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Federal Deposit Insurance Corporation

1987 Annual Report

i







Federal Deposit Insurance Corporation
Washington, D .C .
June 24, 1988

SIRS: In accordance with the provisions of Section 17(a) of the
Federal Deposit Insurance Act, the Federal Deposit Insurance
Corporation is pleased to submit its Annual Report for the
calendar year 1987.

Very truly yours,

L. William Seidman
C hairm an

T he President of the U .S . Senate
T he Speaker of the U .S . H ouse of R epresentatives

FD IC Board o f Directors

FDIC BOARD OF DIRECTORS: (From left) Comptroller of the Currency Robert L. Clarke,
Chairman L. William Seidman, and Director C. C. Hope, Jr.




L. William Seidman
L. William Seidman was elected Chairman of the Federal Deposit Insurance Corporation on October 21, 1985.
Prior to his appointment to the FDIC, Mr. Seidman pursued an extensive career in the financial arena in both the
private and public sectors. He was Dean of the College of Business of Arizona State University and a director of
several organizations including the Phelps Dodge Corporation, Prudential-Bache Funds, United Bancorp of Arizona
and The Conference Board. He has served as Co-chair of the White House Conference on Productivity, Vice-Chairman
of the Phelps Dodge Corporation, Assistant to the President for Economic Affairs and Managing Partner of Seid­
man & Seidman, Certified Public Accountants, New York. He also was Chairman and Director of the Federal Reserve
Bank of Chicago, Detroit Branch. Mr. Seidman received an A .B. degree from Dartmouth College and earned an
LL.B. from Harvard Law School. He also holds an M .B.A . from the University of Michigan. He is a member of
the American Bar Association, the American Institute of Certified Public Accountants and several academic honorary
fraternities including Phi Beta Kappa. He is the author of two books and numerous articles on business and tax subjects.

C. C. Hope, Jr.
C. C. Hope, Jr., was named to the Board of Directors of the Federal Deposit Insurance Corporation on March
10, 1986, confirmed by the Senate on March 27 and commissioned by President Reagan on April 7, 1986. Before
his appointment to the FDIC, Mr. Hope spent 38 years at First Union National Bank of North Carolina in Charlotte
where he retired as Vice Chairman in 1985. Mr. Hope is a former President of the American Bankers Association
and has served as Secretary of the North Carolina Department of Commerce. In the field of education, Mr. Hope
is a trustee and former Chairman of the Board of Wake Forest University and has been Dean of the Southwestern
Graduate School of Banking at Southern Methodist University. He holds a B.A. in Business Administration from
Wake Forest University and has completed graduate work at the Harvard Business School and The Stonier Graduate
School of Banking at Rutgers University.

Robert L. Clarke
Robert L. Clarke became the 26th Comptroller of the Currency on December 2, 1985, and simultaneously became
a member of the FDIC's Board of Directors. Before his appointment, Mr. Clarke founded and headed the Banking
Section at the Houston, Texas, law firm of Bracewell & Patterson. He joined that firm after completing his military
service in 1968. The Banking Section prepared corporate applications and securities registrations, counseled manage­
ment in expansion opportunities and the effects of deregulatory initiatives, and represented institutions in enforce­
ment matters. Mr. Clarke holds a B.A. in Economics from Rice University and an LL.B. from Harvard Law School.
He is a member of the bars of Texas and New Mexico. He has served as a director for two state banks, and has
been active in a number of civic, political and professional organizations.




FDIC Organization Chart




FDIC Committee on M anagement




FDIC COMMITTEE ON MANAGEMENT-. (From left, front row) Janice M. Smith, Stanley J.
Poling, L. William Seidman, Hoyle L. Robinson, Thomas P. Horton, and David C. Cooke.
(From left, back row) Paul G. Fritts, Beth L. Climo, Robert V. Shumway, Thomas E. Zemke, Robert
A . Dorbad, Mae Culp, William R. Watson, and Alan J. Whitney.
Members of the Committee not shown are: John L. Douglas, James A. Davis, and Robert D. Hoffman.

FD IC Officials
Deputy to the C hairm an_______________________

. David C. Cooke

Special Assistant to the Deputy to the Chairman

_ Louis E. Wright

Assistant to the Deputy to the Chairm an_______

Janet M. Reddish

Director, Division of Bank Supervision_________

___ Paul G. Fritts
. James A. Davis

Director, Division of Liquidation_______________
General C ounsel_______________________________

____John L. Douglas

Director, Division of Accounting and Corporate Services

____Stanley J. Poling

Deputy to the Appointive D irector_____________________

Robert V. Shumway

Special Assistant to the Appointive D irector_________

____ Dean F. Cobos

Deputy to the Director (Comptroller of the Currency)

Thomas E. Zemke

Executive Secretary_________________________________

Hoyle L. Robinson

Director, Office of Corporate Communications

_

Alan J. Whitney

Director, Office of Legislative A ffairs_________

___

Director, Office of Research and Strategic Planning

William R. Watson

Director, Office of Budget and Planning___________

. Thomas P. Horton

Beth L. Climo

Director, Office of Corporate Audits and Internal Investigations

Robert D. Hoffman

Director, Office of Consumer A ffairs__________________________

___ Janice M. Smith

Director, Office of Personnel M anagem ent________

Robert A. Dorbad

Director, Office of Equal Employment Opportunity

_______ Mae Culp




Regional Offices and Directors
Division of Bank Supervision
ATLANTA ___________________________________________________________________________________ (404) 525-0308
Edwin B. Burr, Marquis 1 Building, Suite 1200, 245 Peachtree Center Avenue, N.E., Atlanta, Georgia 30303
Alabam a, Florida, Georgia, North Carolina, South Carolina, Virginia, West Virginia

BOSTON ___________________________________________________________________________________ (617) 449-9080
Jesse G. Snyder, 160 Gould Street, Needham, Massachusetts 02194
Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, Vermont

CHICAGO ___________________________________________________________________________________ (312) 207-0210
Paul M. Rooney, 30 S. Wacker Drive, Suite 3100, Chicago, Illinois 60606
Illinois, Indiana, Michigan, Ohio, Wisconsin

DALLAS _____________________________________________________________________________________ (214) 220-3342
Kenneth L. Walker, 1910 Pacific Avenue, Suite 1900, Dallas, Texas 75201
Colorado, New Mexico, O klahom a, Texas

KANSAS CITY _______________________________________________________________________________ (816) 234-8000
Charles E. Thacker, 2345 Grand Avenue, Suite 1500, Kansas City, Missouri 64108
Iowa, Kansas, Minnesota, Missouri, Nebraska, North D akota, South Dakota

