merely combine an existing bank with a non-operating institution; as such, and without regard to the acquisition of the surviving bank by First International Bancshares, Inc., it would have no effect on competition. APPENDIX B Statistical Tables Statistical Tables Table No. Title B-1 Comptrollers of the Currency, 1863 to the present B-2 Deputy Comptrollers of the Currency. . . B-3 Regional administrators of national banks, December 1979 B-4 Changes in the structure of the national banking system, by states, 1979 B-5 Applications for national bank charters, approved and rejected, calendar 1979 . B-6 Applications for national bank charters pursuant to corporate reorganizations, by states, calendar 1979 B-7 Newly organized national banks, by states, calendar 1979 B-8 Mergers consummated pursuant to corporate reorganizations, by states, calendar 1979 B-9 State-chartered banks converted to national banks, by states, calendar 1979 . B-10 National bank charters issued pursuant to corporate reorganizations, by states, calendar 1979 B-11 National banks reported in voluntary liquidation, by states, calendar 1979 B-12 National banks merged or consolidated with state banks, calendar 1979 B-13 National banks converted into state banks, by states, calendar 1979 B-14 Purchases of state banks by national banks, by states, calendar 1979 B-15 Consolidations of national banks, or national and state banks, by states, calendar 1979 B-16 Mergers of national banks, or national and state banks, by states, calendar 1979 B-17 Mergers resulting in national banks, by assets of acquiring and acquired banks, 1960-1979 146 Page 147 147 Table No. Title Page B-18 Domestic assets, liabilities and capital accounts of national banks, June 30, 1979 B-19 148 31, 1979 149 B-20 150 B-21 151 B-22 151 B-23 153 B-24 154 B-25 155 Domestic office loans of national banks, by states, December 31, 1979 Outstanding balances, credit cards and related plans of national banks, December 31, 1979 Income and expenses of foreign and domestic offices and subsidiaries of national banks, by states, year ended December 31, 1979 National banks engaged in lease financing, December 31, 1979 Assets and equity capital, net income and dividends of national banks, 19671979 Loan losses and recoveries of national banks, 1970-1979 B-26 Assets and liabilities of national banks, date of last report of condition, 1972- B-27 Consolidated assets and liabilities of national banks with foreign operations, December 31, 1979 Foreign branches of national banks, by region and country, December 31, 1979 Total foreign branch assets of national banks, year-end 1953-1979 Foreign branch assets and liabilities of national banks, December 31, 1979 . . . 155 1979 156 157 B-28 159 B-29 160 160 165 B-30 166 Domestic assets, liabilities and capital accounts of national banks, December 174 182 183 184 200 201 202 203 204 205 206 206 Table B—1 Comptrollers of the Currency, 1863 to the present No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 Date of resignation Date of appointment Name May Mar. Feb. Apr. May Apr. May Aug. Apr. Jan. Oct. Apr. Feb. Mar. May Dec. Nov. May Oct. Apr. Nov. Nov. July July McCulloch, Hugh Clarke, Freeman Hulburd, Hiland R Knox, John Jay Cannon, Henry W Trenholm, William L Lacey, Edward S Hepburn, A. Barton Eckels, James H Dawes, Charles G Ridgely, William Barret Murray, Lawrence 0 Williams John Skelton Crissinger, D.R Dawes, Henry M Mclntosh, Joseph W Pole, John W O'Connor J F T Delano Preston Gidney, Ray M Saxon, James J Camp, William B Smith, James E Heimann, John G 9, 1863 21, 1865 1, 1867 25, 1872 12, 1884 20, 1886 1, 1889 2, 1892 26, 1893 1, 1898 1, 1901 27, 1908 2, 1914 17, 1921 1, 1923 20, 1924 21, 1928 11, 1933 24, 1938 16, 1953 16, 1961 16, 1966 5, 1973 21, 1977 Mar. July Apr. Apr. Mar. Apr. June Apr. Dec. Sept. Mar. Apr. Mar. Apr. Dec. Nov. Sept. Apr. Feb. Nov. Nov. Mar. July State 8, 1865 24, 1866 3, 1872 30, 1884 1, 1886 30, 1889 30, 1892 25, 1893 31, 1897 30, 1901 28, 1908 27, 1913 2, 1921 30, 1923 17, 1924 20, 1928 20, 1932 16, 1938 15, 1953 15, 1961 15, 1966 23, 1973 31, 1976 Indiana. New York. Ohio. Minnesota. Minnesota. South Carolina. Michigan. New York. Illinois. Illinois. Illinois. New York. Virginia. Ohio. Illinois. Illinois. Ohio. California. Massachusetts. Ohio. Illinois. Texas. South Dakota. New York. Table B-2 Deputy Comptrollers of the Currency No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 Name Howard, Samuel T. Hulburd, Hiland R. . Knox, John Jay . . . Langworthy, John S. Snyder, V. P Abrahams, J. D. Nixon, R. M Tucker, Oliver P. . . Coffin, George M. . Murray, Lawrence O Kane, Thomas P. . . Fowler, Willis J. . . . Mclntosh, Joseph W Collins, Charles W. . Stearns, E. W Await, F. G Gough, E. H Proctor, John L. . . . Lyons, Gibbs Prentiss, Jr., William Diggs, Marshall R. . State Dates of tenure May Aug. Mar. Aug. Jan. Jan. Aug. Apr. Mar. Sept. June July May July Jan. July July Dec. Jan. Feb. Jan. 9, 1, 12, 8, 5, 27, 11, 7, 12, 1, 29, 1, 21, 1, 6, 1, 6, 1, 24, 24, 16, 1863 1865 1867 1872 1886 1887 1890 1893 1896 1898 1899 1908 1923 1923 1925 1927 1927 1928 1933 1936 1938 Aug. Jan. Apr. Jan. Jan. May Mar. Mar. Aug. June Mar. Feb. Dec. June Nov. Feb. Oct. Jan. Jan. Jan. Sept. 1, 31, 24, 3, 3, 25, 16, 11, 31, 27, 2, 14, 19, 30, 30, 15, 16, 23, 15, 15, 30, 1865 1867 1872 1886 1887 1890 1893 1896 1898 1899 1923 1927 1924 1927 1928 1936 1941 1933 1938 1938 1938 New York. Ohio. Minnesota. New York. New York. Virginia. Indiana. Kentucky. South Carolina. New York. District of Columbia Indiana. Illinois. Illinois. Virginia. Maryland. Indiana. Washington. Georgia. Georgia. Texas. 147 Table B-2—Continued Deputy Comptrollers of the Currency No. 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 Name Dates of tenure Jan. Oct. May July Sept. Oct. Jan. Sept. Mar. Feb. Sept. May Apr. Aug. Sept. Dec. Jan. July Sept. Sept. July July Feb. July July Feb. Aug. Aug. Aug. Aug. Aug. Aug. Mar. Mar. Mar. Nov. Nov. Mar. May July Oppegard, G. J. Upham, C. B. Mulroney, A. J. McCandless, R. B. Sedlacek, L. H. Robertson, J. L Hudspeth, J. W Jennings, L. A Taylor, W. M Garwood, G. W Fleming, Chapman C. . Haggard, Hollis S Camp, William B Redman Clarence B. . . Watson, Justin T Miller, Dean E DeShazo, Thomas G. . . Egertson, R. Coleman . Blanchard, Richard J. . Park, Radcliffe Faulstich, Albert J Motter, David C Gwin, John D Howland, Jr., W. A. . . . Mullin, Robert A Ream, Joseph M Bloom, Robert Chotard, Richard D. . . . Hall, Charles B Jones, David H Murphy, C. Westbrook . Selby, H. Joe Homan, Paul M Keefe, James T Muckenfuss, Cantwell F., Wood, Billy C Longbrake, William A. . Odom, Jr., Lewis G. . . . Martin, William E Barefoot, Jo Ann 16, 1938 1, 1938 1, 1939 7, 1941 1, 1941 1, 1944 1, 1949 1, 1950 1, 1951 18, 1952 15, 1959 16, 1960 2, 1962 4, 1962 3, 1962 23, 1962 1, 1963 13, 1964 1, 1964 1, 1964 19, 1965 1, 1966 21,1967 5, 1973 5, 1973 2, 1975 31, 1975 31, 1975 31, 1975 31, 1975 31, 1975 31, 1975 27, 19.78 27, 1978 27, 1978 7, 1978 8, 1978 21, 1979 22, 1979 13, 1979 Sept. Dec. Aug. Mar. Sept. Feb. Aug. May Apr. Dec. Aug. Aug. Nov. Oct. July State 30, 1938 31, 1948 31, 1941 1, 1951 30, 1944 17, 1952 31, 1950 16, 1960 1, 1962 31, 1962 31,1962 3, 1962 15, 1966 26, 1963 18, 1975 Mar. 3, 1978 June 30, 1966 Sept. 26, 1975 June 1, 1967 Oct. 26, 1974 Dec. Mar. Sept. June Feb. Nov. 31, 27, 8, 30, 28, 25, 1974 1978 1978 1978 1978 1977 Sept. 20, 1976 Dec. 30, 1977 California. Iowa. Iowa. Iowa. Nebraska. Nebraska. Texas. New York. Virginia. Colorado. Ohio. Missouri. Texas. Connecticut. Ohio. Iowa. Virginia. Iowa. Massachusetts. Wisconsin. Louisiana. Ohio. Mississippi. Georgia. Kansas. Pennsylvania. New York. Missouri. Pennsylvania. Texas. Maryland. Texas. Nebraska. Massachusetts. Alabama. Texas. Wisconsin. Alabama. Texas. Connecticut. Table B-3 Regional administrators of national banks, December 1979 Region Name Headquarters Ralph W. Gridley Boston, Mass 2 3 4 5 Thomas W. Taylor . . . R. Coleman Egertson Larry T. Gerzema Michael A. Mancusi . . New York, N.Y. . Philadelphia, Pa.. Cleveland, Ohio . Richmond, Va. . . 6 7 8 9 Robert J. Herrmann . . Rufus O. Burns, Jr. . . Dean S. Marriott Kenneth W. Leaf John R. Burt Clifton A. Poole, Jr. . . Peter C. Kraft M. B. Adams Kent D. Glover Atlanta, Ga Chicago, III Memphis, Tenn Minneapolis, Minn. . . Kansas City, Mo. . . . Dallas, Tex Denver, Colo Portland, Oreg San Francisco, Calif. 10 11 12 13 14 148 States Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, Vermont. New Jersey, New York, Puerto Rico, Virgin Islands. Pennsylvania, Delaware. Indiana, Kentucky, Ohio. District of Columbia, Maryland, North Carolina, Virginia, West Virginia. Florida, Georgia, South Carolina. Illinois, Michigan. Alabama, Arkansas, Louisiana, Mississippi, Tennessee. Minnesota, North Dakota, South Dakota, Wisconsin. Iowa, Kansas, Missouri, Nebraska. Oklahoma, Texas. Arizona, Colorado, New Mexico, Utah, Wyoming. Alaska, Idaho, Montana, Oregon, Washington. California, Guam, Hawaii, Nevada. Table B-4 Changes in the structure of the national banking system, by states, 1979 Consolidated and merged under 12 USC 215 In operation Dec. 31, 1978 Organized and opened for business during 1979 Consolidated Merged 4,564 43 3 Alabama Alaska Arizona Arkansas California Colorado Connecticut Delaware District of Columbia . . . . Florida 99 6 3 69 53 137 19 5 16 236 2 0 0 0 3 2 0 1 0 5 0 0 0 0 0 0 0 0 0 0 Georgia Hawaii Idaho Illinois Indiana Iowa Kansas Kentucky Louisiana Maine 64 2 6 419 121 99 151 79 54 17 0 1 1 0 1 0 0 0 1 0 0 0 0 0 0 0 0 0 0 0 Maryland Massachusetts Michigan Minnesota Mississippi Missouri Montana Nebraska Nevada New Hampshire 34 73 125 205 37 101 56 117 4 39 0 0 2 0 1 0 0 0 0 0 New Jersey New Mexico New York North Carolina North Dakota Ohio Oklahoma Oregon Pennsylvania Rhode Island 96 40 124 27 43 217 191 6 226 5 South Carolina South Dakota Tennessee Texas Utah Vermont Virginia Washington West Virginia Wisconsin Wyoming 18 32 72 609 10 13 88 20 106 129 46 United States 12 USC 214 In operation Dec. 31, 1979 Converted to state banks Merged or consolidated with state banks 3 51 39 4,448 0 0 0 0 0 1 0 0 0 0 o o o o 0 0 1 0 0 1 7 0 0 0 0 0 0 0 0 0 7 0 0 0 0 9 99 6 3 68 42 139 19 6 16 221 0 0 0 0 1 0 0 0 0 0 0 0 0 1 0 0 0 0 0 0 0 0 0 1 0 0 0 0 0 0 1 0 0 6 2 0 3 0 0 1 0 0 0 1 0 0 0 0 0 2 63 3 7 410 119 99 148 79 55 14 0 0 0 1 0 0 0 0 0 0 0 0 o o o o o o o o 0 0 0 0 0 0 0 0 0 1 0 0 0 0 0 0 0 0 0 0 0 0 4 0 0 3 0 0 0 2 2 2 0 0 0 0 0 0 0 0 31 71 123 205 38 98 56 117 4 36 0 0 0 0 0 0 3 0 0 0 0 0 3 0 0 0 0 0 0 0 3 0 1 0 0 37 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 3 0 2 0 4 0 1 0 0 0 1 1 0 3 0 0 2 0 93 40 116 26 41 177 190 6 223 5 0 1 0 12 1 0 0 1 1 3 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 7 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 0 0 0 0 0 0 0 0 0 3 4 0 1 1 0 0 1 0 0 0 0 1 0 0 8 0 0 0 0 18 33 69 615 11 12 72 21 107 131 47 Insolvencies Liguidated 62 1 0 0 0 0 0 0 0 0 11 0 0 o 0 0 NOTE: Does not include one nonnational bank in the District of Columbia supervised by the Comptroller of the Currency. For summary of changes 1863-1977, see Table B-4 in Annual Report, 1977. 149 Table B-5 Applications for national bank charters,* approved and rejected, by states, calendar 1979 ALABAMA Exchange National Bank of Birmingham, Birmingham Approved Rejected NEVADA Nevada County National Bank, Grass Valley June 14 NEW Rejected Apr. 5 YORK ARKANSAS New York City National Bank of Arkansas in North Little Rock, North Little Rock NORTH CAROLINA June 1? Approved Aug. 6 Mar. 4 Fayetteville CALIFORNIA Carson Monterey Park National Bank, Monterey Park. . . Orange National Bank, Orange San Francisco Newport Harbor National Bank, Newport Beach. San Dieguito National Bank, Encinitas California National Bank, San Francisco University National Bank and Trust Company, Palo Alto California Pacific National Bank, Los Angeles . . Feb . 9 Apr . 5 Apr . 5 Apr. 19 June 14 June 28 Oct. 19 Knox National Bank, Knoxville Nov. 28 Dec. Mar . 2 Mar. 16 Apr. 19 June37 M) / 2 Oct . 1 Nov. 13 9 Nov p> Feb 9 Feb 7 ooo Mar. Oct. Feb GEORGIA Dahlonega IDAHO Twin River National Bank, Lewiston. . . . Apr 19 ILLINOIS Schaumberg First National Bank of Orland Park, Orland Park. Aua 3 IOWA Community National Bank of Muscatine, Muscatine Sept 30 KANSAS Nov. Andover .... KENTUCKY Feb Lewisport 9 LOUISIANA New Orleans Southwest National Bank of Lafayette, Lafayette Feb . 9 Mar 22 MICHIGAN Pacesetter Bank Lansing N.A., Lansing Huron National Bank, Roger City Feb . 8 Mar. 16 MINNESOTA Community National Bank, Branch Tri-County National Bank, Forest Lake Nov. 12 Dec 1? MISSISSIPPI Bank of Jackson, N.A., Jackson Sept. ?9 MISSOURI Battlefield National Bank, Springfield . . . Aor 19 Parkway National Bank, Farmers Branch Austin National Bank, Northwest, Austin Fidelity National Bank, Austin First National Bank, Seminole First National Bank of San Benito, San Benito . . The Woodlands National Bank, Woodlands . . . . Angelina National Bank of Lufkin, Lufkin First National Bank, Boerne Liberty National Bank, Dallas West El Paso National Bank, El Paso First City Bank - Greenspoint, N.A., Houston . . . First National Bank, Sherman Woodforest National Bank, Harris County First United Bank - Arlington N.A., Arlington. . . . Mercantile National Bank, Arlington Unincorporated Area of Harris County First United Bank - Richland N.A., North Richland Hills Pioneer National Bank, Richardson Universal City Bank, N.A., Universal City First National Bank of Dayton, Dayton Citizens National Bank, Victoria Westhollow National Bank, Houston Exchange National Bank, San Antonio Humble National Bank, Humble Nacogdoches Texas Commerce Bank Northwest Freeway N.A., Unincorporated Area of Harris County . . Southern National Bank of Corpus Christi, Corpus Christi Town North National Bank, Longview Longview City National Bank, Weslaco East El Paso National Bank, El Paso American National Bank, Abilene Commerce Parkway Bank, N.A., Addison Mid-Cities National Bank, Hurst Onion Creek National Bank, Travis County National Bank of Commerce - South, Austin.... Southwest National Bank, Austin Plaza National Bank, Dallas Dec Jan. 23 Feb. 7 Feb. 7 Feb. 7 Feb. 8 Feb. 8 Feb. 9 Feb. 24 Mar. 30 Mar. 30 Mar. 30 Apr. 6 Apr. 5 Apr. 4 Apr. 4 Apr. 4 Apr. 12 May 3 May 17 May 23 May 23 May 24 June 4 July 3 Aug. 2 Aug. 3 Aug. 3 Sept. 30 Oct. 1 Nov. Nov. Dec. Dec. Dec. 12 21 11 12 12 Dec. 17 Dec. 30 Dec. 30 Dec. 30 First Security Bank of Sandy, N.A., Sandy . . . Nov. 1 WEST VIRGINIA Upshur National Bank, Buckhannon . American National Bank, Glen Daniel Feb. 24 Aug. 2 WISCONSIN T h e M a r i n e Trust C o . , N.A., M i l w a u k e e . . . . June 22 WYOMING Mountain Plaza National Bank, Casper.... 5 * Does not include applications for conversion or pursuant to corporate reorganization. 150 Oct. 5 UTAH NEBRASKA Sioux Land National Bank, Sioux City Jan. 12 Mar. 28 Oct. 29 TEXAS FLORIDA Pace Alexander Hamilton National Bank, North Lauderdale The National Trust Company, Fort Myers Miami Beach Mercantile Bank, N.A., Moore American National Bank, Woodward Commercial National Bank, Oklahoma City TENNESSEE COLORADO Lakewood Valley National Bank of Cortez, Cortez Community National Bank, Dillon First Bank of Governor's Ranch, Denver Louisville Mountain Bank, N.A., Boulder County. Southeast National Bank, Denver Foothills National Bank, Fort Collins OKLAHOMA Nov. 2 Table B-6 Applications for national bank charters pursuant to corporate reorganizations, by states, calendar 1979 ALABAMA Approved Limestone Bank N.A., Athens . . Galion National Bank, Galion The Huntington National Bank, Columbus New Bryan National Bank, Bryan New Marion National Bank, Marion The FBG National Bank of Kenton, Kenton CALIFORNIA ANB National Bank, Anaheim . . Mar. 7 ILLINOIS Urbana National Bank, Urbana Belleview National Bank, Belleview . Jan. 17 May 21 First National Interim Bank of McMinnville. McMinnville TEXAS Aug. 3 Lewisville Bank N.A., Lewisville Mar. 22 West Davis National Bank, Conroe July 27 West Freeway National Bank, Fort Worth Aug. 16 New Gateway National Bank of Beaumont, Beaumont Sept. 27 Wurzbach Road National Bank, San Antonio . . . Oct. 10 NEW HAMPSHIRE New Hampshire Bank N.A., Manchester. . . Aug. 19 Aug. 3 MASSACHUSETTS Old Colony Bank Berkshire County, N.A., Pittsfield Rejected Mar. 22 June 28 Aug. 3 Aug. 16 Oct. 22 OREGON IOWA First National Interim Bank, Sioux City. . . /Approved Rejected Feb. 9 Nov. 16 VIRGINIA NEW JERSEY New Garden State National Bank, Paramus . . . . Midlantic National Bank/Atlantic, Atlantic City. . . Colonial American National Bank-Clifton Forge, Clifton Forge Nov. 16 Oct. 29 Dec. 10 WISCONSIN OHIO 1st Bank of Clermont County N.A., Bethel . . First Bank and Trust Company Racine N.A., Racine Jan. 12 Nov. 13 Table B-7 Newly organized national banks, by states, calendar 1979 Charter No. Title and location of bank Total, United States: 41 banks Total capital accounts $66,569,520 ALABAMA 16783 16779 Exchange National Bank of Birmingham, Birmingham Central Bank of Dothan, N.A., Dothan 16764 16792 16811 Westwood National Bank, Los Angeles Santa Fe National Bank, Norwalk Orange National Bank, Orange 1,200,000 1,500,000 CALIFORNIA 4,558,520 2,000,000 2,500,000 COLORADO 16765 16808 FirstBank of West Arvada, National Association, Arvada Valley National Bank of Cortez, Cortez 1,000,000 1,750,000 DELAWARE 16773 First National Bank of Georgetown, Georgetown 1,150,000 FLORIDA 16776 16793 16800 16804 The Hemisphere National Bank, Miami All American National Bank, Virginia Gardens Charlotte County National Bank, Unincorporated Area of Charlotte County The Gold Coast National Bank, Unincorporated Area of Dade County 2,500,000 2,000,000 2,000,000 3,000,000 HAWAII 16777 Bank of Maui, N.A., Kahului 1,500,000 IDAHO 16814 Twin River National Bank, Lewiston 1,700,000 INDIANA 16782 Clarksville National Bank, Clarksville 1,500,000 151 Table B-7—Continued Newly organized national banks, by states, calendar 1979 Charter No. Title and location of bank Total capital accounts LOUISIANA 16817 Southwest National Bank of Lafayette, Lafayette . . . $3,125,000 MICHIGAN 16785 16802 Michigan National Bank - Ann Arbor, Ann Arbor Northern National Bank, Grayling 2,500,000 1,300,000 MISSISSIPPI 16810 Bank of Jackson, N.A., Jackson . . . 1,600,000 OKLAHOMA 16816 16796 16807 Mid-West National Bank, Mid-West City Mercantile Bank, N.A., Moore American National Bank, Woodward 2,000,000 1,200,000 1,250,000 SOUTH DAKOTA 16797 Tri-State National Bank, Belle Fourche. . . 1,500,000 TEXAS 16791 16794 16795 16824 16812 16784 16770 16799 16774 16809 16806 16772 Security National Bank, Austin Austin National Bank Northwest, Austin First National Bank, Boerne Forestwood National Bank of Dallas, Dallas Texas Commerce Bank - Southbelt N.A., Houston League City National Bank, League City Texas National Bank of Midland, Midland The American National Bank of Mount Pleasant, Mount Pleasant Salado National Bank, Salado First National Bank of San Benito, San Benito First National Bank, Seminole Texas Commerce Bank - Katy Freeway N.A., Unincorporated Area of Harris County . 1,500,000 1,500,000 2,000,000 2,000,000 1,700,000 1,250,000 2,000,000 1,250,000 750,000 1,250,000 1,250,000 1,700,000 UTAH 16813 First Security Bank of Richfield, N.A., Richfield . . . 1,000,000 WASHINGTON 16819 National Bank of Bremerton, Bremerton . . . 1,500,000 WISCONSIN 16787 16801 16815 First National Bank, Minocqua and Woodruff, Minocqua Community National Bank, Mukwonago Northern Security National Bank of Rhinelander, Pelican 1,086,000 1,500,000 1,000,000 WYOMING 16818 Wyoming National Bank of East Casper, Casper 152 500,000 Table B-8 Mergers* consummated pursuant to corporate reorganizations, by states, calendar 1979 (Dollar amounts in thousands) Total capital accounts Operating bank New bank Resulting bank Effective date Total assets ALABAMA Sept. 12 Citizens National Bank of Limestone County, Athens L i m e s t o n e Bank N.A., Athens Charter issued S e p t e m b e r 10, 1979 Citizens National Bank of Limestone County, Athens . . . .... $1,180 $15,151 1,990 18,360 .... 11,878 165,931 ... 6,787 100,970 16,576 258,609 .... 10,257 160,428 .... 2,367 30,505 6,520 108,628 2,415 30,329 5,793 100,759 11,770 142,630 6,955 104,743 18,710 329,859 5,081 68,560 CALIFORNIA June 30 Anaheim National Bank, Anaheim ANB National Bank, Anaheim Charter issued June 27, 1979 Anaheim National Bank, Anaheim ILLINOIS Dec. 31 June 30 July 9 Belleville National Savings Bank, Belleville Belleville National Bank Charter issued December 31, 1979 Belleville National Bank, Belleville City National Bank and Trust Company of Rockford, Rockford City Bank, N.A., Rockford Charter issued June 28, 1979 City National Bank & Trust Company of Rockford, Rockford . . . First National Bank of Evergreen Park, Evergreen Park FNEP National Bank, Evergreen Park Charter issued July 6, 1979 First National Bank of Evergreen Park MICHIGAN Jan. 30 National Lumberman's Bank and Trust Company, Muskegon NLB National Bank of Muskegon, Muskegon Charter issued January 29, 1979 National Lumberman's Bank and Trust Company, Muskegon . . OHIO Apr. 13 Nov. 29C Aug. 29C Apr. 30C Dec. 10C First National Bank of Clermont County, Bethel 1st Bank of Clermont County, N.A., Bethel Charter issued April 12, 1979 First National Bank of Clermont, Bethel . . . The Citizens National Bank, Bryan New Bryan National Bank, Bryan Charter issued August 3, 1979 The Citizens National Bank, Bryan The First National Bank of Galion, Galion Galion National Bank, Galion Charter issued August 28, 1979 The First National Bank of Galion, Galion The Huron Banking Company, National Association, Norwalk H.C.B. National Bank of Norwalk, Norwalk Charter issued April 30, 1979 The Huron County Banking Company, National Association, Norwalk The National City Bank of Marion, Marion New Marion National Bank, Marion Charter issued December 10, 1979 The National City Bank of Marion, Marion . . . TEXAS Dec. 31 Mar. 16 May 15 First National Bank of Conroe, Conroe West Davis National Bank, Conroe Charter issued December 28, 1979 First National Bank in Conroe, Conroe National Bank of Commerce of Dallas, Dallas New National Bank of Commerce of Dallas, Dallas Charter issued March 15, 1979 National Bank of Commerce of Dallas, Dallas The Citizens National Bank of Denison, Denison Citizens Bank, National Association, Denison Charter issued May 9, 1979 The Citizens National Bank of Denison, Denison. . . , City National Bank, Fort Worth 5600 Lancaster National Bank, Fort Worth Charter issued December 29, 1978 .... 153 Table B-8—Continued Mergers* consummated pursuant to corporate reorganizations, by states, calendar 1979 (Dollar amounts in thousands) Jan. 2 Mar. 29 Sept. 19 Mar. 1 May 1 Feb. 9 Total capital accounts Operating bank New bank Resulting bank Effective date 5600 Lancaster National Bank Fort Worth Gulf Freeway National Bank, Houston Gulf Bank, N.A., Houston Charter issued March 27, 1979 Gulf Freeway National Bank, Houston . . . . Lewisville National Bank, Lewisville Lewisville Bank, N.A., Lewisville Charter issued September 13, 1979 Lewisville National Bank The Lufkin National Bank, Lufkin New Lufkin National Bank, Lufkin Charter issued February 26, 1979 The Lufkin National Bank, Lufkin The First National Bank of Piano, Piano Avenue K National Bank, Piano Charter issued April 24, 1979 First National Bank of Piano, Piano The First National Bank of Waco, Waco First Waco Bank, National Association, Waco Charter issued February 7, 1979 The First National Bank of Waco, Waco Total assets $5,896 $74,467 .... 2,238 23,143 .... 2,653 39,090 .... 4,859 97,742 .... 2,711 53,896 15,475 209,103 * Includes consolidations effected pursuant to corporate reorganizations. Does not include transactions involving more than a single operating bank. Those transactions are found in Table B-16. C Consolidation. Table B-9 State-chartered banks converted to national banks, by states, calendar 1979 Charter No. Title and location of bank Effective date of charter Total: 1 bank Outstanding capital stock Surplus, undivided profits and reserves Total assets $12,500 $2,555 $37,328 12,500 2,555 37,328 FLORIDA 16786 Sun First National Bank of Polk County, Auburndale, conversion of Sun Bank of Polk County, Auburndale 154 June 27 Table B-10 National bank charters issued pursuant to corporate reorganizations, by states, calendar 1979 Charter No. Date of Issuance Title and location of bank Total: 20 banks ALABAMA 16291 Limestone Bank, N.A., Athens. . . Sept. 10 June 27 Dec. July June 31 6 28 Jan. 29 Apr. Aug. Dec. Aug. Dec. Apr. 12 3 28 28 10 30 Dec. Mar. May Mar. Sept. Feb. Apr. Feb. 28 15 9 27 13 26 24 7 CALIFORNIA 16595 ANB National Bank, Anaheim . . . ILLINOIS 13236 14618 14511 Belleville National Bank, Belleville FNEP National Bank, Evergreen Park City Bank, National Association, Rockford MICHIGAN 4840 NLB National Bank of Muskegon, Muskegon. . . OHIO 5627 13740 7745 419 11831 16419 First Bank of Clermont County, N.A., Bethel New Bryan National Bank, Bryan The Huntington National Bank, Columbus Galion National Bank, Galion New Marion National Bank, Marion H.C.B. National Bank of Norwalk, Norwalk TEXAS 12809 3985 12728 14890 15104 5797 13511 2189 West Davis National Bank, Conroe New National Bank of Commerce of Dallas, Dallas . Citizens Bank N.A., Denison Gulf Bank N.A., Houston Lewisville Bank N.A., Lewisville New Lufkin National Bank, Lufkin Avenue K National Bank, Piano First Waco Bank N.A., Waco Table B-11 National banks reported in voluntary liquidation, by states, calendar 1979 (Dollar amounts in thousands) Title and location of bank Total capital accounts of liquidated Date of liquidation bank* Total: 3 national banks . . . $9,480 ALABAMA Southern National Bank, Birmingham (16489), Birmingham, absorbed by Exchange National Bank of Birmingham, Birmingham (16783) June 14 2,949 July 16 (28) Dec. 7 6,559 ILLINOIS Gateway National Bank, Chicago (14803), Chicago, absorbed by Independence Bank of Chicago, Chicago Mercantile National Bank of Chicago (14419), Chicago, absorbed by American National Bank and Trust Company of Chicago (13216), Chicago * Includes subordinated notes and debentures, if any. 155 TableB-12 National banks merged or consolidated with state banks, by states, calendar 1979 (Dollar amounts in thousands) Title and location of bank Total capital accounts of national banks* Effective date Total: 39 banks , $259,133 CALIFORNIA First National Bank of Fresno, Fresno (15007), Tahoe National Bank, South Lake Tahoe (15217), and Valley Bank, National Association, Livermore (15305) merged into Central Bank, Oakland, under title "Central Bank" Irvine National Bank, Irvine (16168), merged into Heritage Bank, Anaheim, under title "Heritage Bank" Sierra National Bank, Petaluma (15174), merged into United California Bank, Los Angees, under title "United California Bank" Surety National Bank, Encino (15368), merged into California Overseas Bank, San Francisco, under title "California Overseas Bank" West Coast National Bank, Oceanside (15220), merged into La Jolla Bank & Trust Company, La Jolla, under title "La Jolla Bank & Trust Company" Dec. Dec. 31 31 5,144 3,706 Mar. 27 1,697 Nov. 8 1,450 Jan. 2 2,029 FLORIDA Bamett Bank of Deland, National Association, Deland (13388), merged into Barnett Bank of Daytona Beach, Daytona Beach, under title "Barnett Bank of Volusia County" First Marine National Bank and Trust Company of Lake Worth (14356), First Marine National Bank and Trust Company, Jupiter/Tequesta (15918), merged into First Marine Bank and Trust Company of Palm Beaches, Rivera, under title "First Marine Bank and Trust Company of Palm Beaches" Flagship Bank of West Orlando, National Association, Orlando (15948), merged into Flagship Bank of Orlando, Orlando, under title "Flagship Bank of Orlando" Florida Coast Bank of Coral Springs, National Association, Margate (16386), merged into Florida Coast Bank of Pompano Beach, Pompano Beach, under title "Florida Coast Bank of Broward County" Pan American Bank of Broward County, National Association, Oakland Park (15162), merged into Pan American Bank of Inverrary, Lauderhill, under title "Pan American Bank of Broward" Southeast First National Beach Bank, Jacksonville Beach (14896), merged into Southeast First Bank of Jacksonville, Jacksonville, under the title "Southeast Bank of Jacksonville" Southeast National Bank of Panama City, Panama City (16363), merged into Southeast Beach State Bank, Bay County, under title "Southeast Bank of Panama City" The Exchange National Bank of Tampa, Tampa (4949), merged into The Exchange Bank of Temple Terrace, Temple Terrace, under title "The Exchange Bank of Temple Terrace" Mar. 7,192 23 5,008 Jan. 1 1,020 Oct. 1 4,012 Jan. 1 2,728 Nov. 16 4,427 Oct. 22 1,156 Dec. 1 23,863 Mar. 10 1,226 Jan. 31 1,624 Feb. 1 1,716 Jan. 1 4,233 Feb. 26 8,926 Nov. 9 27,818 Sept. 4 1,204 Mar. 30 2.382 Oct. 1 1,597 Apr. 3 19,959 May 14 1,574 June 1 1,532 Sept. ILLINOIS First National Bank of Jacksonville (15371), merged into Elliott State Bank, Jacksonville, under title "Elliott State Bank" MAINE Springvale National Bank, Springvale (13730), merged into Depositors Trust Company of Portland, Portland, under title "Depositors Trust Company of Southern Maine" The Liberty National Bank in Ellsworth, Ellsworth (14303), merged into Depositors Trust Company of Bangor, Bangor, under title "Depositors Trust Company of Eastern Maine" MARYLAND Chesapeake National Bank, Towson (15249), merged into American Bank of Maryland, Silver Spring, under title "First American Bank of Maryland" University National Bank, Rockville (15365), merged into The Equitable Trust Company, Baltimore, under title "The Equitable Trust Company" MASSACHUSETTS Baybank Middlesex, National Association, Burlington (614), merged into Baybank Newton-Waltham Trust Company, Waltham, under title "Baybank Newton-Waltham Trust Company" The Merchants National Bank of Newburyport, Newburyport (1047), merged into Naumkeag Trust Company, Salem, under title "Naumkeag Trust Company" NEW YORK Genesee Valley National Bank and Trust Company of Genesee (886), merged into Key Bank of Central New York, Syracuse, under title "First Trust and Deposit Company" NORTH CAROLINA Cape Fear Bank and Trust Company, Fayetteville, and Capital National Bank, Raleigh (16100), merged into Waccamaw Bank and Trust Company, Whiteville, under title "United Carolina Bank, Whiteville" OHIO Heritage Bank, National Association, Steubenville (2160), Heritage Bank, National Association, Salem (973), and Heritage Bank, National Association, Hopedale (6938), merged into Heritage Bank, Toronto, under title "Heritage Bank" PENNSYLVANIA The First National Bank of Millville, Millville (5389), merged into Northern Central Bank, Williamsport, under title "Northern Central Bank" The Union National Bank of Lewisburg, Lewisburg (784), merged into Central Counties Bank, State College, under title "Central Counties Bank" ' 156 Table B-12—Continued National banks merged or consolidated with state banks, by states, calendar 1979 (Dollar amounts in thousands) Total capital accounts of national banks* Title and location of bank TEXAS United National Bank, Dallas (16446), merged into First City Bank of Dallas, Dallas, under title "First City Bank of Dallas" June 4 $8,976 VIRGINIA Central Fidelity Bank, National Association, Herndon (14325), merged into Central Fidelity Bank, Bailey's Crossroads, under title "Central Fidelity Bank" Farmers and Merchants National Bank in Onley, Onley (14190), merged into Bank of Chincoteague, Inc., Chincoteague, under title "Farmers and Merchants Bank - Eastern Shore" The First National Bank of Yorktown, Yorktown (11554), merged into Fidelity American Bank, Norfolk, under title "Fidelity American Bank" United Virginia Bank/Seaboard National, Norfolk (10194), United Virginia Bank/National, Vienna (651), United Virginia Bank/First National, Lynchburg (1558), United Virginia Bank of Roanoke, National Association, Roanoke (15117), United Virginia Bank/National Valley, Staunton (1620), merged into United Virginia Bank/Commonwealth, Richmond, under title "United Virginia Bank" 2,104 2,528 1,409 106,893 * Includes subordinated notes and debentures, if any. Table B-13 National banks converted into state banks, by states, calendar 1979 (Dollar amounts in thousands) Charter No. Effective date Title and location of bank Total: 51 banks Total capital accounts of national banks* $196,030 ALABAMA 14638 First National Bank of Childersburg, Childersburg, converted into First Bank of Childersburg, Childersburg Oct. 30 1,428 Jan. 8 4,291 ARKANSAS 15222 First National Bank and Trust Company of Mountain Home, Mountain Home, converted into First Bank and Trust Company of Mountain Home 157 Table B-13—Continued National banks converted into state banks, by states, calendar 1979 (Dollar amounts in thousands) Charter No. Title and location of bank Total capital accounts of national banks* Effective date CALIFORNIA 16453 12904 16139 6268 15032 2158 14891 South Coast National Bank, Costa Mesa, converted into South Coast Bank, Costa Mesa The Capital National Bank, Downey, converted into Capital Bank, Downey Foothill National Bank, Glendora, converted into Foothill Independent Bank, Glendora First National Bank and Trust Company, Ontario, converted into First Trust Bank, Ontario Placer National Bank, Rockland, converted into Placer Bank, Rockland First National Bank of San Jose, San Jose, converted into Bank of the West, San Jose Santa Barbara National Bank, Santa Barbara, converted into Santa Barbara Bank and Trust, Santa Barbara Aug. Apr. July Apr. Apr. Jan. $2,090 2,328 1,842 12,446 2,106 27,361 May 9,531 GEORGIA 9613 The First National Bank of Haversham County, Cornelia, converted into First Bank of Haversham, Cornelia Sept. 15 2,821 Aug. July Aug. 1 2 20 1,347 8,574 433 Oct. May 18 1 3,101 1,291 ILLINOIS 14589 14474 10690 6924 15612 14407 First National Bank of Byron, Byron, converted into The Byron Bank, Byron National Bank of Austin, Chicago, converted into Austin Bank of Chicago, Chicago The First National Bank of Gorham, Gorham, converted into the Bank of Gorham, Gorham The First National Bank of Old Fallon, Old Fallon, converted into First Bank and Trust Company of Old Fallon, Old Fallon First National Bank of Eureka, Eureka, converted into First Bank of Eureka, Eureka First National Bank in Greenville, Greenville, converted into First Bank and Trust Company, Greenville 2,349 May INDIANA 6388 12028 The Springs Valley National Bank, French Lick, converted into Springs Valley Bank and Trust Company, French Lick First National Bank of Spurgeon, Spurgeon, converted into The Spurgeon State Bank, Spurgeon . . . July June 31 27 4,246 583 Dec. 17 281 Dec. Oct. 1 1 613 1,493 KANSAS 10587 9695 15306 The First National Bank of Beathe, Beathe, converted into Marshall County Bank of Beathe, Beathe. The Gypsum Valley National Bank of Gypsum, Gypsum, converted into Gypsum Valley Bank, Gypsum Hays National Bank, Hays, converted into Hays State Bank, Hays MAINE 13843 First National Bank of Aroostook, Fort Fairfield, converted into Depositors Trust Company of Aroostook, Fort Fairfield 4,057 Feb. MICHIGAN 15877 4840 13753 3378 National Bank of Marshall, Marshall, converted into Bank of Marshall, Marshall National Lumberman's Bank and Trust Company, Muskegon, converted into Lumberman's Bank, Muskegon First National Bank of Southwestern Michigan, Niles, converted into Pacesetter Bank and Trust Southwest, Niles Clinton National Bank and Trust Company, St. Johns, St. Johns, converted into Clinton Bank and Trust Company, St. Johns Oct. 1 1,009 Aug. 16 10,754 Sept. 4 11,843 Aug. 4 7,266 Nov. Jan. 16 12 3,055 1,727 Apr. 20 1,004 July Nov. 16 1 3,709 2,534 Feb. 1 4,835 Feb. 1 5,251 Feb. 1 1,575 Jan. 2 966 July 2 2,684 MISSOURI 15586 15457 16603 Mid-Continent National Bank of Kansas City, Kansas City, converted into Mid-Continent Bank of Kansas City, Kansas City Security National Bank of Sikeston, Sikeston, converted into Security Bank of Sikeston, Sikeston . . . Mehlville National Bank, Unincorporated Area of St. Louis County, converted into Mehlville Bank, St. Louis County NEW HAMPSHIRE 12889 15652 Indian Head National Bank of Exeter, Exeter, converted into Indian Head Bank of Exeter, Exeter . . Indian Head Bank, N.A., Portsmouth, converted into Indian Head Bank of Portsmouth, Portsmouth. NEW YORK 1345 222 9977 The National Bank of Auburn, Auburn, converted into The Bank of Auburn, Auburn First National Bank and Trust Company of Ithaca, Ithaca, converted into First Bank and Trust Company of Ithaca, Ithaca Glen National Bank and Trust Company, Watkins Glen, converted into Glen Bank and Trust Company, Watkins Glen NORTH DAKOTA 12393 12026 First National Bank in Drake, Drake, converted into First Bank in Drake, Drake The Dakota National Bank and Trust Company of Fargo, Fargo, converted into The Dakota Bank and Trust Company of Fargo, Fargo 158 Table B-13—Continued National banks converted into state banks, by states, calendar 1979 (Dollar amounts in thousands) Charter No. Total capital accounts of national banks* Effective date Title and location of bank OKLAHOMA 11705 1439 12093 8524 The First National Bank in Chattanooga, Chattanooga, converted into First Bank of Chattanooga, Chattanooga The First National Bank in Claremore, Claremore, converted into First Bank in Claremore, Claremore The Farmers National Bank of Elk City, Elk City, converted into Bank of Western Oklahoma, Elk City The First National Bank of Stratford, Stratford, converted into First American Bank, Stratford $ 619 Jan. July Feb. Jan. 1 12 2,337 2,015 838 14 9,318 10 PENNSYLVANIA 2958 The Drovers and Mechanics National Bank of York, York, converted into The Drovers and Mechanics Bank, York Feb. TENNESSEE 11985 9319 8640 The First National Bank of Hohenwald, Hohenwald, converted into First Citizens Bank of Hohenwald, Hohenwald First National Bank of Mount Pleasant, Mount Pleasant, converted into The First Bank of Maury County, Mount Pleasant Farmers National Bank, Winchester, converted into Farmers Bank and Trust Company, Winchester. 878 Feb. Sept. Feb. 17 22 1,950 2,905 July Aug. Sept. June 23 1 4 25 1,478 3,169 169 5,624 Jan. 2 2,623 Jan. 2 6,599 Jan. 2 2,684 TEXAS 16251 14779 13669 14992 Dallas/Forth Worth Airport National Bank, Dallas/Fort Worth, converted into Dallas/Fort Worth Airport Bank, Dallas/Fort Worth '. Central National Bank of Houston, Houston, converted into Central Bank of Houston, Houston The First National Bank in Mount Calm, Mount Calm, converted into First State Bank, Mount Calm. . Windsor Park Bank, N.A., San Antonio, converted into Windsor Park Bank, San Antonio VERMONT 194 Catamount National Bank, North Bennington, converted into Catamount Bank, Catamount VIRGINIA 11976 First National Bank of Bassett, Bassett, converted into First Bassett Bank and Trust, Bassett WISCONSIN 14460 First National Bank in Menomonie, Menomonie, converted into First Bank and Trust, Menomonie . . . Table B-14 Purchases of state banks by national banks, by states, calendar 1979 (Dollar amounts in thousands) Title and location of bank Total capital accounts of state banks Effective date Total: 6 banks $ 8,865 KENTUCKY The Farmers National Bank of Cynthiana (2560), Cynthiana, purchased Union Bank of Berry, Berry. July 2 546 Oct. 1 2,073 28 2,255 Aug. 31 1,856 Sept. 14 1,078 Oct. 31 1,057 MISSISSIPPI Bank of Jackson, N.A. (16810), Jackson, purchased Fidelity Bank, Utica NORTH CAROLINA First National Bank of Catawba County (4597), Hickory, purchased Western Carolina Bank and Trust Company, Mpch\/i||p The Planters National Bank and Trust Company (10608), Rocky Mount, purchased Liberty Bank and Trust Company, Durham SOUTH CAROLINA T h e N a t i o n a l B a n k of S o u t h C a r o l i n a ( 1 0 6 6 ) , S u m t e r , p u r c h a s e d B a n k of N o r t h C h a r l e s t o n , N o r t h C h a r l e s t o n . . . . SOUTH DAKOTA The First National Bank in Sioux Falls (3393), Sioux Falls, purchased Dakota State Bank of Dell Rapids, Dell Rapids 159 Table B-15 Consolidations* of national banks, or national and state banks, by states, calendar 1979 (Dollar amounts in thousands) Effective date Outstanding capital stock Consolidating banks Resulting banks Surplus Undivided profits and reserves Total assets $10,298 21,207 32,455 $ 7,896 75,064 82,960 $ 287,868 1,462,525 1,750,393 Total: 1 Consolidation NEVADA Oct. $ 5,702 21,207 25,959 Bank of Nevada, Las Vegas First National Bank of Nevada, Reno (7038) First National Bank of Nevada, Reno (7038) 1 * Excludes consolidations involving a single operating bank, effected pursuant to corporate reorganization. Those transactions may be found on Table B-8. TableB-16 Mergers of national banks, or national and state banks, by states, calendar 1979 (Dollar amounts in thousands) Effective date Merging banks Resulting bank Outstanding capital stock Surplus Undivided profits and reserves Total assets ARKANSAS Oct. 15 Continental Bank and Trust Company, Barling The Merchants National Bank of Fort Smith, Fort Smith (7240). The Merchants National Bank of Forth Smith, Fort Smith (7240) $ 120 $ 280 $ 107 $ 4,269 2,000 2,000 9,119 112,769 2,000 2,000 8,125 116,607 818 2,754 652 44,541 94,461 310,101 321,307 16,605,829 94,461 310,101 321,307 16,656,462 732 400 755 558 3,468 475 945 1,660 1,246 541 401 646 67,274 19,838 32,885 40,663 6,000 8,534 500 9,000 15,459 315 13,000 17,960 233 374,795 505,532 16,137 2,000 3,000 2,613 103,221 2 303 550 3512 360 2 846 96 119,358 17,026 1,000 2,000 3,086 83,169 1,171 2,739 3,182 100,195 800 1,837 2,213 74,255 64,000 64,000 1,020 800 1,837 2,637 1,608 1,510 3,860 1,480 299 6,247 6,047 1,446 1,926 3,520 4,458 8,483 148,636 156,195 46,957 62,801 115,366 116,936 905 1,195 1,431 54,842 1,372 1,873 6,802 122,732 500 700 13,880 16,557 305 544 41,120 48,345 244 427 67,010 80,394 17,562 17,491 2,180,175 2,509,738 CALIFORNIA July 14 First Central Coast Bank, San Luis Obispo Wells Fargo Bank, National Association, San Francisco (15660) Wells Fargo Bank, National Association, San Francisco (15660) FLORIDA Jan. 1 Jan. 31 Mar. 31 Apr. 1 June 1 July 1 Bamett Bank of Murray Hill, Jacksonville Barnett Bank of North Jacksonville, Jacksonville Bamett Bank of Regency, Jacksonville Barnett Bank of San Jose, Jacksonville Barnett Bank of Jacksonville, National Association, Jacksonville (9049) Barnett Bank of Jacksonville, National Association (9049) . . Atlantic Bank of Gainesvile, Gainesville Atlantic First National Bank of Gainesville, Gainesville (3894) Atlantic First National Bank of Gainesville, Gainesville (3894) Atlantic Bank of West Daytona Beach, Daytona Beach Atlantic First National Bank of Daytona Beach, Daytona Beach (12456) Atlantic First National Bank of Daytona Beach, Daytona Beach (12456) Royal Trust Bank of South Dade, N.A., Unincorporated Area of Dade County (16698) Royal Trust Bank of Miami, N.A., Miami (15156) Royal Trust Bank of Miami, N.A., Miami (15156) Sun Bank of Cocoa, National Association, Cocoa (14806). . Sun First National Bank of Melbourne, Melbourne (16107). . Sun First National Bank of Brevard County (16107) Southeast National Bank of Coral Way, Miami (15568) Southeast Bank of Dadeland, Unincorporated Area of Dade County Southeast First National Bank of Miami Springs, Miami Springs (14707) Southeast National Bank of Tamiami, Unincorporated Area of Dade County (16480) Southeast Bank of Westland, Hialeah Southeast First National Bank of Miami, Miami (15638) Southeast First National Bank of Miami, Miami (15638) 160 Table B-16—Continued Mergers of national banks, or national and state banks, by states, calendar 197$ (Dollar amounts in thousands) Merging banks Resulting bank Effective date Sept. 30 Nov. 30 Dec. 1 First National Bank of Hallandale, Hallandale (15874) First National Bank of Miramar, Miramar (16233) Hollywood National Bank, Hollywood (16008) First National Bank of Hollywood, Hollywood (14530) First National Bank of Hollywood, Hollywood (14530) Century Bank of Pinellas County, St. Petersburg Century First National Bank in St. Petersburg, St. Petersburg (14367) Century First National Bank of Pinellas County (14367) . . . . Sun First National Bank of Lake Wales, Lake Wales (14923) Sun First National Bank of Polk County, Auburndale (16786) Sun First National Bank of Polk County, Auburndale (16786) Outstanding capital stock $ 863 400 432 2,640 3,814 498 Surplus $ 710 400 400 2,640 4,671 702 Undivided profits and reserves $ 863 118 186 4,555 5,722 436 Total assets $ 27,205 10,779 13,093 116,909 168,735 19,805 2,386 2,622 53,653 5,114 6,078 1,163 9,161 9,597 0 216 523 235,027 45,057 12,500 1,900 655 37,328 12,500 4,025 1,934 83,925 150 350 142 11,815 593 593 611 611 2,476 2,201 46,864 58,855 150 250 614 10,987 749 1,912 2,661 71,142 1,059 2,162 3,155 82,129 320 14,000 14,880 940 17,000 25,000 0 22,387 15,893 23,892 597,057 616,893 100 16,065 16,165 110 16,165 16,275 350 35,835 35,357 125 36,356 36,806 189 43,108 43,108 199 47,538 47,538 7,783 1,814,834 1,821,180 6,566 1,833,793 1,839,883 438 850 900 100 375 2,650 3,200 500 (142) 2,488 2,406 308 7,565 115,058 127,636 13,596 300 1,000 2,011 35,276 400 1,500 2,318 48,872 75 79 0 2,733 1,200 3,600 1,544 116,480 1,200 3,600 1,544 119,059 250 11,359 11,568 1,320 77,261 78,647 25 209 209 16,120 1,489,201 1,505,321 325 1,180 1,180 1,425 6,309 9,477 1,405 3,382 3,382 43,963 188,010 231,973 4,728 7,000 8,376 305,878 1,721 6,449 1,706 14,206 14,411 665 7,665 1,371 20,000 20,000 1,517 9,893 1,083 43,987 42,272 63,377 369,255 24,166 976,705 1,000,301 INDIANA May 7 The Colonial National Bank, Ohio Township (8956) Warrick National Bank of Boonville, Boonville (14218), Boonville Warrick National Bank of Boonville (14218), Boonville KENTUCKY Dec. 1 The Peoples Bank, Cave City The New Farmers National Bank of Glasgow, Glasgow (13651) The New Farmers National Bank of Glasgow, Glasgow (13651) LOUISIANA June 1 Caddo Trust and Savings Bank, Belcher The First National Bank of Shreveport, Shreveport (3595). . . The First National Bank of Shreveport, Shreveport (3595). . . MARYLAND May 30 Nov. 1 The The The The The The Sharpsburg Bank of Washington County, Sharpsburg. . First National Bank of Maryland, Baltimore (1413) First National Bank of Maryland, Baltimore (1413) National Bank of Perryville, Perryville (11193) First National Bank of Maryland, Baltimore (1413) First National Bank of Maryland, Baltimore (1413) MASSACHUSETTS Jan. 1 Oct. 1 Citizens Bank and Trust Company of Peabody, Peabody. . . Bay State National Bank, Lawrence (1014) Bay State National Bank, Lawrence (1014) Chatham Trust Company, Chatham The Barnstable County National Bank of Hyannis, Barnstable (13395) ; The Barnstable County National Bank of Hyannis, Barnstable (13395) MINNESOTA Jan. 1 The First State Bank of Rice, Rice The First American National Bank of St. Cloud, St. Cloud (11818) The First American National Bank of St. Cloud, St. Cloud (11818) MISSISSIPPI Dec. 31 Bank of Inverness, Inverness Deposit Guaranty National Bank, Jackson (15548) Deposit Guaranty National Bank, Jackson (15548) NEW HAMPSHIRE Nov. 30 Indian Head National Bank of Derry, Derry (8038) Indian Head National Bank of Nashua, Nashua (15563). . . . Indian Head National Bank of Nashua, Nashua (15563). . . . NEW JERSEY Jan. 1 June 30 First Merchants National Bank, Neptune Township (13363) . Midlantic National Bank/Raritan Valley, Edison Township (15430) First Merchants National Bank (15430), Edison Township. . . Arcadia National Bank, Secaucus National Community Bank of New Jersey, Rutherford (5005) National Community Bank of New Jersey, Rutherford (5005) 161 Table B-16—Continued Mergers of national banks, or national and state banks, by states, calendar 1979 (Dollar amounts in thousands) Effective date Nov. Merging banks Resulting bank 30 The National Bank of Manuta, Sewell (12917) The National Bank and Trust Company of Gloucester County, Woodbury (1199) The National Bank and Trust Company of Gloucester County, Woodbury (1199) Outstanding capital stock $ Surplus Undivided profits and reserves B 957 Total assets $ 52,633 713 B 3,000 2,830 4,678 6,270 193,975 4,611 7,678 6,159 246,609 4,400 9,636 21,491 19,637 600 1,600 (1,170) 309,016 6,000 200 10,236 600 2,321 1,519 328,653 19,478 13,953 15,000 15,141 686,295 14,753 15,000 16,660 704,735 980 900 63 25,038 1,342 1,342 1,932 9,072 9,072 6,286 521,707 517,474 103,418 5,264,166 5,485,502 NEW YORK Apr. Dec. 30 28 Bankers Trust Company of Central New York, Utica Bankers Trust Company of Albany, National Association, Albany (15758) Bankers Trust Company of Albany, National Association, Albany (15758) The Little Falls National Bank, Little Falls (2406) The Oneida National Bank and Trust Company of Central New York (1392) The Oneida National Bank and Trust Company of Central New York (1392) NORTH CAROLINA Sept. 30 Dec. 3 Carolina State Bank, Gastonia Southern National Bank of North Carolina, Lumberton (10610) Southern National Bank of North Carolina (10610) The Bank of Asheyille, Ashville North Carolina National Bank, Charlotte (13761) North Carolina National Bank, Charlotte (13761) 62,143 58,181 62,345 13,721 14,335 1,925 123,709 126,791 2,250 1,899 53 76,904 12,153 12,702 360 42,847 46,447 2,640 37,295 37,348 919 1,033,364 1,110,130 43,674 3,662 11,338 5,782 333,903 4,022 13,978 6,701 377,577 700 1,300 2,281 47,082 9,210 10,643 200 1,512 1,772 600 1,350 9,620 10,187 200 6,888 7,088 900 1,350 18,398 20,755 791 1,224 1,952 1,005 2,234 447,876 494,915 10,549 83,240 93,789 44,231 91,413 1,950 6,000 400 2,250 14,000 1,200 3,239 12,133 1,124 135,644 469,814 44,731 1,000 1,400 2,181 67,170 300 1,500 450 4,000 2,000 1,400 650 2,500 850 5,500 2,400 1,600 831 2,297 643 4,054 2,128 1,765 23,718 88,343 33,881 202,207 89,464 72,499 500 500 600 1,000 500 700 800 2,500 418 880 1,707 1,602 22,194 28,511 46,540 71,347 1,250 600 625 700 1,500 1,550 1,000 625 1,300 3,000 1,883 923 850 1,094 3,473 64,377 34,409 36,576 40,608 116,140 58,090 OHIO Apr. 16 Apr. 30 May 21 May 22 June 29 The Central Trust Company of Montgomery County, N.A., Dayton (16330) The Central Trust Company, National Association, Cincinnati (16416) The Central Trust Company, National Association (16416). . The Central Trust Company of Wayne County, Wooster The Central Trust Company of Northeastern Ohio, National Association, Canton Central Trust Company of Northeastern Ohio, National Association, Canton The Citizens First National Bank of Greene County, Xenia (2575) The Third National Bank and Trust Company of Dayton, Dayton (10) The Third National Bank and Trust Company (10) First National Bank of Sebring, Sebring (14601) First National City Bank of Alliance, Alliance (3721) First National City Bank of Alliance, Alliance (3721) The Home Banking Company, St. Marys First National Bank of Mercer County, Celina (5523) The Central Trust Company of Western Ohio, National Association (5523) Akron National Bank, Akron (15609) The First National Bank of Cadiz, Cadiz (100) The Central National Bank at Cambridge, Cambridge (13905) The Geauga County National Bank of Chardon, Chardon (14879) The First National Bank of Chillicothe, Chillicothe (128) The Second National Bank of Circleville, Circleville (172). . . The Capital National Bank, Cleveland (15423) First National Bank of Coshoctin, Coshoctin (6892) The First National Bank of Delaware, Delaware (243) The First National Bank at East Palestine, East Palestine (13850) Peoples National Bank of Greenfield, Greenfield (10105). . . Citizens National Bank of Ironton, Ironton (4336) The First National Bank of Jackson, Jackson (1903) The Hocking Valley National Bank of Lancaster, Lancaster (12421) The First National Bank of London, London (1064) National Bank of Loveland, Loveland (15945) The First National Bank of Marysville, Marysville (13460) . . . The First National Bank of Newark, Newark (858) 162 Table B-16—Continued Mergers of national banks, or national and state banks, by states, calendar 1979 (Dollar amounts in thousands) Effective date Merging banks Resulting bank June 29 July 30 Aug. 27 Sept. 28 Oct. Oct. Oct. 4 4 31 Nov. 23 Dec. 1 The National Bank of Portsmouth, Portsmouth (13832) The First National Bank of Springfield, Springfield (238). . . . The First National Bank of Tiffin, Tiffin (3315) First National Bank of