MEMPHIS ___________________________________________________________________________________ (901) 685-1603
Bill C. Houston, 5100 Poplar Avenue, Suite 1900, Memphis, Tennessee 38137
Arkansas, Kentucky, Louisiana, Mississippi, Tennessee

NEW YORK _________________________________________________________________________________ (212) 704-1200
Edward T. Lutz, 452 Fifth Avenue, 21st Floor, New York, New York 10018
Delaware, District of Columbia, Maryland, New Jersey, New York, Pennsylvania, Puerto Rico, Virgin Islands

SAN FRANCISCO ___________________________________________________________________________ (415) 546-0160
Anthony S. Scalzi, 25 Ecker Street, Suite 2300, San Francisco, California 94105
Alaska, Arizona, California, Guam, Hawaii, Idaho, Montana, Nevada, Oregon, Utah, Washington, Wyoming

Division of Liquidation
ATLANTA ___________________________________________________________________________________ (404) 522-1145
William M. Dudley, Marquis 1 Building, Suite 1400, 245 Peachtree Center Avenue, N.E., Atlanta, Georgia 30303
A labam a, Florida, Georgia, Louisiana, Mississippi, South Carolina

CHICAGO ___________________________________________________________________________________ (312) 207-0200
Thomas A. Beshara, 30 South Wacker Drive, Suite 3200, Chicago, Illinois 60606
Illinois, Iowa, Minnesota, North D akota, South D akota, Wisconsin

DALLAS _____________________________________________________________________________________ (214) 754-0098
G. Michael Newton, 1910 Pacific Avenue, Suite 1600, Dallas, Texas 75201
Arkansas, Oklahom a, Texas

KANSAS CITY _______________________________________________________________________________ (816) 234-8000
Carmen J. Sullivan, 2345 Grand Avenue, Suite 1500, Kansas City, Missouri 64108
Kansas, Missouri, Nebraska

NEW YORK _________________________________________________________________________________ (212) 704-1200
Michael J. Martinelli, 452 Fifth Avenue, 21st Floor, New York, New York 10018
Connecticut, Delaware, District of Columbia, Indiana, Kentucky, Maine, Maryland, Massachusetts, Michigan, New Hampshire, New Jersey,
New York, North Carolina, Ohio, Pennsylvania, Puerto Rico, Rhode Island, Tennessee, Vermont, Virginia, Virgin Islands, West Virginia

SAN FRANCISCO ___________________________________________________________________________ (415) 546-1810
Lamar C. Kelly, Jr., 25 Ecker Street, Suite 1900, San Francisco, California 94105
Alaska, Arizona, California, Colorado, Guam, Hawaii, Idaho, M ontana, Nevada, New M exico, Oregon, Utah, Washington, Wyoming




Table of Contents
Transmittal Letter ___________________________________________________________________________

iii

FDIC Board of Directors ____________________________________________________________________

iv

FDIC Organization C h a rt____________________________________________________________________

vi

FDIC Committee on Management ___________________________________________________________

vii

FDIC O fficials_______________________________________________________________________________

viii

FDIC Regional Offices and D irecto rs________________________________________________________

ix

Chairman's Statement

______________________________________________________________________

xii

FDIC Highlights 1987________________________________________________________________________

xv

Operations of the Corporation_______________________________________________________________

1

Division of Bank Supervision _____________________________________________________________

2

Division of Liquidation____________________________________________________________________

11

Legal D ivision_____________________________________________________________________________

14

Division of Accounting and Corporate Services ___________________________________________

17

Corporate Support Offices

20

_______________________________________________________________

Legislation and Regulations __________________________________________________________________

27

Financial Statements ________________________________________________________________________

31

Opinion of the Comptroller General of the United States ____________________________________

44

Statistics ____________________________________________________________________________________

47

Index________________________________________________________________________________________

64




The 1987 Annual Report of the Federal Deposit Insurance
Corporation is published by the FDIC.
Office of Corporate Communications, Room 6061-B,
550 17th Street, N .W ., Washington, D .C . 20429
Alan J. Whitney, Director
Stephen J. Katsanos, Assistant Director
Writer-Editor: Caryl Austrian
Design and Production: Design and Printing Unit
Photography: Paul Fetters, Geoffrey L. Wade

xi

T a b le s a n d G r a p h ic Illu s tr a tio n s
FD IC H ighlights 1987________________________________________________________________________ xv
D ivision o f B an k Supervision
FDIC Examinations, 1985-1987_____________________________________________________________

2

FDIC Problem Banks, 1983-1987___________________________________________________________

3

Changes in FDIC Problem Bank List, 1983-1987 ___________________________________________

4

Assisted Banks by State, 1983-1987

______________________________________________________

4

Distribution of Failed and Assisted Banks, 1987 ___________________________________________

5

Failed Banks by State, 1985-1987

________________________________________________________

6

FDIC Applications, 1 9 8 6-1987_____________________________________________________________

7

Bank Fraud and Embezzlement Statistics, 1981-1987 ______________________________________

8

D iv isio n o f L iq u id a tio n
Ten Largest Bank Failures_________________________________________________________________

11

Failed and Assisted Banks, 1934-1987______________________________________________________

12

DOL Statistical Highlights, 1 9 8 7 ___________________________________________________________
FDIC-Insured Failed and Assisted Banks, 1982-1987, East vs. W est________________________

12
13

Uninsured Deposits of Failed Banks, 1 9 8 7 __________________________________________________

13

L egal D ivision
Cease-and-Desist Orders, 1984-1987 ______________________________________________________

14

D ivision o f A ccou n tin g a n d C o rp o ra te S ervices
Architect's View of Proposed FDIC Center _______________________________________________

19

O ffice o f C on su m er A ffairs
Complaints and Inquiries, 1983-1987 _____________________________________________________

23

O ffice o f P erson n el M an agem en t
Number of Officials and Employees of the FDIC, December 31, 1987 and 1986 ___________

25

Statistics
Table 122—Number and Deposits of Banks Closed Because of Financial Difficulties, 1934-1987

49

Table 123—Insured Banks Requiring Disbursements by the FDIC During 1987_____________

50

Table 125—Recoveries and Losses by the FDIC on Disbursements for
Protection of Depositors, 1934-1987 ____________________________________________________

61

Table 127—Income and Expenses, FDIC, By Year, From Beginning of Operations _________

62

Table 129—Insured Deposits and the Deposit Insurance Fund _____________________________

63




Chairman's Statement
The FDIC ended 1987 with a small
increase — $48.5 million — in net
worth, despite record numbers of
bank failures and assistance transac­
tions and record outlays in handling
them, increased fraud against banks,
depressed regional economies and the
repercussions of Black Monday. The
FDIC fund remains healthy at $18.3
billion, about the same level as last
year.
The FDIC's portfolio of assets ac­
quired from failed institutions was
about $11 billion at year-end, only
slightly higher than a year ago, even
though we experienced one-third
more bank failures during 1987. New
approaches for dealing with failures
and aggressive management of the li­
quidation portfolio enabled us to
keep our cash and U.S. Treasury in­
vestments at about $16 billion.
The year 1988 is likely to mirror
the difficulties experienced in 1987.
With the number of banks on our
problem list holding steady at just
under 1600, any improvement in this
year's failure rate is likely to be
minimal. A moderate recovery in the
agricultural sector of the economy
during 1987 — reflected in the slight
decline of failed agricultural banks
from 1986 — may continue. But any
positive development in the farm seg­
ment of the economy will be offset
by negative results from the battered
Southwestern energy sector, where
the ripple effect of the crude oil price
collapse extends to commercial real
estate, and in turn, to the banks.
More than half of the 1987 bank
failures and most of the assistance
transactions took place in three states
— Texas, Louisiana and Oklahoma.
Though the problem s in the



Southwest will continue, we never­
theless anticipate a modest improve­
ment in earnings for the banking
system in 1988.
The FDIC plays three roles in our
banking system: insurer — of
depositors in insured banks up to
$100,000; supervisor — of more than
8,500 state nonmember banks; and
receiver — of the estates of failed
banks (684 at year-end 1987).
As insurer, once again this year we
were unable to return to our insured
institutions any portion of the
premiums they paid us for deposit in­
surance. We will have to earn almost
$7 billion in net asset income to
replenish our fund before any
premium rebates can be paid.

a purchase and assumption, is struc­
tured so the acquiring institution pur­
chases the maximum possible amount
of the failed bank's assets, relieving us
of the responsibility — and expense —
of liquidating them. Prospective bid­
ders may submit bids to purchase the
failed bank's assets "as is." The bid
gives the amount the purchaser will re­
quire from the FDIC to take over the
failed bank. So in these cases, the
lower the bid the better for the in­
surance fund.
The Competitive Equality Banking
Act of 1987 (CEBA) gave us the other
new option — the bridge bank — to
use in the event of a failure. The bridge
bank is an FDIC-owned full-service
bank that can operate for up to three
years, during which a buyer for the
bank is sought. We exercised that
authority for the first time in 1987,
creating a bridge bank in Baton
Rouge, Louisiana.

As supervisors, we continued to
strengthen our examining force dur­
ing 1987. In an active recruiting pro­
gram, we hired 421 bank examiner
trainees, most of whom graduated
from college with a grade point
average of 3.4 or better. To make bet­
ter and more efficient use of examiners'
time, we continued our distribution of
personal computers and taught the
field force to use them. At the same
time, we automated our Report of Ex­
amination, so our efficiency in gather­
ing accurate, timely data has improved
materially. To further streamline our
bank examination efforts, we continue
to focus on deploying staff where
they're needed and to move toward
assembling examination teams that
comprise the most efficient mix of
trainees and seasoned veterans. Our
aim is to improve supervision by
shortening the interval between ex­
aminations, and we are beginning to
achieve this goal.

Other developments during the year
should be noted. To help analysts,
customers and others obtain useful in­
formation about the financial condi­
tion of operating banks more quickly,
we began distributing a new publica­
tion in 1987 — the Quarterly Bank­
ing Profile. It contains the most timely
data available on the industry: the
data are submitted by the banks a
month after the end of the quarter and
we publish it about a month later.
Another information conduit opened
in 1987 will enable bank customers
and other interested parties to obtain
financial information about banks
merely by asking for it — banks must
provide annual disclosure statements
under a regulation approved by the
FDIC Board in December.

In our role as receiver, we
developed a new way to handle fail­
ing banks during 1987, and Congress
provided us with another. The whole
bank transaction, a new approach to

As part of our heightened concern
for bank customers in an increasing­
ly complex financial environment, we
established a separate Office of Con­
sumer Affairs at the end of 1986.




Moving into high gear in 1987, the Of­
fice responded to more than 3,700
written complaints and inquiries, while
a consumer Hot Line in Washington
handled more than 8,000 inquiries.
Our war against fraud continues.
About 700, or eight percent, of our
banks were victims of fraud or theft
of $10,000 or more in 1987. Some
degree of fraud or insider abuse was
involved in about one-third of the
bank failures that occurred in 1987. To
minimize such activity, we published
a list of "red flags" last year — warn­
ing signs that will prompt examiners
and auditors to take a closer look at
possibly fraudulent activities.
Recognizing that bank directors are
key players in maintaining the health
of our financial institutions, we com­
pleted a new publication in 1987,

Guidelines for Financial Institution
Directors. This pamphlet, designed to
help directors meet their respon­
sibilities, is being distributed to all in­
sured banks.
W ork space needed in the
Washington area to carry out our ac­
tivities has been increasingly difficult
and expensive to acquire. We
remedied that situation for the
foreseeable future when we bought a
nine-acre site at Virginia Square in July
across the Potomac River in nearby
Arlington, Virginia. Our central com­
puter operations, our administrative
staffing and a new training center will
occupy the site. We will vacate the
several properties we now lease in the
Washington area when the new center
is completed in late 1991. We project
a $5-$6 million savings during the first
year from consolidating activities at
one owned site versus continuing to
conduct them at several leased
locations.
The FDIC published a study in
1987, Mandate for Change: Restruc­
turing the Banking Industry, that

xiv

serves as the blueprint for our recom­
mendations for the structure of the
industry. The study examined alter­
natives available to improve the
viability of the banking industry.
Congress is now considering several
proposals to eliminate or modify ex­
isting restrictions on banks' activities,
many of which support the conclu­
sion of our report.

Last but not least, the FDIC was
exempted from provisions of the
Gramm-Rudman-Hollings Act and




the Anti-Deficiency Act by the 1987
CEBA legislation. These exemptions
reserve budget decisions to the
FDIC's Board of Directors and
eliminate Office of Management and
Budget oversight. The Corporation's
independence has been reaffirmed.
Of necessity, when we summarize
the Corporation's activities for any
given year our tendency is to dwell
on statistics. But looking behind
those numbers — the gathering of
them, the analyzing of them, the

implementation of action demanded
by them — we see the outstanding
employees of this Corporation and
the cooperative efforts of thousands
of bankers. Without their tireless ef­
forts, our Annual Report for 1987
might have been a different story in­
deed. Our thanks and appreciation
to all who helped.