Washington Courthouse, Washington, Courthouse (13490) The First National Bank of Wilmington, Wilmington (365) . . . The Citizens National Bank in Zanesville, Zanesville (5760) . The Logan County Bank, Bellefontaine The Cummings Bank Company, Carrollton The Ohio State Bank of Dayton Dayton The Peoples Savings Bank Company, Delta The Kenton Savings Bank, Kenton The Farmers and Merchants Bank of Logan, Logan The Medina County Bank, Medina The Adams Bank, Millersburg The Knox County Savings Bank, Mount Vernon The Community Bank Napoleon The Perry County Bank, New Lexington The Ohio Bank and Trust Company, New Philadelphia The Niles Bank Company, Niles The Citizens Banking Company, Perrysburg The Weston Security Bank, Sandusky The Ohio National Bank of Columbus, Columbus (5065) . . . BancOhio National Bank, Columbus (5065) Society Bank of Painesville, Painesville Society National Bank of Cleveland, Cleveland (14761).... Society National Bank of Cleveland, Cleveland (14761).... The Eastern Ohio Bank, Union Township Heritage Bank, N.A., Flushing (12008) Heritage Bank N A Flushing (12008) The Gnadenhutten-Bank, Gnadenhutten The Peoples National Bank and Trust Company, Dover (4293) The Peoples National Bank and Trust Company, Dover (4293) The First National Bank of Gallipolis, Gallipolis (136) The Central Trust Company, National Association, Cincinnati (16416) Central Trust Company, N.A., (16416) The Citizens National Bank of Middleport, Middleport (8441) The Central Trust Company, National Association, Cincinnati (16416) The Central Trust Company, National Association, Cincinnati (16416) Farmers and Merchants Bank Company, Arlington Mid-American National Bank & Trust Company, Northwood (15416) Mid-American National Bank & Trust Company, Northwood (15416) The Farmers State Bank of Stryker, Stryker The First National Bank in Bryan, Bryan (13899) First National Bank of Northwest Ohio (13899) The Commercial Bank, Ashtabula The Lake County National Bank of Painesville, Painesville (14686) The Lake County National Bank of Painesville, Painesville (14686) The Huntington National Bank of Bellefontaine, Bellefontaine (13749) The Huntington National Bank of Columbus, Columbus (7745) The Huntington National Bank of Franklin, Franklin (5100) . . The Huntington Portage National Bank of Kent, Kent (652) . The Huntington First National Bank of Kenton, Kenton (2500) The Huntington First National Bank of Lima, Lima (13767). . The Huntington National Bank of London, London (10373). . The Huntington Lagonda National Bank of Springfield, Springfield (14105) The Huntington First National Bank of Medina County, Wadsworth (5828) Outstanding capital stock $ Surplus Undivided profits and reserves Total assets 2,000 4,000 1,000 $ 1,697 3,912 1,109 900 400 2,000 700 700 385 800 800 1,000 725 120 1,000 1,000 600 1,000 1,500 700 1,400 20,000 100,000 1,020 18,300 19,000 263 475 738 150 1,000 1,300 3,500 1,100 700 818 800 800 1,000 1,675 600 1,000 1,500 800 1,250 2,000 1,200 2,600 55,000 100,000 1,980 61,700 63,680 789 456 1,245 450 1,018 986 1,911 386 871 281 633 1,099 1,344 533 1,123 1,576 1,088 1,031 912 1,119 469 2,256 36,185 93,495 1,002 21,838 23,160 231 424 655 563 39,096 34,973 80,003 225,572 32,787 25,115 25,464 36,603 41,611 45,224 22,542 43,016 41,660 35,911 49,682 76,885 31,217 82,006 1,686,722 4,261,749 52,747 1,495,576 1,542,964 13,833 22,016 28,901 11,761 752 2,248 4,016 89,436 752 100 2 248 2,250 4 072 368 100,610 24,851 12,738 12,738 46,376 46,376 36,497 35,965 1,186,218 1,207,819 1,200 2,000 1,000 $ $ 69.553 135,536 43,042 100 900 688 14,398 12,702 46,447 41,445 1,116,126 12,702 640 46,447 60 40,899 332 1,157,091 13,569 4,388 4,405 2,238 135,770 5,028 200 394 498 450 4,465 400 806 1,302 1,550 2,570 89 1,535 1,641 529 149,339 7,298 37,941 44,959 28,454 3,862 8,321 7,027 375,574 3,862 8,321 7,027 404,091 910 910 2,353 45,618 12,837 900 813 23,182 900 3,000 48,573 3,107 7,524 1,582,529 38,312 126,950 393 2,420 300 807 2,580 1,220 1,692 6,194 2,377 50,419 125,912 30,632 1,250 1,253 3,783 71,205 362 1,338 1,955 72,065 163 Table B-16—Continued Mergers of national banks, or national and state banks, by states, calendar 1979 (Dollar amounts in thousands) Merging banks Resulting bank Effective date Dec. 31 The Huntington Bank of Ashland, Ashland The Huntington Bank of Wood County, Bowling Green The Huntington Bank of Chillicothe, Chillicothe The Huntington Bank of Toledo, Toledo The Huntington Bank of Washington Court House, Washington Court House The Huntington Bank of Woodville, Woodville The Huntington National Bank, Columbus (7745) The Huntington National Bank, Columbus (7745) Outstanding capital stock $ Surplus Undivided profits and reserves $ 877 1,840 852 1,584 Total assets $ 35,379 97,730 62,472 141,239 300 2,798 500 1,650 $ 1,700 3,802 3,000 6,358 225 300 200 40,000 2,146 1,200 40 40,000 746 1,230 0 84,260 45,753 35,986 240 2,542,896 726 17,600 18,326 2,192 47,655 49,847 1,392 47,953 49,745 64,990 1,643,036 1,708,026 50 325 195 6,984 5,400 5,400 13,044 418,613 5,400 5,400 12,986 425,704 100 78 800 220 222 800 335 1,169 802 8,773 20,768 32,788 200 178 355 10,003 600 4,363 6,141 600 10,867 12,887 275 17,638 20,574 21,415 603,655 694,367 626 2,240 2,425 350 20,552 20,552 175 4,328 4,944 70 40,397 40,397 (129) 3,228 3,099 680 79,598 79,598 7,583 127,721 135,304 8,142 2,403,982 2,411,025 314 255 6,503 9,525 1,100 28,382 29,482 125 2,106 2,231 300 225 533 1,000 400 9,525 10,875 1,500 29,482 29,482 746 220 11,040 9,553 4,020 48,589 52,609 125 7,894 8,019 150 1,200 1,342 1,000 300 9,553 10,903 641 52,609 52,609 238 376 15,124 15,738 3,641 48,073 51,714 209 11,976 12,185 367 3,223 3,590 1,038 2,611 17,276 20,945 719 54,406 54,406 15,483 10,351 410,687 436,101 97,370 2,025,541 2,116,992 9,178 275,415 284,594 8,842 52,163 61,005 36,710 41,249 395,873 473,832 13,597 2,143,256 2,156,853 PENNSYLVANIA Dec. 3 Lebanon County Trust Company, Lebanon The National Central Bank, Lancaster (694) The National Central Bank, Lancaster (694) SOUTH DAKOTA Dec. 14 Springfield State Bank Springfield Northwestern National Bank of Sioux Falls, Sioux Falls (10592) . Northwestern National Bank of Sioux Falls, Sioux Falls (10592) VIRGINIA Jan. 1 Feb. 20 May 31 June 30 June 30 July 2 July 2 Nov. 9 Nov. 30 Fidelity American Bank, Buena Vista, Buena Vista Fidelity American Bank, Chatham Fidelity American Bank, NA, Halifax, Halifax County (16313) Fidelity American Bank, Natural Bridge, Natural Bridge Station Fidelity American Bank, NA, Roanoke Valley, Roanoke County (16192) Fidelity American Bank, NA, Lynchburg (15?2) Fidelity American Bank, NA, Lynchburg (1522) Dominion National Bank of the Peninsula, York County (16159) Dominion National Bank of Tidewater, Norfolk (15461) Dominion National Bank of Tidewater, Norfolk (15461) New Bank of Roanoke, Roanoke Virginia National Bank, Norfolk (9885) Virginia National Bank Norfolk (9885) Fidelity American Bank, NA, Richmond, Henrico County (15315) Cavalier Central Bank and Trust Company, Hopewell The Central National Bank of Richmond, Richmond (10080) The Central National Bank of Richmond, Richmond (10080) The First National Bank of Danville, Danville (1985) First & Merchants National Bank, Richmond (1111) First & Merchants National Bank, Richmond (1111) New Bank of Culpeper, Culpeper National Bank and Trust Company, Charlottesville (10618) . National Bank and Trust Company, Charlottesville (10618) . The Bank of Buckingham Dillwyn The First National Bank of Farmville, Farmville (5683) The First National Bank of Farmville, Farmville (5683) The Citizens National Bank of Emporia, Emporia (12240). . . City Savings Bank and Trust Company, Petersburg Central Fidelity Bank, N.A., Richmond (10080) Central Fidelity Bank, N.A., Richmond (10080) The Services National Bank, Arlington (16277) First & Merchants National Bank, Richmond (1111) First & Merchants National Bank, Richmond (1111) 164 Table B-17 Mergers resulting in national banks, by assets of acquiring and acquired banks, 1960—1979* Assets of acquired banks Under $10 million $10 to 24 9 million $25 to 49.9 million $50 to 99.9 million $100 million and over Total Acquired banks 1960—1977 Under $10 million $10 to 24.9 million $25 to 49.9 million $50 to 99.9 million $100 million and over 101 160 194 235 869 101 141 124 124 274 0 19 53 66 284 0 0 17 40 164 0 0 0 5 71 0 76 1,559* 764 422 221 76 76 ooo Assets of acquiring bankst * Includes all forms of acquisitions involving two or more banks from May 13, 1960, through December 31, 1979. t In each transaction, the bank with the larger total assets was considered to be the acquiring bank. i Comprises 1,383 transactions, 39 involving three banks, 14 involving four banks, 11 involving five banks, three involving six banks, one involving seven banks, one involving nine banks, one involving six banks and one involving 40 banks. 165 Table B-18 Domestic assets, liabilities and capital accounts of national banks, June 30, 1979 (Dollar amounts in millions) Total United States Number of banks Assets Cash and due from depository institutions U.S. Treasury securities Obligations of other U.S. Government agencies and corporations Obligations of states and political subdivisions All other securities Total securities Federal funds sold and securities purchased under agreements to resell Total loans (excluding unearned income) Allowance for possible loan losses Net Loans Lease financing receivables Bank premises, furniture and fixtures, and other assets representing bank premises Real estate owned other than bank premises All other assets Total assets Liabilities Demand deposits of individuals, partnerships and corporations Time and savings deposits of individuals, partnerships and corporations Deposits of U.S. government Deposits of states and political subdivisions All other deposits .... Certified and officers' checks Total deposits in domestic offices Demand deposits Time and savings deposits Federal funds purchased and securities sold under agreements to repurchase . . . Interest-bearing demand notes issued to U S Treasury Other liabilities for borrowed money ... .... Mortgage indebtedness and liability for capitalized leases All other liabilities Total liabilities Alabama Arizona Alaska Arkansas California Colorado 4,493 100 6 3 68 47 138 $ 98,175 43,268 22,790 68,427 10,366 $1,151 394 358 1,383 58 $ 162 62 69 158 3 $ 588 279 202 605 42 $ 12,382 4,443 3,086 5,400 949 $1,579 501 143 923 15 144,851 2,193 292 $ 923 502 162 634 23 1,321 1,128 13,878 1,582 33,443 416,466 4,996 411,470 202 5,520 66 5,454 84 816 8 808 349 4,683 53 4,630 461 2,791 27 2,764 5,666 66,374 781 65,593 303 5,537 60 5,477 6,036 12,384 1,313 37,443 745,114 31 189 13 162 11 61 6 23 30 178 4 122 2,118 1,883 73 5,462 60 182 22 177 9,394 1,448 7,556 12 110 5 100 5,167 107,055 9,382 164,695 300,600 1,627 44,050 32,116 7,015 2,335 4,488 31 769 243 60 466 413 5 242 4 19 2,103 3,967 25 284 69 121 1,290 2,248 6 411 204 24 23,145 47,553 205 3,543 3,114 1,260 2,602 3,604 33 808 560 106 550,103 7,927 1,150 6,570 4,182 78,820 7,713 206,658 343,445 79,464 9,295 9,569 1,261 40,345 2,794 5,133 423 75 56 5 162 541 609 102 23 11 11 23 2,423 4,147 314 96 1 13 88 1,646 2,536 3,295 4,418 644 97 48 33 178 690,036 8,649 1,320 7,082 4,767 26,614 52,206 10,790 1,086 2,400 226 7,151 100,474 80 27 308 42 445 31 10 12 87 8,712 3,206 47 1 Equity Capital Preferred stock Common stock Surplus Undivided profits and reserve for contingencies and other capital reserves Total equity capital 30 11,149 17,407 23,287 0 122 269 307 0 44 123 227 0 80 100 194 0 1,876 2,097 2,301 0 116 192 320 51,873 698 0 32 42 53 127 393 374 6,273 628 Total liabilities, subordinated notes and debentures and equity capital 745,114 9,394 1,448 7,556 5,167 107,055 9,382 Subordinated notes and debentures See note at end of table. Table B-18—Continued Domestic assets, liabilities and capital accounts of national banks, June 30, 1979 (Dollar amounts in millions) Connecticut Number of banks District of Columbia Delaware Florida Georgia Idaho Hawaii 19 6 16 230 64 3 6 $ 897 198 128 349 44 $ 9 10 2 3 $ 878 462 193 836 30 $ 2,973 2,352 1,236 2,333 175 $ 20 18 16 1 719 15 1,521 6,096 $1,904 482 169 738 70 1,459 $ 371 262 75 344 •8 689 171 7 390 3,458 36 3,421 1,133 10,240 121 10,119 626 4,923 75 4,847 28 77 5 166 6,487 55 464 52 466 63 223 110 526 9,757 Assets Cash and due from depository institutions U.S. Treasury securities Obligations of other U.S. Government agencies and corporations Obligations of states and political subdivisions All other securities Total securities Federal funds sold and securities purchased under agreements to resell Total loans (excluding unearned income) Allowance for possible loan losses Net Loans Lease financing receivables Bank premises, furniture and fixtures, and other assets representing bank premises Real estate owned other than bank premises All other assets Total assets 2,226 26 2,200 50 12 71 5 58 0 1 4,133 84 1,069 1,626 8 152 344 48 19 51 3,248 75 1,531 1,717 337 160 8 10 126 3,888 19 55 0 50 1 21,358 35 1 167 94 1 93 2,065 20 2,045 10 3 1 1 36 70 3 53 165 3,435 50 69 26 2 3 754 1,812 6 206 11 34 151 2,822 57 94 Liabilities Demand deposits of individuals, partnerships and corporations Time'and savings deposits of individuals, partnerships and corporations Deposits of U.S. government Deposits of states and political subdivisions All other deposits Certified and officers' checks Total deposits in domestic offices Demand deposits Time and savings deposits Federal funds purchased and securities sold under agreements to repurchase . . . Interest-bearing demand notes issued to U.S. Treasury Other liabilities for borrowed money Mortgage indebtedness and liability for capitalized leases All other liabilities Total liabilities Subordinated notes and debentures 6,554 9,216 55 1,065 664 242 2,013 2,455 109 32 357 75 5,041 17,796 3,156 2,950 34 849 464 55 7,508 1 76 2,453 2,588 593 128 94 12 133 6,000 7,776 10,020 1,470 127 57 16 262 19,727 4,068 3,440 1,010 52 122 27 302 9,021 0 1 0 0 2 872 1,950 248 49 2 4 79 153 3,203 15 — 12 31 57 2 22 0 49 109 72 230 0 2 3 3 1 364 607 628 1,599 0 160 227 293 0 5 3 2 0 38 146 25 8 69 138 268 475 679 10 209 4,133 84 6,487 21,358 9,757 165 3,435 4 1 1 Equity Capital Preferred stock Common stock Surplus Undivided profits and reserve for contingencies and other capital reserves Total equity capital Total liabilities, subordinated notes and debentures and equity capital See note at end of table. i Table B-18—Continued s Domestic assets, liabilities and capital accounts of national banks, June 30, 1979 (Dollar amounts in millions) Number of banks Assets Cash and due from depository institutions U S. Treasury securities . Obligations of other U.S. Government agencies and corporations Obligations of states and political subdivisions All other securities Total securities Federal funds sold and securities purchased under agreements to resell Total loans (excluding unearned income) Allowance for possible loan losses Net Loans Lease financing receivables Bank premises, furniture and fixtures, and other assets representing bank premises Real estate owned other than bank premises All other assets Total assets Liabilities Demand deposits of individuals, partnerships and corporations Time and savings dposits of individuals, partnerships and corporations Deposits of U.S. government Deposits of states and political subdivisions All other deposits Certified- and officers1 checks Total deposits in domestic offices Demand deposits Time and savings deposits Federal funds purchased and securities sold under agreements to repurchase . . . Interest-bearing demand notes issued to U.S. Treasury Other liabilities for borrowed money Mortgage indebtedness and liability for capitalized leases All other liabilities . . . . Total liabilities . . Subordinated notes and debentures Kentucky Kansas Iowa Indiana Illinois Louisiana Maine 416 120 99 151 79 54 14 $ 6,630 3,359 2,174 6,088 827 $ 1,745 1,254 681 1,646 203 $1,225 1,278 317 1,015 21 $ 123 52 74 136 3 3,784 $ 800 519 318 705 29 1,571 $ 764 512 204 710 26 12,448 $ 746 324 219 661 23 1,227 1,452 2,631 265 2,292 664 324 431 601 37,708 438 37,270 8,672 90 8,581 3,383 29 3,354 3,288 33 3,255 328 3,968 38 3,930 5,131 58 5,073 36 698 6 692 169 777 217 2,791 150 265 40 823 30 191 15 199 16,053 4 132 4 90 6,286 106 132 4 83 62,595 6 93 10 106 5,867 6,798 9,966 11,096 22,819 105 2,670 3,610 526 3,225 7,206 28 1,692 425 138 1,296 2,927 7 288 283 29 1,494 2,563 11 844 257 38 1,691 3,107 14 441 310 44 2,685 3,688 38 1,373 349 77 40,826 12,715 4,829 5,206 5,607 8,210 256 610 3 84 7 7 967 13,789 27,038 10,411 808 1,270 36 4,799 4,270 8,445 1,453 255 81 26 357 1,649 3,180 442 36 36 9 90 1,934 3,272 393 54 34 2 70 2,108 3,499 364 97 51 20 159 3,337 4,872 721 44 24 31 150 294 673 71 17 8 5 10 58,149 14,889 5,442 5,760 6,298 9,179 1,078 111 33 32 25 13 32 3 7 809 1,763 1,755 209 394 527 0 65 97 231 0 98 159 243 0 78 141 268 1 124 255 375 0 20 23 37 0 27 1 16 1,159 Equity Capital Preferred stock Common stock Surplus . ... Jndivided profits and reserve for contingencies and other capital reserves Total equity capital 4,334 1,131 393 501 487 755 79 Total liabilities, subordinated notes and debentures and equity capital 62,595 16,053 5,867 6,286 6,798 9,966 1,159 See note at end of table. Table B-18—Continued Domestic assets, liabilities and capital accounts of national banks, June 30, 1979 (Dollar amounts in millions) Maryland Number of banks . Massachusetts 32 73 Michigan 126 Minnesota Mississippi Missouri Montana 205 37 99 56 $ 2,041 774 624 1,813 331 3,542 $ 678 375 146 602 28 $ 1,971 541 405 1,197 96 $ 249 138 60 334 11 1,151 2,239 543 563 9,638 92 1,487 6,314 72 6,242 1,630 15 1,615 Assets Cash and due from depository institutions U.S. Treasury securities Obligations of other U.S. Government agencies and corporations Obligations of states and political subdivisions All other securities Total securities $ 853 325 72. 665 18 1,080 $ 2,174 1 391 291 731 270 2,683 $ 3,382 1 665 527 2,859 162 5,213 857 1,428 7,600 111 7,488 14,991 144 14,847 9,546 155 2,588 28 2,560 171 257 14 1,244 14,886 122 417 28 998 26,435 184 205 35 523 16,640 3 102 5 69 4,721 77 168 13 260 12,457 6 47 2 36 2,522 1,575 2,794 11 221 116 51 3,646 4,976 42 742 857 127 5,327 12,592 45 2,243 574 571 3,141 7,039 25 847 709 110 1,059 1,989 6 690 193 13 534 1,366 3 201 31 20 4,768 10,389 21,352 11,871 3,949 2,726 3,789 50 678 949 72 8,264 1,839 2,929 567 124 12 22 258 6,811 14,541 1,728 640 134 43 696 24,592 4,062 7,809 2,104 391 247 8 771 1,428 2,521 3,740 4,524 330 41 4 18 56 5,751 4,847 5,542 2,064 311 59 25 926 13,774 15,392 4,399 2,234 274 275 36 526 11,609 633 1,523 111 8 8 5 38 2,325 4 36 114 164 16 31 19 0 61 95 257 0 349 579 801 1,729 0 303 332 449 1,083 0 47 236 24 307 2 145 232 438 817 67 67 44 177 26,435 16,640 4,721 12,457 2,522 Federal funds sold and securities purchased under agreements to resell Total loans (excluding unearned income) Allowance for possible loan losses Net Loans 181 3,695 37 Lease financing receivables Bank premises, furniture and fixtures, and other assets representing bank premises Real estate owned other than bank premises All other assets Total assets 51 107 9 229 6,167 3,658 24 Liabilities Demand deposits of individuals, partnerships and corporations Time and savings deposits of individuals, partnerships and corporations Deposits of U.S. government Deposits of states and political subdivisions All other deposits Certified and officers' checks Total deposits in domestic offices Demand deposits Time and savings deposits Federal funds purchased and securities sold under agreements to repurchase . . . Interest-bearing demand notes issued to U.S. Treasury Other liabilities for borrowed money Mortgage indebtedness and liability for capitalized leases All other liabilities Total liabilities Subordinated notes and debentures 2,156 Equity Capital Preferred stock Common stock Surplus Undivided profits and reserve for contingencies and other capital reserves Total equity capital 413 0 170 421 486 1,077 Total liabilities, subordinated notes and debentures and equity capital 6,167 14,886 See note at end of table. CO Table B-18—Continued Domestic assets, liabilities and capital accounts of national banks, June 30, 1979 (Dollar amounts in millions) Nebraska Number of banks New Hampshire Nevada New Jersey New Mexico New York North Carolina 117 4 39 95 40 117 27 $ 834 288 228 622 53 1,191 $ 294 154 116 218 2 $ 198 129 19 210 4 $ 2,263 1,487 1,041 2,875 320 $ 346 241 123 362 7 $17,166 3,680 1,237 3,894 3,363 $1,875 711 536 1,344 317 490 362 5,723 733 12,174 2,908 Federal funds sold and securities purchased under agreements to resell Total loans (excluding unearned income) Allowance for possible loan losses Net Loans 253 3,262 35 3,227 22 1,257 13 1,245 36 1,018 10 1,008, 453 11,063 118 10,945 131 1,696 19 1,678 2,878 44,399 853 43,546 636 7,007 83 6,924 Lease financing receivables Bank premises, furniture and fixtures, and other assets representing bank premises Real estate owned other than bank premises All other assets Total assets 42 92 2 93 5,734 54 52 1 25 2,184 33 1 17 1,655 125 349 57 325 2 85 4 43 618 1,067 229 12,567 20,239 3,023 90,246 109 253 16 636 13,357 1,317 2,604 5 382 357 32 4,696 721 944 5 157 2 26 1,855 404 827 4 143 27 15 1,419 5,071 10,142 49 1,302 236 240 17,041 825 1,222 12 504 40 30 2,634 15,567 23,340 140 1,925 9,670 1,006 51,647 3,326 5,306 23 637 352 91 9,735 1,777 2,918 397 63 33 12 78 800 1,055 104 25 3 8 23 487 932 978 1,656 83 25 5 17 36 24,946 26,702 14,618 542 2,720 76 12,130 3,922 5,813 1,732 189 76 77 557 5,280 2,017 1,530 6,018 11,023 1,133 256 40 7 351 18,829 2,800 81,733 12,366 28 0 2 59 20 349 132 1 1,971 2,529 3,662 8,164 0 170 258 430 90,246 13,357 Assets Cash and due from depository institutions U S Treasury securities Obligations of other U.S. Government agencies and corporations Obligations of states and political subdivisions All other securities Total securities Liabilities Demand deposits of individuals, partnerships and corporations Time and savings deposits of individuals, partnerships and corporations Deposits of U.S. government Deposits of states and political subdivisions All other deposits Certified and officers' checks Total deposits in domestic offices Demand deposits Time and savings deposits Federal funds purchased and securities sold under agreements to repurchase . . . Interest-bearing demand notes issued to U S Treasury Other liabilities for borrowed money .... ... Mortgage indebtedness and liability for capitalized leases All other liabilities Total liabilities Subordinated notes and debentures 55 23 11 4 18 Equity Capital Preferred stock . Common stock ... ... Surplus Undivided profits and reserve for contingencies and other capital reserves Total equity capital Total liabilities, subordinated notes and debentures and equity capital See note at end of table. 81 106 239 427 0 28 44 96 0 16 47 60 2 289 459 600 168 123 1,350 2 59 84 59 204 5,734 2,184 1,655 20,239 3,023 859 Table B-18—Continued Domestic assets, liabilities and capital accounts of national banks, June 30, 1979 (Dollar amounts in millions) North Dakota Oklahoma Ohio Oregon Pennsylvania Rhode Island South Carolina 42 187 188 6 223 5 18 $ 188 114 56 258 7 $ 3,598 1,980 1,078 4,236 274 $ 1,550 1,071 98 1,693 104 $1,182 274 53 1,009 39 $ 5,251 2,951 2,494 4,430 1,756 $ 527 180 109 401 60 435 7,568 2,966 1,375 11,631 $ 341 324 162 446 69 1,001 11 610 6,200 71 6,129 152 2,320 27,149 316 142 2,290 21 359 1,910 22 1,322 1,231 16,066 181 15,886 26,833 2,269 1,888 2 40 2 31 202 524 15 1,049 30,073 8,644 294 582 66 3,665 50,642 101 68 8 185 4,114 16 90 5 45 2,031 30 182 9 183 11,658 457 1,130 3 119 15 12 6,690 14,245 64 1,882 379 284 23,544 2,893 4,811 41 1,299 443 112 1,955 3,846 12 578 105 69 9,293 21,680 57 2,299 1,359 300 9,600 6,565 34,988 625 2,131 5 157 20 26 2,964 2,907 3,551 6,049 685 144 50 3 250 10,732 2,296 4,269 793 156 52 13 447 11,145 23,843 7,111 533 760 61 3,657 735 2,229 505 131 17 27 219 1,637 1,270 308 87 33 7 52 1,873 7,918 15,626 2,806 555 40 48 762 27,755 8,026 47,110 3,862 3,393 16 41 70 141 250 18 13 Preferred stock Common stock Surplus Undivided profits and reserve for contingencies and other capital reserves Total equity capital 0 36 42 65 143 0 471 880 926 2,277 155 203 498 857 0 92 149 235 477 6 526 1,234 1,516 3,282 0 30 88 115 234 0 42 81 149 273 Total liabilities, subordinated notes and debentures and equity capital 2,031 30,074 11,658 8,644 50,642 4,114 3,678 Number of banks Assets Cash and due from depository institutions U.S. Treasury securities Obligations of other U.S. Government agencies and corporations Obligations of states and political subdivisions All other securities Total securities Federal funds sold and securities purchased under agreements to resell Total loans (excluding unearned income) Allowance for possible loan losses Net Loans Lease financing receivables Bank premises, furniture and fixtures, and other assets representing bank premises Real estate owned other than bank premises All other assets Total assets 1,333 11 5,095 45 5,049 37 169 9 671 750 3,678 Liabilities Demand deposits of individuals, partnerships and corporations Time and savings deposits of individuals, partnerships and corporations Deposits of U.S. government Deposits of states and political subdivisions All other deposits Certified and officers' checks Total deposits in domestic offices Demand deposits Time and "savings deposits z ederal funds purchased and securities sold under agreements to repurchase . . . Interest-bearing demand notes issued to U.S. Treasury Other liabilities for borrowed money Mortgage indebtedness and liability for capitalized leases All other liabilities Total liabilities Subordinated notes and debentures 1,737 513 1,224 71 6 27 4 27 Equity Capital See note at end of table. 1 413 1,187 10 221 49 27 Table B-18—Continued Domestic assets, liabilities and capital accounts of national banks, June 30, 1979 (Dollar amounts in millions) South Dakota Number of banks _ Assets Cash and due from depository institutions U S Treasury securities Obligations of other U.S. Government agencies and corporations Obligations of stages and political subdivisions All other securities Total securities Federal funds sold and securities purchased under agreements to resell Total loans (excluding unearned income) Allowance for possible loan losses Net Loans Lease financing receivables Bank premises, furniture and fixtures, and other assets representing bank premises Real estate owned other than bank premises All other assets . . . . . . . . Total assets . . . . Tennessee Texas Utah Vermont Washington Virginia 32 70 611 10 12 82 20 $ 227 108 65 314 7 $1,224 837 407 943 54 $ 8,013 3,892 1,565 7,398 224 $ 38 31 7 57 6 $ 1,406 555 403 1,514 37 $ 2,345 366 207 1,107 71 494 2,241 13,079 $ 368 165 68 229 12 474 101 2,509 1,751 18 1,756 15 1,741 375 5,480 71 2,867 5 344 3 341 517 6,994 73 6,921 658 10,399 104 5,409 31,965 350 31,615 139 1,890 18 1,872 2 50 2 43 51 212 28 265 175 1,015 69 1,870 0 10 2,576 9,805 58,703 44 42 3 50 2,992 30 315 17 188 11,904 500 340 18 421 16,327 2,922 5,833 27 828 101 82 3,966 6,819 30 1,515 368 149 9,793 12,847 4,543 8,304 1,157 385 126 27 773 5 501 10,296 Liabilities Demand deposits of individuals, partnerships and corporations Time and savings deposits of individuals, partnerships and corporations Deposits of U.S. government Deposits of states and political subdivisions All other deposits Certified and officers' checks Total deposits in domestic offices 499 1,521 8 206 23 16 2,333 4,445 24 793 416 48 14,811 20,649 154 6,091 2,999 416 691 1,388 6 319 28 26 2,273 8,060 45,121 2,458 5 447 Demand deposits Time and savings deposits Federal funds purchased and securities sold under agreements to repurchase . . . Interest-bearing demand notes issued to U S Treasury Other liabilities for borrowed money Mortgage indebtedness and liability for capitalized leases All other liabilities 570 1,703 40 15 7 5 36 18,538 26,583 5,508 684 288 110 2,503 795 1,663 204 44 10 101 346 10 2 1 4 54,215 72 2,787 3,350 6,443 654 117 118 71 266 2,375 2,909 5,151 780 44 17 15 179 9,094 465 11,020 15,315 22 31 447 46 3 60 109 0 46 51 82 179 0 144 224 312 0 854 1,057 2,130 4,041 0 35 64 60 159 0 7 9 17 6 203 246 447 33 0 160 260 403 823 58,703 2,992 501 11,904 16,327 Total liabilities Subordinated notes and debentures Equity Capital Preferred stock Common stock Surplus Undivided profits and reserve for contingencies and other capital reserves Total equity capital Total liabilities, subordinated notes and debentures and equity capital See note at end of table. 2,576 680 9,805 88 325 1 28 902 Table B-18—Continued Domestic assets, liabilities and capital accounts of national banks, June 30, 1979 (Dollar amounts in millions) West Virginia Number of banks Wisconsin District of Columbia nonnational* Wyoming 107 128 46 1 $ 510 402 401 727 18 $ 985 725 289 1,014 91 $ 228 134 78 255 5 $ 5 13 6 3 2 1,548 2,119 472 24 332 Assets Cash and due from depository institutions U.S. Treasury securities Obligations of other U.S. Government agencies and corporations Obligations of states and political subdivisions All other securities Total securities Federal funds sold and securities purchased under agreements to resell Total loans (excluding unearned income) Allowance for possible loan losses Net Loans 2,663 28 2,635 310 6,062 58 6,004 55 1,087 11 1,076 Lease financing receivables Bank premises, furniture and fixtures, and other assets representing bank premises Real estate owned other than bank premises All other assets Total assets 10 124 2 51 5,214 43 221 56 198 9,935 2 39 2 31 1,905 1,066 2,843 10 260 93 41 4,314 1,969 4,584 16 758 290 77 7,694 484 862 15 239 38 15 1,654 19 31 1 1,289 3,025 352 16 18 7 52 2,400 5,294 944 225 41 6 332 610 1,044 20 31 4 0 0 0 4,759 9,242 1,749 56 7 55 9 — 0 73 154 220 0 148 243 247 0 60 4 26 26 0 1 0 1 60 Liabilities Demand deposits of individuals, partnerships and corporations Time and savings deposits of individuals, partnerships and corporations Deposits of U.S. government Deposits of states and political subdivisions All other deposits Certified and officers' checks Total deposits in domestic offices Demand deposits Time and savings deposits Federal funds purchased and securities sold under agreements to repurchase . . Interest-bearing demand notes issued to U.S. Treasury Other liabilities for borrowed money Mortgage indebtedness and liability for capitalized leases All other liabilities Total liabilities Subordinated notes and debentures . 45 3 23 4 21 1 52 Equity Capital Preferred stock Common stock Surplus Undivided profits and reserve for contingencies and other capital reserves Total equity capital 448 638 0 11 44 92 147 Total liabilities, subordinated notes and debentures and equity capital 5,214 9,935 1,905 * Nonnational banks in the District of Columbia are supervised by the Comptroller of the Currency. NOTE: Dashes indicate amounts of less than $500,000. Figures may not add to totals because of rounding. 1 2 4 Table B-19 Domestic assets, liabilities and capital accounts of national banks, December 31, 1979 (Dollar amounts in millions) Total United States Number of banks Assets Cash and due from depository institutions . . . . U.S. Treasury securities Obligations of other U.S. Government agencies and corporations Obligations of states and political subdivisions All other securities Total securities Federal funds sold and securities purchased under agreements to resell Total loans (excluding unearned income) Allowance for possible loan losses Net Loans Alabama Arizona Alaska Arkansas California Colorado 4,448 99 6 3 68 42 139 $106,731 44,126 24,702 70,796 9,485 $1,169 390 398 1,580 61 $ 986 433 202 727 21 $ 676 305 223 623 42 $ 15,370 4,506 3,698 4,682 686 $ 2,046 506 171 983 17 149,109 2,429 $ 138 84 129 142 3 358 1,383 1,193 13,572 1,678 36,119 442,986 5,296 437,690 451 5,347 67 76 759 8 456 5,327 61 534 5,281 751 5,265 2,818 28 2,790 2,658 73,673 850 72,822 419 5,705 61 5,644 6,780 12,923 1,193 41,711 10 60 6 24 51 195 2 132 12 114 6 90 1,424 8,470 5,415 2,512 1,927 65 6,399 115,325 63 191 23 188 10,253 2,285 4,373 23 303 76 115 1,470 2,303 6 432 230 26 25,571 50,780 262 3,376 3,830 1,432 3,062 3,763 33 684 843 106 Lease financing receivables Bank premises, furniture and fixtures, and other assets representing bank premises Real estate owned other than bank premises All other assets Total assets 792,256 32 195 23 212 9,792 Liabilities Demand deposits of individuals, partnerships and corporations Time and savings deposits of individuals, partnerships and corporations Deposits of U.S. government Deposits of states and political subdivisions All other deposits Certified and officers' checks 187,201 317,654 1,902 43,484 37,268 7,461 2,512 4,584 27 773 296 65 594,970 8,256 454 436 8 185 4 15 1,103 7,176 4,468 85,250 8,490 234,937 360,033 79,152 7,687 9,439 1,234 42,444 3,058 5,198 436 51 79 6 181 516 587 127 15 11 10 24 2,611 4,565 440 66 194 12 110 1,831 2,637 4,011 4,479 699 89 64 33 172 734,926 9,009 1,290 7,998 388 37 24 12 69 4,997 30,167 55,083 9,810 894 2,590 211 9,774 108,529 9,548 3,034 50 1 47 26 156 41 31 11,403 17,846 25,017 0 37 43 54 0 81 104 208 392 0 1,953 2,180 2,506 134 0 44 126 255 425 6,639 0 118 196 350 664 1,424 8,470 5,415 115,325 10,253 Total deposits in domestic offices Demand deposits Time and savings deposits Federal funds purchased and securities sold under agreements to repurchase . . Interest-bearing demand notes issued to U.S. Treasury Other liabilities for borrowed money Mortgage indebtedness and liability for capitalized leases All other liabilities Total liabilities Subordinated notes and debentures Equity Capital Preferred stock Common stock Surplus Undivided profits and reserve for contingencies and other capital reserves Total equity capital .... 54,296 0 125 287 322 734 Total liabilities, subordinated notes and debentures and equity capital 792,256 9,792 See note at end of table. Table B-19—Continued Domestic assets, liabilities and capital accounts of national banks, December 3 1 , 1979 (Dollar amounts in millions) Connecticut Number of banks Assets Cash and due from depository institutions U.S. Treasury securities Obligations of other U.S. Government agencies and corporations Obligations of states and political subdivisions All other securities Total securities Federal funds sold and securities purchased under agreements to resell Total loans (excluding unearned income) Allowance for possible loan losses Net Loans Lease financing receivables Bank premises, furniture and fixtures, and other assets representing bank premises Real estate owned other than bank premises All other assets Total assets Liabilities Demand deposits of individuals, partnerships and corporations Time and savings deposits of individuals, partnerships and corporations Deposits of U.S. government Deposits of states and political subdivisions All other deposits Certified and officers' checks Total deposits in domestic offices Demand deposits Time and savings deposits Federal funds purchased and securities sold under agreements to repurchase . . . Interest-bearing demand notes issued to U.S. Treasury Other liabilities for borrowed money Mortgage indebtedness and liability for capitalized leases All other liabilities Total liabilities District of Columbia Delaware Idaho 6 16 221 63 3 7 $ 868 193 111 386 31 $10 11 2 3 $1,018 446 196 843 32 $ 3,805 2,163 1,178 2,449 170 $ 1,972 494 222 748 72 $ 27 13 20 1 $ 454 295 113 322 19 721 16 1,517 5,960 1,536 34 749 103 2,406 27 10 51 155 3,774 41 830 2,379 51 3,733 1,736 10,354 123 10,231 5,081 77 5,004 3 103 1 102 165 2,102 20 2,082 13 73 6 149 0 2 52 484 38 524 69 225 79 519 11 3 1 2 4,311 90 27 90 6 186 6,732 22,830 10,235 183 39 73 2 58 3,622 1,315 1,722 19 233 214 49 3,552 22 54 7,247 9,453 51 1,081 881 240 3,492 3,052 37 715 473 73 60 75 1 2,148 2,504 142 53 316 84 26 3 4 831 1,943 6 221 9 32 80 5,248 18,952 7,841 168 3,043 1,646 1,907 23 57 4,337 3,504 67 100 1,093 26 103 26 372 1 1 0 2 1 2 283 159 22 10 33 1 2,610 2,638 634 90 18 12 223 4,058 81 6,225 8,716 10,236 1,681 140 92 15 266 21,146 9,461 172 952 2,090 202 31 1 4 91 3,372 14 — 11 29 57 2 27 0 370 615 671 0 161 228 327 0 5 3 2 0 39 162 23 1,655 717 10 223 22,830 10,235 183 3,622 0 49 113 77 0 2 3 3 239 8 0 69 138 288 495 Total liabilities, subordinated notes and debentures and equity capital 4,311 90 6,732 Hawaii 19 Subordinated notes and debentures Equity Capital Preferred stock Common stock Surplus Undivided profits and reserve for contingencies and other capital reserves Total equity capital See note at end of table. Georgia Florida Table B-19—Continued Domestic assets, liabilities and capital accounts of national banks, December 3 1 , 1979 (Dollar amounts in millions) Number of banks Assets Cash and due from depository institutions U.S. Treasury securities Obligations of other U.S. Government agencies and corporations Obligations of states and political subdivisions All other securities Total securities Federal funds sold and securities purchased under agreements to resell Total loans (excluding unearned income) Allowance for possible loan losses Net Loans Iowa Indiana Illinois Kentucky Kansas Louisiana Maine 410 119 99 148 79 55 14 $ 7,174 3 645 2,269 6,286 726 $ 984 335 230 672 25 1,261 $1,065 510 356 727 32 $ 864 533 219 752 31 1,625 1,535 $ 1,445 1,333 381 1,009 20 2,743 $ 153 58 81 123 3 12,926 $ 1,820 1,300 628 1,705 231 3,864 2,340 40,856 460 40,396 1,131 8,873 96 8,777 380 3,427 31 3,396 57 682 7 676 265 695 481 3,358 33 3,326 4,208 41 4,168 936 5,213 61 5,152 4 132 7 95 6,948 118 142 5 87 30 205 10 165 0 27 1 16 7,399 10,686 1,195 1,714 2,783 12 829 373 45 1,893 3,378 12 442 360 46 3,055 3,809 40 1,360 456 79 275 629 3 93 6 8 5,755 6,132 8,799 1,015 2,308 r 3,824 3,804 332 682 450 61 65 20 144 4,995 782 49 16 31 166 Lease financing receivables Bank premises, furniture and fixtures, and other assets representing bank premises Real estate owned other than bank premises All other assets Total assets 196 832 132 3,069 154 278 37 817 8 98 9 113 67,065 16,878 6,248 Liabilities Demand deposits of individuals, partnerships and corporations Time and savings deposits of individuals, partnerships and corporations Deposits of U S government Deposits of states and political subdivisions All other deposits . Certified and officers' checks 12,909 25,005 117 2,714 3,623 592 44,960 3,432 7,589 25 1,827 469 138 13,480 1,448 3,035 12 258 458 35 5,247 15,965 28,995 11,592 819 440 23 4,582 4,648 8,833 1,514 157 86 26 416 1,960 3,287 386 44 19 9 98 2,282 3,473 468 48 47 2 83 62,415 15,680 5,804 6,403 6,870 9,843 1,110 109 28 28 25 13 33 3 2 813 1,778 1,947 209 403 557 0 66 102 249 0 99 160 261 1 138 262 409 0 20 23 39 810 82 10,686 1,195 Total deposits in domestic offices Demand deposits Time and savings deposits Federal funds purchased and securities sold under agreements to repurchase . . . Interest-bearing demand notes issued to U S Treasury Other liabilities for borrowed money Mortgage indebtedness and liability for capitalized leases All other liabilities Total liabilities Subordinated notes and debentures Equity Capital Preferred stock Common stock Surplus Undivided profits and reserve for contingencies and other capital reserves Total equity capital 4,540 1,170 417 520 0 79 141 296 516 Total liabilities, subordinated notes and debentures and equity capital 67,065 16,878 6,248 6,948 7,399 See note at end of table. 55 18 3 5 14 Table B-19—Continued Domestic assets, liabilities and capital accounts of national banks, December 3 1 , 1979 (Dollar amounts in millions) Maryland Number of banks Massachusetts Michigan Minnesota Mississippi Missouri Montana 31 71 123 205 38 98 56 $ 852 323 102 767 22 $ 2,227 1,867 350 923 187 $ 2,800 1,759 556 3,130 161 $ 2,471 782 592 1,950 458 $ 616 347 165 617 30 $ 2,768 569 412 1,227 198 $ 286 161 62 345 11 1,213 3,327 5,606 3,782 1,159 2,406 579 138 799 7,997 128 7,869 1,199 15,138 144 14,994 621 10,057 100 9,957 280 2,712 30 2,683 2,057 6,557 74 6,483 125 1,607 15 1,592 138 444 36 1,089 26,306 219 229 37 681 17,996 2 104 5 76 4,923 85 175 15 359 6 51 2 38 6,684 195 246 10 1,406 16,079 14,348 2,678 1,704 3,069 11 353 127 50 4,120 4,992 36 715 940 129 5,254 12,597 57 2,086 526 415 4,084 7,327 25 928 886 148 1,240 2,118 7 557 207 18 3,395 4,129 66 699 1,483 70 612 1,454 4 211 48 22 5,315 10,932 20,935 13,398 4,146 9,842 2,350 1,987 3,328 367 91 135 22 317 5,377 5,555 2,730 257 99 24 914 6,519 14,416 2,132 418 74 42 859 1,568 2,578 294 27 37 19 63 4,961 4,881 2,666 188 186 35 559 732 1,618 59 9 3 5 47 6,248 14,956 24,460 5,146 8,252 1,838 260 333 10 876 16,715 4,585 13,477 2,473 3 36 107 145 15 31 19 0 61 96 276 0 347 579 814 1,739 0 304 340 492 1,137 0 48 267 9 4 144 232 461 433 0 162 414 511 1,087 323 840 67 68 51 186 6,684 16,079 26,306 17,996 4,923 14,348 2,678 Assets Cash and due from depository institutions U.S. Treasury securities Obligations of other U.S. Government agencies and corporations Obligations of states and political subdivisions All other securities Total securities Federal funds sold and securities purchased under agreements to resell Total loans (excluding unearned income) Allowance for possible loan losses Net Loans Lease financing receivables Bank premises, furniture and fixtures, and other assets representing bank premises Real estate owned other than bank premises All other assets Total assets Liabilities Demand deposits of individuals, partnerships and corporations Time and savings deposits of individuals, partnerships and corporations Deposits of U.S. government Deposits of states and political subdivisions All other deposits Certified and officers' checks Total deposits in domestic offices Demand deposits Time and savings deposits Federal funds purchased and securities sold under agreements to repurchase . . . Interest-bearing demand notes issued to U.S. Treasury Other liabilities for borrowed money Mortgage indebtedness and liability for capitalized leases All other liabilities Total liabilities Subordinated notes and debentures 3,998 39 3,959 58 113 8 344 Equity Capital Preferred stock Common stock Surplus Undivided profits and reserve for contingencies and other capital reserves Total equity capital Total liabilities, subordinated notes and debentures and equity capital See note at end of table. Table B-19—Continued Domestic assets, liabilities and capital accounts of national banks, December 31, 1979 (Dollar amounts in millions) Nebraska Number of banks Assets Cash and due from depository institutions .... U.S. Treasury securities Obligations of other U.S. Government agencies and corporations Obligations of states and political subdivisions All other securities Total securities New Hampshire Nevada New Jersey New Mexico New York North Carolina 117 4 36 93 40 116 26 $1,051 285 228 645 63 $ 314 163 148 274 4 $ 212 131 23 173 3 $ 2,411 1,562 1,090 2,874 298 5,824 $ 417 226 125 386 7 $ 1,920 864 423 1,473 270 744 $14,360 3,208 1,358 4,117 3,283 11,966 770 2,288 49,775 910 48,865 870 7,470 87 1,221 588 330 Federal funds sold and securities purchased under agreements to resell Total loans (excluding unearned income) Allowance for possible loan losses Net Loans 406 3,425 37 3,389 27 1,514 15 1,499 51 976 11 965 11,481 125 11,356 248 1,765 19 1,746 Lease financing receivables Bank premises, furniture and fixtures, and other assets representing bank premises Real estate owned other than bank premises All other assets Total assets 50 95 2 104 6,317 54 66 2 31 2,580 32 2 17 131 360 46 416 4 87 4 44 635 1,105 268 13,448 122 268 12 874 1,609 21,313 3,293 92,936 14,479 1,542 2,788 7 350 512 36 5,234 868 1,121 6 191 2 35 2,224 404 810 5 129 20 16 1,384 5,502 10,493 53 1,338 313 222 18,011 24,712 212 1,929 10,947 1,068 56,879 3,896 5,541 29 808 396 90 17,922 900 1,310 8 530 54 30 2,832 2,159 3,075 428 50 32 12 87 958 1,266 64 20 36 8 28 6,573 11,349 1,292 199 65 6 374 1,048 1,784 137 23 4 17 43 28,411 28,468 13,224 766 2,605 101 10,401 5,843 2,379 501 883 59 15 2 4 20 1,484 19,859 3,056 83,976 4,557 6,204 1,642 204 70 74 666 13,417 28 0 2 58 20 347 149 82 107 258 447 0 47 64 91 201 0 15 47 61 122 2 307 450 637 2 60 89 68 1,396 218 1 1,974 2,625 4,013 8,614 0 212 259 442 914 6,317 2,580 1,609 21,313 3,293 92,936 14,479 Liabilities Demand deposits of individuals, partnerships and corporations Time and savings deposits of individuals, partnerships and corporations Deposits of U S government . . Deposits of states and political subdivisions .. All other deposits Certified' and officers' checks Total deposits in domestic offices Demand deposits Time and savings deposits Federal funds purchased and securities sold under agreements to repurchase . . . Interest-bearing demand notes issued to U S Treasury . .. ... Other liabilities for borrowed money . Mortgage indebtedness and liability for capitalized leases All other liabilities Total liabilities Subordinated notes and debentures Equity Capital Preferred stock . ... Common stock . Surplus Undivided profits and reserve for contingencies and other capital reserves Total equity capital Total liabilities, subordinated notes and debentures and equity capital See note at end of table. 3,030 7,383 10,760 Table B-19—Continued Domestic assets, liabilities and capital accounts of national banks, December 31, 1979 (Dollar amounts in millions) North Dakota Number of banks Ohio Oklahoma Pennsylvania Rhode Island Oregon South Carolina 41 177 190 6 223 5 18 $ 233 112 50 246 7 $ 3,986 2,237 1,276 4,443 284 $ 2,112 1,104 103 1,833 116 $1,058 270 53 1,104 18 $ 5,681 3,124 2,682 4,556 1,215 $ 366 316 175 438 44 $ 650 240 136 415 43 415 8,240 3,156 1,445 11,577 973 834 24 2,251 28,790 340 28,450 31 2,458 23 2,434 265 1,954 24 Assets Cash and due from depository institutions U.S. Treasury securities Obligations of other U.S. Government agencies and corporations Obligations of states and political subdivisions All other securities Total securities Federal funds sold and securities purchased under agreements to resell Total loans (excluding unearned income) Allowance for possible loan losses Net Loans 1,296 11 1,285 1,338 16,987 189 16,797 1,049 6,568 72 6,496 291 5,202 48 5,154 Lease financing receivables Bank premises, furniture and fixtures, and other assets representing bank premises Real estate owned other than bank premises All other assets Total assets 2 40 2 33 2,035 252 564 16 1,603 32,797 30 192 10 210 13,255 39 174 10 825 8,995 290 610 59 2,853 51,769 109 69 7 269 4,259 515 1,124 4 107 16 19 7,699 15,091 111 1,753 492 258 3,691 5,145 43 1,368 676 133 10,743 23,019 53 2,540 1,273 351 700 2,127 5 171 37 25 1,785 25,405 11,055 2,135 4,117 10 728 104 70 7,164 37,979 3,065 1,554 1,272 10 206 59 26 3,128 576 1,208 37 9 15 3 27 9,062 16,343 3,372 459 185 33 906 4,672 6,383 824 123 37 3 233 1,778 1,350 259 70 29 6 62 30,359 12,275 12,503 25,476 5,071 452 815 61 3,774 48,152 814 2,251 461 52 75 27 320 1,876 2,470 4,695 590 105 42 13 416 8,330 4,000 3,554 16 41 68 165 217 17 13 0 36 41 66 1 173 227 510 911 1 93 149 257 500 11 529 1,252 1,608 3,400 0 30 89 123 242 0 43 82 163 288 13,255 8,995 51,769 4,259 3,855 1,931 16 94 4 61 3,855 Liabilities Demand deposits of individuals, partnerships and corporations . . Time and savings deposits of individuals, partnerships and corporations Deposits of U.S. government Deposits of states and political subdivisions All other deposits Certified and officers' checks Total deposits in domestic offices Demand deposits Time and savings deposits Federal funds purchased and securities sold under agreements to repurchase . . . Interest-bearing demand notes issued to U.S. Treasury Other liabilities for borrowed money Mortgage indebtedness and liability for capitalized leases All other liabilities Total liabilities Subordinated notes and debentures Equity Capital Preferred stock Common stock Surplus Undivided profits and reserve for contingencies and other capital reserves 7~ofa/ equity capital 143 0 496 903 999 2,398 7"ofa/ liabilities, subordinated notes and debentures and equity capital 2,035 32,797 See note at end of table. Table B-19—Continued Domestic assets, liabilities and capital accounts of national banks, December 3 1 , 1979 (Dollar amounts in millions) South Dakota Tennessee Texas Utah Vermont Washington Virginia 33 69 615 11 12 72 21 $ 301 123 84 317 8 $ 1,601 761 464 1,017 70 $ 9,748 3,684 1,642 7,711 247 $ 467 142 70 231 17 $ 52 36 9 65 7 $ 1,179 439 414 1,483 34 532 2,312 13,284 460 117 2,370 $ 2,490 382 203 1,149 38 1,772 Federal funds sold and securities purchased under agreements to resell Total loans (excluding unearned income) Allowance for possible loan losses Net Loans 62 862 4,377 271 14 1,796 16 1,780 5,583 70 5,512 34,200 379 33,821 1,890 20 1,871 350 3 347 440 6,271 67 6,204 472 10,902 110 10,792 Lease financing receivables Bank premises, furniture and fixtures, and other assets representing bank premises Real estate owned other than bank premises All other assets Total assets 2 55 3 45 2,779 55 217 25 287 197 1,074 53 2,640 65,195 48 43 8 55 0 10 6 546 548 369 19 541 3,222 34 296 13 197 10,734 Liabilities Demand deposits of individuals partnerships and corporations Time and savings deposits of individuals, partnerships and corporations Deposits of U.S. government Deposits of states and political subdivisions All other deposits Certified and officers' checks Total deposits in domestic offices 610 1,630 7 170 28 23 18,284 22,523 151 5,748 3,491 562 808 1,524 4 286 58 27 2,684 5,397 21 632 111 66 8,912 13,511 4,984 8,526 1,291 209 159 29 722 Number of banks Assets Cash and due from depository institutions U S Treasury securities Obligations of other U.S Government agencies and corporations Obligations of states and political subdivisions All other securities Total securities Demand deposits Time and savings deposits Federal funds purchased and securities sold under agreements to repurchase . . . Interest-bearing demand notes issued to U.S. Treasury Other liabilities for borrowed money Mortgage indebtedness and liability for capitalized leases All other liabilities Total liabilities 10,873 2,584 4,814 55 763 584 71 8,871 17,002 4,321 7,183 25 1,401 433 147 50,758 2,707 95 348 1 41 1 5 492 930 37 24 16 251 22,663 28,096 5,910 472 298 108 2,889 931 1,776 185 31 15 112 380 2 2 7 69 6 2,983 5,929 527 118 84 64 223 2,569 10,129 60,437 3,008 508 9,928 15,922 2,469 700 1,768 33 13 7 8 39 3,430 5,441 Subordinated notes and debentures Equity Capital Preferred stock Common stock Surplus Undivided profits and reserve for contingencies and other capital reserves Total equity capital 22 30 482 46 3 60 124 0 50 56 81 188 0 144 224 345 0 891 1,121 2,265 0 35 65 68 0 130 229 388 6 204 248 498 713 4,276 168 0 7 9 19 35 746 956 Total liabilities, subordinated notes and debentures and equity capital 2,779 10,873 65,195 3,222 546 10,734 17,002 See note at end of table. Table B-19—Continued Domestic assets, liabilities and capital accounts of national banks, December 3 1 , 1979 (Dollar amounts in millions) West Virginia Number of banks Wisconsin District of Columbia nonnational* Wyoming 107 131 47 1 $ 512 422 464 740 18 $ 276 147 89 261 5 $ 3 12 6 3 2 1,644 $ 1,274 788 329 1,121 100 2,338 502 23 384 2,724 27 2,697 370 6,304 60 6,244 123 1,120 12 5 27 1,109 27 10 127 2 56 44 227 56 227 3 40 2 33 0 1 5,431 10,780 2,088 60 1,090 3,007 9 252 65 41 2,364 4,665 19 645 415 83 598 937 11 241 41 18 19 30 1 4,465 8,191 1,846 50 1,268 3,197 727 1,119 28 4 15 4 27 20 30 5 0 0 0 4,959 2,923 5,268 1,273 186 60 7 342 10,059 1,923 56 7 55 9 — 0 74 156 235 0 11 46 98 0 156 1 2 4 2,088 60 Assets Cash and due from depository institutions U.S. Treasury securities Obligations of other U.S. Government agencies and corporations Obligations of states and political subdivisions All other securities Total securities Federal funds sold and securities purchased under agreements to resell Total loans (excluding unearned income) Allowance for possible loan losses Net Loans Lease financing receivables Bank premises, furniture and fixtures, and other assets representing bank premises Real estate owned other than bank premises All other assets Total assets 1 Liabilities Demand deposits of individuals, partnerships and corporations Time and savings deposits of individuals, partnerships and corporations Deposits of U.S. government Deposits of states and political subdivisions AH other deposits Certified and officers' checks Total deposits in domestic offices Demand deposits Time and savings deposits Federal funds purchased and securities sold under agreements to repurchase . . . Interest-bearing demand notes issued to U.S. Treasury Other liabilities for borrowed money Mortgage indebtedness and liability for capitalized leases All other liabilities Total liabilities Subordinated notes and debentures 385 20 19 7 63 Equity Capital Preferred stock Common stock Surplus Undivided profits and reserve for contingencies and other capital reserves Total equity capital 465 0 151 247 267 666 Total liabilities, subordinated notes and debentures and equity capital 5,431 10,780 * Nonnational banks in the District of Columbia are supervised by the Comptroller of the Currency NOTE: Dashes indicate amounts of less than $500,000. Figures may not add to totals because of rounding. Table B-20 Domestic office loans of national banks, by states, December 31, 1979 (Dollar amounts in millions) Loans to purchase or carry securities Loans to farmers Commercial and industrial loans Personal loans to individuals Other loans Total loans less unearned income $25,580 $6,968 $14,684 $155,073 $104,575 $11,369 $442,986 98 29 99 288 51 4,088 164 138 0 352 306 61 720 91 2 0 8 33 1,705 294 1,354 843 22,015 1,867 748 6 1,063 2,380 1,922 201 1,765 747 15,149 1,592 585 15 837 3,680 125 11 179 76 1,293 119 57 5,347 759 5,327 2,818 73,673 5,705 2,406 51 3,774 10,354 1,316 49 633 8,636 3,748 1,023 693 1,425 1,645 285 162 0 31 4,327 270 45 64 135 139 2 27 0 4 1,401 57 55 87 21 49 1,912 33 608 5,892 2,435 687 873 1,355 1,483 184 153 218 1,004 266 747 737 172 49 4 1,737 22 624 18,884 2,216 831 906 1,181 1,938 203 21 1,238 174 69 61 76 123 9 5,081 103 2,102 40,856 8,873 3,427 3,358 4,208 5,213 682 4,095 8,158 15,416 10,201 2,829 6,666 1,688 3,481 1,592 1,019 1,583 1,585 6,137 2,791 978 1,603 457 459 760 382 110 746 868 407 67 489 5 74 21 4 54 40 77 376 33 175 2 91 2 27 59 126 683 74 300 252 1,206 19 2 1,027 4,112 4,124 3,665 695 2,389 426 766 302 291 1,204 1,435 3,709 1,806 922 1,508 523 808 485 329 90 181 375 472 61 202 23 77 4 12 3,998 7,997 15,138 10,057 2,712 6,557 1,607 3,425 1,514 976 New Jersey New Mexico . . . New York North Carolina . . North Dakota . . . Ohio Oklahoma Oregon Pennsylvania . . . Rhode Island . . . 11,879 1,837 50,596 7,741 1,318 17,719 6,701 5,254 29,674 2,504 5,345 488 8,674 1,415 336 5,954 1,708 1,909 9,762 966 285 28 4,972 302 1 459 225 329 2,481 96 20 4 1,706 72 2 96 146 24 266 19 8 126 369 115 280 256 606 203 206 2,993 555 24,216 2,948 409 4,626 2,294 1,658 9,625 963 3,074 618 8,924 2,709 278 6,075 1,512 1,077 6,558 380 155 17 1,734 180 13 253 211 54 776 80 11,481 1,765 49,775 7,470 1,296 16,987 6,568 5,202 28,790 2,458 South Carolina South Dakota . Tennessee Texas Utah Vermont Virginia Washington . . . West Virginia . . Wisconsin Wyoming 2,044 1,835 5,817 35,011 1,924 359 6,585 10,967 2,936 6,431 1,154 417 437 1,793 7,516 830 189 2,762 2,841 1,295 2,498 341 15 1 151 1,811 21 5 3 81 843 9 37 42 11 74 3 631 446 1,803 14,600 602 78 1,284 3,939 507 1,911 367 906 369 1,741 7,438 392 78 2,198 2,835 1,068 1,372 291 39 15 164 1,434 29 7 130 211 35 152 14 1,954 1,796 5,583 34,200 81 599 9 265 1 31 564 84 1,369 40 8 93 500 12 159 138 3,867 1,459 353 1,069 840 138 3,801 Total loans, gross Loans secured by real estate Loans to financial institutions $454,238 $135,989 Alabama Alaska Arizona Arkansas California Colorado Connecticut Delaware District of Columbia . Florida 5,600 784 5,643 2,891 75,423 5,814 2,466 53 3,839 10,795 1,622 277 1,661 983 29,810 1,482 921 32 1,441 4,102 Georgia . Hawaii . . Idaho . . . Illinois . . Indiana . Iowa . . . . Kansas . Kentucky Louisiana Maine . . 5,347 105 2,138 41,382 9,167 3,458 3,421 4,367 5,426 686 Maryland Massachusetts . Michigan Minnesota Mississippi Missouri Montana Nebraska Nevada New Hampshire All national banks . . 388 130 2,348 500 15 1 49 42 138 247 1,890 350 6,271 10,902 2,724 6,304 1,120 District of Columbia air * Includes national and nonnational banks in the District of Columbia, all of which are supervised by the Comptroller of the Currency. NOTE: Dashes indicate amounts of less than $500,000. 182 Table B-21 Outstanding balances, credit cards and related plans of national banks, December 31, 1979 (Dollar amounts in thousands) Credit cards and other related credit plans Total number of national banks All national banks , Outstanding volume Number of national banks 4,448 1,830 $21,528,485 Alabama Alaska Arizona Arkansas California Colorado Connecticut Delaware District of Columbia . . . Florida Georgia 99 6 3 68 42 139 19 6 16 221 63 23 4 2 9 34 108 12 1 13 95 28 172,182 42,385 336,295 54,495 4,053,174 392,420 151,281 5 176,397 497,010 383,304 Hawaii Idaho Illinois Indiana Iowa Kansas Kentucky Louisiana Maine Maryland Massachusetts Michigan Minnesota Mississippi Missouri Montana Nebraska Nevada 3 7 410 119 99 148 79 55 14 31 71 123 205 38 98 56 117 4 2 4 159 73 42 21 38 15 13 13 56 69 124 4 43 27 30 3 3,750 72,007 1,725,970 251,150 81,179 103,938 153,610 171,474 27,889 362,491 345,100 716,267 145,736 63,985 399,535 14,000 182,821 55,218 New Hampshire . New Jersey New Mexico New York North Carolina . North Dakota . . , Ohio Oklahoma Oregon Pennsylvania . . . Rhode Island . . . 36 93 40 116 26 41 177 190 6 223 5 25 64 11 58 23 15 114 33 3 58 4 34,883 296,439 55,250 4,743,427 South Carolina South Dakota Tennessee Texas Utah Vermont Virginia Washington West Virginia Wisconsin Wyoming 18 33 69 615 11 12 72 21 107 131 47 12 8 13 140 4 2 26 11 20 101 20 139,474 316,723 8,373 17 14 176,559 District of Columbia — all* 404,095 9,023 814,009 198,710 258,842 921,727 74,596 5,395 250,818 866,028 74,289 5,045 311,916 554,515 49,839 * Includes national and nonnational banks in the District of Columbia, all of which are supervised by the Comptroller of the Currency. 183 Table B-22 Income and expenses of foreign and domestic offices and subsidiaries of national banks, by states, year ended December 3 1 , 1979 (Dollar amounts in millions) Total United States Number of banks Operating income: Interest and fees on loans Interest on balances with depository institutions Income on federal funds sold and securities purchased under agreements to resell Interest on U.S. Treasury securities and on obligations of other U.S. government agencies and corporations Interest on obligations of states and political subdivisions in the U.S Income from all other securities (including dividends on stock) Income from lease financing Income from fiduciary activities Service charges on deposit accounts Other service charges, commissions, and fees Other operating income Total operating income Operating expenses: Salaries and employee benefits Interest on time certificates of $100,000 or more (issued by domestic offices) . . Interest on deposits in foreign offices Interest on other deposits Expense of federal funds purchased and securities sold under agreements to repurchase Interest on demand notes issued to the U.S. Treasury and on other borrowed money Interest on subordinated notes and debentures Occupancy expense of bank premises, net, and furniture and equipment expense Provision for possible loan losses Other operating expenses Total operating expenses Income before income taxes and securities gains or losses Applicable income taxes Income before securities gains or losses Securities gains (losses), gross Applicable income taxes Securities gains (losses), net Alabama Arizona Alaska Arkansas California Colorado 68 42 139 $586.8 7.3 $284.8 1.2 $11,140.7 1,623.4 $698.2 .6 7.5 26.7 41.6 392.3 34.9 61.3 80.5 2.5 1.5 17.4 24.6 28.9 15.5 14.8 8.7 .3 1.1 1.5 6.5 6.9 2.0 59.9 35.5 .6 4.1 12.4 31.4 15.7 7.8 38.7 33.4 1.3 1.2 5.2 15.5 9.7 10.5 628.5 264.3 168.3 165.4 152.4 198.4 394.1 368.3 52.6 50.2 .9 6.1 22.3 26.7 27.6 19.5 89,886.1 918.4 150.2 788.2 443.0 15,496.2 939.5 12,403.7 10,723.5 16,903.5 15,737.0 152.5 153.3 0 235.1 38.1 22.9 0 20.9 149.9 88.5 1.8 210.8 78.1 48.0 0 131.3 2,139.7 1,676.9 4,100.5 2,563.5 167.8 151.3 1.9 178.1 8,498.4 53.4 10.7 44.4 42.4 984.8 72.7 2,014.7 265.4 3,571.3 2,251.7 7,356.2 12.5 4.3 47.3 46.1 104.4 16.5 5.2 39.6 29.1 85.9 4.1 2.3 27.9 11.5 48.1 379.0 14.5 548.4 393.8 1,001.8 13.0 3.3 49.2 33.8 122.2 79,725.5 808.9 2.3 .1 13.1 3.9 16.9 128.9 671.8 393.9 13,802.9 793.3 10,160.6 2,753.7 7,406.8 -349.4 -163.2 109.6 12.2 97.3 21.3 6.3 15.0 116.5 38.2 78.2 49.1 5.9 43.2 -1.0 -.2 1,693.3 629.9 1,063.4 146.2 40.2 106.0 -3.4 -1.6 -186.2 -1.0 7,220.7 26.0 96.3 .1 96.4 75.6 0 42.4 0 1,054.3 104.2 .2 15.0 75.6 42.4 1,054.3 104.4 36.0 0 1.8 0 20.4 0 9.9 0 375.1 0 34.9 0 4,448 99 $61,801.9 6,931.2 $647.3 4.5 $100.4 .7 3,551.2 34.4 5,367.2 3,748.2 754.9 730.5 1,345.0 1,316.1 2,453.0 1,887.0 -5.1 -2.5 -1.9 -.9 -2.6 15.0 0 -19.0 -9.8 -9.1 -1. Income before extraordinary items Extraordinary items, net Net income 7,246.7 Cash dividends declared on common stock Cash dividends declared on preferred stock Total cash dividends declared 2,648.2 1.5 2,649.7 36.0 20.4 9.9 375.1 34.9 Recoveries credited to allowance for possible loan losses Losses charged to allowance for possible loan losses Net loan losses 756.6 2,296.5 9.5 51.0 2.0 5.7 8.8 17.7 116.9 366.0 7.7 35.4 1,539.9 41.5 3.7 8.9 3.3 11.8 8.5 249.1 27.7 Ratio to total operating income: Interest on deposits Other interest expense Salaries and employee benefits Other non-interest expense Total operating expenses 48.2 12.0 13.8 14.7 88.7 42.3 7.6 16.6 21.5 88.1 29.2 8.7 25.4 22.6 85.8 38.2 8.4 19.0 19.6 85.2 40.5 11.0 17.6 19.8 88.9 53.8 8.9 13.8 12.5 89.1 Ratio of net income to total equity capital (end of period) 13.3 13.1 11.2 17.8 10.8 15.9 See note at end of table. 35.3 9.5 17.9 21.8 84.4 15.7 Table B-22—Continued Income and expenses of foreign and domestic offices and subsidiaries of national banks, by states, year ended December 3 1 , 1979 (Dollar amounts in millions) Connecticut District of Columbia Delaware Florida Georgia Hawaii Idaho 19 6 16 221 63 3 7 $267.4 44.6 $ 5.0 .1 $445.0 60.9 $1,125.8 38.5 $627.3 32.7 $11.0 $240.2 2.5 7.9 1.0 22.8 151.9 85.5 .4 17.2 23.3 18.5 2.4 1.1 16.4 5.2 15.9 1.8 1.0 .2 0 0 0 .2 .1 .1 50.8 42.1 1.7 2.7 18.1 14.3 8.2 5.4 276.8 122.4 11.3 5.3 46.5 56.1 80.6 28.2 55.4 40.6 3.8 7.0 22.6 39.5 28.4 76.4 2.7 1.2 0 .3 1.0 .5 28.6 17.1 .7 .7 2.5 10.6 8.7 1.9 404.5 7.6 672.1 1,943.5 1,019.3 17.2 330.8 79.6 34.2 24.6 86.0 1.4 .4 0 2.9 110.1 127.2 99.5 76.5 335.8 187.7 7.5 489.9 201.2 103.8 19.2 156.0 4.4 3.9 0 3.4 60.8 39.1 0 104.4 51.8 0 61.0 155.8 138.7 .1 17.7 10.2 1.0 25.5 10.5 38.6 0 0 .4 .1 1.0 6.5 .6 33.5 17.4 47.3 14.2 2.1 100.8 49.5 309.3 11.9 4.6 57.0 50.0 143.9 .1 .1 1.6 362.2 6.2 579.6 1,652.5 886.3 2.7 16.2 2.7 1.9 13.7 7.1 34.1 281.5 Income before income taxes and securities gains or losses Applicable income taxes Income before securities gains or losses 42.4 12.2 30.2 92.5 26.6 65.9 291.0 74.7 216.3 133.0 29.1 103.9 1.0 .5 .5 49.3 14.9 34.3 Securities gains (losses), gross Applicable income taxes Securities gains (losses), net -1.6 -.8 -.8 1.4 .5 .9 -.1 -1.8 -.8 -.1 -1.0 -15.9 -7.2 -8.7 -5.6 -2.2 -3.4 -2.2 -1.1 -1.1 Income before extraordinary items Extraordinary items, net 29.4 .1 29.5 .9 0 207.7 7.1 100.4 4.7 .9 64.9 .3 65.2 z — 214.7 105.1 .8 12.7 0 12.7 .2 0 .2 23.3 .1 23.4 91.0 0 91.0 17.9 0 0 0 17.9 0 Number of banks Operating income: Interest and fees on loans Interest on balances with depository institutions Income on federal funds sold and securities purchased under agreements to resell Interest on U.S. Treasury securities and on obligations of other U.S. government agencies and corporations Interest on obligations of states and political subdivisions in the U.S Income from all other securities (including dividends on stock) Income from lease financing Income from fiduciary activities Service charges on deposit accounts Other service charges, commissions, and fees Other operating income Total operating income Operating expenses: Salaries and employee benefits Interest on time certificates of $100,000 or more (issued by domestic offices) . . Interest on deposits in foreign offices Interest on other deposits Expense of federal funds purchased and securities sold under agreements to repurchase Interest on demand notes issued to the U.S. Treasury and on other borrowed money Interest on subordinated notes and debentures Occupancy expense of bank premises, net, and furniture and equipment expense Provision for possible loan losses Other operating expenses Total operating expenses Net income Cash dividends declared on common stock Cash dividends declared on preferred stock Total cash dividends declared ... .5 .4 33.2 0 33.2 10.7 0 10.7 Recoveries credited to allowance for possible loan losses Losses c h a r g e d to allowance for possible loan losses 3.1 9.6 4.4 17.9 22.6 59.0 14.9 54.8 .5 .7 2.9 7.9 13.5 36.4 39.9 .2 5.0 6.5 .1 .1 Ratio to total operating income: Interest on deposits Other interest expense Salaries and employee benefits Other non-interest expense Total operating'expenses 35.8 15.6 19.7 18.4 89.5 43.4 0 18.4 19.7 81.6 45.1 10.1 16.4 14.6 86.2 35.3 8.9 17.3 23.6 85.0 27.4 15.2 19.7 24.6 87.0 42.4 1.7 25.6 25.0 94.2 43.4 6.7 18.4 16.6 85.1 Ratio of net income to total equity capital (end of period) 12.3 11.3 13.2 13.0 14.7 8.0 14.9 Net loan losses See note at end of table. oo i Table B-22—Continued 00 00 Income and expenses of foreign and domestic offices and subsidiaries of national banks, by states, year ended December 31, 1979 (Dollar amounts in millions) Iowa Indiana Illinois Number of banks Kansas Kentucky Louisiana Maine 410 119 99 148 79 55 14 $5,503.2 968.6 $967.6 48.8 $350.7 2.6 $364.5 .7 $448.1 3.7 $595.9 8.5 $76.1 .5 248.6 74.1 34.1 48.0 36.7 78.5 5.0 440.3 346.3 70.9 20.4 123.0 58.9 184.8 168.1 159.0 93.0 14.3 12.4 28.9 27.1 31.5 19.0 45.4 35.0 1.6 .7 9.1 9.9 19.1 3.9 69.7 37.1 1.8 .5 8.9 13.1 13.0 6.5 58.2 40.0 .7 8.8 4.9 11.8 18.4 6.5 129.6 52.3 1.8 4.2 9.6 23.0 26.1 6.5 10.1 7.3 .2 0 3.0 2.2 3.8 1.0 8,133.0 1,475.6 512.0 563.7 637.8 936.1 109.2 809.3 1,153.9 2,076.4 1,144.6 224.2 181.8 13.7 431.0 73.9 38.7 1.7 181.8 83.8 74.7 0 166.8 100.3 81.7 11.4 177.2 141.6 192.9 6.7 178.9 22.9 9.3 0 34.6 1,169.6 156.6 45.9 48.3 43.2 86.5 6.2 162.0 10.0 239.0 196.1 464.1 21.2 2.9 77.9 32.6 139.3 1,281.0 6.0 2.6 23.0 10.0 56.1 439.6 6.8 2.0 26.7 11.7 53.9 474.8 10.5 1.1 34.5 20.9 63.9 544.8 5.7 3.0 53.2 26.9 87.3 782.8 1.4 .2 7.3 4.2 12.8 99.0 194 6 39.3 155.3 -2.8 -1.3 72 3 15.7 56.6 -3.9 -1.8 -1.5 -2.1 88 9 22.0 66.9 -3.5 -1.5 -2.1 93 0 20.5 72.4 Securities gains (losses), net 708 0 145.2 562.9 -24.1 -9.8 -14.4 153 3 42.1 111.2 -9.4 -4.3 -5.1 102 .9 9.3 -.2 -.1 -.1 Income before extraordinary items Extraordinary items, net 548.5 1.7 153.8 .2 64.9 .2 70.5 550.1 154.0 54.5 .2 54.7 65.1 70.5 106.1 .3 106.4 9.2 .2 9.4 178 0 .1 61 5 61.5 20 5 0 20.5 142 0 14.2 29 3 .1 178.1 174 0 17.4 41 0 4.1 Operating income: Interest and fees on loans Interest on balances with depository institutions Income on federal funds sold and securities purchased under agreements to resell Interest on U.S. Treasury securities and on obligations of other U.S. government agencies and corporations Interest on obligations of states and political subdivisions in the U.S Income from all other securities (including dividends on stock) Income from lease financing Income from fiduciary activities Service charges on deposit accounts . . Other service charges, commissions, and fees Other operating income Total operating income Operating expenses: Salaries and employee benefits Interest on time certificates of $100,000 or more (issued by domestic offices) . . Interest on deposits in foreign offices Interest on other deposits Expense of federal funds purchased and securities sold under agreements to repurchase Interest on demand notes issued to the U.S. Treasury and on other borrowed money Interest on subordinated notes and debentures Occupancy expense of bank premises, net, and furniture and equipment expense Provision for possible loan losses Other operating expenses Total operating expenses Income before income taxes and securities gains or losses Applicable income taxes Income before securities gains or losses Securities gains (losses), gross Applicable income taxes Net income Cash dividends declared on common stock Cash dividends declared on preferred stock Total cash dividends declared 7,424.9 -3.6 -1.6 -2.0 29.4 Recoveries credited to allowance for possible loan losses Losses c h a r g e d to allowance for possible loan losses 66.7 223.0 11.6 35.5 2.8 9.6 4.8 14.0 4.7 19.8 9.8 28.3 1.3 5.5 156.3 23.9 6.8 9.2 15.1 18.5 4.2 Ratio to total operating income: Interest on deposits Other interest expense Salaries and employee benefits Other non-interest expense Total operating expenses 53.8 16.5 10.0 11.1 91.3 42.5 12.2 15.2 16.9 86.8 43.4 10.6 14.4 17.4 85.9 42.8 10.1 14.9 16.4 84.2 42.4 8.6 15.7 18.7 85.4 40.4 10.2 15.1 17.9 83.6 40.2 7.1 21.0 22.3 90.7 Ratio of net income to total equity capital (end of period) 12.1 13.2 13.1 12.5 13.7 13.1 11.5 Net loan losses See note at end of table. oo CO Table B-22—Continued 8 Income and expenses of foreign and domestic offices and subsidiaries of national banks, by states, year ended December 3 1 , 1979 (Dollar amounts in millions) Maryland Number of banks Operating income: Interest and fees on loans Interest on balances with depository institutions Income on federal funds sold and securities purchased under agreements to resell Interest on U.S. Treasury securities and on obligations of other U.S. government agencies and corporations Interest on obligations of states and political subdivisions in the U.S Income from all other securities (including dividends on stock) Income from lease financing Income from fiduciary activities Service charges on deposit accounts Other service charges, commissions, and fees Other operating income Total operating income Operating expenses: Salaries and employee benefits Interest on time certificates of $100,000 or more (issued by domestic offices) . Interest on deposits in foreign offices Interest on other deposits Expense of federal funds purchased and securities sold under agreements to repurchase Interest on demand notes issued to the U.S. Treasury and on other borrowed money Interest on subordinated notes and debentures Occupancy expense of bank premises, net, and furniture and equipment expense Provision for possible loan losses Other operating expenses Total operating expenses Income before income taxes and securities gains or losses Applicable income taxes Income before securities gains or losses Securities gains (losses), gross Applicable income taxes Securities gains (losses), net Income before extraordinary items Extraordinary items, net Net income Massachusetts Michigan Minnesota Mississippi Missouri Montana 31 71 123 205 38 98 56 $444.5 25.0 $1,438.6 277.4 $1,723.0 130.4 $1,114.6 52.4 $289.7 2.9 $765.7 10.8 $178.6 .4 28.6 94.5 105.8 56.6 21.4 168.0 8.4 33.4 36.4 .8 4.1 7.9 15.3 11.8 8.0 615.9 149.3 43.7 50.9 51.8 65.3 18.4 67.0 49.2 178.7 116.1 101.8 2.4 76.5 60.6 2.6 6.9 2,306.0 2,494.5 14.4 32.6 20.1 54.7 54.5 1,620.2 39.4 32.2 1.5 .2 3.6 11.6 14.7 4.3 421.6 16.4 159.9 1,200.0 115.3 56.3 37.4 144.2 334.7 240.7 626.5 174.1 407.0 321.7 142.7 711.8 206.0 264.4 93.2 339.9 64.4 70.7 0 118.8 180.6 52.4 187.1 35.3 25.9 0 85.1 61.5 317.3 202.5 225.3 34.1 262.7 8.4 15.3 .3 35.8 20.0 57.6 79.3 2.7 37.7 8.8 123.6 52.1 218.9 44.3 12.1 46.9 33.5 148.8 1,414.4 3.4 1.1 22.2 13.1 43.6 371.5 50.1 6.6 43.5 1.9 1.6 8.4 2.5 23.7 192.9 44.0 12.3 31.7 -1.1 -.5 543.8 72.0 14.4 57.7 -3.4 -1.6 -1.8 55.9 55.9 10.6 7.7 48.8 41.3 42.8 45.4 29.1 14.9 41.6 23.1 162.5 17.4 .6 .6 .4 4.8 7.0 2.2 236.9 267.6 37.4 230.2 205.8 44.9 -6.0 -3.5 -17.0 -7.8 -7.3 -3.6 22.7 1.6 53.6 25.3 113.6 1,062.0 138.0 31.5 106.4 -4.2 -1.9 -2.5 -9.2 -3.7 -2.3 -.6 116.1 .3 116.4 221.0 .1 157.2 .5 43.5 104.1 31.0 .1 221.2 157.6 43.5 104.1 31.1 92.3 69.5 177.2 2,114.4 191.7 73.1 118.6 2,226.8 160.9 Recoveries credited to allowance for possible loan losses Losses charged to allowance for possible loan losses Net loan losses Ratio to total operating income: Interest on deposits Other interest expense Salaries and employee benefits Other non-interest expense Total operating expenses Ratio of net income to total equity capital (end of period) See note at end of table. CO .. . . cpo Cash dividends declared on common stock Cash dividends declared on preferred stock Total cash dividends declared 14.7 0 14.7 48.1 0 48.1 115.0 0 115.0 48.9 0 48.9 10.1 0 10.1 49.6 .1 49.7 11.6 4.6 19.5 14.9 18.4 56.6 38.2 16.8 61.0 44.2 6.6 21.1 14.5 4.3 13.6 9.3 8.5 26.3 17.8 1.4 2.8 1.4 38.6 12.5 18.7 18.4 88.3 45.2 17.3 14.5 14.7 91.7 10.7 47.2 10.0 16.3 15.8 89.3 43.1 17.4 12.7 14.1 87.3 44.9 9.2 15.3 18.7 88.1 35.0 23.9 13.5 16.0 88.5 46.9 5.0 14.9 14.6 81.4 12.7 13.9 13.5 12.4 16.7 12.9 Table B-22—Continued CO Income and expenses of foreign and domestic offices and subsidiaries of national banks, by states, year ended December 31, 1979 (Dollar amounts in millions) Nebraska Number of banks Operating income: Interest and fees on loans Interest on balances with depository institutions Income on federal funds sold and securities purchased under agreements to resell Interest on U.S. Treasury securities and on obligations of other U.S. government agencies and corporations Interest on obligations of states and political subdivisions in the U.S Income from all other securities (including dividends on stock) Income from lease financing Income from fiduciary activities Service charges on deposit accounts Other service charges, commissions, and fees Other operating income Total operating income Operating expenses: Salaries and employee benefits Interest on time certificates of $100,000 or more (issued by domestic offices) . . Interest on deposits in foreign offices Interest on other deposits Expense of federal funds purchased and securities sold under agreements to repurchase Interest on demand notes issued to the U.S. Treasury and on other borrowed money . .. . .. . . . . . . Interest on subordinated notes and debentures Occupancy expense of bank premises, net, and furniture and equipment expense Provision for possible loan losses . .. Other operating expenses Total operating expenses Income before income taxes and securities gains or losses Applicable income taxes Income before securities gains or losses Securities gains (losses) gross Applicable income taxes Securities gains (losses), net Income before extraordinary items Extraordinary items, net Net income New Hampshire Nevada New Jersey New Mexico New York North Carolina 117 4 36 93 40 116 26 $364.3 .7 $162.9 1.5 $103.6 .8 $1,157.0 16.2 $193.8 2.8 $13,060.7 2,316.2 $858.5 132.6 37.0 6.3 6.1 63.6 17.7 308.0 11.1 42.8 34.6 1.2 4.0 9.1 9.8 25.1 10.4 24.6 14.0 .2 7.4 3.6 11.0 3.4 3.3 10.6 10.1 .4 28.5 18.7 .5 ,4 3.6 9.0 10.6 1.7 373.4 277.0 289.1 214.6 169.3 67.3 662.3 505.0 104.1 74.1 2.1 15.2 30.9 33.8 34.1 45.8 539.0 238.1 3.3 2.5 2.9 1.1 141.4 198.2 152.5 22.8 12.3 25.2 35.9 33.3 27.5 1,744.5 287.3 18,243.1 1,408.9 82.3 51.1 0 158.8 47.6 37.9 0 51.6 27.7 12.8 0 41.6 323.2 174.7 22.5 545.5 49.3 55.7 0 72.8 2,013.9 1,061.1 7,875.8 1,221.4 229.9 165.1 144.9 259 8 45.4 9.1 5.1 130.4 12.3 1,375.2 165.6 9.5 2.3 28.2 11.2 59.3 1.9 0 12.6 4.0 25.3 2.5 .1 9.6 4.2 21.2 2.0 1.8 18.0 5.9 28.6 733.9 48.1 564.4 421.7 1,219.4 448.1 190.0 124.8 18.2 4.5 105.2 35.3 189.5 1,549.0 246.4 16,534.9 18.4 10.8 64.4 34.2 130.5 1,223.4 90.8 23.3 67.6 -2.3 -.9 -1.4 48.1 14.4 33.7 195.5 11.7 183.8 40.9 10.2 30.7 1,708.3 683.7 1,024.5 -2.4 -1.1 16.6 2.3 14.3 -.4 -.2 -1.3 -.2 -5.7 -2.5 -3.2 -.7 -.1 -.6 -48.3 -26.2 -22.1 185.5 48.1 137.5 -12.4 -6.1 -6.3 32.4 0 32.4 14.1 0 14.1 180.6 .1 180.8 30.1 1,002.5 .7 1,003.2 131.1 .9 132.1 66.2 66.2 30.1 13.4 0 13.4 5.1 0 5.1 79.5 .1 79.6 8.2 0 8.2 366.3 .1 366.4 35.7 0 35.7 1.5 4.0 Net loan losses 6.5 14.2 7.7 2.5 1.1 3.1 2.0 14.0 35.8 21.8 3.0 7.3 4.3 193.6 476.0 282.4 7.8 29.0 21.2 Ratio to total operating income: Interest on deposits Other interest expense Salaries and employee benefits Other non-interest expense Total operating expenses 38.9 10.6 15.3 18.3 83.1 37.6 4.6 20.0 17.6 79.8 38.5 5.4 19.6 24.8 88.3 42.6 8.8 18.5 18.9 88.8 Ratio of net income to total equity capital (end of period) 14.8 16.1 11.6 13.0 44.7 5.6 17.2 18.3 85.8 13.8 55.7 11.8 11.0 12.1 90.6 11.6 40.4 13.8 16.3 16.3 86.8 14.5 Cash dividends declared on common stock Cash dividends declared on preferred stock Total cash dividends declared Recoveries credited to allowance for possible loan losses Losses charged to allowance for possible loan losses See note at end of table. CO CO 22.1 22.1 Table B-22—Continued CO Income and expenses of foreign and domestic offices and subsidiaries of national banks, by states, year ended December 31, 1979 (Dollar amounts in millions) North Dakota Number of banks Operating income: Interest and fees on loans Interest on balances with depository institutions Income on federal funds sold and securities purchased under agreements to resell Interest on U.S. Treasury securities and on obligations of other U.S. government agencies and corporations Interest on obligations of states and political subdivisions in the U.S Income from all other securities (including dividends on stock) Income from lease financing Income from fiduciary activities Service charges on deposit accounts Other service charges, commissions, and fees Other operating income Total operating income Operating expenses: Salaries and employee benefits Interest on time certificates of $100,000 or more (issued by domestic offices) . . Interest on deposits in foreign offices Interest on other deposits Expense of federal funds purchased and securities sold under agreements to repurchase Interest on demand notes issued to the U.S. Treasury and on other borrowed money Interest on subordinated notes and debentures Occupancy expense of bank premises, net, and furniture and equipment expense Provision for possible loan losses Other operating expenses Total operating expenses Oklahoma Ohio Oregon Pennsylvania Rhode Island South Carolina 41 177 190 $132.8 .4 $1,886.0 132.6 $758.9 5.7 $598.8 42.4 $3,297.1 324.9 $285.5 9.8 $226.2 .2 3.4 137.4 69.6 25.6 278.2 10.3 32.5 13.2 13.2 .5 95.5 26.2 54.3 .9 1.0 2.6 5.0 1.1 268.4 231.1 8.9 21.5 58.0 69.5 68.3 25.6 25.9 20.1 22.0 38.4 25.2 1.3 8.9 13.9 4.2 6.5 13.6 25.0 20.9 .2 1.5 6.6 18.5 9.8 447.6 247.1 42.3 24.4 107.9 40.4 99.5 118.5 173.3 2,907.4 1,108.0 821.1 5,027.9 417.6 350.2 25.6 11.7 0 71.3 454.7 339.4 55.2 148.9 130.1 679.7 732.7 769.7 156.3 271.6 10.3 231.6 19.3 199.0 550.1 1,050.2 58.9 96.4 29.2 78.2 87.0 20.7 .5 63.0 6.0 327.3 76.6 66.6 686.4 52.1 29.5 2.7 1.3 7.1 4.2 16.7 146.4 38.1 2.7 138.8 67.1 305.2 11.2 6.3 42.7 31.2 106.3 11.6 11.2 34.3 16.2 70.0 121.8 19.2 201.2 131.2 348.8 5.3 1.4 15.4 12.7 38.2 6.9 1.1 2,498.1 944.0 164.0 29.9 707.1 4,521.3 387.8 506.6 67.0 439.6 29.8 -.4 30.3 -9.8 -4.0 114.0 30.9 83.1 -4.3 -2.2 25.3 9.9 46.8 290.9 59.2 16.6 42.6 -42.3 -19.3 -2.0 -1.0 —8 -'3 90.6 3.1 2.0 14.6 223 4.1 14.2 30.9 13.9 18 10.2 8.5 Income before income taxes and securities gains or losses Applicable income taxes Income before securities gains or losses 26.9 6.1 20.7 Securities gains (losses), gross Applicable income taxes Securities gains (losses), net -.9 -.3 409.2 71.0 338.2 -27.5 -11.9 -.5 -15.6 -5.8 -2.1 -23.0 -1.0 -.4 Income before extraordinary items Extraordinary items, net Net income 20.2 322.6 .1 322.7 128.4 2.2 81.0 0 416.6 -.2 29.3 0 130.6 81.0 416.3 29.3 42.2 0 42.2 20.2 134.2 Cash dividends declared on common stock Cash dividends declared on preferred stock Total cash dividends declared Recoveries credited to allowance for possible loan losses Losses charged to allowance for possible loan losses . . Net loan losses Ratio to total operating income: Interest on deposits Other interest expense Salaries and employee benefits Other non-interest expense Total operating expenses Ratio of net income to total equity capital (end of period) . . See note at end of table. CO 6.9 0 34.2 30.6 0 192.5 .2 6.9 181.0 0 181.0 34.2 30.6 192.7 .6 3.3 29.5 80.3 9.5 31.2 4.6 12.6 28.5 115.8 2.7 50.8 21.7 8.0 47.9 5.8 14.8 16.2 84.5 40.0 12.7 15.6 17.6 85.9 46.3 8.5 14.1 16.3 85.2 14.1 13.5 14.3 42.4 10.9 18.1 14.7 86.1 16.2 11.5 0 11.5 12.0 0 12.0 4.0 11.0 87.3 2.6 11.2 8.6 46.4 16.5 13.5 13.5 89.9 48.8 14.1 14.1 15.9 92.9 24.0 10.7 24.8 23.4 83.1 12.2 12.1 14.6 7.0 Table B-22—Continued 8 Income and expenses of foreign and domestic offices and subsidiaries of national banks, by states, year ended December 3 1 , 1979 (Dollar amounts in millions) South Dakota Number of banks Operating income: Interest and fees on loans Interest on balances with depository institutions Income on federal funds sold and securities purchased under agreements to resell Interest on U.S. Treasury securities and on obligations of other U.S. government agencies and corporations Interest on obligations of states and political subdivisions in the U.S Income from all other securities (including dividends on stock) Income from lease financing Income from fiduciary activities Service charges on deposit accounts Other service charges, commissions, and fees Other operating income Total operating income Operating expenses: Salaries and employee benefits Interest on time certificates of $100,000 or more (issued by domestic offices) . . Interest on deposits in foreign offices Interest on other deposits Expense of federal funds purchased and securities sold under agreements to repurchase Interest on demand notes issued to the U.S. Treasury and on other borrowed money Interest on subordinated notes and debentures Occupancy expense of bank premises, net, and furniture and equipment expense Provision for possible loan losses Other operating expenses Total operating expenses Income before income taxes and securities gains or losses Applicable income taxes Income before securities gains or losses Securities gains (losses), gross Applicable income taxes Securities gains (losses), net Income before extraordinary items Extraordinary items, net Net income Tennessee Texas Utah Vermont Virginia Washington 33 69 615 11 12 72 21 $182.1 .8 $629.3 7.3 $4,089.8 458.3 $232.6 2.2 $35.9 .2 $707.2 19.8 $1,319.8 67.3 5.7 70.0 365.4 14.6 1.7 48.7 58.3 97.6 430.5 385.2 13.5 19.2 12.8 .2 2.6 3.7 10.2 9.3 3.8 311.2 3.3 3.2 .5 0 .4 69.8 74.7 49.9 58.5 2.4 54.6 26.6 50.6 38.0 27.9 14.7 17.0 .6 .3 1.3 4.4 7.1 2.2 236.1 956.1 100.5 117.5 128.4 62.0 6,161.9 34.2 21.6 0 99.7 164.5 135.4 3.7 248.2 718.2 1,253.2 703.2 1,028.0 45.4 72.2 0 64.8 4.1 95.8 676.1 2.3 1.8 9.5 6.4 21.2 4.8 2.0 57.7 29.5 101.7 58.7 35.6 194.7 154.4 519.5 200.8 843.3 5,341.8 35.3 8.3 26.9 -1.1 -.5 820.2 180.9 639.3 49.7 1.7 5.5 16.8 29.7 33.5 14.9 -.6 112.8 26.6 86.2 -2.9 -1.4 -1.5 26.4 .1 84.7 3.8 26.4 88.5 10.9 -20.2 -9.1 -11.1 628.2 1.2 629.4 1.2 2.9 19.4 15.9 28.4 47.2 16.7 1,004.8 186.0 1,754.1 19.3 94.3 7.7 305.5 325.1 280.0 108.9 338.8 27.2 .5 68.5 156.2 2.6 4.1 13.2 7.1 33.4 269.8 41.4 12.1 29.3 -2.4 -1.2 -1.2 28.1 0 28.1 .4 .3 2.8 1.0 4.8 41.4 5.8 1.0 4.8 -.3 -.1 11.8 4.7 60.4 27.6 120.2 34.3 10.0 90.1 38.5 173.4 886.8 1,555.2 117.9 16.2 198.9 101.7 141.0 -3.7 -1.7 9.0 3.3 0 -.2 -7.3 -3.3 -4.0 4.7 97.7 .2 4.7 97.9 57.9 -2.0 139.0 .1 139.1 Cash dividends declared on common stock Cash dividends declared on preferred stock Total cash dividends declared 9.7 0 9.7 29.0 0 29.0 209.4 ,3 209.7 11.4 0 11.4 1.6 0 1.6 38.9 0 38.9 41.1 .4 41.5 Recoveries credited to allowance for possible loan losses Losses charged to allowance for possible loan losses Net loan losses 1.9 7.8 5.9 16.7 41.7 42.3 138.0 95.7 .8 4.9 4.1 .2 .9 .7 8.9 29.3 20.4 11.2 34.4 23.2 51.4 3.5 14.5 15.7 85.0 14.0 40.5 10.7 17.2 19.8 88.2 12.4 48.4 12.5 11.7 14.1 86.7 44.0 10.9 14.6 17.3 86.8 16.7 47.9 2.5 19.1 18.2 87.7 40.6 8.5 18.5 20.7 88.3 41.5 11.4 18.5 17.2 88.7 13.5 13.1 14.6 Ratio to total operating income: Interest on deposits Other interest expense Salaries and employee benefits Other non-interest expense Total operating expenses Ratio of net income to total equity capital (end of period) See note at end of table. 25.0 14.7 Table B-22—Continued CO 00 Income and expenses of foreign and domestic offices and subsidiaries of national banks, by states, year ended December 31, 1979 (Dollar amounts in millions) West Virginia Number of banks , Operating income: Interest and fees on loans Interest on balances with depository institutions Income on federal funds sold and securities purchased under agreements to resell Interest on U.S. Treasury securities and on obligations of other U.S. government agencies and corporations Interest on obligations of states and political subdivisions in the U.S Income from all other securities (including dividends on stock) Income from lease financing Income from fiduciary activities Service charges on deposit accounts Other service charges, commissions, and fees Other operating income Total operating income Operating expenses: Salaries and employee benefits Interest on time certificates of $100,000 or more (issued by domestic offices) . . Interest on deposits in foreign offices Interest on other deposits Expense of federal funds purchased and securities sold under agreements to repurchase Interest on demand notes issued to the U.S. Treasury and on other borrowed money Interest on subordinated notes and debentures Occupancy expense of bank premises, net, and furniture and equipment expense Provision for possible loan losses Other operating expenses Total operating expenses Income before income taxes and securities gains or losses Applicable income taxes Income before securities gains or losses Securities gains (losses), gross Applicable income taxes Securities gains (losses), net Income before extraordinary items Extraordinary items, net Net income Wisconsin Wyoming District of Columbia Nonnational* 107 131 47 1 $270.8 3.1 $678.9 35.3 $128.7 .4 $2.7 0 39.9 33.6 7.5 .3 65.3 37.5 1.3 1.0 5.8 4.6 7.4 3.0 439.6 85.7 56.4 4.6 5.7 15.6 17.9 13.1 .6 .3 1.5 .2 .1 0 0 .2 994.1 2.1 180.2 64.9 36.1 0 163.7 142.5 114.6 55.2 261.7 28.3 21.2 0 58.0 1.3 35.8 141.0 4.3 .4 3.3 .6 19.8 10.1 44.0 19.3 4.6 45.4 12.4 97.9 0 378.3 894.7 2.0 .7 8.0 4.4 17.3 144.2 61.3 8.5 52.8 99.4 20.6 78.8 -2.2 -.8 -4.5 -2.2 9.6 26.4 -1.0 -.3 -1.4 51.5 .2 51.6 -2.3 -.6 76.4 25.7 76.4 25.7 14.1 40.1 24.0 1.4 5.3 2.8 35.9 5.0 1.1 .4 0 .2 .4 4.6 .4 .1 .3 .3 .1 Cash dividends declared on common stock Cash dividends declared on preferred stock Total cash dividends declared 14.0 0 14.0 29.0 0 29.0 8.2 0 8.2 .1 Recoveries credited to allowance for possible loan losses Losses charged to allowance for possible loan losses . . . Net loan losses 2.5 11.5 9.0 4.5 15.2 10.7 1.6 4.3 2.7 .1 .3 .2 45.5 9.0 14.8 16.8 86.1 11.1 43.4 16.6 14.3 15.7 90.0 44.0 3.9 15.7 16.5 80.0 11.5 16.5 34.0 8.0 22.0 28.0 92.0 10.0 Ratio to total operating income: Interest on deposits Other interest expense Salaries and employee benefits Other non-interest expense Total operating expenses Ratio of net income to total equity capital (end of period) . . * Nonnational banks in the District of Columbia are supervised by the Comptroller of the Currency. NOTE: Dashes indicate amounts of less than $50,000. Data may not add to totals because of rounding. .1 Table B-23 National banks engaged in lease financing, December 31, 1979 (Dollar amounts in thousands) Total number of national banks All national banks Number of banks engaged in lease financing Amount of lease financing at domestic offices 4,448 838 $6,780,330 Alabama Alaska Arizona Arkansas California Colorado Connecticut Delaware District of Columbia . Florida 99 6 3 68 42 139 19 6 16 221 9 2 1 11 12 37 1 0 3 44 31,872 10,132 50,862 11,942 2,512,363 63,381 12,541 0 27,462 52,055 Georgia Hawaii Idaho Illinois Indiana Iowa Kansas Kentucky Louisiana Maine 63 3 7 410 119 99 148 79 55 14 15 1 3 81 26 20 26 15 11 0 69,073 10,757 38,810 196,437 154,399 7,517 3,766 118,324 30,448 0 Maryland Massachusetts Michigan Minnesota Mississippi Missouri Montana Nebraska Nevada New Hampshire 31 71 123 205 38 98 56 117 4 36 5 11 22 36 6 26 17 28 3 1 57,826 195,304 137,661 218,827 2,022 85,072 6,112 50,166 53,836 1 New Jersey New Mexico New York North Carolina North Dakota Ohio Oklahoma Oregon Pennsylvania 93 40 116 26 41 177 190 6 223 9 14 14 6 9 42 87 2 11 130,650 3,501 634,879 122,158 2,282 252,274 30,131 38,608 290,394 Rhode Island South Carolina South Dakota Tennessee Texas Utah Vermont Virginia Washington West Virginia Wisconsin Wyoming 5 18 33 69 615 11 12 72 21 107 131 47 3 2 5 10 73 3 0 3 9 17 28 18 109,375 16,418 1,746 55,192 197,169 47,612 0 34,014 547,918 10,279 43,961 2,801 District of Columbia—air 17 * Includes the nonnational bank in the District of Columbia, which is also supervised by the Comptroller of the Currency. 200 27,462 Table B-24 Assets and equity capital, net income, and dividends of national banks, 1967-1979 (Dollars in millions) Ratios (percent) Capital stock (par value) Year 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 Number of banks 4,758 4,716 4,669 4,621 4,600 4,614 4,661 4,708 4,744 4,737 4,655 4,564 4,448 Total assets* (foreign and domestic) NA NA NA NA NA $489,403 569,451 629,568 658,751 704,329 796,851 892,272 996,281 Preferred $55 58 62 63 43 42 37 13 14 19 25 29 31 Common $5,312 5,694 6,166 6,457 6,785 7,458 7,904 8,336 8,809 9,106 9,552 9,912 11,403 Total Total equity capital* $5,367 $18,495 5,752 20,268 6,228 22,134 6,520 23,714 6,828 25,624 7,500 28,223 7,941 30,935 8,349 33,572 8,823 36,688 9,125 41,325 9,577 44,999 9,941 49,207 11,434 54,296 Net income before dividends $1,757 1,932 2,534 2,829 3,041 3,308 3,768 4,044 4,259 4,591 5,139 6,173 7,247 Cash dividends on capital stock Net income before dividends to total assets Net income before dividends to total equity capital Cash dividends to net income before dividends $796 897 1,068 1,278 1,390 1,310 1,449 1,671 1,821 1,821 1,994 2,196 2,650 NA NA NA NA NA .68 .66 .64 .65 .65 .64 .69 .73 9.50 9.53 11.45 11.93 11.87 11.72 12,18 12.05 11.61 11.11 11.42 12.54 13.35 45.30 46.43 42.15 45.17 45.71 39.60 38.46 41.32 42.76 39.66 38.80 35.57 36.57 * Data are not exactly comparable because assets through 1975 are net of reserves on loans and securities and since then are net of valuation reserves and unearned discount on loans. Also, equity capital beginning for 1976 is reported including certain portions of the reserves on loans and securities which were not reported separately for the years 1969-1975. Cash dividends to total equity capital 4.30 4.43 4.83 5.39 5.42 4.64 4.68 4.98 5.00 4.41 4.43 4.46 4.88 Table B-25 Loan losses and recoveries of national banks, 1970-1979 Year Total loans at domestic offices, end of year, net 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 $173,456,091 190,308,412 226,354,896 266,937,532 292,732,965 287,362,220 299,833,480 340,605,630 390,104,999 437,689,952 Net loan losses at domestic offices $601,734 666,190 545,473 731,633 1,193,730 2,047,643 1,819,748 1,380,261 1,277,398 1,477,753 Ratio of net losses to loans, net (Percent) 0.35 0.35 0.24 0.27 0.41 0.71 0.61 0.41 0.33 0.34 Total loans, foreign and domestic, end of year, net* $372,458,078 429,317,723 490,142,134 547,397,282 Total net loan lossest Ratio of net losses to loans, net (Percent) $2,105,582 1,670,903 1,438,705 1,539,866 * Loans used in all years are net of reserves; after 1975, loans are also net of unearned discount. t Beginning in 1976 national banks report consolidated loan losses and recoveries including those on loans at foreign offices. NOTE: For earlier data, see Annual Reports of the Comptroller of the Currency, 1947, p. 100; 1968, p. 233 and 1975, p. 161. 202 0.57 0.39 0.29 0.28 Table B-26 Assets and liabilities of national banks, date of last report of condition, 1972-1979 (Dollar amounts in millions) Liabilities Consolidated foreign and domestic assets Year 1972 1973 1974 1975 1976 1977 1978 1979 Number of banks Total assets* Cash and due from banks Total securities* Loans, net* Other assets 4,614 4,661 4,708 4,744 4,737 4,655 4,564 4,448 $485,181 564,714 624,300 648,350 704,329 796,851 892,272 996,281 $ 91.345 108,128 112,790 117,715 126,437 150,508 170,146 188,554 $105,195 106.833 109,376 128,163 139,472 143,219 146,155 155,395 $253,538 303,931 345,527 347,686 372,458 429,318 490,142 547,397 $35,103 45,822 56,607 54,786 65,962 73,806 85,829 104,935 Total deposits $412,316 470,143 519,536 540,492 582,246 654,057 717,057 785,272 * For years 1972-1975, data are net of securities and loan reserves. Since 1975 data are net of valuation reserves and unearned discount on loans. t Includes subordinated capital notes and debentures. NOTE: For earlier data on domestic office assets and liabilities, see Annual Report of the Comptroller of the Currency, 1977, p. 200. Other liabilities} $44,499 63,675 71,191 71,204 80,758 97,795 126,008 156,713 Total equity capital $28,366 30,896 33,573 36,654 41,325 44,999 49,207 54,296 Table B-27 Consolidated assets and liabilities of national banks with foreign operations, December 31, 1979 (Dollar amounts in millions) Foreign* and domestic offices Cash and due from depository institutions U.S. Treasury securities Obligations of other U.S. government agencies and corporations Obligations of states and political subdivisions in the United States Other bonds, notes, and debentures Federal Reserve stock and corporate stock Trading account securities Federal funds sold and securities purchased under agreements to resell Loans, total (excluding unearned income) Less: Allowance for possible loan losses Loans, net Lease financing receivables Bank premises, furniture and fixtures, and other assets representing bank premises Real estate owned other than bank premises Investments in unconsolidated subsidiaries and associated companies Customers' liability on acceptances outstanding Other assets Total assets Demand deposits of individuals, partnerships, and corporations Time and savings deposits of individuals, partnerships and corporations Deposits of United States government Deposits of states and political subdivisions in the United States Deposits of foreign governments and official institutions Deposits of commercial banks Certified and officers' checks Domestic offices $148,742 20,216 10,645 32,402 5,844 824 6,428 18,655 376,021 3,632 $ 66,920 20,062 10,596 31,929 372,389 6,989 7,489 975 828 21,780 262,682 1,056 703 5,726 18,328 266,149 3,466 5,696 6,655 856 472 16,258 20,179 468,117 17,935 672,142 105,057 159,569 105,057 159,569 1,088 18,983 3,878 1,088 18,983 3,878 Total deposits in domestic offices 319,352 23,166 4,611 319,352 Total demand deposits Total time and savings deposits Total deposits in foreign offices* 136,795 182,557 136,795 182,557 Total deposits Federal funds purchased and securities sold under agreements to repurchase Interest-bearing demand notes issued to the U.S. Treasury Other liabilities for borrowed money Mortgage indebtedness and liabilities for capitalized leases Banks' liability on acceptances executed and outstanding Other liabilities Total liabilities Subordinated notes and debentures Preferred stock Common stock Surplus Undivided profits Reserve for contingencies and other capital reserves Total equity capital Total liabilities and equity capital Number of banks 26,166 4,611 190,302 NA 509,654 63,935 5,404 319,352 63,777 5,404 8,395 802 16,675 846 22,023 17,434 20,492 20,892 639,429 435,656 2,144 10 6,567 10,135 13,495 362 10 6,567 10,135 13,495 362 30,569 30,569 672,142 468,117 1,893 111 * For reporting purposes, foreign offices include Edge and Agreement subsidiaries located in the U.S. and branches in Puerto Rico, Virgin Islands and Trust Territories. 204 Table B-28 Foreign branches of national banks, by region and country, December 31, 1979 Region and country Central America . El Salvador Guatemala . . . Honduras Mexico Nicaragua Panama Number 44 . 2 3 3 5 1 30 South America . . Argentina Bolivia Brazil Chile Ecuador Guyana Paraguay Peru Uruguay Venezuela 111 40 6 20 6 13 1 9 3 9 4 West Indies—Caribbean . . Bahamas Barbados British Virgin Islands . . . Cayman Islands Dominican Republic French West Indies Haiti Jamaica Netherlands Antilles St. Lucia Trinidad and Tobago West Indies Federation of States 163 61 3 2 56 18 2 5 5 4 1 5 1 Europe 123 1 6 3 35 9 18 16 4 8 4 1 6 1 3 2 Austria Belgium Denmark England France Germany Greece Ireland Italy Luxembourg Monaco Netherlands Northern Ireland Scotland Spain Number Region and country Europe — Continued Switzerland . . 6 Africa 20 5 1 2 2 4 1 1 1 1 2 Egypt Gabon Ivory Coast Kenya Liberia Mauritius Senegal Seychelles Sudan Tunisia Middle East . Bahrain Jordan Lebanon Oman Qatar Saudi Arabia United Arab Emirates Yemen Arab Republic . . . 26 4 3 4 2 1 2 9 1 Asia and Pacific 125 Brunei Hong Kong India Indonesia Japan Korea Malaysia Pakistan Philippines Singapore Sri Lanka Taiwan Thailand 3 37 10 5 22 7 5 6 9 14 1 4 2 U.S. overseas areas and trust territories Caroline Islands Guam Marianas Islands Marshall Islands Puerto Rico Virgin Islands Total 55 1 4 1 1 24 24 667 205 Table B-29 Total foreign branch* assets of national banks, year-end 1953-1979 (Dollar amounts in thousands) 1953 1954 1955 1956 1957 1958 1959 1960 1961 1962 1963 1964 1965 $1,682,919 1,556,326 1,116,003 1,301,883 1,342,616 1,405.020 1,543,985 1,628,510 1,780,926 2,008,478 2,678,717 3.319,879 7,241.068 1966 1967 1968 1969 I 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 $ 9,364,278 11,856,316 16,021,617 28,217,139 38,877,627 50,550,727 54,720,405 83,304,441 99,810,999 111,514,147 134,790,497 161,768,609 180,712,782 217,611,974 * Includes military facilities operated abroad by national banks from 1966 through 1971. Table B-30 Foreign branch assets and liabilities of national banks, December 31, 1979 (Dollar amounts in thousands) ASSETS LIABILITIES Cash and cash items in process of collection . . $ 884,611 Deposits of all banks in the United States and Balances with all banks in the United States non-U.S. branches of U.S. banks and non-U.S. branches of U.S. banks 19,536,605 Deposits of non-U.S. banks outside the United States Balances with non-U.S. banks outside the U.S 49,177,198 Other deposits Securities 3,373,847 Liabilities for borrowed money Loans, discounts and overdrafts Liability on acceptances executed and outstanding . Secured by real estate $ 2,601,698 Accrued taxes and other expenses To financial institutions 12,265,279 Due to other non-U.S. branches of this bank To commerical and industrial borrowers 57,801,387 I Due to head office and its U.S. To non-U.S. government and official institutions . . 14,319,345 branches of this bank To all others 3,979,345 Due to consolidated subsidiaries of this bank Less: unearned discount 256,587 Other liabilities Total loans, net 90,710,467 Total liabilities Customers' liability on acceptances outstanding . . . . 4,260,955 Premises, furniture and fixtures 512,485 MEMORANDA Accruals—interest earned, foreign Standby letters of credit exchange profits, etc 4,500,848 Commercial letters of credit issued and outstanding Due from other non-U.S. branches of this bank 23,344,760 Guarantees and letters of indemnity Due from head office and U.S. branches of this bank 13,913,865 Contracts to buy foreign exchange and bullion Due from consolidated subsidiaries of this bank . . . . 6,106,117 Contracts to sell foreign exchange and bullion Other assets 1,290,216 Total assets $217,611,974 $26,603,209 60,094,569 78,111,322 4,540,254 4,452,195 3,736,679 23,499,272 12,566,492 2,318,712 1,689,270 $217,611,974 $ 5,543,116 5,346,708 2,525,927 92,404,855 90,558,102 APPENDIX C Administrative Actions, 1979 Administrative Actions Index 1 2 X Reserve for possible loan losses Borrowed funds restrictions Budget report Capital Structure Compliance committee Credit/collateral documentation Criticized assets Delinquent loans Directorate supervision/composition. . . . Dividend restriction Earnings EDP management/operations Equity capital infusion X Insider abuse Insurance Internal audit/control Investment function Lending function Liquidity Management Ownership OREO Progress reports Restitution Rate-sensitive deposits Trust function 12 USC 24 12 USC 29 12 USC 56 12 USC 60 12 USC 61 12 USC 62 12 USC 73 12 USC 74 12 USC 82 12 USC 84 12 USC 161 12 USC 282 12 USC 371 12 USC 375 12CFR 1 12CFR 7.3025 12CFR 7.4020 12CFR 7.4305 12 CFR 7.5217 12CFR 7.5225 12 CFR 7.7410 12 CFR 11.4 12 CFR 18 12 CFR 21 12 CFR 22 12 CFR 23 12 CFR 204 12 CFR 215 12 CFR 217 12 CFR 221 12 CFR 226 31 CFR 103.33 208 Notice of charges Order to cease and desist ( Topics covered UIVII money penalty Nature of Action q 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 2^ 23 24 25 26 27 X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X •x~ X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 31 32 33 34 35 36 37 X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 28 29 30 X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 38 39 40 X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X Totals Memorandum of understanding Formal agreement 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 17 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 73 X X X X X X X X X 8 X X X X X 9 X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 64 X X X X 31 X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 74 X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 84 X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 54 X X X X X X 22 X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 24 X X X X X X X X X X X X X X X X X X X X X X 34 X X X 3 X X X X X X X X X X X X X X X X X 36 X X 33 X X X X X X X X X X X X X X X X 3 X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 53 19 X X X X X X X X X X X X X 70 X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 46 X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 71 7 X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 2 17 20 20 3 X X X X X X X X X X X X X X X X X 6 6 X 2 X 4 2 2 2 2 2 X X 64 3 2 11 33 X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X X 17 12 2 1 1 5 1 1 6 8 8 1 5 5 14 13 8 X 49 209 Administrative Actions, 1979 Civil Money Penalties 1. Bank with assets of $15 to $25 million An Order of Assessment of a Civil Money Penalty in the amount of $1,000 was issued against the bank for committing 19 violations of 12 CFR 215.4(a) and two violations of 12 CFR 215.5(c)(3). An Order of Assessment of a Civil Money Penalty of $1,000 was also issued against the president for causing the bank to commit 19 violations of 12 CFR 215.4 (a) and two violations of 12 USC 375a(4). The penalties were paid by the bank and its president, and the violations of law were corrected. 2. Bank with assets of $15 to $25 million An Order of Assessment of a Civil Money Penalty of $7,000 was issued against the bank to increase its reserve for possible loan losses to a level deemed appropriate by the regional administrator. The penalty was paid by the bank, and the reserve was subsequently increased to an adequate level. Cease and Desist Orders 3. Bank with assets of $250 to $500 million An Order to Cease and Desist was issued requiring the bank to eliminate all demand deposit accounts maintained, directly or indirectly, for the benefit of the controlling owners, their family members or any business entity in which either owner maintained significant equity interest. The bank was also prohibited from extending, endorsing, guaranteeing or in any manner providing extensions of credit to or for the benefit of the same parties. The board of directors was to conduct a complete review of all demand deposit accounts maintained at the bank by the new owners and to seek restitution or otherwise recover any loss suffered by the bank due to the preferential treatment afforded them. 4. Bank with assets of less than $15 million An Order to Cease and Desist was issued requiring the board of directors to appoint a compliance committee composed of at least three non-officer directors to ensure the bank's ongoing compliance with the provisions of the Order. The board was instructed to comprehensively assess management's strengths and weaknesses and to immediately provide the bank with an additional loan officer. The board was further required to establish an adequate capital structure by injecting at least $500,000 of equity capital within 120 days of the Order's effective date. The bank was to revise the written loan policy and ensure adherence thereto. Written programs were to be established and implemented to (1) remove all assets from criticized status, specifically those made to insiders or their related interests, (2) establish guidelines for internal loan review, (3) correct all violations cited in the report of examination, (4) maintain a liquidity level of not less than 20 percent and (5) correct deficiencies relating to credit documentation. 