FD IC Highlights 1987
Chronological Highlights
Jan. 12

— FDIC amends regulation concerning securities transfer agents (see p.30)

Jan. 27

— FDIC adopts rule to ensure compliance with Bank Secrecy Act (see p.29)

March 15 — FDIC Division of Bank Supervision publishes "red flag" warning signs (see p.8)
March 18 — First Quarterly Banking Profile distributed (see p. 18)
March 24 — First satellite conference on how to prepare call reports (see p. 17)
April 9

— First use of whole bank transaction to handle a failed bank (Deer Lodge Bank and Trust Company,
Deer Lodge, Montana) (see p.5)

May 1

— Automated applications tracking system begins operating (see p .7)

May 28

— FDIC Board approves policy statement on criteria used to evaluate applications for deposit insurance

June 8

— FFIEC awards contract for electronic transmission of call reports

July 7

— FDIC amends capital forbearance policy (see p .7)

July 17

— FDIC approves assistance program for BancTEXAS Group Inc., Dallas, Texas (see p.4)

July 16

— FDIC buys property for new office space and training center in Arlington, Virginia (see p. 19)

July 24

— Automated Reports of Examination begin (see p .2)

Aug. 10

— Competitive Equality Banking Act of 1987 (CEBA) signed into law (see p.28)

Aug. 20

— M andate fo r Change: Restructuring the Banking Industry published (see p.22)

Sept. 10

— Total bank failures exceed 1986 record of 138

Sept. 21

— FDIC amends regulations to redelegate certain authority to DBS officials (see p .30)

Oct. 27

— FDIC adopts interim rule on amortization of agricultural loan losses by agricultural banks (see p.29)

Oct. 30

— FDIC uses bridge bank authority provided under CEBA for first time when Capital Bank & Trust
Co., National Association, is established in Baton Rouge, Louisiana (see p.6)

Nov. 10

— FDIC adopts guidelines for compliance with the Bank Bribery Statute (see p.8)

Nov. 30

— FFIEC announces pilot program for electronic transmission of call reports

Dec. 2

— FDIC amends capital regulation (see p.29)

Dec. 3

— Record established for highest number of banks closed in one day (9, plus 1 assistance transaction)

Dec. 11

— FDIC revises rules governing securities activities of subsidiaries and affiliates (see p.30)

Dec. 14

— FDIC and other bank regulatory agencies adopt guidelines for real estate appraisals

Dec. 15

— FDIC presents annual awards (see p.24)

Dec. 15

— FDIC withdraws proposed amendment relating to real estate activities (see p.30)

Dec. 17

— FDIC Board approves regulation requiring banks to provide annual financial statements on request
(see p.29)







Statistical Highlights
Year-end Comparative Financial Information (billions)
1987
Income
Operations Expense
Liquidation/Insurance
Losses and Expenses
Net Income
Insurance Fund
Fund as % of Insured Deposits

1986

1985

3.301

$ 3.385

.202

.180

.179

3.065

2.825

1.778

.049

.296

1.428

18.302

18.253

17.957

$ 3.316

$

1.10%

1.12%

11.0

10.9

9.6

1987

1986

1985

14,330

14,837

14,906

1,575

1,484

1,140

184

138

116

Failed Agricultural Banks

56

57

65

Assisted Banks

19

7

4

684

507

362

Assets Held for Liquidation

1.19%

Selected Year-end Bank Statistics

Total Insured Banks
Problem Banks
Bank Failures

Number of Failed
Bank Receiverships




Operations of the Corporation

Division of Bank Supervision
"Records" for the Division of Bank
Supervision (DBS) and the FDIC
were set again in 1987: The number
of problem banks peaked at 1,624,
more assistance transactions were
negotiated and approved than ever
before and bank failures again reach­
ed an all time high. Despite these
records, DBS continued making
gains toward its objective of examin­
ing banks more frequently. DBS
started working toward this goal in
1986 with a four-point program, the
elements of which are: a significant
increase in staff, improved produc­
tivity, strengthened off-site monitor­
ing and better allocation of its
resources.
To increase staff, DBS worked
with the FDIC's Office of Personnel
Management to improve recruiting
techniques and emphasize the hiring
of the best possible candidates. Dur­
ing 1987, the division hired 421 new
examiners, most of whom graduated
from college with a grade point
average of 3.4 or better. By year-end
1988, DBS had 1,909 field bank ex­
aminers. By year-end 1988, the goal
is 2,072.
To improve productivity, DBS
developed an automated report of ex­
amination which examiners began
using in July. The division also
developed a time utilization report
for tracking time and budget expen­
ditures. Crucial to these automated
reports was the fulfillment in 1987 of
DBS' goal to provide one microcom­
puter for every two examiners.
During 1987, DBS fine-tuned
CAEL, the FDIC's principal off-site
monitoring system. CAEL is an
acronym for four com ponents
(capital, asset quality, earnings per­
formance and liquidity) of the bank
rating system used by all U .S. bank



regulatory agencies. CAEL rates 70
percent of the failed banks as prob­
lems, or near-problems, two years
before failure. And it correctly iden­
tifies 86 percent of the banks on the
problem list as problems, thus serv­
ing as a valuable early indicator of
developing difficulties if the bank has
not been examined for some time.

The FDIC conducts four main
types of examinations: safety and
soundness; compliance with con­
sumer protection and civil rights laws
and regulations; proper performance
of fiduciary responsibilities in trust
departments; and, adequacy of inter­
nal controls in electronic data pro­
cessing operations.

FDIC EXAMINATIONS, 1985-1987
1987

1986

1985

3,364
163
72
54

2,795
171
172
56

2,436
186
271
47

3,653

3,194

2,940

Compliance and civil rights
Trust departments
Data processing facilities

2,832
588
619

1,436
333
427

1,251
272
422

TO TA L

7,692

5,390

4,885

Safety and soundness
State nonmember banks
Savings banks
National banks
State member banks
Subtotal

Exam inations
Although the program to intensify
DBS' examination efforts is still at an
early stage, some improvements are
already evident. The number of
banks examined has increased
significantly, while the time between
examinations of banks that should be
receiving more attention has declin­
ed notably. As of January 1, 1987,
1,814 commercial banks subject to
FDIC supervision had not been ex­
amined within three years; by
December 31, 1987, the total was
reduced to 924. The intensified ex­
amination program will continue in
1988, including more examinations
of national and state member banks
in cooperation with the Office of the
Comptroller of the Currency and the
Federal Reserve Board.