5. Bank with assets less than $15 million An Order to Cease and Desist was issued requiring the board of directors to appoint a compliance committee composed of at least three non-officer directors to ensure the bank's ongoing compliance with the provisions of the Order. The board was instructed to comprehensively assess management's strengths and weaknesses and to immediately provide the bank with an additional loan officer. The board was further required to establish an adequate capital structure by injecting at least $500,000 of equity capital within 120 days of the Order's effective date. The bank was to revise the written loan policy and ensure adherence thereto. Written programs were to be established and implemented to (1) remove all assets from criticized status, specifically those made to insiders or their related interests, (2) establish guidelines for internal loan review, (3) correct all violations cited in the report of examination, (4) maintain a liquidity level of not less than 20 percent and (5) correct deficiencies relating to credit documentation. 6. Bank with assets of $15 to $25 million An Order to Cease and Desist was issued requiring the bank to immediately correct all violations cited in the report of examination. A compliance committee composed of at least three outside directors was to be organized with the responsibility of conducting a review of the bank's operations and of submitting written reports to the regional administrator. The board of directors was ordered to develop plans to secure reimbursement of all interest or fees which would have been paid to the bank had all extensions of credit to insiders been made on non-preferential terms. The board was also to review thoroughly the bank's management needs, with a copy of their findings to be forwarded to the regional administrator. An analysis of the bank's earning capacity and capital needs was also required, with a provision for an equity 211 capital injection if considered necessary by the regional administrator. Written plans were required to (1) achieve and maintain an average daily liquidity of not less that 20 percent, with bi-weekly liquidity analysis reports to be submitted to the regional administrator, (2) eliminate all assets from criticized status, (3) establish lending policies of a safe and sound nature, (4) obtain current and satisfactory credit information, (5) perfect collateral on secured loans, (6) ensure the ongoing adequacy of the reserve for possible loan and (7) monitor delinquent loans. The bank was ordered to cease making unreasonable expense reimbursements to employees or former employees. Internal control deficiencies were to be immediately corrected. 7. Bank with assets of $50 to $100 million A Temporary Order to Cease and Desist was initially served upon the bank. Subsequently an Order to Cease and Desist required the bank's directors, officers, employees and agents, individually, to correct all violations of law and required procedures to be adopted to prevent future violations. The board of directors was ordered to immediately reimburse the bank for a political contribution made in violation of 2 USC 44lb. The board was instructed to retain an independent special counsel acceptable to the regional administrator to conduct a written review of the total remuneration package for the top five officers of the bank and was to submit the review to the regional administrator. The bank was also ordered to cease paying for certain expenses of the bank's top five officers and was prohibited from paying any overdraft on any account of an executive officer or director of the bank unless a prearranged interest-bearing line of credit had been established by the involved officer or director. Written programs were to be developed and implemented to (1) eliminate all assets from criticized status, (2) review and increase reserve for possible loan, (3) rectify all credit information exceptions and collateral deficiencies, and (4) improve the internal control and audit procedures. The board was to review and amend the bank's lending policies to ensure that they conform with safe and sound banking practices and all applicable laws, rules and regulations. 8. Bank with assets of $25 to $50 million A Temporary Order to Cease and Desist was issued requiring a capital injection of $3.75 million, a new chief executive officer and limiting new loans until capital was increased. A Permanent Order to Cease and Desist was placed on the bank shortly thereafter. The Permanent Order incorporated the provisions of the Temporary Order already in place, and an Order to Cease and Desist required the bank to develop and implement a written capital plan to maintain ongoing capital adequacy and a detailed budget. The Order also called for maintenance of the reserve for possible loan at an adequate level and for liquidity to be maintained at no less than 15 percent. A certified public accounting 212 firm was to conduct a full-scale audit, and a special directors' committee was to be appointed to review management fees, salaries and expenses. An independent counsel was required to evaluate the board's liability for violations of 12 USC 84. The bank's lending policy was to be revised to cover officers' lending limits and concentrations of credit. Detailed plans to remove all assets from criticized status, correct all violations of 12 USC 84, remedy and prevent credit documentation and collateral deficiencies and coordinate the management of assets and liabilities were to be submitted for the approval of the regional administrator and subsequently implemented. A new loan administration officer was required, and all violations of law noted in the examination report were to be corrected. 9. Bank with assets of less than $15 million A Order to Cease and Desist required correction of all violations of law and required procedures to be adopted to prevent future violations. The bank was ordered to submit a written proposal for its sale or merger to the regional administrator. In addition the board was ordered to provide the bank with a new chief executive officer. The board was also required to provide the bank with a $450,000 subordinated placement and to submit a written program to inject $500,000 in equity capital. The declaration and payment of dividends was restricted. 10. Bank with assets of $15 to $25 million An Order to Cease and Desist required that all violations cited be corrected immediately. Additionally, the board of directors was required to indemnify the bank for any loss caused by the violation of 12 USC 24. The board was instructed to formulate a policy governing all types of transactions to insiders and their interests. The board was further ordered to cause the bank's equity capital accounts to be increased by not less than $500,000. Written programs were required to (1) remove all assets from criticized status, (2) provide for improved collection efforts, (3) obtain current and satisfactory credit information on all loans so lacking, (4) maintain an adequate reserve for possible loan, (5) improve and sustain the bank's earnings and (6) improve the bank's written investment policy. The bank was further required to develop comprehensive liquidity and asset/liability management policies. An internal auditor was to be appointed, and the board agreed to develop a management plan describing in detail the duties and functions of senior officers. 11. Bank with assets of $25 to $50 million A Cease and Desist Order required that all violations of the law immediately be corrected and that the board of directors develop plans to recover any loss of income resulting from loans made in violation of statutes mentioned in the examiner's report. The bank was prohibited from making advances on insurance premiums written through named agencies unless (1) within legal lending limitations, (2) interest was charged at a nonpreferential rate and (3) insurance was authorized by the bank's customer. The bank was instructed to hold no checks presented for payment longer than 24 hours. Written programs were required to (1) reduce land development loans to 25 percent of gross capital funds, (2) eliminate all assets from criticized status, (3) resolve deficiencies in loan documentation, (4) obtain current and satisfactory credit information, (5) establish and maintain an adequate reserve for possible loan and (6) correct deficiencies in internal control procedures. The employee profit sharing trust was ordered to be transferred to an independent corporate trustee. The bank was ordered to employ or appoint a new, capable senior lending officer and a capable external auditor, both of whom had to be approved by the regional administrator. Signing of real estate appraisals without actual on-site inspection was prohibited. 12. Bank with assets of $50 to $100 million A Notice of Charges initiated administrative action, and a Temporary Order to Cease and Desist was issued. The bank was prohibited from lending money to any borrower whose loan was subject to criticism in the report of examination. The bank was ordered to refrain from granting loans without first acquiring current and satisfactory credit information. The volume of total loans outstanding was not to increase over the level of such loans existing as of the effective date of the Order. Additionally, no loans were to be made in excess of the legal limit provided in 12 USC 84. 13. Bank with assets of $250 to $500 million A Notice of Charges initiated administrative action, and a Temporary Order to Cease and Desist was issued prohibiting any payments, loans or transfers of any monies between the bank and its parent holding company. The bank was also prevented from declaring or paying any dividend without the prior written approval of the regional administrator. Subsequent to the issuance of the Order, the board of directors accepted an offer from a group of investors to purchase $7.5 million in bank stock, giving the group control of more than 51 percent of the voting shares in the bank. 14. Bank with assets of $25 to $50 million A Notice of Charges initiated administrative action, and a Temporary Order to Cease and Desist prohibited the bank from increasing the volume of its total loans outstanding. The bank subsequently merged with a state-chartered bank, terminating the administrative proceedings. 15. Bank with assets of $15 to $25 million A Notice of Charges initiated administrative action, and a Temporary Order to Cease and Desist was issued prohibiting the bank from making payments against uncollected deposits in accounts maintained by subject director or in any entity in which said director maintained an interest. The bank was ordered not to make any loan or extension of credit in any manner to any insider unless the loan was made on substantially the same terms as those prevailing at the time for comparable transactions with other persons. The bank was required to immediately correct the violation of 12 USC 84. Subsequently, the director resigned from the board of directors. 16. Bank with assets of $15 to $25 million A Notice of Charges initiated administrative action, and a Temporary Order to Cease and Desist limited the amount of compensation paid to directors. The bank was ordered to correct all violations cited in the report of examination. The bank was prohibited from lending additional money or otherwise extending credit to any borrower whose loan or other extension of credit had been criticized in the report of examination. The bank was also ordered not to grant any extension of credit which was not fully supported by current and satisfactory credit information and collateral documentation. Notice of Charges 17. Bank with assets of $15 to $25 million A Notice of Charges was issued against the bank citing the violations of law and regulations and addressing the serious inadequacy in the bank's capital structure. Subsequently, the bank did initiate steps to improve its capital position; however, during the pendency of the administrative proceeding, the bank converted to a state charter. Formal Agreement 18. Bank with assets of $15 to $25 million A Formal Agreement required correction of all violations of law and required procedures to be adopted to prevent their recurrence. The bank was required to adopt and implement written programs to (1) eliminate all assets from criticized status, (2) achieve and maintain an average daily liquidity position of not less than 15 percent and (3) improve collection efforts. The bank was directed to take all necessary steps to obtain current and satisfactory credit information on all loans and to refrain from granting any new loans unless supported by such information. The bank was required to correct collateral imperfection and to submit a detailed written capital plan to the regional administrator for his approval and not declare any dividend without the regional administrator's prior written approval. The bank was directed to .review the reserve for possible loan on a quarterly basis and maintain it at a level reflective of the risk and potential for loss inherent in the bank's loan portfolio. The deficiencies in the bank's internal control and audit procedures were required to be corrected. The board of directors was required to establish a committee to perform an in-depth study of current management and to formulate and implement a comprehensive 213 written management plan. Detailed written policies covering the investments and funds management practices of the bank were also required pursuant to the Agreement. The board was directed to appoint a compliance committee, a majority of whom were outside directors. 19. Bank with assets of less than $15 million A Formal Agreement required correction of all violations of law and the implementation of procedures to prevent future violations. The board of directors was required to provide the bank with a new, active and capable chief executive officer acceptable to the regional administrator. The authority of the new chief executive officer was to be set forth in writing by the board. The board also was directed to retain, subject to the regional administrator's approval, the services of an experienced agricultural credit consultant to assist the bank in eliminating existing agricultural loans from criticized status and implementing a program to ensure that future loans were granted on a sound basis. The board was required to adopt and implement a written program to promptly eliminate the grounds of criticism of its classified assets and to take all necessary steps to obtain current and satisfactory credit information on all loans and to refrain from granting any new loans until satisfactory credit information had been obtained. The bank was required to submit monthly written reports to the regional administrator detailing the actions taken by the bank to comply with the provisions of the Agreement and the results of those actions. 20. Bank with assets of $15 to $25 million A Formal Agreement required correction of all violations of law and required procedures to be implemented to prevent future violations. The bank was directed to implement written programs to (1) establish and maintain an adequate reserve for possible loan, (2) eliminate all assets from criticized status and (3) improve collection efforts overall. The Agreement further required that the board of directors review the bank's lending function and report to the regional administrator the duties of each employee participating in the lending function. The board was also required to develop and submit to the regional administrator written guidelines governing liquidity and asset/liability management. A comprehensive budget for the fiscal year was also required. The bank was directed to obtain current and satisfactory information on all loans so lacking and was to refrain from granting any new loans until said information had been ascertained. The Agreement required the bank to establish a committee of outside directors to ensure compliance. 21. Bank with assets of $100 to $250 million A Formal Agreement required correction of violations of law and implementation of procedures to ensure that violations did not recur. The bank was directed to formulate and implement written pro 214 grams with the approval of the regional administrator, to strengthen the capital structure, to improve the liquidity position and to eliminate any assets from criticized status. The Agreement required the board to evaluate the adequacy and competency of the bank's management and required the board to submit a comprehensive written report to the regional administrator detailing its findings. The Agreement further directed the bank to immediately correct the deficiencies in its internal control and audit procedures. 22. Bank with assets of $15 to $25 million A Formal Agreement required correction of all violations of law and implementation of written procedures to ensure that violations did not recur. The board was directed to formulate and implement written programs to improve the capital structure and to eliminate all assets from criticized status. The bank was required to correct the deficiencies relating to current and satisfactory credit information. An independent auditor was to be retained to prepare written recommendations for the establishment and maintenance of internal controls and internal auditing procedures. The board was directed to make no further loans or extensions of credit to any executive officer or principal shareholder. The board was required to review the adequacy of the reserve for possible loan and maintain it at a level acceptable to the regional administrator. The board was also required to evaluate the adequacy and competency of the bank's management and to submit a comprehensive written report to the regional administrator detailing its conclusions and setting forth the bases for those conclusions. 23. Bank with assets of $100 to $250 million Pursuant to a Formal Agreement, the bank was required to correct and eliminate each violation of law cited. Deficiencies in internal controls were to be corrected immediately. The board of directors was required to formulate written programs to (1) establish and maintain an adequate reserve for possible loan, (2) restore and maintain earnings of the bank, (3) augment and strengthen the capital structure of the bank, (4) eliminate all assets from criticized status, (5) adopt safe and sound loan policies to be strictly adhered to and (6) cover other real estate owned in accordance with prudent banking procedures. A compliance committee to be made up of non-officer directors was also mandated. 24. Bank with assets of $50 to $100 million A Formal Agreement required correction of all violations of law and required the bank to adopt written procedures to prevent recurrence of similar violations. The board of directors was required to develop and implement a written program to eliminate all assets from criticized status. The board was required to draft a plan for injecting sufficient equity capital to satisfy the bank's needs, and the bank was prohibited from paying dividends without prior written approval of the regional administrator. The board was also required to develop and implement a detailed written loan policy of a safe and sound nature. The bank was required to obtain current and satisfactory credit information on all loans so lacking and was prohibited from granting any new loans without first obtaining such information. The board was to review the bank's reserve for possible loan on a regular basis and to ensure that the reserve be maintained at a level reflective of the risk and potential for loss inherent in the bank's loan portfolio. The board was to immediately and substantially increase the amount of the reserve. The board was required to undertake a comprehensive assessment of the sufficiency and quality of the management of the lending function and to submit its findings to the regional administrator. Compliance with the provisions of the Agreement was to be monitored by an executive committee to be appointed by the board of directors. 25. Bank with assets of $25 to $50 million A Formal Agreement required correction of all violations of law and required written procedures to be adopted to ensure that similar violations did not recur. The board of directors was to formulate a written program to remove all assets from criticized status. The board was also to pursue all available courses of action to eliminate the grounds for criticism or cause complete liquidation from the bank's books of all criticized loans to directors. The board was to provide the bank with a new, experienced and capable senior loan officer who was to have broad written authority over the administration of the bank's lending function. After the designation of the new senior loan officer, the bank was to revise its written loan policy. Written programs were to be developed and implemented to (1) improve collection efforts and to effect a reduction in the level of delinquent loans, (2) maintain an adequate reserve for possible loan and (3) establish appropriate audit procedures to ensure timely identification of problem assets. The bank was required to take all necessary steps to obtain current and satisfactory credit information on all loans lacking such information and was to correct the imperfections pertaining to the securing of collateral. In light of pending litigation against the bank, the board was to develop a contingency plan designed to assur maintenance of the bank's capital structure at an adequate level. An enforcement committee comprised of three nonofficer directors was to be appointed by the board to ensure compliance by the bank with the provisions of the Agreement. 26. Bank with assets of $50 to $100 million A Formal Agreement required correction of the statutory violations and required procedures to be adopted to ensure that these violations did not recur. The bank was required to institute a program for improving its liquidity position and to reduce the ratio of the bank's loans to deposits. The Agreement further provided that the bank reduce its dependency on borrowed funds of all types. The bank was to draft both an investment and a loan policy to be submitted to the regional administrator for review and comment prior to adoption. The bank was also to formulate and implement a written program designed to eliminate all assets from criticized status. The bank was to take all necessary steps to obtain current and satisfactory credit information on all loans so lacking and to refrain from granting any new loans without first obtaining such information. The board of directors was to formulate and submit to the regional administrator the bank's plan for liquidation of a substantial amount of the bank's other real estate owned. 27. Bank with assets of $25 to $50 million A Formal Agreement required correction of all violations of law and required procedures to be adopted to prevent their recurrence. The bank was to employ an outside, capable senior lending officer who was to be vested with broad authority to ensure that the lending area of the bank was operated in accordance with prudent banking standards. The board of directors was to adopt and implement a written program to eliminate the basis of criticism of its criticized assets and was not to lend additional money or otherwise extend credit to any borrower whose loan or other extension of credit had been criticized. The board was required to conduct a review of the adequacy of the bank's reserve for possible loan in relation to the risk inherent in the bank's loan portfolio. The bank was to take all necessary steps to correct the deficiencies relating to the lack of current and satisfactory credit information and was to adopt a written program to improve collection efforts. The bank was prohibited in any manner from extending credit to the bank's parent holding company, and no dividends were to be declared by the board without the prior written approval of the regional administrator. Policies were to be adopted to ensure that any transactions between the bank and insiders, were to be on terms not more favorable than those afforded other persons dealing with the bank. The board was to adopt formal written policies and procedures for the administration of the trust department of the bank and was to take steps to ensure that the trust auditor and trust officer obtain specific training in their respective functions as soon as possible. The board was also to direct the management of the trust department to establish a complete and accurate fiduciary recordkeeping system which would clearly reflect the interests of the various fiduciary beneficiaries. The bank was to submit every 30 days the actions taken by the bank to comply with the provisions of the Agreement and the results of those actions. 28. Bank with assets of $15 to $25 million A Formal Agreement required correction of all violations of law and required the bank * dopt pro215 cedures to ensure non-recurrence of similar violations. Subject to the regional administrator's approval, the board of directors was required to formulate and implement a written program to augment the bank's equity capital. The bank was required to submit to the regional administrator a written program designed to improve and maintain the bank's liquidity at an average of not less than 20 percent. The program was also to include provisions for reducing the volume of borrowed funds, especially rate-sensitive federal funds. All criticized assets were to be eliminated and the board was to review the adequacy of the bank's reserve for possible loan and to augment the reserve accordingly. The bank was required to adopt procedures and develop forms for obtaining and recording all necessary credit information, and no future loans were to be granted until said information had been received and properly recorded. The bank was prohibited from making any payments to the controlling majority shareholder without prior written approval of the regional administrator. Furthermore, the board of directors was to review all travel and entertainment expenses incurred by, or for the benefit of, said controlling majority shareholder. The board was to submit to the regional administrator a written plan providing for the restitution of any travel and entertainment expenses determined not to have been legitimate business expenses of the bank. The board was also required to develop and implement a written program subject to the regional administrator's approval addressing the prompt elimination of all internal control and audit deficiencies. 29. Bank with assets of $15 to $25 million A Formal Agreement required correction of all violations of statutes and regulations and required the adoption of procedures to prevent future violations. The board was to obtain a new chief executive officer and to submit a written capital program to augment the equity capital needs of the bank. The bank was further required to take immediate action to protect its interests with regard to criticized assets and was to report on a monthly basis the progress it made in removing assets from criticized status and for eliminating past due loans. The board was not to extend credit in excess of the lending limitations provided in 12 USC 84 and to reduce to a conforming amount any extensions of credit in excess of the 12 USC 84 lending limitation. The bank was to take necessary action to seek restitution for any loss suffered by the bank with respect to any preferential loans granted to its directors and officers within the 24 months preceding the date of the Agreement. The bank also was to adopt a written loan policy. The bank was to review its reserve for possible loan and agreed to adopt a program to eliminate the internal control and audit deficiencies cited in the report of examination. A comprehensive and detailed budget was also to be developed. 216 30. Bank with assets of less than $15 million A Formal Agreement required correction of all violations of law and the bank was further required to notify the regional administrator of the manner of said correction. Procedures were to be adopted to prevent recurrences of similar violations. The board of directors was to augment the bank's management team by employing the services of a new, experienced and capable senior lending officer. The name of such officer was required to be submitted in advance to the regional administrator who reserved the right to veto said officer's appointment. Furthermore, broad executive authority was to be granted to the new senior lending officer who was to implement and maintain lending practices in accordance with applicable law and the provisions of the Agreement. The board was further required to appoint a compliance committee composed of at least two outside directors to ensure compliance with the terms of the Agreement. The board agreed to initiate procedures to ensure that the bank's customers were charged fees for title opinions on real estate. Moreover, the board was required to ensure that the bank's pro rata share of any income derived from the sale of insurance in connection with any loan by the bank would be handled within the framework provided in 12 CFR 2. The bank was to substantially increase the reserve for possible loan and to formulate a plan to maintain the reserve at a level reflective of the risk and potential for loss inherent in the bank's loan portfolio. Provisions to supply sufficient equity capital were to be made. All deficiencies in internal control and audit procedures were to be corrected. A comprehensive and unqualified audit by a certified public accounting firm was to be conducted to review all insider transactions, the adequacy of bank records and all control deficiencies. The board was required to draft new written loan policies of a safe and sound nature. The bank was to obtain and maintain current and satisfactory information on all loans lacking such information and was to refrain from granting any new loans until said information was ascertained. The bank was to adopt written programs to eliminate all assets from criticized status and to improve its overall collection efforts. 31. Bank with assets of $50 to $100 million A Formal Agreement required correction of all statutory violations and adoption of measures to prevent their recurrence. The board of directors was required to employ a new and capable president and chief executive officer subject to approval by the regional administrator. A compliance committee was to be appointed consisting of a majority of outside directors. Said committee was required to submit quarterly status reports of its review of the bank's relocation expenses and loan policies to the regional administrator. The bank was to establish written programs to (1) remove all assets from criticized status, (2) evaluate lending officers and the credit administration function, (3) amend loan policies, (4) improve collection efforts, (5) provide pertinent credit information and (6) control expenses and improve earnings. An infusion of $1 million in equity capital was required to improve the bank's capital position. The bank was to employ an independent internal loan review officer to aid in the improvement of the reserve for possible loan. The adequacy of the reserve was to be reviewed quarterly by the board of directors with a copy of its findings submitted to the regional administrator. 32. Bank with assets of $50 to $100 million A Formal Agreement required correction of all violations of law and required procedures to be adopted to prevent recurrence of similar violations. The board of directors was to formulate and adopt written programs designed to (1) augment and strengthen the capital structure of the bank, (2) increase and maintain the bank's earnings and (3) increase the bank's reserve for possible loan. The bank was required to eliminate all assets from criticized status and further loans to borrowers with criticized credits were prohibited. The bank was to correct the deficiencies relating to lack of current and satisfactory credit information and was prohibited from granting any new loans until such information had been acquired. The board was to employ the services of a qualified public accounting firm, acceptable to the regional administrator and experienced in electronic data processing operations, to assit the bank in establishing an adequate internal audit program. A full-time independent auditor was also to be employed to establish and implement adequate internal audit and control procedures. 33. Bank with assets of less than $15 million A Formal Agreement required correction of all violations of law. The board of directors was to provide the bank with a new, active and capable senior executive officer who was to be vested with complete authority over the lending function of the bank. Prior to the appointment of said individual, his name and employment background together with a description of his proposed duties and responsibilities was to be submitted to the regional administrator who reserved the right to veto the appointment. The board was to adopt and implement a written program to eliminate all assets from criticized status. The bank was also prohibited from loaning any additional money to any borrower whose loan had been criticized. The bank was required to obtain current and satisfactory credit information on all loans so lacking and was to refrain from granting any new loans until satisfactory credit information had been ascertained. The board was to undertake a thorough and complete review of the bank's lending function and was to submit the review to the regional administrator. The bank was required to submit to the regional administrator a written program for the establish ment and the maintenance of an adequate reserve for possible loan. The claims by the bank against its bonding company were pursued toward an appropriate settlement. After arriving at a settlement of said claims, the board was to promptly evaluate the capital needs of the bank and to formulate a written program to raise the equity capital of the bank to an acceptable level. The bank was required to review the effectiveness of the bank's internal control program and was to retain the services of an outside independent auditing firm for the purpose of reviewing and evaluating the bank's accounting records, procedures and operations. 34. Bank with assets of $100 to $250 million A Formal Agreement required correction of all violations of law and required procedures to be adopted to prevent future violations. The board of directors was required to formulate and implement written programs to (1) eliminate all assets from criticized status, (2) establish safe and sound loan policies, (3) improve the bank's collection efforts, (4) limit the bank's loan portfolio to no more than 70 percent of its deposits and (5) increase and maintain the bank's average daily liquidity position to not less than 15 percent. The bank was required to take all necessary steps to obtain and maintain current and satisfactory credit information on all loans so lacking and was prohibited from granting any new loans without first obtaining such information. The Agreement further provided that the board was to review, and increase accordingly, the bank's reserve for possible loan to ensure that the reserve was maintained at a level reflective of the risk and potential for loss inherent in the bank's loan portfolio. To ensure the capital integrity of the bank, the board was required to inject $3 million in equity capital. The bank was also prohibited from paying any dividends without prior written approval of the regional administrator. The board was required to establish a capital committee to coordinate monitoring of, and planning for, the bank's capital needs. The board was further required to undertake a written study of the reasonableness of, and justification for, the bank's business transaction involving insiders. The board was directed to seek reimbursement of any income lost to the bank on any transaction determined to be preferential. The Agreement prohibited certain transactions that may have been a conflict of interest for any bank officer or employee. The board was to appoint a compliance committee composed of at least three individuals, two of whom were not to be officers of the bank, to ensure compliance by the bank with the provisions of the Agreement. 35. Bank with assets of $15 to $25 million A Formal Agreement required the board to provide the bank with a new chief executive officer, to be approved by the regional administrator, whose authority was required to be set forth in writing. The board was to submit a capital program within 180 days sufficient to meet the present and future 217 needs of the bank. The bank was required to correct the violations of 12 USC 84 and to implement procedures to prevent recurrence. The bank was further required to pursue the liability of each director for any losses resulting from loans the directors previously granted or consented to in violation of 12 USC 84. The bank was required to comply with 31 CFR 103.33 when making loans and to implement procedures to ensure compliance. The bank was required to correct all other violations of law and to implement procedures to prevent recurrence. The board was required to implement a program within 60 days for the elimination of each asset from criticized status. New written loan policies were required to be adopted by the board within 60 days. The board was required to adopt a written program to improve collection efforts. The bank was required to secure current credit information and proper collateral on outstanding and future loans and to limit the loan portfolio to no more than 70 percent of total deposits. The bank was requested to increase its reserve for possible loan and to perform quarterly reviews thereof. The bank was required to correct the deficiencies in its internal control and audit procedures and to cover all major areas of the bank with written policies, including a funds management policy. Finally, the board was to appoint a compliance committee to report to the regional administrator on the progress in complying with the Agreement. 36. Bank with assets of less than $15 million A Formal Agreement required correction of all violations of law and required procedures to be adopted to prevent recurrence of similar violations. The board was to perform a study of current management and to report its findings to the regional administrator. The bank was required to develop a written program for elimination of all assets from criticized status and was prohibited from extending credit to any borrower whose loans or other extensions of credit had been criticized in whole or in part. The bank was to establish detailed procedures for the recovery of previously charged-off assets and for the collection of delinquent loans. The bank was required to obtain and maintain current and satisfactory credit information on all loans so lacking, and the board was to ensure that no future loans were to be granted to any borrower without first obtaining such information. The board was to submit a written equity capital plan to the regional administrator for approval. The Agreement further required the board to develop, implement and submit to the regional administrator a program to achieve a profitable level of bank operations. A component of said program was to include a comprehensive and detailed budget for the fiscal year. The board was also to review the bank's reserve for possible loan to ensure that the reserve was maintained at a level reflective of the risk and potential for loss inherent in the bank's loan portfolio. 218 37. Bank with assets of less than $15 million A Formal Agreement required the board of directors to immediately increase equity capital by at least $300,000. The board was also to develop and implement a plan to increase the bank's income and reduce the bank's expense with a goal of establishing profitable operations. The board was required to adopt and implement a written program to eliminate all assets from criticized status. The board was required to pursue all available courses of action to eliminate the grounds for criticism or cause removal from the bank's books of all criticized loans to insiders. The bank was to obtain current and satisfactory credit information on all loans so lacking and was to refrain from granting any new loans without first obtaining and analyzing the financial status of the prospective borrower. The bank was prohibited from maintaining or accepting any deposit of public funds on an unsecured basis if such deposit was required to be secured by contract or by law. The bank was to correct the imperfections pertaining to the securing of collateral and was prohibited from granting any future secured loans involving collateral without first perfecting its security interest. Reviews were to be conducted of all loans exceeding $5,000 to ascertain credit quality. The board was required to promptly investigate the extent to which overcharges on loans may have occurred and.to reimburse any overcharge to affected customers. A written study detailing all deficiencies in the bank's accounting and administrative controls was to be undertaken and all deficiencies were to be resolved to the satisfaction of the regional administrator. The board was to designate a compliance committee composed of three outside directors to ensure the ongoing compliance of the bank with the provisions of the Agreement. 38. Bank with assets of less than $15 million A Formal Agreement required correction of all violations of law and the adoption of procedures to ensure that violations did not recur. The board was to prepare an analysis of the bank's present and future capital needs and to formulate and implement a written program, subject to the regional administrator's approval, designed to ensure the capital adequacy of the bank. The bank was to formulate and implement a liquidity program by which the bank would achieve and maintain an average daily liquidity position of not less than 15 percent. Said program was to include, but was not limited to, plans for reducing reliance on ratesensitive deposits and plans for reducing the level of loans to 75 percent of deposits. A liquidity analysis report and a market-rate funds report were to be submitted to the regional administrator on a weekly basis. The bank was required to adopt and implement written programs designed to (1) eliminate all assets from criticized status, (2) improve collection efforts and to effect a reduction in the level of delinquent loans and (3) increase and maintain the reserve for possible loan at a level deemed appropriate by the regional administrator. The bank was to take all necessary steps to obtain current and satisfactory credit information on all loans so lacking and was to submit to the regional administrator a written summation of the procedures adopted to obtain and record all necessary credit information. The bank was also required to amend its written investment policy in accordance with prudent banking standards. 39. Bank with assets of $50 to $100 million A Formal Agreement required correction of all violations of law and adoption of procedures to ensure against future violations. The board was to provide the bank with a new, active and capable senior executive officer who was to be vested with complete authority over the lending functions of the bank. Prior to the employment of said officer, his/her name and background were to be submitted to the regional administrator for approval. The board was required to prepare an analysis of the bank's present and future capital needs and to formulate a written program designed to augment and strengthen the capital structure of the bank. The program was to include an injection of additional equity capital into the bank in an amount acceptable to the regional administrator. The board was prohibited from declaring or paying any dividends without prior written approval by the regional administrator. The board was required to develop and implement a written program to eliminate all assets from criticized status and to achieve and maintain an average daily liquidity position of not less than 15 percent. Formal procedures and policies were to be adopted by the bank to ensure the ongoing adequacy of the reserve for possible loan and also to ensure that all concentrations of credit were properly identified and duly monitored. A compliance committee comprised of at least three non-officer directors of the bank was to be formed to ensure compliance with the provisions of each article of the agreement. 40. Bank with assets of $15 to $25 million A Formal Agreement required the bank to immediately correct all violations cited in the report of examination. Written programs were required to (1) remove all assets from a criticized status, (2) obtain current and satisfactory credit information, (3) correct criticisms pertaining to the securing of collateral and (4) review and improve the adequacy of the reserve for possible loan. The board of directors was to augment the bank's equity capital by $500,000 and to initiate action designed to improve and sustain the bank's earnings. The bank was prohibited from declaring or paying dividends without the prior written approval of the regional administrator. 41. Bank with assets of less than $15 million. A Formal Agreement required the board of directors to immediately correct all violations of law, rules and regulations. The board was also required to initiate a detailed review of the effectiveness of the bank's chief executive officer and other staff members. The bank was required to formulate a comprehensive written loan policy. The board was to adopt written programs to (1) eliminate all assets from criticized status, (2) obtain current and satisfactory credit information on all loans, (3) correct deficiencies pertaining to the securing of collateral, (4) establish and maintain an adequate reserve for possible loan, (5) improve overall collection efforts and (6) provide additional equity capital. The board was also required to appoint a committee comprised solely of outside directors to ensure compliance with the terms of the Agreement. 42. Bank with assets of $25 to $50 million A Formal Agreement required the bank to correct immediately all violations of law, rules and regulations, as well as to appoint a consumer compliance officer. The board was to review the management needs of the bank and to provide the bank with a capable senior lending officer. The board also agreed to formulate and implement written programs to (1) raise the capital of the bank to an acceptable level, (2) eliminate all assets from criticized status, (3) obtain current and satisfactory credit information and collateral documentation, (4) achieve and maintain an average daily liquidity position of not less than 15 percent without reliance on borrowed funds, with a bi-weekly analysis report submitted to the regional administrator, (5) improve collection procedures and reduce the level of past-due loans, (6) achieve and maintain an adequate reserve for possible loan, (7) restore and maintain earnings of the bank and (8) adopt a safe and sound investment policy. The board was further required to perform a comprehensive review and to amend the bank's written lending policy. 43. Bank with assets of $25 to $50 million A Formal Agreement required the board to provide the bank with a new chief executive officer and to correct all violations of law, rules and regulations. The board was required to analyze the bank's capital needs and establish a written program to augment and strengthen the overall capital structure. Other written programs were to be implemented to (1) eliminate all assets from criticized status, (2) obtain current and satisfactory credit information and collateral documentation, (3) ensure an adequate reserve for possible loan, (4) improve liquidity/funds management and (5) review and revise written loan policies. 44. Bank with assets of less than $15 million A Formal Agreement required the board to remedy all violations of law and to establish a compliance committee composed of at least three outside directors to ensure compliance with the terms of the 'Agreement. The board was required to establish 219 and implement written programs to (1) adopt a sound loan policy, (2) remove all assets from classified status, (3) obtain current and satisfactory credit information, (4) correct imperfections pertaining to the securing of collateral, (5) remove all criticized loans to insiders, (6) establish a formal internal loan review system, (7) ensure that reserve for possible loan is maintained at a level commensurate with prudent banking practice, (8) ensure compliance with applicable consumer laws, rulings and regulations, (9) adopt a sound investment policy and (10) analyze and fulfill future capital needs. The board was to submit to the regional administrator a written liquidity policy designed to achieve and maintain a liquidity position of at least 20 percent to be computed weekly on an average daily basis and in no event to fall below 15 percent on any given day. 45. Bank with assets of $25 to $50 million A Formal Agreement required the bank to correct all existing violations of law and ensure that future violations would be prevented. The bank was further required to review and amend its written loan policy and to specifically incorporate provisions of 12 USC 375a and 12 CFR 215 (Regulation 0) in said policy. A new, active and capable senior officer was required to be appointed by the bank. The board of directors was to establish and implement written programs to (1) improve and maintain the capital structure, (2) achieve and maintain an average daily liquidity position of not less than 15 percent without reliance on short-term non-deposit liabilities, with a bi-weekly analysis report to be submitted to the regional administrator, (3) amend the bank's written investment policy to establish guidelines of a safe and sound nature, (4) eliminate all assets from criticized status, (5) review the bank's entire management structure and (6) restore the reserve for possible loan to an adequate level. 46. Bank with assets of $15 to $25 million A Formal Agreement required the Board of Directors to establish an executive loan committee consisting of at least four outside directors, with the responsibility of implementing and ensuring compliance with the following written programs: (1) to eliminate all assets from criticized status, (2) to correct procedural imperfections relating to securing proper collateral, (3) to obtain current and satisfactory credit information, (4) to review and modify current loan policies and (5) to strengthen the quality of the lending staff, including the appointment of a new senior lending officer. A comprehensive review was called for to improve the capital structure and increase equity capital by at least $600,000. The bank was required to augment the reserve for possible loan by $175,000. A program whereby the bank would achieve an average daily liquidity position of at least 20 percent exclusive of short-term non-deposit liabilities was required, with weekly reports including the bank's statement of 220 condition to be submitted to the regional administrator. 