Safety and soundness examina­
tions are comprehensive evaluations
of the financial condition and opera­
tions of a financial institution.
Through the examination process,
the FDIC can identify the nature and
severity of individual bank and in­
dustry problems, assess the adequacy
of the deposit insurance fund and
monitor compliance with laws and
regulations — all with the intent of
maintaining public confidence in the
banking system. In 1987, the number
of safety and soundness examinations
increased 14 percent and compliance
examinations conducted by the FDIC
increased 97 percent. Trust examina­
tions increased 77 percent, while EDP
examinations increased 45 percent.
Through consumer and civil rights
examinations, the FDIC ensures

3

banks' compliance with federal laws
governing truth in lending, fair credit
reporting, electronic funds transfer,
fair debt collection practices, com­
munity reinvestment, fair housing,
home mortgage disclosure and real
estate settlement procedures. The
FDIC's review of truth-in-lending pro­
visions requiring accurate disclosures
of interest rates and finance charges
resulted in reimbursements of $612,624
for 9,208 consumers in 1987.
The FDIC examines the trust depart­
ment and securities transfer activities
of state nonmember banks. In 1987,
42 banks obtained permission to ex­
ercise trust powers; at year-end, the
FDIC supervised about 2,000 active
trust departments. FDIC-supervised
banks had investment discretion over
$120.3 billion in trust assets and
responsibility for a further $348.8
billion in non-managed assets at yearend 1987.
The FDIC supervised the securities
transfer activities of 282 banks
registered with it under federal
securities laws; 39 examinations of
their activities were performed during
the year.
FDIC examiners participated in
EDP examinations of 439 bankoperated and 58 independent data
processing centers during 1987, iden­
tifying 19 data centers (17 banks and
two non-bank institutions) as problem
situations. Since October 1987, the
composite rating of data processing
centers has been disclosed in the ex­
amination report to a center's
management.
The FDIC participates with the
other federal and state bank super­
visory agencies in the Shared National
Credit Program. The program pro­
motes efficient use of examination
resources through coordinated and
uniform supervisory treatment of
large loans in which two or more



banks participate. In 1987, FDIC staff
devoted 16,730 hours to the review
of 3,879 loans totaling $471 billion.

address off-balance-sheet activities;
and, the establishment of specific
course subjects that are taught regular­
ly at the DBS training center and
regional offices. Bank regulators in the
U.S. and abroad, who have been try­
ing to devise a risk-based capital
framework (see discussion of these
proposals on page 9), agree that offbalance-sheet activities must be con­
sidered by regulators and manage­
ment alike when evaluating a bank's
capital adequacy and overall exposure
to risk of loss.

In December, the bank supervision
offices of the FDIC, the Federal
Reserve and the Comptroller of the
Currency adopted guidelines describ­
ing acceptable standards, policies and
procedures for real estate appraisals.
The FDIC and other bank
regulatory agencies also adopted a
policy for interstate sharing of con­
fidential supervisory information with
state banking and thrift regulatory

FDIC PROBLEM BANKS, 1983-1987
1987
Total Insured Banks
Problem Banks
% Increase in
Number of
Problem Banks

1986

14,289
1,575
6.1

11.0

% of Total Insured
Banks

agencies. Several such agreements
went into effect during 1987.

O ff-Balance-Sheet Activities
Some activities that can expose a
bank to risk of loss do not appear on
its balance sheet. These activities in­
clude standby letters of credit, loan
commitments, interest rate swaps and
foreign exchange contracts. DBS is
conducting a major ongoing project
to ensure that examiners are aware of,
and appropriately evaluate, these risks
during the course of onsite examina­
tions. Results of this project include:
changes in examination policies to re­
quire adverse classification of certain
contingent liabilities when warranted
by the level of risk they present to a
bank; preparation and distribution to
examiners of discussion papers that

1985

1984

1983

14,837

14,906

14,825

14,759

1,484
30.2

1,140
34.4

848
32.1

642
74.0

10.0

7.6

5.7

4.4

P roblem Banks
The results of examinations are
used to characterize banks accord­
ing to a system used by all U .S.
bank regulators. Banks are assign­
ed an examination rating on a scale
of one through five in ascending
order of supervisory concern. In­
stitutions rated “4" or "5 " are con­
sidered problem institutions. The
FDIC places special emphasis on ex­
amining problem banks — and
large banks — because of their
potential effect on the deposit in­
surance fund.
Because it insures deposits in vir­
tually all commercial and savings
banks, the FDIC's problem list in­
clu d es n a tio n a l b a n k s, sta te
member banks, savings banks, and

4

CHANGES IN FDIC PROBLEM BANK LIST, 1983-1987
1987

1986

Deletions

627

Additions

718
91

Net Increase

1985

1984

1983

494

312

296

149

838

604

502

422

344

292

206

273

state nonmember banks and thrift in­
stitutions. After reaching a historical
high of 1,624 in mid-1987, the list of
FDIC-insured problem banks declin­
ed through the latter half of the year
due to both record failures and im­
provements in the Midwest.

operation of the bank is essential to
provide adequate banking services to
its community or severe financial con­
ditions exist that threaten a significant
number of financial institutions or
financial institutions with significant
resources.

Banks of supervisory concern have
historically resulted in large part from
poor lending
decisions
and
mismanagement. While these prob­
lems continue, an additional reason
for the the growth in the number of
problem banks in 1987 is weakness in
the energy sector of the economy and
the related effects on real estate and
business markets in the southwestern
part of the country. Despite the net in­
crease in the number of problem
banks, many former problems were
rehabilitated, usually with close super­
visory guidance.

A bank applying for financial
assistance should have a commitment
for a capital infusion from an outside
source other than the FDIC and
demonstrate to the FDIC that its
management can restore the bank to
health. Shareholders of the bank
generally should receive no greater
return on their investment than they
would have if the bank had failed.

Assistance Transactions
The Federal Deposit Insurance Act
authorizes the FDIC to provide finan­
cial assistance to prevent the closing
of an insured bank. Assistance may
be granted directly to an insured bank
in danger of failing, to facilitate a
merger of an insured bank in danger
of failing, or to a company that con­
trols or will control an insured bank
in danger of failing. To provide such
assistance, the FDIC's Board of Direc­
tors must determine that the amount
of assistance is less than the cost of li­
quidating the bank. An exception is
made, however, when the continued



quired more quickly and at a more ad­
vantageous price than if the same
functions were performed by the
FDIC; and, the FDIC avoids the ad­
ministrative costs of liquidating assets
and bringing in personnel to handle
a payoff of the bank's depositors.
Of the 19 banks assisted in 1987,
eleven were subsidiaries of BancTEXAS Group Inc., a bank holding
company headquartered in Dallas,
Texas. The FDIC made a one-time
cash contribution of $150 million. In
this case, the FDIC did not assume any
of the subsidiary banks' problem
assets. Instead, the new investors and
managers of the holding company are
expected to implement their own
strategies for dealing with those assets
ASSISTED BANKS BY STATE,
1983-1987
1987