47. Bank with assets of $25 to $50 million A Formal Agreement was entered into with the bank which required the correction of all violations of law, rules and regulations and prohibited any further advances in excess of the lending limitations of 12 USC 84. The bank was required to appoint a compliance committee, including at least three non-officer directors, to evaluate the bank's progress. The bank was required to employ a new chief executive officer, to evaluate current management's quality and depth and to implement a plan to strengthen management. The bank was required to take all actions necessary to eliminate criticized assets and was prohibited from extending further credit to criticized borrowers. A written program to improve collection efforts and reduce delinquent loans and a new comprehensive written loan policy were required. Periodic reviews of the reserve for possible loan, a comprehensive liquidity policy and a full independent audit by an outside certified public accounting firm were also required. Finally, the bank was required to develop a formal written budget for the next calendar year. 48. Bank with assets of $25 to $50 million A Formal Agreement required correction of all statutory violations, and procedures were to be adopted to prevent their recurrence. The board of directors was to provide the bank with both an active and capable chief executive officer who was to be experienced in bank operations, lending and investment and an active and capable senior lending officer to manage and supervise the loans. Prior to the appointment of said individuals, proposed names were to be submitted to the regional administrator for approval. The board also was to ensure a $600,000 injection of equity capital. A detailed written capital plan was to be submitted to the regional administrator for his review and approval. The bank was prohibited from paying any dividend without the prior written approval of the regional administrator. The bank was to adopt and implement written programs to eliminate all assets from criticized status and to improve the bank's collection efforts. The board was also to review and, as necessary, amend its written investment, lending and funds management policies and procedures in accordance with prudent banking standards. All necessary steps were to be taken to obtain and maintain current and satisfactory credit information on all loans so lacking, and no new loans were to be granted until such information had been obtained. The bank was to institute programs to limit the bank's loan portfolio to no more than 70 percent of total deposits and maintain an average liquidity of not less than 15 percent. Reserve for possible loan was to be reviewed on a quarterly basis, and the bank was required to immediately increase the reserve to a level reflective of the risk and potential for loss inherent in the bank's loan portfolio. All deficiencies with respect to its internal control and audit procedures were to be corrected. The board was to undertake a written study of all recent insider transactions to determine the existence and extent of any preferential treatment afforded to insiders. The board was to seek reimbursement of any income lost to the bank caused by any preferential transaction. The bank was prohibited from paying any fee to a director for any meeting which a director did not attend and was not to pay any fees or compensation to any of its directors in excess of $200 a month. The board was to appoint a compliance committee, composed of at least three directors, to ensure the bank's compliance with the provisions of the Agreement. 49. Bank with assets of $25 to $50 million A Formal Agreement required the board of directors to correct all violations of 12 USC 84 cited. The bank was to adopt and adhere to a written investment policy. Other written programs required (1) improving the bank's liquidity position and establishing sound asset and liability management procedures, (2) revising the bank's loan policy commensurate with prudent banking practices, (3) recovering delinquent loans, (4) obtaining current and satisfactory credit information on all loans so lacking, (5) strengthening those assets in criticized status, (6) comprehensively evaluating the bank's present and future management needs and (7) improving the bank's profitability. The bank was required to immediately increase its reserve for possible loan. The board was required to adopt a written code of ethics, specifically addressing loans to insiders and their interests. Dividends were restricted subject to prior written approval by the regional administrator. 50. Bank with assets of $25 to $50 million A Formal Agreement required immediate correction of violations of law and procedures to prevent future violations. The bank was to adopt and implement written programs to (1) eliminate all criticized assets, (2) improve collection efforts and to effect a reduction in the level of delinquent loans and (3) increase the reserve for possible loan. The bank was to take all necessary steps to obtain and maintain current and satisfactory credit information on all loans lacking such information and to correct the imperfections pertaining to the securing of collateral. The board of directors was to review and amend the bank's written loan policy so as to enable the bank to perform its lending function in a safe and sound manner. The board was required to correct all internal control and audit deficiencies and was to engage the services of an independent certified public accounting firm to render an unqualified opinion on the financial statements of the bank and to recommend systems and procedural changes necessary to establish proper internal controls and sound and efficient operations. The board was required to submit a written capital pro gram to the regional administrator which provided, among other things, for a minimum $1.2 million equity capital injection. The bank was prohibited from paying any dividends without the prior written approval of the regional administrator. The board of directors was to establish a compliance committee of at least three board members, a majority of whom where to be non-officer directors, for conducting an in-depth study of current management adequacy and competency. After the study had been completed, the committee was to report its findings to the regional administrator. The compliance committee was also to be responsible for ensuring the bank's adherence to the provisions of the Agreement and was to submit to the regional administrator every 60 days those actions taken to comply with each article in the Agreement and the results of those actions. 51. Bank with assets of less than $15 million A Formal Agreement required the bank to implement policies and procedures to reduce its volume of criticized assets, delinquencies and credit file and collateral documentation deficiencies. The reserve for possible loan was required to be reviewed quarterly and maintained at an adequate level. Extensions of credit to borrowers whose loans had been criticized were limited. Policies concerning loans to insiders were to be reviewed and revised to insure that such transactions were at least as favorable to the bank as loans to the general public. To improve earnings, the bank agreed to develop a detailed budget, analyze pricing of bank services and its costs of funds and implement specific plans to control operating expenses. A liquidity position of no less than 15 percent was to be maintained, and weekly liquidity calculations were to be submitted to the regional administrator. The board was required to formulate and implement a program designed to strengthen and augment the bank's capital structure. The bank was required to employ a qualified certified public accountant to conduct a full scope directors' examination and assist in developing adequate internal controls. Dividends were restricted, and the bank was required to immediately correct all violations of law noted in the report of examination. 52. Bank with assets of less than $15 million A Formal Agreement required that the bank not lend money or otherwise extend credit to any borrower beyond the lending limitations imposed by 12 USC 84. The Agreement further required that all violations of law be corrected and that procedures be adopted to prevent future violations. The board was required to undertake an assessment of active management and was to provide the bank with a new, active and capable senior lending officer who was to have broad authority over the lending function of the bank. Written programs to eliminate all classified assets, improve collection efforts and eliminate all internal control and audit deficiencies 221 were to be adopted and implemented. The board was to review the existing loan policies of the bank and was to draft, adopt and adhere to written loan policies of a safe and sound nature. Credit information exceptions were to be eliminated, and the bank was to refrain from granting any new loans without first obtaining current and satisfactory credit information. A review of the reserve for possible loan was to be conducted on a quarterly basis to ensure that the reserve was maintained at a level reflective of the risk and potential for loss inherent in the bank's loan portfolio. The board was to inject $200,000 in equity capital and was to submit a written capital program to the regional administrator for his approval. The board was also required to initiate actions to improve and sustain the bank's earnings. The bank was prohibited from paying any dividends without prior written approval of the regional administrator. Written policies of a safe and sound nature regarding investment and funds management were to be drafted, implemented and adhered to by the bank. The board agreed to report every 60 days to the regional administrator all actions taken to comply with the Agreement and the results of those actions. 53. Bank with assets of $25 to $50 million A Formal Agreement required the board of directors to initiate and subsequently complete all action necessary to increase the bank's capital accounts by an amount deemed appropriate by the regional administrator. The board was to fully adhere to and enforce the terms of a deposit agreement to which the bank and the controlling owner of the bank were parties. 54. Bank with assets of less than $15 million A Formal Agreement required the bank to evaluate the capability and effectiveness of its chief executive officer, take steps to eliminate criticized assets, revise loan policy, eliminate violations of law, eliminate collateral exceptions, implement a revised collection policy and reduce the level of past-due loans. The board was also required to review the adequacy of the reserve for possible loan on a quarterly basis and implement a funds management program to reduce the level and frequency of borrowings. The bank was required to correct internal control deficiencies and to initiate an external audit of the bank. The board was to develop a capital plan to inject equity capital and restrict its dividends unless prior approval of the regional administrator was obtained. The board was to implement a budget monitored on a quarterly basis and adopt realistic by-laws to fit the needs of the bank. 55. Bank with assets of less than $15 million A Formal Agreement required the bank to immediately correct all violations of law and regulation. The board of directors was required to provide the bank with a new, active and capable chief execu 222 tive officer, subject to the approval of the regional administrator. The board was instructed to submit to the regional administrator a written capital program, including plans for an equity capital increase of not less than $200,000. Other written programs were required to (1) establish and maintain an adequate reserve for possible loan, (2) correct collateral exceptions, (3) obtain current and satisfactory credit information, (4) remove all assets from criticized status and (5) review and improve the bank's overall lending policy. The board was to develop and implement a written policy for coordination and management of the bank's assets and liabilities. 56. Bank with assets of less than $15 million A Formal Agreement required correction of all violations of law and required procedures to be adopted to prevent future violations. The Agreement further provided for the board, as provided by 12 USC 93, to indemnify the bank against any losses resulting from loans or other extensions of credit made in violation of 12 USC 84. The board was required to develop and submit to the regional administrator for approval a written capital program which was to provide for an increase of equity capital of not less than $500,000 and was to prohibit the paying of any dividends except as provided for in the approved capital program. The bank was required to prepare and furnish to the regional administrator a detailed budget for the fiscal year. The board was to take all necessary measures to improve the quality of its supervision of active management and was to provide the bank with a qualified full-time operations officer who was to be vested with sufficient authority to perform his functions in an acceptable manner. The bank was to refrain from extending credit to any insider on conditions or terms more favorable than those prevailing at the time for comparable transactions with other persons. The board was also to remove all criticized loans to insiders from the bank's books. Written programs to eliminate all assets from criticized status, to improve collection efforts and to increase and maintain the bank's reserve for possible loan were to be developed and implemented by the bank. The bank was to review and revise its written loan policy to conform with prudent banking standards. All necessary steps were to be taken to obtain current and satisfactory credit information on all outstanding loans, and no new loans were to be granted unless supported by such information. The board was to submit written reports every 30 days outlining the actions taken by the bank to comply with the provisions of the Agreement and the results of those actions. 57. Bank with assets of less than $15 million A Formal Agreement restricted dividends and placed limitations on compensation paid to the bank's executive officers. The bank was required to submit to the regional administrator for his review a written program to effectively manage the nature and volume of the bank's assets and liabili- ties, avoiding the need for excessive temporary borrowings, and to reduce the level of reliance on public fund deposits. The bank was required to review and amend its written loan policy. Procedures and guidelines requiring a quarterly review of the bank's reserve for possible loan were to be adopted to ensure that the reserve was maintained at an adequate level in view of the condition of the bank's loan portfolio. The bank was required to submit monthly reports to the regional administrator outlining actions taken to comply with terms of the Agreement and results of those actions. 58. Bank with assets of $25 to $50 million A Formal Agreement required correction of all violations of law and required adoption of procedures to prevent future violations. Dividends were restricted and the board of directors was required to employ the services of an independent auditor to commence a complete audit of the bank, paying particular attention to all forms of compensation paid to the officers and directors of the bank. The board was also required to retain the services of an independent legal counsel acceptable to the regional administrator to prepare a detailed written plan to eliminate or reduce any excessive remuneration being paid by the bank and to seek reimbursement of the bank by all responsible parties for any loss realized from any loans made in violation of 12 USC 84. The regional administrator retained power to veto or modify said plan in any manner deemed appropriate by him. The board agreed to prepare an analysis of the present and future capital needs of the bank and formulate a written plan to augment and strengthen the bank's capital structure. All necessary steps were to be taken to obtain current and satisfactory credit information on all loans so lacking, and the bank was to submit to the regional administrator a written summation of the procedures and forms adopted to obtain and record all necessary credit information. The board was required to adopt and implement a written program for the elimination of all assets from criticized status and was prohibited from extending credit to particular parties and business entities. The board was also to cause the collection of all uncollectible assets. If after 120 days from the effective date of the Agreement the bank, in the opinion of the regional administrator, had not made sufficient progress in complying with the terms of the Agreement and in improving the condition of the bank, the board was required to obtain a new, active and capable chief executive officer. Said chief executive officer was to be vested with substantial authority to ensure that the bank was operated on a safe and sound basis. A compliance committee of not less than five persons was to be established to ensure compliance by the bank with the articles of the Agreement. 59. Bank with assets of $15 to $25 million A Formal Agreement required correction of all violations of law and required procedures to be adopted to prevent future violations. The board of directors was required to provide the bank with both a new and full-time senior lending officer and a qualified full-time operations officer. Both officers were to be vested with sufficient authority to perform their duties in an acceptable manner. The bank was to review and increase its reserve for possible loan to a level commensurate with the risks inherent in the bank's loan portfolio. A written capital program was to be developed and submitted to the regional administrator for approval. Said program was to include specific plans for an immediate injection of equity capital and for future increases in equity capital to support the bank's growth and activities. Dividends were restricted as was the remuneration received by directors and senior officers of the bank. The board members were required, as provided by 12 USC 93, to indemnify the bank for all losses suffered on any loan or other extension of credit granted in violation of 12 USC 84. All credit information exceptions were to be rectified and all imperfections with respect to collateral were to be corrected. The bank was to adopt and implement written programs to improve collection efforts, eliminate all assets from criticized status and correct the deficiencies in its internal control and audit procedures. Administration of the bank's electronic data processing equipment function was to be improved. The board was to review and revise the bank's lending, investment and asset/liability management policies. Compliance with the provisions of the Agreement were to be monitored and ensured by the board, which was to submit to the regional administrator complete written reports every 30 days detailing the actions taken to comply with the Agreement and the results of those actions. 60. Bank with assets of less than $15 million A Formal Agreement required correction of all violations of law and required procedures to be adopted to prevent future violations. The bank was required to formulate and implement a program to improve its liquidity position and to reduce the bank's reliance on rate-sensitive deposits. The bank further was to prepare an analysis of its present and future capital needs and to formulate and implement a written program designed to maintain the capital structure at an adequate level. The reserve for possible loan was to be reviewed and augmented by an amount acceptable to the regional administrator. A written program to eliminate all assets from criticized status was to be adopted and implemented. The bank was required to review and amend its written loan policy in accordance with prudent banking standards. All internal control and internal audit deficiencies were to be corrected. The bank was also required to take such action as necessary to obtain fidelity insurance coverage. An evaluation of the adequacy and competency of current management was to be conducted, and if the bank determined that deficiencies existed then corrective action was to be 223 taken. The bank was to submit monthly reports to the regional administrator outlining those actions taken to comply with the terms of the Agreement and the results of those actions. 61. Bank with assets of $15 to $25 million A Formal Agreement required the bank to contact those account holders whose accounts may have been subject to as yet unidentified overcharges, to contact all account holders whose accounts had escheated to the state and to provide periodic statements of account to all account holders. An outside certified public accountant was required to conduct a complete audit of the allotment account department, and the bank was required to appoint an officer to supervise that department. 62. Bank with assets of $15 to $25 million A Formal Agreement required correction of all violations of law and required procedures to be adopted to prevent future violations. The board of directors was required to provide the bank with a new, active and capable chief executive officer who was to be vested with sufficient authority to assure the safe and sound operation of the bank. A written plan for achieving and maintaining an average liquidity of not less than 15 percent, exclusive of federal funds purchased and other shortterm borrowings, was to be developed and implemented, and bi-weekly liquidity reports were to be submitted to the regional administrator. The bank was also required to eliminate all repurchase agreements with entities not having an established and/or regularly recurring deposit relationship with the bank, and the bank was to substantially reduce the overall level of borrowed funds. The board was to retain an independent special counsel, acceptable to the regional administrator, to review all insider transactions with the bank and to formulate a plan to secure payment to the bank of all interest/ fees which should have been paid to the bank. Written programs were to be developed and implemented to (1) augment and strengthen the capital structure of the bank, (2) eliminate all assets from criticized status, (3) improve collection efforts, (4) rectify credit information exceptions and (5) review and increase accordingly the reserve for possible loan. The board was to review and substantially revise the bank's written loan and investment policies. The board was required to submit complete written reports to the regional administrator, every 30 days, detailing the action taken by the bank to comply with the provisions of the Agreement and the results of those actions. 63. Bank with assets of $50 to $100 million A Formal Agreement required correction of all violations of law and appointment of a compliance committee to report progress on correction of those violations. The compliance committee was also directed to submit a program for the elimination of all assets from criticized status and improve collection efforts. The bank was prohibited from making further loans to borrowers whose assets 224 were criticized. The board of directors was required to employ a capable senior lending officer subject to the approval of the regional administrator. The board was also required to prepare an analysis of the bank's present and future capital needs. Increases in salaries and bonuses paid to all directors were prohibited until the bank's condition and capital were restored to a level satisfactory to the regional administrator. The board was further required to perform quarterly reviews of the reserve for possible loan and to maintain the reserve at an adequate level. The board was to submit programs to the regional administrator addressing the following areas: loan collections, credit information, collateral exceptions, loan reviews and internal controls and auditing procedures. Finally, a restriction was placed on the dividend payments. 64. Bank with assets of $50 to $100 million A federal court required the bank to prepare a written plan to raise at least $2 million in new equity capital, and dividends were restricted. A new, active and capable chief executive officer was to be provided, with complete authority over the bank's operational functions. A complete review of the overall management team was to be undertaken. All assets were to be removed from classified status. Future loans to named parties were restricted. All violations of law were to be corrected immediately. Loans to insiders were restricted. New written loan policies were to be adopted, implemented and strictly adhered to. Credit concentrations in excess of 25 percent of gross capital funds were expressly prohibited. Measures were required to improve procedures relating to securing collateral and documenting credit information. Delinquent loans were to be reduced to a reasonable level. The board was to act to ensure the maintenance of an adequate liquidity position with a written policy to be submitted to the regional administrator, as well as bi-weekly reports reflecting average daily liquidity. Deficiencies in internal control and auditing procedures were to be corrected. The reserve for possible loan was to be restored and maintained at an adequate level. An oversight committee composed of at least three outside directors was to be established to insure the bank's compliance with the terms of the Agreement, and monthly progress reports were to be submitted to the regional administrator. 65. Bank with assets of less than $15 million A Formal Agreement required the bank to expand the duties of the chief executive officer giving him primary responsibility for monitoring the granting of loans, loan review and loan loss review functions. The board was further required to appoint a new chief executive officer if the bank's condition failed to show substantial improvement. The board was also responsible for reviewing the composition of the board to determine whether to expand membership or to replace present board members. The bank was required to immediately correct all violations of law and to review internal controls and procedures to ensure that other violations did not occur. The bank was to develop written programs to (1) implement an internal credit review system, (2) establish guidelines for sound asset/liability management and (3) strengthen the reserve for possible loan. 66. Bank with assets of $15 to $25 million A Formal Agreement required the bank to correct and eliminate each violation of law, rule or regulation cited. The board of directors was also to provide the bank with an active, capable full-time chief executive officer within 90 days of the Agreement and establish a personnel committee composed of directors and officers to recommend personnel policies and procedures. The board was required to conduct a quarterly review of the bank's reserve for possible loan, with a copy of each report sent to the regional administrator. The board was required to submit to the regional administrator monthly delinquent loan percentage reports. Written programs were required to be developed and implemented to (1) remove all assets, including other assets especially mentioned, from criticized status, (2) obtain current and satisfactory credit information on all loans so lacking, (3) correct collateral exceptions, (4) review and revise lending policy, (5) establish appropriate internal control and audit procedures and (6) review and revise the bank's investment policy. A compliance committee composed of board members was to be established with written progress reports on compliance with the Agreement to be submitted to the regional administrator. Additionally, the bank was required to submit a detailed budget for the following fiscal year to the regional administrator and for each year the Agreement remained in effect. 67. Bank with assets of $25 to $50 million A Formal Agreement with the bank required that the board of directors always consist of at least five members and that the names of any nominees for the board be submitted to the regional administrator subject to his veto. The daily operating management of the bank was placed in the hands of the chief executive officer who reported only to the board of directors. The bank was required to adopt and implement a written program to eliminate all assets from criticized status and to refrain from extending credit to borrowers whose assets were criticized. An executive loan committee was appointed to review all extensions of credit in excess of a specified amount, and the bank was required to establish internal controls to monitor the lending function. Current and satisfactory credit information was to be obtained on all loans so lacking and all collateral exceptions were to be remedied. Moreover, each loan officer was required to prepare a written credit analysis for every loan. The bank was required to adopt policies governing •liquidity and asset/liability management and policies governing its investment account. A written capital program was required, as well as quarterly review of the bank's reserve for possible loan. The chairman of the board resigned from the board of directors and entered into a written agreement which prohibited him from involvement in the bank's daily operations, from attempting to cause any extension of credit to be made by the bank to any particular person, corporation, business or other entity, from serving as chief executive officer of the bank or from unilaterally attempting to make any change in the bank's personnel. 68. Bank with assets of $25 to $50 million A Formal Agreement required the bank to correct all violations of law cited. The board of directors was required to establish a compliance committee comprised of at least three outside directors to ensure the bank's compliance with the terms of the Agreement, with quarterly progress reports to be submitted to the regional administrator. The board was also required to make a comprehensive evaluation of the bank's management with monthly progress reports submitted to the regional administrator. A capable senior lending officer was to be appointed by the board, with a loan and executive committee to monitor lending functions until such officer was appointed. The bank was to achieve and maintain an adequate capital structure and to obtain an infusion of $1 million in equity capital within 180 days of the Agreement. The bank was prohibited from declaring or paying dividends except: (1) in conformity with the provisions of 12 USC 56 and 60, (2) justified by sound banking policy and (3) with the prior written approval by the regional administrator. Written programs were required to be established and implemented to (1) revise written loan policies, (2) obtain current and satisfactory credit information on future loans and correct imperfections pertaining to the securing of collateral, (3) provide for improved collection efforts and reduce the level of delinquent loans, (4) remove all assets from criticized status and (5) maintain an adequate reserve for possible loan. The bank was to employ the services of a capable internal auditor whose primary responsibility was to prepare written recommendations to the board for establishment of adequate internal controls. 69. Bank with assets of less than $15 million A Formal Agreement required the bank to immediately correct all violations of law cited. The board of directors was required to evaluate the adequacy and effectiveness of management and detail the authority and responsibility of the chief executive officer. A compliance committee was mandated to ensure compliance with the terms of the Agreement. The board was to adopt written programs to (1) implement a written loan policy of safe and sound nature, (2) improve collection efforts, (3) correct credit and collateral exceptions, (4) correct internal control deficiencies and (5) achieve and maintain an adequate reserve for possible loan. 225 Memorandum of Understanding 70. Bank with assets of less than $15 million A Memorandum of Understanding required the board of directors to correct each violation of law cited in the report of examination and expressly stated the board's acknowledgement of personal liability for any losses suffered by the bank on excessive loans in violation of 12 USC 84. The board was further required to develop a written policy to ensure that loans to insiders or their related interests were based on documented creditworthiness of such individuals. The board was to review the bank's management team and ensure that needed officers were employed in a timely fashion. Written programs were required for (1) elimination of all assets from a criticized status, (2) correction of loan documentation deficiencies and (3) augmentation of reserve for possible loan. The board was required to engage an independent certified public accountant to commence and complete a comprehensive audit of the bank. Additionally, the bank was required to submit monthly progress reports to the regional administrator covering (a) correction of violations, (b) strengthening and/or removal of criticized assets, (c) correction of internal control deficiencies and (d) correction of loan documentation exceptions. 71. Bank with assets of less than $15 million A Memorandum of Understanding required the board of directors to immediately correct all violations of law cited in the report of examination. The board was to provide the bank with an active and capable chief executive officer and to submit a report to the regional administrator assessing the competency of all bank officers. The board was to establish an oversight committee composed of at least four outside directors to ensure compliance with all terms of the Memorandum. The board was required to establish and implement written programs to (1) amend the bank's written lending policies, (2) obtain current and satisfactory credit information on all future loans, (3) remove all assets from criticized status and (4) achieve a profitable level of bank operations. In order to improve the bank's unsatisfactory liquidity position, the board was to develop written asset/liability guidelines as well as a new written investment policy of a safe and sound nature suited to the needs of the bank. 72. Bank with assets of less than $15 million A Memorandum of Understanding required the board to immediately seek a qualified and capable chief executive officer, experienced in both lending and operations. A new written lending policy was required, with special emphasis on reducing the volume of criticized loans, monitoring delinquent loans and obtaining proper credit and collateral documentation. The reserve for possible loan was to be maintained at a level deemed adequate in light of the risk and potential for loss inherent in the bank's loan portfolio. The bank was to engage 226 an independent certified public accountant to aid in establishing proper internal controls and audit procedures. Liquidity was to be maintained at an adequate level, and a policy addressing volume and volatility of rate-sensitive deposits was to be formulated. An equity capital injection of at least $250,000 was required to improve the bank's capital structure. All violations of law cited were to be immediately corrected, with steps taken to prevent future violations. 73. Bank with assets of $25 to $50 million A Memorandum of Understanding required the bank to correct each violation cited in the report of examination, with an express restriction on loans in excess of the lending limitation provided for in 12 USC 84. The bank was required to develop a written program covering loans to insiders and their interests, with a copy submitted to the regional administrator for approval. The bank was further required to appoint an independent corporate trustee to administer the employee's profit sharing plan in full compliance with Employee Retirement Income Security Act. The board of directors was to prepare an analysis of the bank's capital needs, including a plan to reduce the bank's loan-tocapital ratio. Other written programs were required to (1) eliminate all assets from classified status, (2) correct loan documentation deficiencies, (3) correct deficiencies in internal controls and audit procedures and (4) improve collection efforts. The board was to evaluate the adequacy and competency of the bank's management. A detailed report of this evaluation was to be submitted to the regional administrator. 74. Bank with assets of $15 to $25 million A Memorandum of Understanding required comprehensive plans to improve the bank's earnings and its liquidity and asset/liability management policy. An adequate reserve for possible loan was to be achieved and maintained. Written programs were required to (1) remove all assets from criticized status, (2) reduce the level of delinquent loans and (3) correct internal control deficiencies. The bank was further required to remedy all violations cited in the report of examination. 75. Bank with assets of $15 to $25 million A Memorandum of Understanding required that all violations cited be immediately corrected. A new senior lending officer was to be appointed. Written programs were required to be established and implemented to (1) remove all assets from criticized status, (2) obtain current and satisfactory credit information, (3) amend the written loan policy, (4) improve the bank's liquidity position and (5) eliminate internal control deficiencies. A new written investment policy of a safe and sound nature were also required. 76. Bank with assets of less than $15 million A Memorandum of Understanding required the board of directors to improve the quality of loan supervision by active management and the board. The board was required to comprehensively review the bank's current written loan policy and make all necessary modifications, specifically addressing repayment terms and collateral requirements. Written programs were required to be established and implemented to (1) eliminate all assets from criticized status, (2) obtain current and satisfactory credit information on all loans so lacking, (3) correct collateral exceptions, (4) ensure that the bank's reserve for possible loan is maintained at an adequate level, (5) analyze and fulfill the bank's present and future capital needs, (6) correct internal control deficiencies and (7) ensure that all future loans to insiders and their interests comply with appropriate statutes and regulations. Loans to any borrower whose loans or other extensions of credit had been criticized were restricted. The board was further required to appoint a qualified employee to perform the bank's internal audit programs and independently submit written reports to the regional administrator. 77. Bank with assets of $15 to $25 million A Memorandum of Understanding required the bank to reduce all loans in excess of the 12 USC 84 lending limitation and to refrain from the granting of such loans. All other violations cited were to be immediately corrected. The board of directors was instructed to reduce the bank's ratio of net loans to capital to 9.5 to 1 within 24 months of the effective date of the Memorandum. The board was required to appoint a compliance committee composed of at least three outside directors to ensure the ongoing compliance with the terms of the Memorandum. Written programs were to be adopted to (1) remove all assets from criticized status, (2) achieve and maintain an adequate reserve for possible loan, (3) obtain current and satisfactory credit information on all loans so lacking, (4) correct each collateral exception noted and (5) correct internal control deficiencies. The bank was not to declare or pay any dividends except (a) in conformity with 12 USC 60, (b) when justified by sound banking policy and (c) with prior written approval of the regional administrator. 78. Bank with assets of less than $15 million A Memorandum of Understanding required the board of directors to immediately correct all violations of law cited in the report of examination. All criticized loans to insiders or their related interests were to be removed from criticized status. The board was required to take all necessary steps to improve the bank's management and increase the supervision thereof. A new written loan policy was required, as well as written programs designed specifically to (1) reduce and collect each classified loan, (2) closely monitor each delinquent loan and initiate aggressive collection efforts, (3) obtain current and satisfactory credit information and (4) correct deficiencies in collateral documentation. The board was to employ the services of an inde pendent certified public accountant to recommend to the bank procedures for proper internal auditing and control. The board was also required to formulate and adopt a comprehensive policy to improve the bank's liquidity position, specifically addressing volume and volatility of rate-sensitive deposits. 79. Bank with assets of less than $15 million A Memorandum of Understanding required the board of directors to improve the quality of supervision by both active management and the board. A thorough review of the bank's written loan policies was to be undertaken, and staff adherence thereto was to be ensured. Written plans were to be adopted to (1) strengthen or collect each criticized loan, (2) monitor and identify problem credits, (3) obtain current and satisfactory credit information, (4) maintain an adequate reserve for possible loan, (5) ensure that liquidity is maintained at an adequate level, specifically addressing volume and volatility of rate-sensitive deposits and (6) establish proper internal controls. All violations cited in the report of examination were to be corrected and the board was required to ensure against their recurrence. 80. Bank with assets of $25 to $50 million A Memorandum of Understanding required the bank to develop a comprehensive plan to improve earnings. The plan was to include a detailed budget which carefully controlled expenses, particularly interest and salaries. Policies concerning liquidity, asset/liability management and investments were to be reviewed and revised. A written capital program was required, and dividends were restricted. A written loan policy was to be revised and implemented, and a program of credit administration to reduce delinquencies and credit/ collateral documentation deficiencies was required. The bank had to develop a plan to remove from criticized status all loans so listed in the examination report. A program to replenish and maintain the reserve for possible loan at an adequate level was to be designed and implemented. 81. Bank with assets of $50 to $100 million A Memorandum of Understanding required the board of directors immediately to correct each violation of law, rule or regulation cited in the report of examination. Written programs were to be established and implemented to (1) reduce or collect each criticized loan, (2) obtain current and satisfactory credit information and perfect procedures pertaining to the securing of collateral on all loans so lacking, (3) establish asset/liability management of a safe and sound nature, ensuring a liquidity level of a* daily average of 15 percent or more (exclusive of borrowed funds), (4) achieve and maintain an adequate reserve for possible loan and (5) to correct the bank's internal control deficiencies. The board was further required to formulate a plan for the injection of $1 million in equity capital. 227 82. Bank with assets of less than $15 million A Memorandum of Understanding required the board of directors to review and improve the loan portfolio and management thereof. Written programs were to be established to (1) reduce the volume of criticized assets, (2) recover past-due loans, (3) maintain an adequate reserve for possible loan, (4) obtain current and satisfactory credit information on all loans so lacking, (5) improve internal audit procedures and (6) ensure sufficient liquidity and capital positions. The board was required to take steps to improve the overall lending function and ensure compliance by all lending officers with established lending procedures. All violations of law, rule or regulation were to be immediately corrected. The board was also directed to prevent future insider abuse of the bank's lending function and to see that the bank was reimbursed for loss of interest resulting from such practices. 83. Bank with assets of less than $15 million A Memorandum of Understanding required the board of directors to institute a program designed to ensure that liquidity be restored and maintained at a level commensurate with prudent banking practices. The bank was also required to comprehensively analyze its equity capital needs and take steps toward the strengthening and augmentation thereof. Written programs were required to (1) eliminate all loans from criticized status, (2) obtain current and satisfactory credit information, (3) collect delinquent loans, (4) maintain an adequate reserve for possible loan and (5) correct all collateral exceptions. The board was required to obtain the services of an independent certified public accountant to thoroughly examine the bank's operating budget. If, in the opinion of the regional administrator, the bank's condition failed to sufficiently improve, the board was required to obtain a new, active and capable chief executive officer. All violations of law and regulation were to be corrected. 84. Bank with assets of less than $15 million A Memorandum of Understanding required the board of directors to review and amend the bank's written loan policy and reduce the level of criticized assets. Delinquent loans were to be closely monitored. The bank was required to maintain an adequate reserve for possible loan. The board was required to formulate a comprehensive funds management policy to ensure maintenance of liquidity at no less than 20 percent. An injection of $300,000 in equity capital was required. A compliance committee including at least two outside directors was to be established and violations of law were to be immediately corrected. 85. Bank with assets of less than $15 million A Memorandum of Understanding prohibited the bank from extending credit in violation of the lending limitations provided for in 12 USC 84. The board of directors was required to reimburse the bank for any losses incurred as a result of any 228 such violations. The board was required to immediately correct all other violations cited. The board was required to reduce the level of loans outstanding to borrowers located outside the bank's primary trade area to an amount not to exceed 25 percent of gross loans. Written programs were required to (1) remove all assets from criticized status, (2) correct credit and collateral deficiencies, (3) reduce the level of delinquent loans, (4) ensure the ongoing adequacy of the reserve for possible loan and (5) correct internal control deficiencies. The board was required to implement a previously approved capital program calling for an injection of an additional $800,000 in equity capital. 86. Bank with assets of $15 to $25 million A Memorandum of Understanding required the immediate correction of all violations cited. The board of directors was required to increase and maintain a liquidity level in excess of 15 percent and to provide bi-weekly liquidity calculations to the regional administrator. A written fundsmanagement policy with investment guidelines was to be formulated and implemented. The board was required to design written programs to (1) reduce the level of criticized assets and past-due loans, (2) obtain current and satisfactory credit information on all loans made in excess of $5,000, (3) reduce the volume of out-of-territory loans and (4) review and maintain the reserve for possible loan at an adequate level. The board was required to inject equity capital in an amount sufficient to increase the bank's capital account to a level acceptable to the regional administrator. 87. Bank with assets of $15 to $25 million A Memorandum of Understanding required the bank to immediately correct all violations cited, especially with respect to the lending limitation imposed by 12 USC 84. Written programs were to be established and implemented to (1) eliminate reliance on rate-sensitive funds and to achieve and maintain a liquidity level of not less than 20 percent, (2) remove all assets from criticized status, (3) ensure an adequate reserve for possible loan, (4) improve collection efforts and reduce the level of delinquent loans, (5) obtain current and satisfactory credit information on all loans so lacking, (6) correct internal control deficiencies and (7) ensure adherence to existing written lending and overdraft policies. The board of directors was to provide the bank with a new, active and capable senior lending officer. The board was required to provide the bank with fidelity insurance coverage in an appropriate amount. Also required were monthly reports to be submitted to regional administrator comprehensively analyzing the bank's earnings and present and future capital needs. 88. Bank with assets of $15 to $25 million A Memorandum of Understanding required the board of directors to develop a management plan addressing the bank's management and staffing needs. All violations of law were to be immediately corrected. The board was required to establish and implement written programs designed to (1) obtain current and complete financial information on all loans cited as lacking such information, (2) correct imperfections pertaining to the securing of collateral, (3) correct internal control deficiencies and (4) correct deficiencies in the electronic data processing operations. 89. Bank with assets of less than $15 million A Memorandum of Understanding required the bank to correct all violations of law, rule or regulation cited in the report of examination. The bank was required to institute a program for improving and maintaining the bank's liquidity position at not less than 15 percent, exclusive of volatile deposits, with monthly liquidity analysis reports sent to the regional administrator. A written program to improve and sustain the bank's earnings was also required. The board of directors was required to prepare an analysis of the bank's present and future capital needs and formulate a program to augment and strengthen the bank's capital structure, with a copy of said program sent to the regional administrator for approval. The board was required to hire a new, qualified and capable lending officer to act as the bank's credit administrator, whose duties were to include supervision of the overall lending function. 90. Bank with assets of less than $15 million A Memorandum of Understanding called for comprehensive analysis of the bank's present and future management needs. The Memorandum required the bank to develop a plan to implement procedures to correct internal control deficiencies. The board was required to develop written programs to eliminate criticized assets, eliminate loans lacking complete credit information and improve collection practices and procedures. The board was directed to eliminate the violation of 12 CFR 1.8 and to develop a written program to improve the bank's earnings. This board agreed to submit the following reports on a monthly basis to the regional administrator: balance sheets, operating statement, reconciliation of the reserve for possible loan, criticized assets and liquidity computation past due report. 