1986

Alabama

0

Illinois

0

Kansas

1984

1983

0

1

0

0

0

0

1

0

1

2

0

0

0

Louisiana

In 1987, the FDIC provided finan­
cial assistance to prevent failures in
nine instances involving 19 banks.
These assistance transactions resulted
in estimated savings to the FDIC of
$170,421,000. This compares to sav­
ings of $67,659,000 resulting from
seven assistance transactions in 1986.
The savings are calculated by
estimating the cost of an assistance
transaction compared to the estimated
cost to the FDIC if the bank failed.
The FDIC saves money by arranging
assistance transactions because: a
healthy institution or outside provider
of capital involved in an assistance
transaction normally pays the FDIC
a premium for the failing bank's fran­
chise; an assisted bank generally is run
by new management, which is often
better positioned because of existing
local contacts to liquidate assets as re­

1985

1

1

0

0

0

Missouri

1

1

0

0

0

M ontana

1

0

0

0

0

New Jersey

0

0

0

1

0

New York

1

0

2

0

2

Oklahom a

2

1

0

0

0

Oregon

0

0

1

0

1

Tennessee

0

1

0

0

0

12*

0

0

0

0

0

1

0

0

0

19*

7

4

2

3

Texas
Washington

T O TA L

* O ne transaction involving BancTEXA S Group
Inc., Dallas, Texas, accounted for 11 of the 19
banks assisted in 1987.

and to maintain the subsidiary banks
in sound condition. This approach
permits the FDIC to grant assistance
in situations that meet policy criteria
without increasing its pool of assets
to be liquidated. This method also
permits continuous, convenient bank­
ing services for customers of the
banks.

5

The FDIC's Board of Directors in
June gave preliminary approval to
financial assistance for Alaska
Mutual Bank and United Bank
Alaska, both of Anchorage, Alaska.
In September, the Board gave
preliminary approval to an assistance
program for First City Bancorporation of Texas, Houston, Texas. The
FDIC established loss reserves of
$295 million for the proposed
assistance program for the Alaska
banks and loss reserves of $942
million for the proposed program for
First City Bancorporation. These two
transactions had not been consum­
mated at year-end.
In 1987, the FDIC agreed to ter­
m inate
ongoing
assistance
agreements reached in prior years
with nine savings banks.
In the years following enactment
of the Garn-St Germain Depository
Institutions Act of 1982, Net Worth
Certificates (NWCs) with a total
“book" value of $710,439,076 were
issued to 29 savings banks experien­
cing severe losses due to interest rate
mismatches. In 1987, outstanding
N W Cs
were
reduced
by
$211,078,000. The repayments in­
cluded $36,751,000 in contractually
required payments from 11 of the 12
banks receiving net worth assistance
at year-end 1986. In addition, nine
banks prepaid their NWCs in full
during 1987, as a result of mergers
or recapitalization, in the amount of
$174,327,000. At year-end 1987,
three banks had NWCs outstand­
ing aggregating $315,015,830.

Failed Banks
At 184, the number of insured
bank failures in 1987 again set a postDepression record for the year, ex­
ceeding the previous record of 138 set
in 1986. The nine bank failures on
December 3, 1987, were the highest



number of banks to close in one day
in the FDIC's history. States with the
highest number of failures in 1987
were Texas (50), Oklahoma (31) and
Louisiana (14). The concentration of
bank failures in those three states,
like the higher incidence of problem
banks, was an outgrowth of the
depressed energy and real estate in­
dustries in those areas.
Average assets of all failed banks
in 1987 were $37.6 million. Average
deposits were $34.7 million. Approx­
imately 63 percent of the 1987
failures involved state nonmember
banks with average deposits of less
than $35 million. Deposits in all fail­
ed banks in 1987 totaled $6.4 billion,
compared to $6.0 billion in 1986 and
$2.6 billion in 1985.
Purchase and assumption transac­
tions (P&As) were arranged for 133,
or 72 percent, of the bank failures.
In these cases, a healthy institution
assumed the deposits and other
liabilities and purchased a portion of
the assets of the failed bank.
Premiums totaling more than $52
million were paid by the assuming
banks. Direct savings resulting from
these transactions compared to the

cost of payoffs are estimated to be
approximately $241 million. In 1986,
98, or 71 percent of bank failures
were handled by P&As.
A new approach to purchase and
assumption transactions was used in
1987. In what is called a whole bank
transaction, prospective bidders are
invited to analyze a failing bank's
assets and submit bids to purchase
essentially all assets "as is" on a dis­
counted basis. This type of sale has
two advantages: First, it softens the
impact on the local community
because the failing bank's loan
customers continue to be serviced
locally by an ongoing financial in­
stitution instead of FDIC liquidators;
and second, this approach decreases
the growth in assets held by the FDIC
for liquidation. In 1987, the FDIC at­
tempted whole bank transactions in
52 failing bank situations, succeeding
in 19 cases.
For 40 failed banks, the FDIC ar­
ranged insured deposit transfers in­
stead of paying off depositors directly
up to the insurance limit. In an in­
sured deposit transfer, insured
deposits are made available to their

6

owners by transferring the accounts
to an existing healthy institution or
a newly-formed bank. The transferee
bank also may purchase many of the
assets of the failed bank. This method
is used when a failed bank has
substantial contingencies and/or an
acceptable purchase and assumption
transaction cannot be arranged. Pur­
chase premiums of $33 million were
received on these transactions.
The FDIC directly paid depositors
their insured claims in 11 bank
failures in 1987 when neither a pur­
chase and assumption transaction nor
an insured deposit transfer could be
arranged.

Bridge Banks
The Competitive Equality Banking
Act of 1987 empowered the FDIC to
establish a bridge bank when an in­
sured bank is closed. A bridge bank
is a full service national bank that can
be operated for up to three years by
a Board of Directors appointed by the
FDIC. A bridge bank may be
established if:
•

•

•

The cost of organizing and
operating the bridge bank does
not exceed the cost of liquidating
the closed bank;
The continued operation of the
insured bank is essential to pro­
vide adequate banking services
in the community; or
The continued operation of the
insured bank is in the best in­
terest of the depositors and the
public.

The FDIC used its bridge bank
authority for the first time when
Capital Bank & Trust Company,
Baton Rouge, Louisiana, was closed
on October 30, 1987. Using the new
bridge bank authority was determined
to be the most cost-effective way to
preserve existing banking ser­



FAILED BANKS BY STATE, 1985-1987

FAILED BANKS*

PURCHASE &
A SSU M PTIO N S
(P&As)

1987

1987

1986

1985

1987

1986 1985

INSURED
D EPO SIT
TRANSFERS

PAYOFFS

1986 1985

1987 1986 1985

Alabama
Alaska
Arkansas
California

2
2
0
8

1
1
0
8

1
0
1
7

2
1
0
6

1
1
0
5

1
0
1
6

0
0
0
1

0
0
0
0

0
0
0
1

0
1
0
1

0
0
0
3

0
0
0
0

Colorado
Florida
Idaho
Illinois

13
3
0
2

7
3
1
1

6
2
0
2

10
2
0
2

3
2
1
1

5
2
0
2

0
0
0
0

2
1
0
0

1
0
0
0

3
1
0
0

2
0
0
0

0
0
0
0

Indiana
Iowa
Kansas
Kentucky

3
6
8
1

1
10
14
2

1
11
13
0

2
6
4
1

1
9
11
1

1
11
8
0

0
0
2
0

0
1
3
0

0
0
5
0

1
0
2
0

0
0
0
1

0
0
0
0

Louisiana
Massachusetts
Minnesota
Mississippi

14**
2
10
1

8
0
5
0

0
0
6
0

14**
0
5
1

8
0
4
0

0
0
4
0

0
0
0
0

0
0
0
0

0
0
0
0

0
2
5
0

0
0
1
0

0
0
2
0

Missouri
Montana
Nebraska
New Mexico

4
3
6
0

9
1
6
2

9
0
13
3

2
3
6
0

6
1
6
2

8
0
6
3

2
0
0
0

2
0
0
0

1
0
7
0

0
0
0
0

1
0
0
0

0
0
0
0

New York
North Dakota
Ohio
Oklahom a

1
2
1
31

0
0
0
16

2
0
0
13

0
1
1
22

0
0
0
7

0
0
0
10

1
0
0
0

0
0
0
4

0
0
0
3

0
1
0
9

0
0
0
5

2
0
0
0

Oregon
Pennsylvania
South Dakota
Tennessee

1
1
2
0

1
0
1
2

2
0
0
5

1
1
1
0

1
0
1
1

2
0
0
4

0
0
0
0

0
0
0
0

0
0
0
0

0
0
1
0

0
0
0
1

0
0
0
1

50
3
0
4
0

26
3
1
7
1

12
1
1
5
0

37
2
0
0
0

19
3
0
2
1

9
1
0
3
0

5
0
0
0
0

4
0
0
4
0

2
0
0
2
0

8
1
0
4
0

3
0
1
1
0

1
0
1
0
0

184

138

116

133

98

87

11

21

22

40

19

7

Texas
Utah
Wisconsin
Wyoming
Puerto Rico
T O TA L

* For A SSISTED BANKS BY STA TE, 1983-1987, see page 4.
** Includes one failure handled as a bridge bank.

vices and give the FDIC sufficient time
to arrange a permanent transaction.
The bridge bank, Capital Bank &
Trust Co., National Association,
opened for business on the next
business day under the direction of a
five-member board appointed by the
FDIC. At year-end, the FDIC was in
the process of seeking an acquirer for
the bridge bank.

Agricultural Initiatives
Declining land values, depressed
crop prices and softer export markets
continued to plague farmers in 1987,
but they did abate somewhat. O f the
184 bank failures in 1987, 56, or 30

percent, involved agricultural banks
— institutions in which loans related
to agriculture accounted for 25 per­
cent or more of the loan portfolio. Of
the 19 banks assisted in 1987, two
were agricultural banks. In 1986, 57
agricultural banks failed and two
were assisted. In 1985, 65 agricultural
banks failed; none were assisted.
The Competitive Equality Banking
Act permits agricultural banks to
amortize losses on agricultural loans
and losses resulting from reappraisal
of other related assets over a sevenyear period. The federal banking
agencies adopted interim regulations
in November 1987. At year-end, 20

7

state nonmember banks had applied
for the program, one had been ac­
cepted, two were denied, and 17 were
in process.

Capital Forbearance
In 1987, the FDIC broadened its
1986 capital forbearance guidelines,
formerly applicable to agricultural
and so-called energy banks, to include
any bank with difficulties primarily
attributable to economic problems
beyond the control of management.
Under the capital forbearance pro­
gram, a bank may operate temporari­
ly with capital below normal
supervisory standards if it is viable
and has a reasonable plan for restor­
ing capital. The 1987 amendments
also extended the deadline for obtain­
ing approval to December 31, 1989.
At year-end, the FDIC had receiv­
ed 232 applications for forbearance.
Of the 135 banks admitted to the pro­
gram, 16 were terminated for various
reasons, leaving 119 banks in the pro­
gram at year-end. Applications of 56
banks were denied and 31 were still
in process. In 10 cases, the bank was
closed before a decision was made on
the application.

A pplications
Proposed new state-chartered
banks must apply to the FDIC for
federal deposit insurance if they will
not be members of the Federal
Reserve System and banks supervis­
ed by the FDIC must apply to
establish branches and facilities or to
relocate existing offices. The FDIC
judges mergers, consolidations and
purchase and assumption transactions
if the resulting bank would be subject
to FDIC supervision. And, the FDIC
has authority over who may serve as
a director, officer or employee of an
insured bank under certain cir­
cumstances. Additionally, anyone



FDIC APPLICATIONS, 1986-1987
1987

1986

188
180
8

195
190
5

1,029
1,027
812
215
2

804
801
746
55
3

234
234
0

244
244
0

Requests for Consent to Serve
Approved
Denied

39
37
2

72
70
2

Notices of Changes in Control
Letters of Intent Not to Disapprove
Disapproved

80
79
1

121
118
3

Deposit Insurance
Approved
Denied
New Branches
Approved
Branches
Remote Service Facilities
Denied
Mergers
Approved
Denied

proposing to acquire control of an in­
sured nonmember bank must file a
notice with the FDIC. The FDIC
generally has 60 days in which to
disapprove the transaction.
In 1987, an automated system was
implemented to track applications
from the time received through final
action by the FDIC to consummation
of the proposal.
The table above shows the FDIC's
actions on selected types of applica­
tions in 1987 compared to the
previous year.
To reduce the processing time for
applications, in 1987 the FDIC's
Board of Directors increased authori­
ty to act on many routine matters
delegated to Division of Bank Super­
vision officials. During 1987, 95.6 per­
cent of total applications actions were
taken under delegated authority; 92.6
percent of the total actions were taken
in DBS' regional offices.
In 1987, 13 institutions converted
from insurance provided by the
Federal Savings and Loan Insurance
C orp oration (FSLIC) to FDIC

coverage, compared to 11 conversions
in 1986. In 1987 the FDIC issued a
policy statement containing the ma­
jor criteria that an institution
operating without FDIC insurance
must satisfy to be eligible for FDIC
membership.
The Money Laundering Control
Act of 1986 directed the regulatory
agencies to independently determine
the accuracy and completeness of any
information furnished by an acquirer
in connection with a Notice of Ac­
quisition of Control. The FDIC issued
guidelines in 1987 formalizing in­
vestigation requirements and, in some
areas, expanding the scope of the in­
vestigation to include the financial
position and background of prospec­
tive acquirers of insured state
nonmember banks.