91. Bank with assets of $25 to $50 million A Memorandum of Understanding required the bank's chief executive officer to provide the regional administrator with an in-depth written review of the bank's management structure. The board was required to adopt measures for improving the bank's liquidity position and reducing dependence on rate-sensitive funds. All violations of law, rule or regulation were to be immediately corrected. Written programs were required to (1) remove all assets from criticized status, (2) maintain an adequate reserve for possible loan, (3) correct internal audit deficiencies, (4) improve collection of delinquent loans and (5) revise the written lending policy to render it commensurate with safe and sound practices. An oversight committee, composed of at least three outside directors, was to be established to ensure and coordinate the bank's ongoing compliance with all provisions of the Memorandum. 92. Bank with assets of less than $15 million A Memorandum of Understanding required the board of directors to develop a comprehensive plan designed to improve the bank's earnings. The board was required to prepare an in-depth analysis of the bank's present and future capital needs, with a plan to augment the bank's equity capital by an amount deemed appropriate by the regional administrator. Written programs were required to (1) reduce delinquent loans to an acceptable level, (2) obtain current and satisfactory credit information on all loans so lacking, (3) remove all assets from criticized status and (4) ensure the adequacy of the reserve for possible loan. The board was further required to correct and prevent the recurrence of all violations of law and regulations cited in the report of examination. 93. Bank with assets of $25 to $50 million A Memorandum of Understanding required the board of directors to comprehensively evaluate the bank's management and to provide a program for formal training to increase managerial competency. The board was to propose a written policy for liquidity and asset/liability management, with a copy of the proposal to be forwarded to the regional administrator for comments and review. Written programs were required to be established and implemented to (1) remove all assets from criticized status, (2) obtain current and satisfactory credit information on all loans so lacking, (3) achieve and maintain an adequate reserve for possible loan and (4) eliminate all unresolved violations of law, rule or regulation cited in the report of examination. The board was required to conduct an objective, in-depth analysis of the bank's present and future capital needs. The bank was restrained from declaring or paying any dividend unless (a) in conformity to 12 USC 56 and 60, (b) justified by safe and sound banking policy and (c) with prior written approval of the regional administrator. The bank was further required to correct deficiencies in its accounting and administrative controls and to employ-a qualified internal auditor to supervise this effort. 229 APPENDIX D Selected Addresses and Congressional Testimony Selected Addresses and Congressional Testimony Date and Topic Jan. 26, 1979. Statement of John G. Heimann, Comptroller of the Currency, before the Senate Committee on Banking, Housing and Urban Affairs, Washington, D.C Feb. 9, 1979. Remarks of John G. Heimann, Comptroller of the Currency, before the Assembly for Bank Directors, Boca Raton, Fla Feb. 28, 1979. Statement of John G. Heimann, Comptroller of the Currency, before the Senate Committee on Banking, Housing and Urban Affairs, Washington, D.C Mar. 26, 1979. Remarks of John G. Heimann, Comptroller of the Currency, before the Government Research Corporation, London, England Apr. 5, 1979. Statement of John G. Heimann, Comptroller of the Currency, before the Subcommittee on Financial Institutions Supervision, Regulation and Insurance of the House Committee on Banking, Finance and Urban Affairs, Washington, D.C Apr. 11, 1979. Statement of John G. Heimann, Comptroller of the Currency, before the Subcommittee on Financial Institutions of the Senate Committee on Banking, Housing and Urban Affairs, Washington, D.C. May 4, 1979. Remarks of Donald R. Johnson, Director for Trust Operations, before the 27th Annual Southern Trust Conference, Mobile, Ala May 15, 1979. Statement of John G. Heimann, Comptroller of the Currency, before the Subcommittee on Financial Institutions Supervision, Regulation and Insurance of the House Committee on Banking, Finance and Urban Affairs, Washington, D.C May 23, 1979. Statement of John G. Heimann, Comptroller of the Currency, before the Senate Committee on Banking, Housing and Urban Affairs, Washington, D.C June 14, 1979. Statement of John G. Heimann, Comptroller of the Currency, before the Senate Committee on Banking, Housing and Urban Affairs, Washington, D.C June 27, 1979. Statement of Cantwell F. Muckenfuss, III, Senior Deputy Comptroller for Policy, before the Subcommittee on Financial Institutions of the Senate Committee on Banking, Housing and Urban Affairs, Washington, D.C Aug. 1, 1979. Statement of John G. Heimann, Comptroller of the Currency, before the Subcommittee on Commerce, Consumer and Monetary Affairs of the House Committee on Government Operations, Washington, D.C Aug. 8, 1979. Remarks of Donald R. Johnson, Director for Trust Examinations, before the 53rd Western Trust Conference, Seattle, Wash Sept. 12, 1979. Statement of Lewis G. Odom, Jr., Senior Deputy Comptroller of the Currency, before the Subcommittee on Commerce, Consumer and Monetary Affairs of the House Committee on Government Operations, Washington, D.C Sept. 20, 1979. Remarks of Dean E. Miller, Deputy Comptroller for Specialized Examinations, before the 37th Trust Conference, Florida Bankers Association, Lake Buena Vista, Fla Sept. 25, 1979. Statement of John G. Heimann, Comptroller of the Currency, before the Subcommittee on Financial Institutions Supervision, Regulation and Insurance of the House Committee on Banking, Finance and Urban Affairs, Washington, D.C Oct. 16, 1979. Statement of Lewis G. Odom, Jr., Senior Deputy Comptroller of the Currency, before the Subcommittee on Financial Institutions Supervision, Regulation and Insurance of the House Committee on Banking, Finance and Urban Affairs, Washington, D.C Dec. 11, 1979. Statement of Jo Ann S. Barefoot, Deputy Comptroller for Customer and Community Programs, before the Subcommittee on Consumer Affairs of the Senate Committee on Banking, Housing and Urban Affairs, Washington, D.C Dec. 12, 1979. Statement of John G. Heimann, Comptroller of the Currency, before the Subcommittee on International Finance of the Senate Committee on Banking, Housing and Urban Affairs, Washington, D.C. Dec. 21, 1979. Statement of Cantwell F. Muckenfuss, III, Senior Deputy Comptroller for Policy, before the Senate Committee on Banking, Housing and Urban Affairs, Washington, D.C Dec. 28, 1979. Remarks of John G. Heimann, Comptroller of the Currency, before the Joint Luncheon of the American Economic Association and the American Finance Association, Atlanta, Ga 232 Page 233 236 239 244 247 250 257 263 268 276 279 283 290 288 297 300 302 305 311 317 326 Statement of John G. Heimann, Comptroller of the Currency, before the Senate Committee on Banking, Housing and Urban Affairs, Washington, D.C., January 26, 1979 I appreciate this opportunity to discuss the 1979 budget of the Office of the Comptroller of the Currency. Copies of the 1979 operating and capital budgets have previously been supplied to the committee. I would like to use this occasion to highlight the most important features of the 1979 operating budget. Total expenses of the 1979 operating budget amount to $102,012,900 and are broken down into the following categories: Salaries and benefits Travel Education and training Rent and maintenance Office expense Other expenses Total $ 73,640,200 13,906,300 592,200 4,819,200 2,375,800 6,679,200 72.2% 13.6 .6 4.7 2.3 6.6 $102,012,900 100.0% Salaries and benefits, travel, and education and training account for more than 86 percent of the 1979 operating budget and are directly related to employment of people. Trained and skilled people are essential for performing our responsibilities to examine and analyze national banks for soundness, to protect consumer interests, to protect investor interests and to foster economic stability. It is important to realize that the tasks assigned to the Comptroller's Office are people intensive. Therefore, because the safety and soundness of the banking system to our economy are crucial, it is imperative to hire the best people, train them well and retain the flexibility to assign them to wherever they are most needed. Before turning to a more detailed discussion of these figures, I want to point out that the increase in the 1979 budgeted expenses stems from (1) growth of the national banking system, (2) changes in supervisory requirements imposed by the increasing complexity of national banks' activities both domestically and internationally, (3) new duties stemming from passage of the International Banking Act and the Financial Institutions Regulatory and Interest Rate Control Act, (4) continuing implementation of duties mandated by Congress in recent years, such as Truth in Lending, Fair Housing Act and Community Reinvestment Act, which will result in greater expenditures in 1979 than in 1978 and (5) inflation. Total domestic and foreign assets of banks supervised by the Comptroller's Office have grown 56 percent over the last 5 years from $570.9 billion at yearend 1973 to an estimated $890 billion at year-end 1978. The estimated increase for 1979 is 10.3 percent. We expect continued growth and expansion in the national banking system during 1979 which, in turn, will require allocating additional resources to meet existing responsibilities of the Comptroller's Office. In addition, the complexity of commercial banking has also made examination and supervision more demanding. Because our functions depend primarily on people, this complexity has increased the need to place special emphasis on obtaining the services of individuals with abilities to deal with the most sophisticated banking operations, to train and keep them abreast of the latest developments and to design incentives to retain the best possible staff in the face of offers from the private sector which are frequently more attractive because of governmental limitations on salaries and benefits. Over the last several years, we have increasingly found it essential to hire and train specialists. This is reflected in organizational changes which have resulted in separate divisions dealing with consumer examinations, consumer affairs, community development, civil rights, multinational banks, special surveillance of national banks (National Bank Surveillance System) and other specialized areas. Thus, both salary expense and training expense have risen considerably. Relatively high personnel turnover adds to the expense of maintaining the highly qualified people we must have to respond quickly and effectively to new situations or problems that inevitably arise, especially in times when the economy is less than robust. Another indication of the growing complexity of commercial banking is the rapid expansion in both size and scope of the domestic and international activities of the largest national banks. Foreign assets of national banks grew 112 percent over the last 5 years from $79.9 billion at year-end 1973 to an estimated $169.1 billion at year-end 1978. This percentage increase is more than double the 47 percent growth in domestic assets over the same period. Foreign assets as a percentage of total assets have risen from 14 percent at year-end 1973 to an estimated 19 percent at year-end 1978. Because of our increasing interest in this area, the Comptroller's Office has become an active participant in the deliberations of the Group of Ten Committee on Banking Regulations and Supervisory Practices, known as the Cooke Committee. We have provided research to this committee and have sent representatives to its quarterly meetings. In 1978, Congress continued its trend to add new duties for federal bank regulators to make regulation more responsive to the public's concerns. The extensive regulatory and supervisory changes mandated by the new Financial Institutions Regulatory and Interest Rate Control Act and the International Banking Act, together with expanded supervisory responsibilities in connection with the Community Reinvestment Act, will inevitably require more personnel and support systems if they are to be administered effectively. We estimate that our costs in connection with these three laws will amount to $2,079,000 during 1979. One of the most compelling—I might even say insidious—elements influencing the 1979 budget is the inflation rate, which affects our Office as it does other components of our society. During the last 5 years the price level, as measured by the Gross National 233 Product (GNP) deflator, has risen 44 percent. This is an annual rate of inflation equal to 7.5 percent. During this same period, our expenses per employee increased 58 percent. The more rapid rise in expenses per employee than the increase in prices resulted from the upgrading and increased specialization of personnel, which we deem essential to respond adequately to the increasing complexity and sophistication of banking operations. Expenses per employee are expected to rise at least 3.5 percent in 1979, compared to the official 7.4 percent increase forecast by the administration for the GNP deflator. Over the last 5 years, growth of the national banking system, increasing complexity in national banks' activities, new duties, expansion of traditional duties and inflation have combined to increase our expenses 103 percent from $45.8 million in 1973 to $92.9 million in 1978. About half of the increase was the result of inflation. The other half stemmed from the addition of employees to carry out new and traditional responsibilities. To improve the effectiveness of our Office in carrying out its statutory responsibilities and in responding to an increasingly complex and volatile economy, changes were made in the structure of the Office early last year. We are confident these changes will further improve our efficiency. This program consolidates management functions, strengthens the administration of regional activities and accommodates changes in the banking industry. Of course, an effective and efficient organization must always be open to selfexamination, improvement and, if necessary, change. We intend to continue to approach our responsibilities in this spirit. The major functions of bank supervision, operations, policy and law have been grouped into four areas of control and direction. Each major function is the responsibility of a senior officer who reports directly to the Comptroller. This arrangement has the advantages of consolidating management of similar functions, strengthening administration of regional activities and planning for accommodation of evolutionary changes. It is designed to improve the ability of the Comptroller to exercise proper direction and control of programs and functions, to meet our statutory responsibilities and to address more readily new and emerging issues confronting the national banking community. These changes enhance program effectiveness by clearly delineating and consolidating major functional areas of responsibility and reducing the number of positions reporting directly to the Comptroller. The changes resulted in adding 39 permanent positions to the 3,069 originally budgeted for 1978. (Copies of the new organization chart have been supplied to the committee.) In this time when the administration is making strenuous efforts to bring inflation under control, we are making every effort to keep our expenditures to a minimum consistent with effective supervision of the national banking system. While we initially estimated that our new and traditional duties would require expenditure of $111,090,300 and a staff of 3,270 in 1979, we are confident that stringent emphasis on efficiency will 234 permit us to carry out our responsibilities with the expenditure of $102,012,900 and a staff of 3,123. We believe that elimination of 147 positions, salary expense reduction of $3,359,600 and travel expense reduction of $3,825,200 from estimated needs will not impair the Office's performance. The slight net increase of 15 new positions in the 1979 budget over 1978 was reviewed and appoved by the Department of the Treasury.Their decision recognizes that our banking system, in times like these, needs more people to assure the soundness of the system. Projected revenues for 1979 are $102,500,000, which should provide a surplus of $487,100. Because our projected income and expenses are essentially balanced, we will add this slight excess of revenue to our reserve funds which we must, in prudence, maintain to operate during different economic periods when revenues fall short of expenses. The 1979 budget recognizes the increasing importance of the areas I highlighted last year, viz., international operations and consumer programs. A multinational region has been created to deal with the increasingly complex and multifaceted nature of some of the nation's largest banks. Because of the dispersed geographical composition of the banks' responsibilities, it is, in effect, a separate region. Its creation derives from the fact that there exist two types of banking systems based on size and services—those that are global in operation and others that serve more restricted areas. Using $1 billion in total assets as an approximate indicator of a multinational bank, there were 150 banks whose total assets exceeded this amount on September 30, 1978. These 150 banks amounted to only 1 percent of the 14,394 commercial banks but held 57 percent of the total assets. The multinational region will be divided into two general areas: (1) examination and supervision and (2) support and analysis. By concentrating on banks in this group, our objective is to understand and supervise the operations of these major banks outside our classical framework. However, we intend to continue the traditional examination process and the external analysts' perception to permit a more logical conclusion as to the present condition of the banks. Economic data affecting multinational banks or banks in general will be used to assess the impact of developments on the entire banking system. Initially, the region will be responsible for 10 of the largest national banks. More will be added as we gain experience. However, we felt it prudent at the outset to start with a limited number of banks to facilitate experimentation and development of sound and workable supervisory and analytical programs. The amount allocated in the 1979 budget to this region is $1,475,300 as against $1,002,200 expended in 1978. We are convinced this increase is vital if we are to perform effectively our responsibilities in this growing and sensitive area. Expenses also continue to increase as a result of our commitment to consumer protection and community development. Our newly created Office of Customer and Community Programs will strengthen the consumer affairs, civil rights and community development activities of our Office. These activities include: (1) The development and improvement of regulations, legislative proposals and general policy; (2) Guidance, training and monitoring for our consumer examination program which is now enforcing the provisions of the Community Reinvestment Act, Truth-in-Lending Act, Equal Credit Opportunity Act, Fair Housing Act, Real Estate Settlement Procedures Act and other consumer-oriented laws; and (3) Liaison with a broadening consumer and community constituency, who increasingly recognize they are affected by the lending practices of the banks we regulate. Of particular importance is the Office's expanding role in implementing the Community Reinvestment Act, which requires that the regulatory agencies encourage lenders to help meet the credit needs of their local communities. As part of our commitment to effective action, the new office will promote communication between lenders and community officials, residents and business, and it will develop information to help identify community credit needs and take steps to improve access of nonbanking groups to the regulatory process, in tms way, we nope to substitute a process of education for burdensome regulatory requirements or complex formal interpretations. Because we feel strongly that, in this time of severe public budget constraints, financial institutions must make major contributions to meet housing, community development and small business credit needs and that our technical support to encourage and provide leadership in developing these programs is essential, the customer and community program expenses of the 1979 budget are $1,322,600, or 106 percent above the estimated 1978 expenses of $642,100. To improve the ability of our Office to address more readily new and emerging issues and to increase our effectiveness in carrying out existing programs, we have expanded the staff involved in research, analysis and regulatory reform. The increased complexity of the banking system, the financial markets and the economy as a whole require broader and more timely analysis of developments than ever before. The role of financial institutions in the economy is constantly changing, and we, as a regulator and supervisor, have a responsibility for anticipating developments and preparing appropriate strategies for dealing with them. To this end, we have expanded our staff in the area of interagency coordination to facilitate the greatly increased number of matters requiring interagency consultation that have resulted from new legislation, the increasing complexity of the financial system, the increasing need to develop uniform regulatory policies and supervisory procedures and the need to exchange information about different parts of the same banking organization supervised by different agencies. In addition, we have created the Office of Regulations Analysis to improve the efficiency and effectiveness of the regulation and supervision of national banks. This office reviews regulations for clarity and brevity to minimize cumbersome procedures and complex legal terminology with special attention paid to the burdens placed on small institutions which do not have the resources to handle the volume of paperwork or analysis involved in complying with existing regulatory requirements. We expect that over time the work of this office will reduce national banks' costs of complying with regulations and reduce the costs incurred by the Comptroller's Office in administering and enforcing regulations. We have expanded and upgraded the staff in the Division of Banking Research and Economic Analysis and the Strategic Analysis Division to enhance the quality and range of research and analysis of economic developments, banking industry trends and developments, banking operations and a variety of other issues, both long- and short-term, affecting the banking and financial systems. The amount allocated in the 1979 budget to regulatory reform, research and analysis is $1,612,100, or 116 percent above the 1978 expense of $746,600. Turning now to the most important expense categories in the 1979 budget, the largest proportion is devoted to salaries. The simple fact is that supervision of national banks to assure their soundness requires many people and depends on their abilities and motivation. Total salaries and benefits in 1979 are scheduled to be $73,640,200, 10.3 percent above the $66,751,000 spent in 1978. Travel costs are another significant contributor to total expenses. They amount to" almost 14 percent of the total 1979 budget. In 1979, the travel budget for the Comptroller's Office is projected to be $13,906,300, up 12.2 percent from the 1978 actual expenses. Because of an accounting change, the 1979 travel budget includes travel related to education of $2,006,300 which was charged to "education and career development" in prior years. After restating the 1979 travel budget to reflect this accounting change, the 1979 travel budget decreased $490,000, or 4 percent when compared to 1978, and amounts to 11.7 percent of the total budget. Last year I discussed with the committee the large percentage increase in the educational and career development budget. At that time, 1 conveyed my commitment to education as an indispensable factor in maintaining quality supervision in a rapidly changing and complicated field. We have allocated $592,200, or 0.6 percent of the total 1979 budget, for this item. If the budget were restated to include $2,006,300 in travel expenses, the total for education and career development would be $2,598,500, or 2.5 percent of the total budget. This is an increase of 49.6 percent over actual 1978 expenses of $1,737,000. While still a small part of our total budget, it is the optimum amount we can effectively use at this time. The cost of rent and maintenance for all nationwide facilities of the Comptroller's Office is budgeted at $4,819,200 in 1979. Our Washington headquarters accounts for slightly more than half of total office space. As required by our Washington lease, the Office is now negotiating with the lessor to establish new rental rates 235 for the next 5-year lease renewal period to begin in June 1979. The 1979 budget for rent is somewhat inflated because the lessor's proposed rates were included for the last 7 months of the year. We are hopeful that the negotiation process will succeed in lowering these rates substantially, but we have made a conservative budget estimate. A survey has been made to compare the Comptroller's rental rates for its privately leased office space with the cost of comparable General Services Administration (GSA) space in 15 cities. In the majority of these locations, we have found that other federal agencies are paying rental rates to GSA that exceed those the Comptroller's Office will pay in 1979. Our Office remains committed to the highly structured, disciplined and cost effective budget process which I described last year in my testimony before this committee. With numerous competing demands on our resources, it is difficult to hold expenditures to our present income. We realize, however, that members of the public who use and own the banks ultimately pay for our expenses. We are determined that the cost of our operations be as low as possible. I am convinced our 1979 budget is consistent with this principle. In closing, I would like to reiterate the goals which define our budget decisionmaking process and to which our resources are allocated: • Enforcing full compliance by national banks with laws and regulations; • Promptly detecting and seeking correction of deficiencies in banks; • Promoting fair and nondiscriminatory treatment by national banks of their depositors, customers and shareholders; • Operating the Comptroller's Office openly, consistent with applicable law and maintenance of public confidence in the banking system; • Promoting maximum competition among banks, consistent with safety and soundness; • Requiring appropriate public disclosure by national banks of information, consistent with the maintenance of public confidence and rights of privacy; • Identifying important trends affecting the national banking system and incorporating such information into Comptroller policies and procedures; • Recommending statutory changes to improve the ability of the Comptroller's Office to carry out its responsibilities in the interest of the public; • Fostering maximum cooperation among federal, state and other countries' supervisory agencies; • Confining intervention by the Comptroller's Office in management decisions to the minimum consistent with the protection of the public; and • Continually planning and effecting improvement in the Comptroller's internal management, policies and procedures and extending fair and nondiscriminatory treatment to all employees of the Comptroller's Office. Remarks of John G. Heimann, Comptroller of the Currency, before the Assembly for Bank Directors, Boca Raton, Fla., February 9, 1979 The historian Carl Becker stated: "The primary purpose of all government regulation of the economic life of the community should be not to supplant the system of private economic enterprise but to make it wcprk." The vitality and stability of the American banking 'system since the depression confirm that the legal and institutional structure of banking regulation has been largely successful—particularly when banking is compared with other regulated industries. Yet, the banking industry, indeed the financial system, is undergoing fundamental change. The existing content and structure of regulation have been called into question. Taken together, the Community Reinvestment Act (CRA), the International Banking Act and the Financial Institutions Regulatory Interest Rate Control Act (FIRA), enacted by the 95th Congress, represent the most massive change in banking law since the Depression. Moreover, additional matters of fundamental significance will be considered by the present Congress, including universal reserve requirements and pricing of federal reserve services, reorganization of the bank regulatory agencies, interest rate controls 236 on deposits (Regulation Q) which discriminate against small savers, and review of restrictions imposed by the McFadden Act on branching. Notwithstanding this flurry of activity, the most profound changes are not occurring in the halls of Congress or the offices of the bureaucracy—but in the marketplace where institutions and individuals vie for profit. The entire landscape of competition in the delivery of financial services is shifting. More and more industries are engaging in face-to-face competition-in the same markets and for the same customers. Nowhere is this increased competition more evident than in the provision of consumer financial services such as savings deposits, longer-term retirement accounts, transaction accounts, residential mortgages and consumer lending. For example, in New England and New York state, all depository institutions are permitted to offer NOW accounts which are interest bearing transaction accounts, as of the third quarter of 1978, 37 percent of NOW account deposits in New England were held by thrift institutions. Competition for transaction account balances is also coming from outside of the depository system. Money market funds amounted to $10.7 billion at the end of 1978. Most of these funds allow investors to sell shares by writing a check drawn on a demand deposit account maintained at a bank by the mutual fund. Merrill Lynch offers a cash management account which permits customers to earn interest on margin accounts, make purchases with a VISA card and write checks against either cash balances or an overdraft line of credit. And Sears has begun a pilot project, in conjunction with credit unions in Michigan and California, which allows credit union members in those states to pay for Sears' merchandise and make cash withdrawals by authorizing Sears to debit their share draft account. Competition for consumer loans is also intense. Credit unions which held 4 percent of the consumer installment loan market in the early 1950's held 17 percent of the market at the end of 1977. This growth has largely been at the expense of the retailers and finance companies which have seen their market share shrink from 52 to 30 percent over the same time period. Moreover, General Motors held 3.5 percent of all consumer installment credit at the end of 1977, and Sears held 2.8 percent. More significant perhaps is the increasingly national and international nature of the banking business. Of the 300 largest banks in the non-communist world, U.S. banks control 26 percent of the assets; Japanese banks, 25 percent; and western European banks, 47 percent. There are 150 banks in this country with deposits over $1 billion, 1 percent of all U.S. banks, that control 56 percent of the total banking assets. If you combined all of the banking activities of the Bank of Tokyo within the United States, it would rank as the 21st largest bank in the U.S. The activities of these banks are by no means limited to a single locality, state or country. This flux in the financial system presents significant opportunities and serious pitfalls. In the marketplace, erosion of geographical restraints on competition, easing of restrictions on interest rates, more direct competition, easing of restrictions on interest rates, more direct competition among different providers of financial services, etc., will benefit the public and lead to a more efficient financial system. Moreover, there exists an increasing consensus that much governmental interference with financial markets is inappropriate in light of current economic and technological realities. I have stated on a number of occasions my own commitment to minimizing governmental intervention in private decisionmaking. I have spent most of my professional life in the private sector, and I believe in the marketplace as the best regulator of economic conduct. I am certain that these views are shared by the vast majority of my colleagues. Nevertheless, I suspect that this is not the message you are getting from Washington. I know there seems to be little relief from what must appear to be an endless stream of regulatory requirements. Reflecting this contradiction is the legislation passed in the 95th Congress. Although I applaud much that is contained in FIRA, the International Banking Act, and the Community Reinvestment Act, these statutes will impose significant new costs and restrictions. Some of these costs may prove unwarranted. How we approach the challenge of implementing new law in a manner that is sensible, while reinforcing progressive changes in the marketplace, will say much about the future health and vitality of American commercial banking relative to its competitors, old and new. In this context of flux, we at the Comptroller's Office have attempted to identify the basic principles of decisionmaking which will, as Becker suggested, "not . . . supplant the system of private economic enterprise but . . . make it work." We believe that the elements of a progressive approach to bank regulation include: • Reliance on competition among various financial intermediaries with the gradual elimination of existing geographical and product market demarcations which tend to protect competitors rather than foster competition; • Reliance on the pricing mechanism as the most efficient allocator of financial resources and ultimate elimination of such restrictions as the prohibition of the payment of interest on demand deposits and usury ceilings which tend to interfere with the efficient functioning of financial markets; • Reinforcement of and reliance on existing private institutional structures, such as the board of directors, to perform functions which diminish the need for governmental intervention; • Vigorous actions to correct abuses by bank insiders; • Targeting of supervision so that intervention in the management decisions of soundly run institutions is minimized and scarce resources are focused on the most serious problems; • Reliance on disclosure of material information to protect investors and ensure the effective functioning of financial markets; • A willingness to tolerate individual bank failures which result from the normal operation of market forces coupled with a willingness to strengthen the already effective deposit insurance mechanism; • Specific intervention when necessary to ensure that bank customers have fair access to bank services; • Employment of the flexibility, expertise and resources of the private sector in dealing with our nation's social problems; and • Development of mechanisms of regulatory reform which prompt the revision or discard of laws, rules and regulations when they have outlived their usefulness. These principles reflect judgments that are perhaps contradictory. On the one hand, we have fundamental confidence in the pricing mechanism of the marketplace as the best allocator of resources and in the quality of informed private decisionmaking generally. On the other hand, it is clear that governmental intervention is sometimes necessary in a complex and interrelated society. The continued vitality of our society, as well as our financial system, will depend on our ability to resolve this apparent paradox. The basic elements I have outlined represent an attempt to suggest such a resolution with respect to concrete questions of regulatory policy that we must deal with daily. With this framework in mind, I would like to discuss specific areas in which we have applied or will apply these concepts. By now, most of you will have taken part in reviewing and approving your bank's Community Reinvestment Act statement. The Community Reinvestment Act arose out of congressional concern with the "redlining" issue. The act reflects, in part, dissatisfaction by Congress with the manner in which the financial regulatory agencies have applied the concept of "convenience and needs." The legislative history clearly reflects Congress' view that the agencies had not, in applying that standard, given proper attention to the bank's record in meeting community credit needs. In addition, the act seems to reflect the view that inattention by some financial institutions to the credit needs of local communities and especially low and moderate income neighborhoods is responsible, in part, for the decline of some of these communities. Accordingly, the Community Reinvestment Act's stated purpose is to require each financial institution supervisory agency to use its authority when examining a financial institution to encourage it to help meet the credit needs of its local communities. The act requires the appropriate agency to assess a financial institution's record of meeting the credit needs of its entire community and to take that record into account in evaluating an application pertaining to a charter, branch office or merger. Faced with these statutory requirements, the agencies made certain fundamental choices consistent with the principles I have outlined. The statute was vague; critical terms like "community" and "credit needs" were left undefined. No guidance was provided as to when an application should be denied. First of all, the agencies recognized the diversities of both the communities and financial institutions of our country by not attempting to establish arbitrary, inflexible definitions of "community" or "credit needs." Rather, each institution is required to delineate its own community apd to define in its CRA statement the ways in which it proposes to meet the credit needs of that community. The agencies focused on the critical role of the board of directors by mandating its role in this process and by identifying the extent of the board's participation as a factor that will be considered in assessing the bank's record for CRA purposes. Your role in this capacity is especially important because most directors are not bankers and therefore bring a fresh perspective to this process. Second, the agencies also adopted a flexible approach in addressing the absence of a statutory standard to be applied in assessing the bank's record for CRA purposes. Rather than adopting quotas of types of loans that would be considered "good" under CRA 238 or creating a regulatory straitjacket which would unreasonably constrain management discretion, the agencies identified a number of factors that would be relevant in evaluating the record, including: (1) A bank's efforts to communicate with its community; (2) A bank's offering of loans and investments which help meet its community's credit needs for housing, small business and community development; and (3) A bank's offering loans throughout its community on a nondiscriminatory basis. In addition to these factors, it is explicitly recognized that other activities could help meet local credit needs, that a bank's abilities to meet credit needs are not limitless, and that safety and soundness considerations must be maintained. Two other points should be borne in mind as you help your institutions address CRA. First, what is important is not compliance with a series of technical/legal requirements but rather a bank's good faith effort to keep itself aware of and sensitive to the credit needs of the community, which it alone is best equipped to meet. This concept of community service is not new to bankers nor, I am sure, to you, and its application should not prove troublesome. Second, I would emphasize that while we believe the approach we have chosen is a sensible one, which will be neither expensive nor constrictive, it is by no means written in stone. We have already implemented a process for reviewing the effectiveness and efficiency of our approach, and we will not hesitate to modify it or seek legislative changes where appropriate. In describing our approach to CRA, I have outlined an agency response that was essentially reactive. More is required, if we are serious about restructuring the framework of law and regulation to place greater reliance on private decisionmaking and the market mechanism, and less on restrictive government regulation. Concrete initiatives must be taken. Some of these would require legislative action, such as simplification of truth-in-lending, elimination of geographical restraints on expansion and relaxation of interest rate restrictions. Others may be accomplished administratively. Our newly established Office of Regulations Analysis will serve as the focal point for identifying and initiating those aspects of our supervisory framework— including regulations, interpretations, circulars and supervisory policies and practices—where changes can and should be made to eliminate or reduce unnecessary regulatory burdens. In addition, the Office of Regulations Analysis will be involved in developing new policies and regulations to assure that further regulation is justified and that the costs of various alternative courses of action have been considered. Recent call report changes and our new "Chinese wall" regulation are examples of our initiatives in this respect. Instead of adopting a very lengthy regulation setting forth all the detailed procedures a bank would have to follow to assure that important nonpublic information did not p^ss from a bank's commercial department to its trust department, we adopted a threesentence regulation which says, in effect, "Here is the law; you establish procedures for compliance which are appropriate for your type of operation." With respect to the call reports, we found that we no longer used about 40 percent of the information submitted from the 90 percent of the banks which have assets under $100 million, so we simply deleted the requirement that such information be filed. We are currently reviewing a number of other existing regulations, including investment securities rulings, real estate interpretations, Securities Exchange Act disclosure rules, offering circular requirements, security devices reports and annual reports to shareholders. While we anticipate that review of existing regulations and reports will prove productive, we do not intend to stop there. We consider all policies and procedures to be fair game. For example, we have concluded that our procedures and policies dealing with bank chartering, branching and mergers are too costly, too burdensome and too time consuming. And in some instances, the policies we have pursued serve to thwart rather than promote competition. We intend to remedy this situation. I am pleased to report to you today that we are committed to a thorough overhaul of our operations in this area. This effort will involve, among others, our Office of Regulations Analysis and Bank Organization and Structure Division and will be directed by the Senior Deputy Comptroller for Policy. Indicative of the importance we place on this project and its priority, we are calling it the "Applications for Structural Activities Project," known by its acronym, ASAP. Certain policies are already being modified. For example, decisions in the coming months will reflect a chartering policy that provides for greater ease of entry. Similarly, we will take steps to ensure that our policies and procedures pertaining to protested applications do not allow competing institutions to delay applications where no substantial issues are raised. My hope is that this project and others like it will prove to be models of regulatory reform. In conclusion, I would simply repeat my view that the marketplace is the best regulator of economic activity and my commitment as a bank regulator to making that mechanism work efficiently and effectively. Statement of John G. Heimann, Comptroller of the Currency, before the Senate Committee on Banking, Housing and Urban Affairs, Washington, D.C., February 28, 1979 We welcome the opportunity to testify on S. 332, the Consolidated Banking Regulation Act of 1979, and to address generally the reorganization of the regulation of. financial services. As Superintendent of Banks of New York, as Comptroller of the Currency and as Acting Chairman of the Federal Deposit Insurance Corporation (FDIC), I have had a unique opportunity to observe the operation of this system. Both as State Superintendent and as Comptroller, I testified before the Senate Banking Committee regarding similar proposals. In the past, I have not favored creation of a single federal agency which would regulate commercial banks. Instead I suggested a structure in which regulation and supervision of all federally chartered financial institutions and their holding companies and affiliates would be centralized, with the FDIC continuing to support a strengthened system of state supervision. I continue to believe that evolution toward such a structure is preferable to consolidation of the commercial banking agencies. Since I last testified, Congress has created the Federal Financial Institutions Examination Council under Title X of the Financial Institutions Regulatory and Interest Rate Control Act of 1978 (FIRA). Congress acted NOTE: The appendix to this statement was not included because of space constraints. The appendix, which gives examples of joint efforts by bank regulatory agencies to achieve uniformity, is available from other sources. wisely in taking this step. The council provides a flexible framework within which financial regulatory reform can occur in an orderly and reasoned fashion. Such an approach recognizes both the realities and uncertainties of our financial system as well as the practicalities of administering a regulatory process. First, and quite simply, the realities of the current market place demonstrate that, however correct historically, the singular focus of S. 332 on commercial banks is out of date. Second, further developments in both the market place and the legislative arena are likely to blur distinctions among competitors. Because the shape of these and other developments is yet unclear, we should avoid a reorganization that will tend to be viewed as the final rationalization of the regulatory structure. Third, that such a proposal would become permanent makes it all the more important that we fully evaluate and understand the disruptions and costs that sweeping consolidation would entail at this time and that we understand the benefits inherent in the existing system that would be lost. In short, an incremental process responsive to the evolving realities of the market place is more desirable and less costly and disruptive than a single, sweeping reorganization. I should emphasize that the Comptroller's Office is not wedded to the existing structure. We are commit239 ted to regulatory reform through reorganization. Indeed, we have already begun to take certain steps, such as the transfer of an existing division of the Comptroller's Office to the FDIC, to achieve efficiencies in this manner, and we fully intend to continue to do so through the examination council. Before outlining in greater detail why an evolutionary process through the examination council is preferable to a single vast reorganization and suggesting the direction that I hope such a process would take, I will focus on the realities of competition in the market place for financial services. The business of banking, or more accurately the business of providing financial services, has changed radically in the last decade and is continuing to change at an extraordinary pace. While many of us are aware of the individual pieces of the puzzle, we often fail to recognize fully the implications of change in the various financial markets. Certainly the current reality of competition is not that of 1937 when a study by the Brookings Institution originally proposed the creation of a single federal agency to regulate all commercial banks. The financial system that emerged from the Great Depression consisted of distinct kinds of financial institutions, differing statutory powers and mandates, as well as separate regulators. The activities and markets of these institutions were segmented to a substantial degree. Where one or more types of financial institutions offered the same service, it was usually within distinct markets. Or, as was the case with savings deposits, commercial banks simply did not compete seriously with savings and loan associations, mutual savings banks or credit unions. Since that time, the financial services industry has undergone substantial change at both the national and international level. No longer are markets for financial services segmented and identified with a specific type of financial institution. Commercial banks and thrift institutions are in head-to-head competition in many areas; commercial banks and thrifts have entered markets of nondepository institutions and vice versa; the gulf between large and small institutions has widened considerably; domestic and international geographical barriers to competition have eroded; and substantial changes have occurred in the legal and regulatory environment. A few examples will underscore the extent of this change. From the end of World War II through 1977, the commercial banking share of the deposit market shrank from 82 to 62 percent, while savings and loan associations and credit unions increased their share from 6 to 29 percent. Demand deposits, which represented 74 percent of commercial bank liabilities in 1948, dropped to 32 percent in 1978, while time and savings deposits increased from 25 to 51 percent. These figures demonstrate a fundamental realignment in the provision of deposit services that occurred as a consequence of higher interest rates, the prohibition of interest payments on demand deposits and the Regulation Q differential. Thrift institutions have responded to increased commercial bank competition for savings deposits by competing for transaction balances through NOW ac 240 counts, telephone transfer accounts, billpayer services, credit union share drafts and other ways of directly accessing savings deposits for the purpose of making payments. Similar changes, although to a more limited extent, are occurring on the asset side, especially at the state level. Credit unions are increasingly involved in financing home mortgages as compared to their more traditional consumer finance role, while savings and loan associations are offering credit cards and seeking additional consumer lending powers. Commercial banks have offered products once almost entirely the domain of nondepository institutions, including credit cards, mortgage banking, factoring, leasing, consumer finance and other services. For example, commercial banks' share of the consumer installment credit market has increased since World War II from 38 to 49 percent, while the combined share of finance companies and retailers declined from 58 to 30 percent. Nondepository institutions have invaded the deposit markets of banks and thrifts. As of February 7, 1979, money market mutual funds stood at $13.9 billion, growing $3.1 billion in the 5 weeks since the beginning of 1979. Merrill Lynch offers a cash management account which permits customers to earn interest on margin accounts, make purchases with a VISA card and write checks against either cash balances or an overdraft line of credit. And recently, Sears, Roebuck and Co. announced its intention to offer approximately $500 million of $1,000 denomination medium-term notes to its 26 million credit card holders. Banks and thrifts have also developed methods for raising funds from the money and capital markets, such as mortgage-backed bonds and commercial paper, that compete directly with nondepository and nonfinancial institutions. For example, bank holding companies issue commercial paper under their own names and then channel some of the funds back to their bank affiliates. Recently, the Federal Home Loan Bank Board announced approval for savings and loan associations to issue both mortgage-backed and unsecured commercial paper, thus providing savings and loan associations with greater access to the national money markets. At the same time traditional distinctions among types of financial institutions are becoming less clear, the difference between locally oriented banks and large national and multinational banks is increasing. On the one hand, the local institution is often comparable to the specialty boutique. On the other, the conglomerate multinational is in effect a department store chain for financial services. The operations of the latter are more complex and sufficiently far-flung to span many jurisdictions. For example, according to its 1977 annual report, Citicorp engages in commercial banking, mortgage banking, trust services, consumer finance, credit card, equipment leasing, factoring and other services in 1,937 offices in 95 countries with total assets amounting to $77 billion. The 10 largest banking organizations in the United States at the end of 1977 controlled nearly 30 percent of the nation's commercial banking assets and oper- ated 46 banks with 2,906 domestic branches, 1,895 foreign offices and 41 Edge Act offices, not to mention numerous loan production offices and nonbanking subsidiaries controlling another $8.2 billion in assets. Of the 14,412 commercial banks at the end of 1977, 1,246, or 9 percent, had more than $100 million in assets.Collectively, these controlled 77 percent of commercial bank assets. Moreover, 8,700, or more than 60 percent of all commercial banks, have less than $25 million in assets and confine their services to their local communities. Geographical market barriers have disappeared to a large extent in every area except consumer deposit services, where the McFadden Act restriction on national bank branching imposes effective restraints. For example, BankAmerica Corp. operates 13 subsidiaries, including FinanceAmerica which has 372 offices in 39 states. And as I have already indicated, nationwide nonfinancial institutions not subject to McFadden Act type restrictions are already casting covetous eyes on consumer deposits. As the geographical barriers to competition have eroded, the distinctions between domestic and international banking systems have been, for all practical purposes, obliterated. Of the 300 largest banks in the non-communist world, U.S. banks control 26 percent of the assets; Japanese banks, 25 percent; and Western European banks, 47 percent. The banking activities of these banks are by no means limited to a single locality, state or country. As of 1978, 122 foreign banks operated banking facilities in the United States with total assets of about $90 billion. This total represents the combined assets of 123 agencies, 106 branches, 39 commercial bank subsidiaries and five investment companies. For example, combined, the banking activities of the Bank of Tokyo in the United States would represent the 21st largest bank in the country. Similarly, 141 U.S. banks have branches or subsidiaries abroad with assets that totaled approximately $228 billion at year-end 1977. At the same time that the marketplace for financial services is reforming itself, the legal and regulatory structure in which financial institutions operate has been changed significantly. Legislation in the last 18 months, including FIRA, Community Reinvestment Act and International Banking Act, involves the most massive change in banking law since the Depression. Moreover, resolution of the Federal Reserve membership problem and serious reconsideration of Regulation Q and the McFadden Act hold out the possibility of further and perhaps more fundamental change. In the context of these changes, we believe that an incremental approach to reorganization which does not focus solely on commercial banks is preferable for several reasons. First of all, consolidation of the commercial bank regulatory functions does not address the existing reality of financial competition. In addition, we are on the threshold of changes that will have far-reaching implications for the future structure of the financial services industry. For example, it is impossible to know the degree to which nonbanking firms such as Sears, Merrill Lynch or American Express, which are poised on the edge of traditional segments of banking markets, will enter those markets. Similarly, it is clear that reconsideration of the role of Regulation Q will have serious implications for the health and role of the thrift industry. If the asset and liability powers of thrift institutions are expanded in the context of this consideration, they will come into even more direct competition with commercial banks. While one can argue that the adoption of S. 332 would not foreclose further modifications of the federal financial regulatory framework in response to these changes in the marketplace, history suggests that wholesale reorganization of this type would be relatively permanent. In the face of flux that is occurring in our financial markets, I believe that the creation of a single regulatory agency which focuses solely on commercial banking ignores the reality of our financial system. This does not and should not mean that bold reorganization initiatives cannot occur in certain areas. Rather, it means that such reorganization should occur in an orderly, incremental fashion. Many of the problems which have been identified in the existing regulatory structure can be addressed administratively in the context of the examination council or already have been addressed through the informal processes of interagency coordination. It has been argued that consolidation would lead to economy and efficiency of operation; that consolidation would eliminate certain frictions and practical problems, especially in the handling of distressed banks and in the supervision and regulation of bank holding companies; and, finally, that consolidation would result in a uniformity of approach and eliminate certain inequities. Although substantial economies could not be achieved by a reorganization of the bank examination operation, efficiency can be improved if certain other functions are centralized. We are already involved in substantial steps in this direction. For example, in December 1978 the FDIC and the Comptroller's Office began exploring the feasibility of merging the processing of call reports and other statistical reports which banks file routinely. These reports are essentially similar for both national and state commercial banks. At present, detailed planning is in process to effect such a merger in April. It is anticipated that the FDIC by virtue of assuming a larger volume of work will be able to achieve certain efficiencies. For example, rather than printing separately two sets of forms and developing two sets of instructions, only one will be required. Other efficiencies should stem from greater flexibility in scheduling personnel to handle processing of the various reports. Also, data processing expenses will be reduced. Further, our Office is exploring transfer to the FDIC of our computer operations, and the Federal Reserve System, the FDIC and this Office are cooperating in developing a statistical monitoring system for all banks. Additionally, under provisions of Title X of FIRA, we are developing a joint training facility. It has been argued that consolidation into a single commercial banking agency would probably eliminate some of the problems associated with communication and coordination. Much has been done to alleviate 241 such problems in recent years. The appendix to this statement provides instances where the agencies have cooperated to achieve coordinated approaches to problems. I am confident that much more will be done within the framework of the examination council. In the past, special attention has been paid to frictions and inefficiencies involving the supervision of bank holding companies. Coordination and communication have improved significantly in this area. I am hopeful that the council will be an effective vehicle for further improvement until Congress can act to remedy what I consider to be a serious flaw in the present regulatory structure. It has also been argued that consolidation of bank regulatory functions in a single agency would be desirable in that it would eliminate inequities and confusion which flow from a lack of uniformity. In recent years, the agencies have recognized that uniformity is highly desirable in certain areas and have taken affirmative steps to insure a uniform approach in policies and practices. In my judgment, the most notable achievements in this area include: • Implementation of a coordinated and uniform approach to the Community Reinvestment Act, a task which involved an enormous degree of cooperation and effort on the part of the staffs and principals of the agencies; • Development of a uniform approach to country risk evaluation; • Development of a joint program to evaluate shared national credits; and • Issuance of uniform Regulation Z enforcement guidelines. At present, the staffs of the agencies are hard at work devising regulations and procedures to implement FIRA and the International Banking Act, which are uniform to the maximum degree possible. In this regard, it should be noted that Title X of FIRA, which provides for the Federal Financial Institutions Examination Council, mandates that the council "establish uniform principles and standards and report forms for the examination of financial institutions which shall be applied by the federal financial institutions regulatory agencies." Moreover, that "(t)he Council shall make recommendations for uniformity in other supervisory matters, such as, but not limited to, classifying loans subject to country risk, identifying financial institutions in need of special supervisory attention, and evaluating the soundness of large loans that are shared by two or more financial institutions." Based on my experience during the past 18 months, I expect that the agencies will move forward to implement these requirements in an orderly and expeditious fashion. As we move to encourage and achieve uniformity, it is critical that we not lose sight of an important point. One of the geniuses of the American political system is its emphasis on checks and balances and the fragmentation of the basis of decisionmaking. The wisdom of this principle is proved to me by the health, 242 creativity and competitiveness of our commercial banking system. The history of this industry— especially when contrasted with others supervised by a single regulator—is why I have supported maintenance of a strong state banking system overseen at the federal level by an independent FDIC. The existence of other agencies engaged in the same effort tends to produce better results over time. I wish that I and the staff at the Comptroller's Office were sufficiently smart and prescient to arrive at the optimal solution to a problem immediately. But we are not, and we do learn and borrow from our fellow regulators. Even where uniformity is ultimately the object, as it was in the Community Reinvestment Act, often the pull and tug of independent agencies leads to a far better result than if a single agency approached the problem. In short, I am persuaded that former FDIC Chairman George LeMaistre was correct when he stated: . . . banking history demonstrates conclusively that the existence of regulatory alternatives provides, in part at least, one of the mechanisms which the regulatory reform movement seeks—a means of self-adjustment and self-reform. In effect, something like a market mechanism may be seen at work with good regulation driving out bad over the long haul. Illustrations of this point are legion. We are particularly proud of two fundamental innovations in our Office's approach to bank examination. We believe that our new bank examination procedures, which emphasize a qualitative review of a bank's condition and management and rely heavily on the National Bank Surveillance System—a computer-based data and ratio analysis system—represent an important advance in the state of the art. An equally fundamental departure is our creation of a Multinational Banking Division, which will supervise our largest and most complex banking institutions. The establishment of what is, in effect, a new region for the regulation and supervision of the multinationals recognizes the reality that these entities are fundamentally different from the great majority of the institutions which we examine and supervise. Finally, in response to the argument that agencies "compete" for constituents, I would simply note that I have never suspected that a fellow regulator was motivated by such a concern. I am convinced that decisions which have been cited to support this proposition reflected legitimate differences over policy and the law and not any effort for agency self-aggrandizement. For these reasons, I have concluded that creation of a single commercial bank regulatory agency is not responsive to the realities of either the market place or the regulatory process. The examination council provides a flexible framework in which to go forward with reform and reorganization of financial institutions regulation in an orderly and efficient manner. As I emphasized at the outset, we at the Comptroller's Office are not wedded to the existing bank regulatory structure. Indeed, a systematic review of that structure can and should occur as part of an evolutionary process in which concrete experience can be a guide. One can describe an agenda for that review which is responsive to the realities of the marketplace and the practicalities of the regulatory environment. Some of these items can be accomplished administratively. Others will obviously require legislation. First and foremost, we should move quickly to address the problem resulting from regulation of various parts of a bank holding company system by different agencies. It has been pointed out time and again that this facet of the regulatory structure significantly interferes with our effectiveness in supervising either these systems or the banks within them. The failure of Hamilton National Bank in Chattanooga, Tenn., is the most graphic illustration of this point. Both the FDIC and the Comptroller of the Currency are on record as favoring resolution of this problem by transferring primary authority over the entire system to one agency. I would hope that in the context of the examination council we can come up with a legislative approach to this issue that all the agencies can agree on and that Congress will see fit to act on this proposal expeditiously. In the meantime, I am hopeful that problems in this area can be minimized through coordination and cooperation within the council. Second, if Congress does rationalize the subject of holding company supervision and regulation, it may also address whether the Federal Reserve System should have a supervisory function at all. It has long been argued that the system should not have this role so long as it has sufficient information to implement monetary policy effectively. Because of the concern the Federal Reserve Board has expressed with respect to attrition from the system and its consequent impact on monetary policy, any action in this direction should await resolution of the Fed membership issue. Third, we should eliminate the conflict, duplication and overlap that result from the fact that both the states on one hand and the FDIC and the Federal Reserve Board on the other hand supervise and regulate state banks. I have indicated in the past my support of plans which would involve withdrawal of the federal presence on certification of the competency of the state agencies. I would note that the essence of this concept could be implemented administratively by the FDIC. At the same time, I should also note that skepticism has been expressed as to the efficacy of the federal withdrawal strategy. It has been argued that the federal government has the comparative advantage in the bank examination area and that the states should recognize this and focus scarce resources on matters more nearly of local concern, such as the enforcement of consumer and civil rights laws and the enforcement of state laws and their chartering functions. A compre- hensive FDIC study of the relationship between state and federal bank regulation is expected to be completed this summer. Fourth, the Congress should also examine overlaps that exist between the federal financial agencies and other government agencies. As I have indicated, it makes no sense to segment the regulation of a holding company and its constituent banks. Yet, the banking agencies are responsible for the enforcement of the securities laws vis-a-vis banks while the Securities and Exchange Commission is responsible for the enforcement of the securities laws vis-a-vis holding companies. This anomaly should be corrected. Similarly, the present fragmentation and overlap in the regulation of consumer credit at both the state and federal levels surely can be rationalized in a way that would achieve necessary protection with less cost to society. As I indicated earlier, commercial banks on one hand and thrift institutions and credit unions on the other are increasingly coming into direct competition. This phenomenon may be accelerated if Congress and the agencies move seriously to phase out Regulation Q. If the trend toward increased direct competition continues, logic would favor the eventual consolidation of regulation of all federally chartered providers of financial services. My own experience in New York and at the FDIC strongly suggests to me the benefits of an agency which regulates different types of financial institutions. Finally, we must ultimately address the fact that institutions that are not among traditional deposit-taking intermediaries are increasingly engaging in functions which might well be characterized as "banking" functions. To the degree that institutions engage in like functions, both the public interest and equity among competitors would seem to dictate that they be regulated equally. This may very well suggest a role for the financial regulators vis-a-vis some entities which are not commonly thought to be subject to their jurisdiction. An alternative approach might be to deregulate that function. For example, I certainly favor the phasing out of Regulation Q rather than the imposition of interest rate restrictions on money market funds. In conclusion, I would simply reiterate what I have already stated. Reform in the regulation of financial institutions is not merely desirable but essential. To achieve the intended result, however, financial reform must be reasoned and orderly. And, most important, it must address the realities of the marketplace and not definitions and conceptions of another era. So long as we are open-minded and diligent in our commitment to regulatory reform, the examination council can and will provide a convenient and flexible framework for the progressive evolution of financial regulation. 243 Remarks of John G. Heimann, Comptroller of the Currency, before the Government Research Corporation, London, England, March 26, 1979 "Banking across state lines—should it develop? Will it develop?" As a title this is a bit deceiving. In the United States, interstate banking is for all practical purposes already a reality. The question is not should or whether we will have interstate banking, but how we will balance competing interests to conform law and regulation to the realities of the marketplace. The aggressiveness of competitors in the marketplace has brought this issue to the forefront and raises the broader problem of the appropriateness of geographical restraints on competition, both in the United States and throughout the world. In this, as in other areas, government has the choice of responding in an open and progressive way that will facilitate competition and private decisionmaking or of reinforcing interference with free choice in the marketplace. I believe strongly in a free and open system of competition among the providers of financial services at the local, national and international levels. Accordingly, geographical restraints on competition should over time be eliminated. At the same time, I recognize that elimination of the artificial barriers that define markets raises fundamental questions that must be addressed to ensure the long-term health and stability of our domestic and international banking system. The business of banking or, more'accurately, the business of providing financial services has changed radically in the last two decades both domestically and internationally and is continuing to change at an extraordinary pace. While many of us are aware of the individual pieces of the puzzle, we often fail to recognize the full implications of change in the various financial markets. Thus, before focusing specifically on interstate banking in the United States, it is appropriate to place this subject in the larger context. The financial system that emerged in the United States from the Great Depression consisted of distinct kinds of financial institutions, differing statutory powers and mandates, as well as separate regulators. Legislation enacted during this period sought to protect and insulate financial institutions against failure and was essentially anticompetitive—the first order of priority was the preservation of existing institutions. Where one or more types of financial institutions offered the same service, it was usually within distinct markets or, as was the case with savings deposits, commercial banks simply did not compete seriously with savings and loan associations, mutual savings banks or credit unions. In effect, both product and geographical markets were segmented by state and federal law as well as by custom. State laws govern branching within the state and generally prohibit branches by banks from outside the state. This applies even if several states are within what we call a standard metropolitan statistical area, or market, such as the greater metropolitan New York area which is comprised of New York City, neighboring New York counties, northern New Jersey and southern Connecticut. 244 In 1927, the U.S. Congress passed the McFadden Act, which applied these state laws to nationally chartered banks—affirmatively permitting branching but generally limiting branch locations to those permitted to state banks. Hence, branching across state lines by a national bank was generally prohibited. With the increased importance of multibank holding companies, Congress chose to apply the principle of the McFadden Act to holding companies through the Douglas Amendment to the Bank Holding Company Act. This amendment prohibits acquisition of a bank in any state other than that in which it has its principal operations unless specifically authorized by the state in which the bank is located. This all sounds remarkably complicated, and it is. In addition, a host of other laws serve to define the product markets in which financial institutions can operate. These statutes define the powers at the state and federal level for commercial banks, thrift institutions and credit unions. By segmenting the geographic and product markets, these laws resulted in a remarkable number of financial institutions in the United States. There are over 42,000 depository institutions, including 22,000 credit unions, 5,300 savings and loan associations and mutual savings banks, and almost 15,000 commercial banks. These institutions range in size from the smallest credit unions with assets of less than $5,000 to the largest U. S. bank, Bank of America, with assets expected to reach $100 billion in the near future. Although most of these laws remain on the books and some remain effective in isolating certain markets, many of the resulting artificial barriers have been eroded by the solvency of competition. Large money center banking organizations have expanded their operations to a national level to serve the growing needs of their customers. For example, BankAmerica Corp. now operates 13 subsidiaries, including Finance America which has 372 offices in 39 states. Through local subsidiaries, loan production offices and Edge Act offices, the large U. S. banks can now reach almost every banking market except retail deposit-taking on a nationwide basis. And as our large banks fund an increasing percentage of their liabilities through the purchase of funds, dependence on retail deposits is diminishing, thereby lessening the restraints that the interstate branching prohibition places on fund raising by large banks. A similar erosion has occurred with respect to the barriers which segment financial product markets. Commercial banks now offer products once almost entirely in the domain of nondepository institutions such as credit cards, mortgage banking and consumer finance. Thrift institutions now compete for demand deposit balances through hybrid interest-paying accounts such as NOW accounts and bill payer services. Nondepository institutions which have nationwide operations have also invaded the deposit markets of banks and thrifts. Merrill Lynch now offers a cash man- agement account which permits its customers to earn interest on margin accounts and write checks against either cash balances or overdraft lines of credit. Sears, the country's largest retailer, recently announced its intention to offer $1,000 denomination medium-term notes to its 26 million credit card holders across the country. These notes are clearly substitutes for the medium-term certificates of deposit offered by banks and thrifts. Holders of American Express cards are able to obtain cash advances across the country through automated money machines. Money market mutual funds, which are available to individuals nationwide, offer share redemption by both telephone and check. These funds grew by almost 180 percent last year and rose by more than 40 percent in the first 2 months of this year. The breakdown of geographic barriers within U.S. banking markets has been paralleled in the international financial markets. In the 1960's, one of the most remarkable phenomena was the rapid expansion of U.S. banking as the institutions followed their customers abroad. In the early 1960's, the annual flow of direct U.S. investments abroad exceeded foreign investments into the United States by more than nine times. Between 1960 and 1969, the number of foreign branches of U.S. banks quadrupled from 124 to 460. This represented a remarkable increase in competition in a number of countries in which local banks had long maintained a monopolistic position. This phenomenon has continued in the 1970's, with U.S. banks' expansion supplemented by a similar growth of the international activities of non-American banks. Non-U.S. banks have become a competitive force not only in the international financial markets but also in the United States. Whereas 104 U.S. banking institutions with assets totaling $24 billion were controlled by foreign banks in 1972, by 1978, there were 273 institutions with assets of $90 billion. These banks have to a large extent followed their multinational clients' recent investments into the United States. Direct investment in the United States from abroad in 1977 was almost nine times the 1967 level. In this sense, these banks have followed the same pattern of international expansion as U.S. banks did in the previous decade. But now they are seeking to compete directly with U.S. banks for business of U.S. corporations. For example, some sources calculate that foreign banks in the United States now account for approximately 20 percent of all domestic commercial and industrial loans extended by the 300 largest banks in the United States. Japanese banks alone control over 62 banking institutions in the United States, with assets totaling over $42 billion—nearly half of the total foreign ownership. They are followed by Canadian banks, which control 32 institutions and $13 billion in assets. Foreign banks in the United States also took advantage of the absence of federal restriction prior to the passage of the International Banking Act of 1978 to establish operations in near-banking activities not open to U.S. commercial banks, as well as offices in more than one state. As of May 1977, 23 foreign bank parent companies operated branches, subsidiaries or affiliates in three or more states. The original impetus for the foreign banking movement to the United States was the movement of foreign corporations to the United States. But there are additional forces behind this reversed migration. These banks desire dollar deposit bases to help fund their Eurocurrency operations. And, of course, the size and growth potential of the U.S. economy is also attractive to non-U.S. interests. Non-U.S. banks are now turning their attention to expansion in the U.S. retail banking market. The most telling manifestation of foreign competition for U.S. retail banking business is the recent growth in actual and proposed acquisitions of U.S. banks by foreign institutions. Since 1974, several major international banks, including Lloyds Bank, Fuji Bank and the European-American group have enlarged their American operations in this fashion. At the present time, five proposed acquisitions are under consideration by federal and state banking authorities. They include acquisition of National Bank of North America, a $4.4 billion bank, by National Westminster Bank; Union Bank, with $5 billion in assets, by Standard Chartered Bank Ltd.; and Marine Midland, the largest of the three with over $14 billion in assets, by Hong Kong and Shanghai Bank. The latter two represent acquisitions of extensive branch networks in the country's two most populous states: California and New York. Also pending are applications by the Bank of Montreal to purchase 89 branches of the Bankers Trust Company in New York City and another by Algemene Bank N.V. to purchase La Salle National Bank of Chicago. The impetus behind all of these developments has not come from regulators or legislators. Rather, it has come from competitors vying for advantage in the marketplace. However, these forces also increase the likelihood of governmental action. For example, the increasing presence of foreign banks in the United States led to the passage of the International Banking Act of 1978. This law applied the principle of national treatment to foreign banks in the United States. Implementation of the principle of equality of competitive opportunity resulted in some curtailment of the previously unrestricted activities of foreign banks. For example, the act restricted future interstate branching by foreign banks operating in the United States to a rough parallel with what Congress conceived to be market opportunity available to domestic banks. However, the act also explicitly recognized the need for a thoroughgoing reassessment of the McFadden Act as applied to all banks and directed the administration to conduct such a review. Certainly the increasing pace of foreign takeovers of U.S. banks has assured that this will be a principle focus of the study. For U.S. banks, one of the major concerns was expressed by M. A. Schapiro and Co. in a recent publication of the Bank Stock Quarterly. Under present U.S. law, it is noted: "Major opportunities in U.S. banking law are effectively reserved for foreign banks only, since they are free to make acquisitions of banks in the United States that are foreclosed to domestic banking." Thus: "A bank with headquarters in Hong Kong can acquire a New York bank, but a bank 245 with headquarters in San Francisco cannot . . . no underlying economic realities can justify (this anomaly)." Congress has indeed recognized the need for fairness in any openly competitive market as envisaged by the International Banking Act. This law requires the federal branches of foreign banks to have generally the same duties, restrictions, penalties, liabilities, conditions, limitations, as well as rights and privileges as a national bank. On the other hand, Congress also expected that U.S. banks should receive national treatment in their foreign operations. To determine what treatment U.S. banks are presently receiving abroad, the International Banking Act also required a study of foreign treatment of U.S. banks. In addition to the McFadden and foreign treatment studies and the foreign acquisition issue, other developments in the judicial, legislative and regulatory arenas are likely to stimulate constructive change. The Federal Home Loan Bank Board recently proposed allowing federally chartered Washington, D.C.-based savings and loan associations to branch across state lines into Maryland and Virginia counties in the Washington metropolitan area. Moreover, a number of states, including Illinois, Washington and Minnesota, have proposals under consideration which would liberalize branching laws. In the context of these developments, we must seriously address the phasing-out of legal constraints on geographical bank expansion in the United States by domestic or foreign concerns. Such restraints create inefficiencies by forcing banks to devote resources seeking ways to circumvent these barriers. Will the erosion of barriers be recognized in our banking legislation? Or will these restrictions be allowed to wither away, as they are certain to do, in an uncontrolled fashion that could cause substantial disruptions? For my own part, I prefer the former course in order to facilitate constructive change. The phasing out of these restrictions might involve a number of elements. First of all, Congress should consider permitting branching for all federally insured institutions within natural market areas such as metropolitan areas. This concept was reflected in a bill proposed in the last Congress by Senator Mclntyre which would have allowed banks to establish electronic funds facilities across state lines within their natural market areas. At the very minimum this should be allowed, as the Washington, D.C, experiment of the Federal Home Loan Bank Board goes forward. Secondly, consideration should be given to either the repeal or some modification of the Douglas Amendment, which in effect prohibits multibank holding companies from acquiring out of state banks. Many states have moved from a unit banking structure to statewide branching with the multibank holding company as an interim step. A phasing in of interstate banking through multibank holding companies provides a reasonable approach to the ultimate elimination of geographic restraints, while simultaneously permitting an equitable adjustment for ownership interests in the changed competitive framework. 246 For example, the Douglas Amendment might be amended to provide that a bank holding company could acquire another bank in a state contiguous to the holding company's home state; that a holding company could acquire another bank within a certain region; that a holding company could acquire a limited number of banks in other states; or that a holding company could acquire another bank in a market that was significantly concentrated. Certainly, at the very minimum and in order to facilitate the least disruptive consequences of bank failure, the Douglas Amendment should be amended to provide for interstate acquisition in a failing bank situation. Finally, I believe that we should address the important federal policy question raised by state laws whose restrictions serve to create what in effect are monopolistic or oligopolistic effects in certain markets. In recognition of these phenomena, the Supreme Court, speaking through Justice Stewart, in 1975 characterized restrictive branch banking statutes as a restraint of trade which would be a "per se" violation of our antitrust laws but for the fact that the restriction is governmentally rather than privately imposed. I believe that where it is demonstrated that restricted markets serve to disadvantage customers in those markets, that federal law should override state law and allow de novo entry. I believe very strongly in a free and open competitive system on the national and international levels. Governmental intervention in the marketplace should be tolerated only where clearly warranted. However, I recognize that there are fundamental concerns both within countries and within regions in countries that must be recognized. This, at times, will necessarily involve a political balance between our interest in competition and local concerns. Thus, in striking the balance, we must make certain that concerns which do lead us to impose restrictions on competition and indeed legitimate and overriding. In addition, as a bank supervisor, I am particularly sensitive to the special problems posed by the entry into the U.S. market of a foreign operation, whether by acquisition or de novo. For example, different national laws and customs regarding disclosure of information which we require from our domestic institutions may make it difficult to permit entry at times. Moreover, the inability to obtain the quantity and quality of pertinent information about the related activities of the foreign owner and the absence of ready jurisdiction over controlling principals gives further cause for concern. Finally, we must recognize that as we permit free and open competition we must be careful to avoid the concentrations of economic power that often go with size. In conclusion, I would emphasize that these concerns can and should be addressed. These changes which are on us are profound. As such, they afford the opportunity for governmental action which is constructive and will be of substantial benefit to our financial systems. I am hopeful that we will respond to this challenge. Statement of John G. Heimann, Comptroller of the Currency, before the Subcommittee on Financial Institutions Supervision, Regulation and Insurance of the House Committee on Banking, Finance and Urban Affairs, Washington, D.C., April 5, 1979 I welcome the opportunity to present the views of the Office of the Comptroller of the Currency on H.R. 2515. This testimony does not necessarily represent administration policy. H.R. 2515 provides for the temporary preemption of state usury ceilings on business and agricultural loans of $25,000 or more until January 1, 1981, and establishes a ceiling 5 percentage points above the Federal Reserve discount rate on 90-day commercial paper. H.R. 2515 is essentially the same as Public Law 93-501, which was enacted on October 29, 1974, to provide temporary relief from state usury ceilings for financial institutions—principally those in Arkansas, Montana and Tennessee. That law expired on July 1, 1977. Problems stemming from arbitrarily imposed usury limits are not new. When market interest rates are above usury ceilings, low-income borrowers and higher-risk borrowers generally have been unable to obtain loans from commercial banks or other financial institutions, and credit has flowed to markets not subject to usury ceilings. This has occurred during every period of high interest rates over the last 15 years. Many states have revised usury statutes in response to market realities, but some have not or could not because usury ceilings were mandated in their constitutions. Since 1974, Tennessee has amended its constitution to grant the state legislature discretion to establish usury ceilings; Arkansas has not, although a constitutional convention has been convened. As New York State Superintendent of Banks, I testified on the subject of usury ceilings before the New York State Assembly in 1975, which was considering revision of the state usury limit that applied to conventional mortgage loans. I stated: stitutions and state economies were all adversely affected. H.R. 2515 is an example of a measure which deals with today's financial realities, but it is only a partial stop-gap measure. It is tailored to respond to the present situation in Arkansas. The constitutionally mandated 10 percent usury ceiling in Arkansas is restricting the flow of credit into the state's financial markets. Interest rates in many national markets exceed Arkansas' 10 percent limit. For example, rates on mortgages have recently risen to over 10 percent, and the prime lending rate at most banks is now over 11 percent. Although Arkansas has convened a constitutional convention and a new usury provision is being drafted to provide greater flexibility, the new constitution will not be presented to voters until November 1980. Thus, to alleviate some of the immediate problems facing lending institutions in Arkansas, we support prompt adoption of H.R. 2515. We believe, however, that the time has come to reconsider whether usury laws, generally, serve a useful purpose in our society. A usury ceiling is not supposed to be a form of price control. It should function solely to protect the financially weak or unwary borrower from paying an exorbitant rate of interest; that is, to prevent what amounts to extortion, or cupidity. To use it to control interest rates in free capital markets is only to guarantee that money will not be generally available for home finance. Perhaps a major reason that usury laws have persisted is that they are intended to protect small- and low-income borrowers from unscrupulous money lenders and to limit the power of lenders to charge whatever interest rate they want. These goals are important, but usury laws have a poor record of accomplishing them. Indeed, usury laws have had unintended and adverse effects on borrowers, financial institutions and the public-at-large. This suggests that means of obtaining these goals other than usury ceilings should be pursued. Restrictive interest rate limitations have closed off conventional credit sources to high-risk, generally lowincome borrowers. When lenders are unable to charge rates sufficient to yield a reasonable rate of return, they generally stop lending to high-risk borrowers. Good risks may also be unable to obtain credit because the cost of making small loans exceeds usury ceilings. Both groups of borrowers may either forego obtaining Protection of weak and unwary borrowers from unscrupulous money lenders has been an objective of usury laws since Biblical times. In the U.S., usury ceilings have had a long history and have been supported by some as a way of guaranteeing cheap credit to borrowers. Constitutional and statutory usury ceilings seldom impinged significantly on the lending activities of legitimate institutions until recent times. However, with the advent of inflation, various free market-determined interest rates have frequently exceeded usury ceilings. In those states where statutes were not changed to reflect market realities or whose constitutions prevented change, individual borrowers, businesses, lending in Usury: Goals vs. Impacts Evidence collected over several years overwhelmingly indicates that elimination of restrictive usury limits would be in the public interest. (A summary of evidence accumulated in various studies is contained in the appendix.*) Generally, usury laws: • Fail to accomplish their desired objectives, • Have an adverse effect on production and employment, and • Distort allocation of credit among markets and among states. * The appendix to this statement was not included because of space constraints. The appendix is available from other sources. 247 credit, go to loan sharks where loans are available above usury rate limits or seek nonmarket sources of credit such as family or friends. These conclusions have been documented in several studies of consumer finance companies, commercial banks and mutual savings banks. Similar studies of new automobile, mortgage and personal loan markets offer the same conclusions. The results are consistent—low-income consumers are denied access to conventional credit when market rates exceed usury ceilings. Interest rates on home mortgages have been the target of usury limitations in several states. New York state is a primary example. From October 1973 until the end of 1978, the state had an 81/2 percent limit on conventional home mortgages. Prior to 1973, the maximum rate was even less. But this law did not and could not prevent mortgage lenders from obtaining market rates for their investable funds by making outof-state loans and other kinds of loans not subject to the ceiling on mortgages. For example, between 19661976, when mortgage rates generally were frequently above the New York ceiling, the amount of out-of-state mortgages held by New York mutual savings banks averaged 48 percent. Other evidence suggests that when national mortgage interest rates rise above usury ceiling rates construction activity in states with restrictive rates declines significantly. These observations clearly indicate that placing restrictive limits on mortgage rates fails to provide for the public's housingrelated credit needs. Firms which must operate in markets subject to usury restrictions feel the impact on both costs and revenues. In the consumer finance industry where rate restrictions abound, low-rate ceilings tend to result in fewer and larger loans because credit is allocated to low-risk consumers and because larger loans are less costly to make. When low legal loan size limits are combined with low ceilings on interest rates, the number of loans increases, but low-income, high-risk customers still find it difficult, if not impossible, to obtain credit. Instead, good risk customers are forced to "double-up" by acquiring costly multiple loans to get the amount of credit they desire. The cost of making small loans to consumers, even good-risk customers, can be considerable. For example, consider a 1-year, $1,000 consumer installment loan with 12 monthly payments. The 1977 Functional Cost Analysis of average banks compiled by the Federal Reserve System estimates that the cost of making and servicing such a loan is $130.68. This cost includes $41.35 to process the loan application, $34.92 to collect and process 12 payments, $49.76 to cover the cost of funds and $4.65 to cover the average expected loss on loans of this type. To break even, the bank must charge about a 13.1 percent interest rate. The cost of making and servicing a 1-year $500 loan with 12 payments would be $103.47, or 20.7 percent. Longer-term or larger loans are less costly to make. Thus, it is not surprising that financial institutions in states with restrictive usury ceilings are reluctant to make small and short-term loans. Usury limits have also had adverse effects on the economies of certain states. For example, one study 248 shows that Tennessee's economy grew at a faster rate than the national economy except when market interest rates rose above the state usury ceilings. At that point, Tennessee's economy slowed substantially. The same study calculated that between 1974-1976, the annual loss in production averaged $150 million, the annual loss of jobs averaged 7,000, the annual loss of retail sales averaged $80 million and the annual loss of assets in financial intermediaries averaged $1.25 billion. Because usury laws are regulated by each state, variations in usury rates distort the geographic distribution of credit. This is apparent from the types of financial institutions which exist in various states. For example, Arkansas with its 10 percent usury limit has few consumer finance companies. Because credit is an essential ingredient to commerce, restrictions that limit its availability, such as usury ceilings, tend to dampen economic growth. This occurred in Missouri from early 1973 to early 1974 when the mortgage ceiling was 6 percent. New mortgage loans at Missouri savings and loan associations declined 37 percent compared to a 6 percent decline in neighboring states. The usury limit was raised in 1974. Arkansas offers another example of distortions created in credit markets by restrictive usury rates. In the Texarkana region, there are distinct differences between the types of firms located on the Texas side of the city and those on the Arkansas side. There is considerably less retail trade on the Arkansas side despite the approximately equal distribution of population between states. The majority of automobile dealers, appliance stores, furniture stores and other businesses that rely on consumer credit has moved to the Texas side of the city. Clearly, inefficiency and inconvenience result from the locational patterns created by Arkansas's usury ceiling. The inescapable conclusion to all of this, I think, was stated well 115 years ago by the first Comptroller of the Currency, Hugh McCulloch, in his initial report to Congress: Where money is abundant it is cheap, where scarce it is dear; and no legislation has been able to control the effect of this general law. Timeliness for Change The call for market-responsive lending rates is not new. Hugh McCulloch took issue with the caprice of usury laws in his 1864 report, citing the "embarrassment" caused to interstate commerce by the "different and frequently changing legislation of the States in fixing the value of the use of money." Today, in the few states that have adopted the Uniform Consumer Credit Code, nonconsumer related loans are free from usury ceilings. Other states have chosen not to control interest rates on specific categories of loans. Furthermore, almost every state permits corporate loan rates to be fixed without restriction. Nevertheless, usury laws continue to vary on different kinds of loans from state to state. While appeals for comprehensive reform have been heard from some quarters through the years, the rule has always been to place reliance on the individual states to respond to changing economic needs. But the reality is that our economy has become national in scope, and no state legislature acting alone has the power to bring about change on a national scale. Legal restrictions that inhibit credit flows are becoming less and less effective. However, the impact on local communities, individuals and businesses can still be quite severe. When left to itself, our market-based economy generally attunes itself to the public interest on a local, state or national level, as the situation dictates. Where a problem transcends political boundaries and the states lack the capacity to devise an appropriate solution or find it difficult to adopt consistent and uniform approaches, federal involvement may be the best way of dealing with the problem. The federal Truth-in-Lending Act is a good case in point. Disclosure is an important way of protecting the unwary and the weak. The annual percentage rate and finance charge disclosure requirements provide a uniform basis nationwide which borrowers can use to evaluate the cost of credit. While many express concern about the regulatory burden that has accompanied truth in lending, few would deny that it has brought about uniform and consistent disclosure that has benefited borrowers. Responses to Usury Limits It is in this spirit that we propose that Congress consider revising federal law to eliminate usury ceilings and, in doing so, return rate-setting to its proper place in the competitive credit markets. Such action would recognize existing market realities and result in substantial public benefits. However, in moving toward the elimination of usury limits it is important that the objective of protecting weak and unwary borrowers from unscrupulous lenders also be met. Ten years ago, in testimony before the Legislature of the Commonwealth of Massachusetts on the Uniform Consumer Credit Code, Senator Paul Douglas stated: I strongly endorse the Code's attempt to foster meaningful price competition on credit charges through uniform rate disclosure and a policy of free entry. To the extent feasible, rates on consumer credit transactions should be set by market forces rather than state legislatures. However, in today's credit market certain barriers to competition blunt the impact of market forces. Price competition is difficult because of the lack of meaningful rate disclosure. Hopefully, the Truth-in-Lending Act will help to solve this part of the problem. But even if all creditors disclose the true annual rate on consumer credit, effective competition is [still] hampered by barriers to entry. We believe that uniformity of principle and consistency of regulation in matters of credit is long overdue. Much can be learned about the advantages to interstate commerce and consumer protection which have been achieved through nationwide adoption of the Uniform Commercial Code. Other model acts hold similar promise as they gain more widespread acceptance among the states. The Uniform Consumer Credit Code deserves par ticular mention. Drafted under the aegis of the National Conference of Commissioners on Uniform State Laws, the provisions of this code are grounded in the assumption that consumers are protected best when the cost of credit is determined by competition in the marketplace subject to certain minimal controls. Since garnering the approval of the National Conference and the American Bar Association on its completion in 1968, the code has been adopted by only 11 states. With response lagging, its intended purposes have yet to be realized. So lacking in consistency is the present environment that usury laws not only differ from state to state, but they differ, as well, from bank to bank. National banks operate under the federal usury statute (12 USC 85), which appears to subject them to state limits. However, the rule, originated in 1863 as Section 30 of the National Bank Act, is not quite so simple. The U.S. Supreme Court was first asked to interpret Section 30 in 1873 in the Tiffany case. That landmark decision held that Congress intended the statute to give "advantages to national banks over their state competitors." Congress created an even greater advantage in 1933 when it enacted the current provision entitling national banks to elect to peg interest to the Federal Reserve discount rate in lieu of the applicable state limit. The principal sponsor of that amendment, Senator Glass, argued persuasively that when the discount rate exceeded the state interest rate ceilings, national banks had to be the instrumentalities to permit businesses to borrow money to avoid possible collapse. This past December these advantages were again reaffirmed as the Supreme Court echoed the words of Tiffany. In the Marquette National Bank case, perhaps its most significant decision on usury since 1873, the court held that the law allows a national bank to provide credit anywhere, in any state, subject exclusively to the interest rate ceiling of its home state or the alternative formula in the federal statute. In our highly integrated financial system, interstate transactions are already a commonplace occurrence. The justices in Marquette openly acknowledged that the "exportation" of interest rates significantly impairs the ability of states to enact effective usury laws. Laboring under the weight of this expanding body of case law and caught in the midst of emerging new economic realities, usury ceilings are increasingly inexpedient. The challenge now is not to roll back the advances made by national banks but rather to recognize the urgency of the situation and to work toward the removal of artificial credit constraints on financial institutions. In this effort, we must be mindful, as well, of the legitimate concern for the small, financially weak borrower who may fall prey to disreputable lending practices. In those parts of the country where credit markets are not yet reasonably competitive, the need to safeguard the rights of those most vulnerable is pressing. The time is ripe for change. If we do not soon release our financial institutions from the grip of antiquated and labyrinthine laws which restrict competi249 tion, we are condemning them to a handicapped role in the marketplace. In our rapidly changing financial and economic environment, geographic barriers to entry, interest rate ceilings on deposits and usury laws all limit the ability of depository institutions to compete effectively with nondepository institutions which are not similarly restricted and which are increasingly offering the same financial services. We believe that a competitive marketplace in which all providers of a financial service can compete on an equal footing is a desirable goal to pursue and that we should proceed to phase out in an orderly manner those restrictions that impede attainment of that goal. Federal law can and should be used to help achieve this objective. The Comptroller's Office stands ready to assist this subcommittee as fully as possible in carrying forward this most important effort. Statement of John G. Heimann, Comptroller of the Currency, before the Subcommittee on Financial Institutions of the Senate Committee on Banking, Housing and Urban Affairs, Washington, D.C., April 11, 1979 I am pleased to have the opportunity to present the views of the Office of the Comptroller of the Currency on S. Concurrent Resolution 5, S. Resolution 59 and on deposit rate controls generally and to commend this subcommittee and its Chairman for the timeliness of these hearings. As Superintendent of Banks of New York, Comptroller of the Currency, Acting Chairman of the Federal Deposit Insurance Corporation and member of the Board of the Federal National Mortgage Association, I have observed the consequences of deposit rate controls on depository institutions, on the financial system and on the economy. This testimony reflects that experience. It does not necessarily represent Treasury Department or administration policy. The administration is developing recommendations based on the work over the past year of the Interagency Task Force on Deposit Rate Controls. As New York State Superintendent of Banks, I also voiced concern over the inequity of deposit rate controls. In March 1976 testimony before the House Banking Subcommittee on Financial Institutions, I stated that the: saver of small means has been i^nf airly forced to subsidize the borrower. Indeed, the saver of means and financial sophistication has not been victimized at all. He moves his money as interest rates change to take advantage of the best investment opportunities. It is the saver with a few hundred dollars or the saver who has the wherewithal but is timid or too unsophisticated to make direct investments who is victimized. Furthermore, the Comptroller's Office has been a frequent critic of deposit rate controls. Former Comptroller James E. Smith, testifying before the Financial Institutions Subcommittee of the Senate Banking Committee in November 1973, noted that deposit rate controls place financial institutions at a severe disadvantage in competing for funds against Treasury bills, U.S. agency issues and corporate debentures and that rate ceilings fail to insulate institutions from deposit outflows. Moreover, he noted, "Such rate setting is highly discriminatory to the consumer-saver, who lacks either the financial sophistication or the monetary where 250 withal to shift his funds to the high yielding market instruments." In addition, deposit interest rate controls have received considerable attention by the Congress and the Executive branch. The conclusions of the 1958 Commission on Money and Credit, the Heller Report, the congressionally mandated 1966 Study of the Savings and Loan Industry, the 1971 Hunt Commission Report, the 1972 Federal Reserve Board study, "Ways to Moderate Fluctuations in Housing Credit," and the FINE (Financial Institutions and the Nation's Economy) Discussion Principles released by the House Subcommittee on Financial Institutions in 1975 are virtually unanimous in recommending that Regulation Q be phased out and that thrift institutions be granted broader asset and liability powers. The collective verdict of these studies is that the costs to society of continuing Regulation Q outweigh the benefits. It is time to commit ourselves to phasing out ceilings on all types of deposits and to structure a solution that recognizes and deals with the problems that removal of ceilings may create. Only with the certain knowledge that rate controls will be removed by a definite date will affected institutions begin making the necessary adjustments. In addition to setting a timetable for removal of deposit rate ceilings, we recommend that thrift institutions be permitted to: • Offer with appropriate safeguards a full array of mortgage instruments safeguards; • Issue longer-term insured liability instruments and certificates to reduce their dependence on short-term, more interest-sensitive deposits; • Offer a range of household financial services, including transaction accounts and some consumer loan powers, to provide consumers with the convenience of one-stop banking; and • Invest to a greater extent in other short-term assets to shorten the maturity of their loan portfolio. Furthermore, state usury laws should be repealed, preempted or modified substantially because they create another arbitrary distortion of our capital market system. These ceilings reduce the incentives to make mortgages and distort the flow of funds by encouraging out-of-state investment of funds. When usury ceilings are below market interest rates, they reduce the ability of less creditworthy consumers, such as young families, to obtain mortgage funds. These recommendations should be acted on at the earliest possible time to permit thrift institutions to begin implementing the adjustments that will make early removal of deposit rate ceilings possible. In the meantime, those agencies charged with regulating deposit rate ceilings should be encouraged to do what they can to provide depositors with a fair rate of return on their funds without jeopardizing the viability of depository institutions. Preliminary steps were taken along this line on April 4, 1979, when the agencies invited comment on a series of proposed changes in deposit rate ceilings that would enhance the return to small savers and provide them greater flexibility: • A fixed 5-year maturity certificate with a $500 minimum denomination, a 6-month interest forfeiture for early withdrawal and a flexible ceiling (in commercial banks, 125 basis points; in thrift institutions, 100 basis points) below the average 5-year rate based on the yield curve for Treasury securities; • A bonus of 50 basis points on individuals' passbook savings accounts on the minimum balance during a 12-month period; • Reduction of present minimum denomination requirements to $500 except for large negotiable certificates of deposit and money market certificates; • A $500 minimum denomination rising-rate certificate (6 percent in the first year; 6.5 percent between 1 and 21/2 years; 7 percent between 21/2 and 4 years; 7.5 percent between 4 and 5 years; and 8 percent between 5 and 8 years; thrifts would be permitted to pay 1A percent more) with a 3-month interest forfeiture penalty for early withdrawal during the first year and thereafter no penalty; and • Reduction of early withdrawal penalties on existing certificates to 6 months' loss of interest. The comment period for this proposal extends through May 4. We encourage all interested parties to participate in this exercise. Our recommendation that concrete and certain steps should be taken to eliminate deposit interest rate ceilings reflects the judgment that these ceilings are inefficient, inequitable and create problems throughout the financial system. These problems have been recognized by most since their inception. Specifically, deposit rate ceilings are undesirable because: • Unsophisticated savers and those of modest means do not receive as large a return as wealthier and more sophisticated savers can; • Depository institutions are forced to resort to inefficient and wasteful forms of nonprice competition and to devise roundabout strategies to circumvent ceilings; • Costly and unnecessary transactions occur as savers, seeking the best rate, move funds in and out of depository institutions; • Disintermediation has heightened the cyclically of the housing construction industry, causing inefficiencies and added costs for home buyers; • Strength of depository institutions is eroded due to their inability to respond fully to the competition of unregulated institutions for funds in the marketplace; and • Saving in the form of financial assets is discouraged in favor of saving in the form of durable assets, which may discourage the kinds of investments that promote increases in productivity. In light of these problems, why have deposit ceiling controls been renewed year after year, and why have calls for their elimination been ignored? There are several reasons: • Rate controls were designed to favor thrift institutions over commercial banks, with the intent of funneling funds into housing construction and mortgages; • Rate controls were intended to lower the cost of credit, particularly mortgages; • Rate controls were designed to protect the local markets of depository institutions by preventing outside institutions from attracting deposits through higher rates; • Those benefiting from the present deposit rate structure wish to retain their competitive positions; • During times of rising interest rates, market rates on short-term funds, which comprise the majority of thrift deposits, adjust more quickly than yields on thrift assets, which consist mostly of long-term mortgages; this threatens thrift institutions' liquidity and possibiy solvency; and • Rate controls are believed to prevent excessive interest rate competition for deposits and, therefore, inhibit unsafe investment policies. Thus, despite the costs deposit ceilings impose on our society in terms of inefficiency and inequity, the prospect of a weakened thrift industry if rate controls were to be removed has led many to accept controls as the lesser of evils. However, the dynamics of the marketplace are such that a continuation of deposit rate controls will lead to a restructuring of the financial services industries, changing and perhaps diminishing the role of depository institutions. The financial system that emerged from the Great Depression consisted of distinct kinds of financial institutions with differing statutory powers and mandates as well as separate regulators. The activities and markets of these institutions were segmented to a substantial degree. Where one or more types of financial institutions offered the same service, it was usually within distinct markets. Or, as was the case with savings deposits, commercial banks simply did not compete seri251 ously with savings and loan associations, mutual savings banks or credit unions. Since that time, the financial services industry has undergone substantial change at both the national and international levels. Because of innovations in communications technology and inflationary pressures, markets for financial services are no longer segmented and identified with a specific type of financial institution. Commercial banks and thrift institutions are in head-to-head competition in many areas; commercial banks and thrifts have entered markets of nondepository institutions and vice versa; the gulf between large and small institutions has widened considerably; and domestic and international geographical barriers to competition have eroded. What role will deposit-taking institutions play and what role should they play in this rapidly changing economic environment? We believe, as do many others, that strong deposit-taking industries are crucial to a vital and efficient economic and financial system. Thus, we believe it is imperative to address the issue of deposit rate ceilings immediately and to develop a program for an orderly phasing out as quickly as practicable. Paul A. Samuelson, winner of the Nobel Prize in economics, in a 1969 study of the savings and loan industry noted: But just as Sigmund Freud has shown that adults are better for meeting their problems head-on rather than suppressing them from attention, so I believe a healthy democratic society should be the better for facing up to the problems that are really there. Before elaborating an approach to resolving the Regulation Q problem, I believe further discussion of problems created by rate ceilings and difficulties that may develop as a result of their removal will be helpful. What Is Wrong With Deposit Interest Rate Controls? There is no question that the system of deposit rate controls that was established in 1966 is unfair to small savers of modest means and those of limited financial sophistication because they receive a below-market rate of return on their savings. Federal Reserve Board Vice Chairman Robertson in August 1966 testified in favor of legislation that would broaden deposit rate controls and extend them to thrift institutions but noted that the legislation "discriminates against the small saver" and that the board was requesting the Regulation Q authority with "considerable reluctance." Small savers may have large savings balances. Consider, for example, a retired person who relies on savings interest on a $40,000 account to provide a substantial portion of his or her yearly income. Because of the desire to maintain liquidity and preserve principal, the risks and inconveniences tied to nondeposit forms of investment encourage savers to keep their funds in low-rate passbook savings accounts. Of course, the money market certificate now affords such savers an opportunity to earn a market return but many still prefer the instant liquidity of a passbook account. The difference between a 9.4 percent return on the money market certificate and a 5 or 5.25 percent 252 return on passbook savings is an unfair premium to exact for the privilege of maintaining instantaneous liquidity. In the present environment of high inflation, the current yield on consumer deposits, adjusted for income taxes and for inflation, is negative. A dollar spent today can purchase more real goods than a dollar put aside in an interest-bearing savings account can purchase next year. Rather than rewarding individuals for saving, our system of deposit ceilings penalizes them. Perhaps indicative of these facts, a popular investment guide recently advised readers that investment in a case of tuna fish now yields a higher after-tax return than investment in a passbook savings account at a savings and loan association. For example, the deposit rate ceiling on a 1-year certificate at a thrift institution is currently 6.5 percent. An individual in a 30-percent federal income tax bracket would receive an after-tax yield of slightly over 4.5 percent, but when this return is adjusted for inflation, which last year was over 9 percent, the return is a negative 4.5 percent. This makes it exceedingly difficult for people of modest means to accumulate funds necessary to make a down payment on a home. It also discourages them from saving, thereby preventing them from improving their standard of living in the future. The relatively well-to-do and sophisticated savers, however, are able to earn a market rate of interest on their investments. Large denomination negotiable certificates of deposit; federal agency securities; Treasury bills, notes and bonds; money market funds; and, more recently, money market certificates are all now yielding significantly higher rates of return than consumer deposits. However, to purchase many of these instruments, the investor must be able to meet minimum denomination requirements and be willing to accept the risk of moving outside the traditional depository system. It seems likely that the moderate-income families, the elderly and the retired are among those least likely to withdraw their savings and invest directly in the market. This inequity in treatment of depositors is not inadvertent; it was designed purposely to respond to the realities of the financial market. If large depositors are not offered yields on their deposits which are competitive with other investment instruments, they will rapidly shift their funds elsewhere. To be viable, the rate controls can only apply to the household depositor for whom there are few suitable alternative investments. For example, the money market certificate was limited to a minimum denomination of $10,000 because large depositors are more sensitive to interest rate changes than small depositors. Realizing the reality of such inequities, the calls made by many to end discriminatory treatment by authorizing low-denomination deposit instruments, which pay market-based interest rates, are clearly justified. The fact of the matter is that the current structure of deposit rate ceilings is, in effect, a regressive tax. The losses to savers from deposit ceilings have been substantial. One study by professor David H. Pyle of the University of California at Berkeley concluded that be- tween 1968 and 1975 Regulation Q resulted in a loss to depositors of $22 billion. More recently, professor Edward Kane of the Ohio State University estimated that between 1968 and 1979 Regulation Q cost $42 billion in lost interest, and rate restrictions on all types of financial instruments resulted in a loss of $55 billion in interest. Kane estimates that $19 billion was lost by people over the age of 65. ity and to invest smaller amounts in long-term investments such as mortgages. Even those thrift institutions gaining new deposits during high interest rate periods may be reluctant to tie the funds up in long-term mortgages. There has been some evidence that a portion of the 6-month money market certificate balances has been invested in large negotiable certificates of deposit of commercial banks. Disruptions of the Housing Market Inefficient Competition for Deposits Inefficiency results when goods and services are not produced at the minimum attainable cost or with the minimum amount of resources. For example, efforts to restrict competition among institutions by controlling deposit rates result in these institutions competing on the basis of other factors, such as premiums, free services and more convenience in the form of more branch offices and longer hours. This raises the cost of intermediation because the cost to the depository institution of providing the extra services frequently exceeds the value the depositor places on the services he receives. Many depositors would prefer to receive interest income which they can spend as they choose rather than having to accept free services or a choice of premiums. During recent high interest rate periods, some depository institutions in the highly competitive urban areas have looked more like department stores than depository institutions. In their windows one might find cameras, radios, television sets, blankets, glassware and so on. Governmental policy that forces a young family—which is seeking to accumulate sufficient savings for a down payment on a house—to choose between a color television set or an outboard motor, simply because federal regulations prohibit their bank from paying a realistic rate of return on savings deposits, should be questioned. Inefficiency in the Market During periods when market interest rates significantly exceed rate ceilings that commercial banks and thrift institutions may pay on their deposits, savers in the aggregate tend to decrease the proportion of their savings allocated to these institutions by investing directly in market securities or allocating savings to unregulated financial intermediaries, such as money market funds and municipal bond funds. When market rates fall relative to deposit ceilings, funds have tended to flow back into depository institutions. Such shifting of funds generates transactions and costs that are not necessary to the functioning of the economy. In addition, savers, particularly those with small deposits, expend more resources in investing their funds directly in market securities or new financial intermediaries than depository institutions would. To the extent that depository institutions are more efficient in collecting funds from depositors and lending them to borrowers, the growth of alternatives to deposits will increase costs. The shifting of funds increases uncertainty and forces depository institutions to maintain greater liquid When interest rates rise above deposit ceilings and depositors withdraw their funds, housing has been clobbered. There is no doubt that Regulation Q has exacerbated cyclical swings in the housing market. It is an economic principle that stable markets function more efficiently than unstable ones. Instability in the availability of housing finance contributed to creation of governmental or governmentally supported agencies to supplement the flow of funds into housing. Since the imposition of deposit rate controls on thrifts in 1966, the share of outstanding residential mortgage loans financed directly or indirectly by federal agencies or sponsored credit agencies has increased from 6 to 19 percent. In 1974, over half of all new mortgage credit was provided directly or indirectly through funds made available by federal agencies. Even last year, when thrift deposits were strong, federal participation directly and through federal housing agencies, mortgage pools and Federal Home Loan Bank advances totaled 30 percent of new mortgages. By way of comparison, the government's participation in the residential mortgage market in 1964 totaled less than 2 percent. Yet, despite this assistance, the housing market still tends to be hit harder than other sectors of the economy when interest rates are high. It is generally agreed that the money market certificates introduced last year helped maintain considerable housing strength, even as mortgage rates rose sharply. The key to this success was that until a month ago a market rate could be paid on money market certificates. Eroding Competitive Strength of Depository Institutions Deposit rate controls, including the differential, have placed commercial banks at a serious disadvantage in the competition for deposits. Their share of financial assets declined from 57 percent in 1946 to 40 percent in 1977. Over the same period, savings and loans associations, mutual savings banks and credit unions increased their share from 13 to 24 percent; however, this increase did not offset the commercial bank loss. But since 1962, commercial banks' share has increased from 38 to 40 percent, reflecting more aggressive competition for nondeposit funds, such as negotiable certificates of deposit, borrowed funds, subordinated debentures and so forth. By limiting the flexibility of deposit-taking institutions to attract deposits, rate controls have fostered the development of new institutions and markets ready to meet the demands of the consumer. Intermediaries established primarily since 1966 include money market funds and tax-exempt municipal bond funds. These 253 funds have grown in rapid spurts when interest rates have risen. More significantly, these funds have not contracted when interest rates declined and may have become a permanent feature in our financial system. Initial investments in some of these funds start as low as $500; and many provide check writing privileges. Not surprisingly, money market funds grew by 180 percent during 1978 and increased by 42 percent during the first 2 months of 1979, reaching $15.5 billion in size. Corporations have also been encouraged by deposit rate controls to deal directly with each other and with the household sector, rather than operating through depository institutions. For instance, new money raised by both financial and nonfinancial corporations in the commercial paper market averaged less than $800 million per year from 1961 through 1965 and did not exceed $1.6 billion in any year. In the years immediately following the introduction of deposit rate controls, the average new money raised in the commercial paper market was over $4.7 billion and exceeded $11 billion in 1969. As of the end of 1978, commercial paper outstanding totaled almost $84 billion. Other examples of direct borrowing and lending include: • The recent announcement by Sears of plans to issue small denomination intermediate notes directly to its credit card holders; • The issuance by municipalities of "minibonds" in denominations as low as $100; and • The entry of insurance companies and even cash-rich non-financial companies into the short- and intermediate-term corporate lending business. It is difficult to quantify what the cost to society has been of using resources to circumvent rate controls. However, it seems likely that our financial system has not been strengthened and thrift deposits have not been protected by regulations that unintentionally encourage borrowers or lenders to transact their business in newly formed markets. The financial and credit expertise built up over the years in the commercial banking system is lost to the investor and the issuer when business which could be performed more efficiently by the banking system is forced by restrictions on banks to go elsewhere. Saving in Financial Assets is Discouraged While below-market rates on deposits may have little, if any, impact on aggregate saving in the economy, they will discourage saving in the form of deposits. Under our tax policy, consumers are given a strong incentive to substitute consumer durables, whose implicit yields are not taxed, for deposits, whose yields are taxed. Both reduce the quantity of savings available for investment in new plant and equipment. Therefore, deposit rate ceilings can be faulted as having contributed to the slow growth of productivity producing investment in the past decade. They may also have contributed to the recent speculative boom in the housing market. 254 Why Haven't Deposit Interest Rate Controls Been Eliminated? Several arguments raised in favor of deposit ceilings are of doubtful validity. These include lower interest rates on loans and excessive interest rate competition that may include unsafe banking practices. Other arguments, such as protection of local markets and maintenance of preferential market positions, are inconsistent with the principle of competition. Nevertheless, it has been a matter of national policy to channel funds to the housing industry. An instrument of that policy has been the deposit interest rate differential accorded thrift institutions. The appropriateness of depending on such a policy instrument in light of the problems created by deposit ceilings certainly must be questioned. An interest rate differential cannot exist without effective deposit rate ceilings. However, one of the arguments against removing ceilings is quite real. Because of a mismatching of asset and liability maturities, thrift institutions' earnings and, possibly, solvency are vulnerable in times of rising interest rates. Some Arguments for Deposit Ceilings Are of Doubtful Validity There is no convincing evidence of the impact of deposit rate ceilings on the cost of loans, although it is generally believed that mortgage rates have been lower than they might have been if there were no ceilings. However, it is possible that the involvement of federal government and governmentally sponsored agencies in providing funds for housing may be responsible for lower mortgage rates, rather than Regulation Q. Even if loan rates are lower because of the ceilings, it does not follow that the bargain rates will have desirable economic effects. Lower mortgage interest rates may simply mean more household borrowing via mortgage finance as a substitute for other borrowing, rather than more home purchases. Since 1950, the increase in residential mortgage loans has been significantly greater than the increase in investment in residential housing. Thus, to the extent deposit ceilings have diverted funds from commercial banks to thrift institutions, not all of these funds have found their way into housing investment. Furthermore, there is no convincing evidence that deposit ceilings have led to a greater availability of funds to low- and moderateincome households. Some argue that unrestrained competition for deposits will lead to unsafe banking practices because institutions will seek to recover higher interest expenses by investing in high-yielding, high-risk assets. There is some evidence that this occurs; however, as long as the yields are sufficiently greater to compensate for the added risk, this can hardly be regarded as an unsafe banking practice. Furthermore, studies of bank failures* in the 1930's have demonstrated that deposit rate competition was not a cause. Recent evidence from the NOW account experience of New England depository institutions, although not conclusive, suggests that rate competition may lead to lower profits in the short run. However, profits tend to return to more normal levels as institutions make adjustments in their operating and pricing policies. Those institutions that are not able to cope with increased competition tend to be poorly managed and have survived only because deposit rate ceilings have protected them from competition. Protection of inefficient competitiors is inconsistent with a free market economy. Moreover, deposit insurance has virtually eliminated the most adverse economic and social consequences of failure. Thrift Institution Liquidity and Solvency Are Cause for Real Concern Thrift institutions are limited by law and regulation in the kinds of liabilities and assets they may hold. The intention of Congress in establishing the Federal Home Loan Bank System was to support and stimulate an industry almost-exclusively devoted to homebuilding. Thus, the bulk of assets of savings and loan associations and mutual savings banks to a lesser extent is invested in fixed-rate, long-term residential mortgages. These mortgages are funded by household savings which are essentially short-term owing to household liquidity needs. During the 1950's and early 1960's when prices and interest rates were relatively stable, thrifts encountered little difficulty in operating profitably and remaining solvent without the need for ceilings on deposit rates. In fact, as long as interest rates are stable over an extended period of time, regardless of level, thrifts will have no difficulties. The mismatching of asset and liability maturities only causes problems when interest rates rise relatively quickly over an extended period of time such as has occurred, with a few temporary interruptions, over the last 15 years. Because savings deposits are relatively liquid, thrift institutions must raise rates to market levels to hold them. However, mortgages made 15 years ago at 6 percent may still be on the books even though current mortgage rates are in excess of 10 percent. When rates are rising, the average return on a portfolio of fixed-rate mortgages will always be lower, sometimes substantially, than current rates. Thus, payment of market rates on savings during sustained periods of rising rates would cause low or negative earnings and if sustained over a long enough period would eventually result in insolvency and failure. Deposit rate controls preserve thrift institution profitability, but the result is disintermediation and unfair treatment of savers. Regulators have sought to minimize the extent of disintermediation by structuring a system of deposit rate controls that gives sophisticated savers a market or near-market rate while holding rates on the savings of small and unsophisticated savers substantially below the market because it is well known that most of the deposits of these savers will remain regardless of the interest rate. This is patently discriminatory. However, as long as thrift institutions remain vulnerable to interest rate cycles, it will be difficult to eliminate such discriminatory treatment. Commercial banks do not share this problem for the most part because they hold much shorter-term assets. Ways of Resolving the Problems Related to Deposit Rate Ceilings Removal of deposit rate ceilings in the present economic environment would have catastrophic consequences, not only for the thrift industry and some banks but also for the homebuilding industry and perhaps other sectors of the economy. Despite the inefficiencies that result from Regulation Q, the inefficiencies stemming from its removal, at least in the short run, might be much greater. Therefore, any solution to the problem must of necessity involve a gradual phasing in over time. What Can Be Done? The need for basic financial institutions reform is clear. The longer our depository system and mortgage finance remain hostage to thrift earnings problems, the longer the socially wasteful allocation of resources devoted to avoiding deposit rate controls will continue. The decision to begin phasing out deposit rate controls should be made now, and a firm timetable should be established. There are two types of solutions. The first involves reducing inflation. This would cause interest rates to stabilize or even decline. As this occurs, the earnings problems created by the mismatching of liability and asset maturities would gradually be eliminated. The second solution would involve relaxing statutory and regulatory contraints presently imposed on thrift asset and liability powers with the intent of reducing the asset-liability maturity mismatch. Average liability maturities can be lengthened; average asset maturities can be shortened through investment diversification; flexible rates can be substituted for fixed rates so that a long-term asset behaves more like a short-term asset; usury ceilings on loans can be removed; and the competitive ability of thrifts to attract and hold household deposits can be improved. Some steps have already been taken. Since 1966, a variety of new deposit instruments has been authorized by regulation, generally with the objectives of increasing the competitiveness of deposit instruments and lengthening the maturity structure of thrift liabilities. Authorization of the 6-month money market and 8year certificates last year is the most recent step. As a result of these efforts, the proportion of savings and loan deposits in non-passbook accounts has risen from 12 percent in 1966 to over 70 percent. Additional steps intended to enhance the return to savers of modest means and limited financial sophistication and to provide them greater flexibility have been proposed for comment. However, these actions have not solved, and will not solve, the problem entirely. So long as the fundamental imbalance in the thrift asset and liability structure continues, thrift institutions will continue to be vulnerable to prolonged periods of tight credit. Recommendations It is time to commit ourselves to an orderly phasing out of ceilings on all types of deposits and to structure solutions that enable depository institutions to pay 255 competitive rates of interest without endangering their viability in both the short-run and the long-run. I am convinced that the agencies charged with regulating deposit rate ceilings are committed to do whatever is possible, consistent with the viability of depository institutions, to eliminate existing inequities in the present structure of deposit rate controls. S. Concurrent Resolution 5 would reenforce this commitment by clearly establishing the sense of Congress that the agencies "should promptly provide an appropriate method under which the interest rate on small savings deposits and accounts is increased equitably in order to reduce the adverse impact of such regulation on the holders of such deposits and accounts." However, S. Resolution 59, by stating the sense of the Senate that the agencies should establish ceilings based on the yields on U.S. government obligations and should reduce minimum denominations to $1,000, will be nearly impossible to meet in the short-run and may prove equally difficult in the long-run unless depository institutions are provided broader asset and liability powers. Some of the necessary modifications can be accomplished through regulatory changes, but much of it will require legislation. Accordingly, we recommend that depository institutions be permitted to offer an array of mortgage instruments to the consumer and not be limited to the standard fixed rate mortgage. If thrift institutions are to continue to invest primarily in mortgages, then the form of the mortgage instrument must be allowed to change to reflect the uncertainties of today's economy. While we do not believe that the standard fixed rate mortgage should be eliminated, it is important that the thrift institution be provided with a means of adjusting earnings should interest rates change in the future. Variable rate mortgages with yields which adjust to changes in the cost of funds will eventually provide thrift institutions with sufficient earnings to adjust their deposit rates to market conditions. The mortgages, of course, must be accompanied by adequate consumer safeguards. While a variable rate mortgage need not change the nominal maturity of the mortgage instrument, it can convert the long-term maturity into an effective short-term maturity. The intermediary realizes a return that follows short-term rates while paying deposit costs that are sensitive to long-term rates. Thrift institutions should also be allowed to offer longer-term liability instruments. Such instruments would help reduce the interest rate risk these institutions now assume when they make long-term fixed rate mortgages. Longer maturity deposits would make a significant contribution to providing thrift institutions with a more stable deposit base. The thrift industry should also be permitted to offer households the convenience of interest-bearing transaction accounts as a part of one-stop banking convenience. These accounts are less interest-sensitive than savings and time deposits and consequently will provide thrifts with a stable source of funds. Also, the ability to offer their customers easy access to a transactions account will benefit the thrifts in competing for direct deposits of payroll checks, social security and other regularly scheduled benefit payments. If thrift in 256 stitutions are to continue to be dependent on households as their major source of deposits, these expanded asset powers should also include consumer loans. Furthermore, the average yield on thrift assets must be made more responsive to changes in deposit interest rates. Short-term assets, which yield market rates of interest and have a frequent turnover during the interest rate cycle, should become part of a thrift's investment alternatives. Furthermore, state usury ceilings frequently prevent depository institutions from earning a market rate of return on loans and mortgages. These ceilings should be repealed or preempted by federal law, at least in the residential mortgage area. Usury laws are intended to protect small- and lowincome borrowers from unscrupulous money lenders and to limit the power of lenders to charge whatever interest rate they want. However, experiences with usury limitations show that conventional credit sources are closed off to high-risk and low-income borrowers. Additionally, housing credit needs are not met, and state economies, business firms, individual borrowers and lending institutions in restricted areas are adversely affected. Funds flow to states that do not have restrictive usury ceilings. Moreover, financial institutions in states with restrictive usury ceilings are reluctant to make costly small- and short-term loans. Certainly, there are better ways of protecting borrowers, such as truth-in-lending disclosure and the Equal Credit Opportunity Act, than relying on usury ceilings, which prevent institutions from earning a market rate of return and which cause arbitrary distortions in our capital markets. Even if all these changes were implemented immediately, it would take time for them to take root. Nevertheless, a firm timetable for phasing out deposit ceilings should be established that is consistent with an orderly process of phasing in new asset and liability powers. Without such a firm commitment, institutions are not as likely to make the necessary adjustments in their policies. We would, however, recommend retaining the power to reinstate deposit rate ceilings on a standby basis. Before concluding my testimony I would like to indicate our views on the relationship between financial institutions reform and housing finance. The provision of decent and suitable housing for citizens of all incomes has been a national priority. Strengthening the ability of thrift institutions to pay competitive deposit rates and authorizing them to offer a broader range of family financial services will be beneficial to housing by ending the disruptive and unstable pattern of savings flows to mortgage-oriented thrift institutions. It is doubtful that anyone can accurately predict what the results of these changes will be on the overall flow of funds to housing. Certainly the significant improvements to the secondary mortgage market and the spectacular growth in the mortgage pools since 1966 have increased the potential for greater mortgage investments by the contractual thrift institutions, such as life insurance companies and public and pri- vate retirement systems. A number of studies have been conducted in recent years on the effect of expanded thrift asset and liability powers and variable rate mortgages on mortgage flows. They have concluded that the resulting increased thrift earnings and the increased thrift deposit base stemming from the reforms we and others have proposed will allow the thrifts to commit at least the same if not a greater amount of funds to the mortgage market. Furthermore, to the extent that our financial system does not meet the mortgage financing needs of our country during tight credit periods, we now have in place an array of government and federally sponsored credit agencies which are able to meet any temporary shortfall in mortgage flows. Finally, there is another reason for supporting asset and liability diversification in thrift institutions. Because of the decline in the birth rate, the rate of new household formation may well diminish sharply in the late 1980's. As a consequence, the priority we now place on new housing may lessen accordingly. Thrift institutions should begin preparing now for that time. Movement toward full-service, family financial centers, as suggested in our recommendations, may be a reasonable direction to take. Remarks of Donald R. Johnson, Director for Trust Operations, before the 27th Annual Southern Trust Conference, Mobile, Ala., May 4, 1979 It is indeed a privilege this morning to represent the Trust Operations Division of the Office of the Comptroller of the Currency here at the 27th Southern Trust Conference. While this is my first opportunity to speak to you as a group, it is not my first time in attendance at your sessions. I feel perhaps more at home here at the Southern Trust Conference than at most others, for I spent a number of years examining out of Richmond, Va., and visiting the banks in South Carolina, North Carolina, Virginia, West Virginia, Maryland and the District of Columbia. Your welcome has been warm even though we both are conscious that at times the regulatory stance we take may not always be the most popular one with you at that particular moment. Our industry is a professional one, and in the long run, our overall goals are not contradictory. It is my belief that the trust industry is faced with greater competition today than perhaps ever before. Competition brings innovation, and this means change. Change often brings increased supervision and eventually more regulation when abuses appear or the potential for abuses are present. The Comptroller believes that meetings such as yours should be attended by our personnel and that we should participate to the ethical extent that you desire us to do so. Certainly, as speakers or panelists, it does represent a forum in which we may voice our views and acquaint you with the regulatory problems and changes that impact our industry. On the other hand, my appearance here permits me to listen to your views, concerns and suggestions for improvement in our examination approach and procedures and in proposed and existing regulations. Hopefully, you may benefit from my message this morning in that a better understanding will result as to what has been accomplished by the Comptroller as it impacts trust and the securities areas. I will elaborate extensively on what has been the impact of the examination procedures we implemented in October 1976, the later modifications and recently introduced specialized and small bank examination approach. The subject I have chosen to speak on today is "OCC Trust Examinations—A Viable Approach." It is especially rewarding for me to speak to you about this subject for, in one capacity or another, I have devoted 25 years of my life to regulatory and bank supervisory work. Therefore, I quickly accepted the invitation that was extended to me in April 1975 to serve as one of two members of a task force to review, examine, develop and codify our trust examination approach. I felt that OCC had need of codification of its procedures and that I could contribute materially toward that end. I firmly believe in the approach that we have taken, and I believe you in the industry generally have endorsed both the approach and the results as your individual departments have been examined by our staff. However, prior to setting the stage on why the approach was taken, I feel it would be beneficial for you to briefly understand the magnitude of our examination responsibility. Nationwide, on December 3 1 , 1978, there were 1,962 national banks with trust powers, of which 1,763 were active. Based on the latest trust department annual report data, which was for December 31, 1977, these departments administered assets with market value of $281,851,809 divided into 874,981 accounts, excluding corporate activities. These assets are currently examined by a total of 162 trust examiners of which 14 are regional directors and another 51 are fully commissioned trust examiners. Our records show that as of February 28, 1979, 1,659 trust departments had been examined under the new procedures for the first time, 345 more for the second time and eight for the third time. Of the 14 regions nationwide, six had examined all trust departments at least once under the new procedures, and an additional seven regions had very nearly completed their assigned examinations. We had set as our goal the completion of all trust departments under the new examination procedures by December 31, 1978, and this was either accomplished or nearly so in all regions with one exception. While preparing this speech and thinking of the Mardi Gras theme and pondering its meaning, "Fat Tuesday," and the fact that Mardi Gras is often represented by Bacchus, it occurred to me that perhaps Janus, the ancient Roman god of gates and doorways, which was depicted with two faces looking in opposite directions, might also serve to emphasize the point I wish to make. The ancient god had a distinct advantage over us mortals, for he could look backwards and forwards at the same time. Perhaps his image would have been appropriate for a logo for the Trust Operations Division of the Comptroller's Office. We tried to use our examining experiences of the past to retain those items that were beneficial with proven results and to discard the examination processes that produced only limited results or provided statistical data that were not used to the fullest extent. We also recognized that OCC must operate within the constraints imposed by manpower and budgetary considerations. We recognized that to achieve superior performance we had to r