Fraud and Insider Abuse
Along with economic factors, other
major causes of bank failures have
been weak management, poor lending
practices, insider abuse and fraud.
Fraud or insider abuse was involved

8

Bank Fraud and Embezzlement Statistics
1981-1987

$ M illio n s
1200

m
i
■n

-e
l
1050
111
900

IIS

750

ills
82
4

1:1.
Ills

ISIS

81
6

111
1(1
600

8118ill»

450

111!

42
0

32
8
Kl­ ■
im
Ml

300

150

gjj
111|

IIS
1 li;
818
1981

■
1982

1983

1984

19 85

1986

■
1987

S ou rce - Federal Bureau o f Investigation

to some degree in about one-third of
1987 bank failures. A total of 633,
or eight percent, of state nonmember
banks were victimized by a fraud or
theft of $10,000 or more.
During 1987, the FDIC continued
working with the Attorney General's
Bank Fraud Enforcement Working
Group and took additional steps to
address fraud and abuse in banks
supervised by the FDIC. For exam­
ple, a list of "red flags," or warning
signs, published by DBS in March
1987 helps examiners and auditors
identify the possible risk of fraud and
abuse in banks and spot unusual and
possibly fraudulent transactions.
The FDIC also established local
working groups to work with law en­
forcement authorities and designated
60 senior examiners as bank fraud
specialists. These specially trained ex­
aminers are available to assist federal
prosecutors as special investigators
or expert witnesses. The FDIC also
designated special review examiners
and attorneys in each regional office
to prepare criminal referrals, coor­



dinate investigative assistance and
advise banks and examiners on
criminal law and criminal referral re­
quirements.
In December, the FDIC and other
financial institution supervisors pro­
posed amendments to the enforce­
ment statutes to help the agencies
deal with insider abuse, misconduct
and fraud in financial institutions.
The proposal would eliminate certain
constraints on regulators contained
in the Right to Financial Privacy Act.
In 1987, the FDIC adopted a rule
to ensure and monitor compliance
with the Bank Secrecy Act. The rule
requires banks to install and main­
tain a compliance program approv­
ed by the bank's board of directors
that provides for internal controls,
independent testing of compliance at
least annually, a designated monitor
and coordinator, and training. The
guidelines on minimum requirements
emphasize that merely installing pro­
cedures may not be sufficient. More
is required of banks that handle a
large volume of currency, operate

from numerous locations, or operate
offices in border areas or areas where
money laundering or drug traffick­
ing is prevalent.

Directors' Responsibilities
Bank directors play a crucial role
in maintaining a bank's safety and
soundness. As part of a larger effort
to improve directors' effectiveness,
the Division of Bank Supervision
helped develop a set of short, plain
English guidelines to help bank direc­
tors meet their responsibilities. The
guidelines have been distributed to all
insured banks.
In another action related to bank
directors, the FDIC issued guidelines
under the Bank Bribery Statute en­
couraging banks to establish and
maintain codes of conduct. Under the
guidelines, such a code should pro­
hibit any official from soliciting
anything of value from anyone in
connection with bank business and
should only permit acceptance of
gifts and entertainm ent within
reasonable limits and under normal
business circumstances.

Accounting and Auditing
DBS worked throughout 1987 with
the other banking agencies and the
accounting profession to develop a
proposed regulation to require banks
over a certain size to have an annual
audit by an outside certified public
accountant. Most larger banks cur­
rently have an outside audit.
However, the agencies were unable
to agree on an asset size that would
trigger such a requirement for a
significant number of unaudited
banks. DBS hopes to identify specific
audit procedures for use in a small
bank, particularly in the loan area,
that will meet the needs of both
ban ks and supervisors at a
reasonable cost to the bank.

9

The FDIC and other bank super­
visors notified banks in June 1987 that
generally accepted accounting prin­
ciples, which banks must follow in
reporting to supervisors, had been
amended by issuance of Financial Ac­
counting Standards Board Statement
No. 91, Accounting fo r Nonrefun-

dable Fees and Costs Associated with
Originating or Acquiring Loans and
Initial Direct Costs o f Leases. General­
ly, if of significant amount, loan
origination fees are to be recognized
over the life of the related loan as an
adjustment of yield; certain direct
loan origination costs are to reduce
yield over the related loan's life. Thus,
banks that relied heavily on loan fee
income or amortized deferred loan
fees over relatively short estimated
loan lives may find their earnings
reduced.
The FDIC adopted a new regula­
tion in 1987 that requires state
nonmember banks to make disclosure
statements available to the public an­
nually on request, beginning with
year-end 1987 information. The
statements contain financial informa­
tion that is comparable to key sections
of the bank's call reports, information
required of particular banks by the
FDIC on a case-by-case basis, and
other information at the bank's op­
tion. The regulation is intended to
enhance public confidence and to im­
prove the public's awareness and
understanding of the financial condi­
tion of individual banks.
In June 1987, a system was approv­
ed for banks to electronically submit
their call reports over telephone lines
using com puters. This system
becomes fully operational for the first
reports of 1988. Banks choosing not
to use this system will continue to
submit their call reports in the tradi­
tional hard-copy form.
Exploring ways to supplement the
existing DBS examination force, the



FDIC conducted a pilot test program
using certified public accountants dur­
ing the first half of 1987. The program
provided insight as to how the talents
of examiners and CPAs might be in­
tegrated to improve bank supervision.
During 1987, DBS worked with the
other federal banking agencies on a
number of revisions to the reports of
condition and income. Requirements
were changed to reflect the Tax
Reform Act of 1986, the completed
phaseout of interest rate ceilings on
deposits, and the new agricultural
loan loss amortization program.
Commercial banks began to report
loans outstanding under home equi­
ty lines of credit separately from other
residential real estate loans. The very
burdensome schedule of data on in­
terest rate sensitivity was dropped
from the commercial bank report of
condition. In its place, the revised
report will contain less detailed
maturity and repricing data on debt
securities, loans and leases and time
deposits.

International
The International Banking Act of
1978 authorizes, and in some cases re­
quires, domestic branches of foreign
banks to obtain deposit insurance
coverage. At year-end, 22 foreign
banks operated 52 insured branches
in ten U.S. cities. In 1987, the FDIC
began a review of its regulation
governing operation of these insured
branches.
The FDIC continues to closely
monitor international lending ac­
tivities, especially through its
members on the Interagency Country
Exposure Review Committee and the
collection of the Country Exposure
Report. During 1987, most of the ma­
jor U.S. banks significantly increas­
ed their bad debt reserve against loans
to lesser developed countries. These

reserves severely depressed earnings
but led to no m ajor problem
situations.
The FDIC is one of the permanent
representatives of the United States to
the Basle Committee on Banking
Supervision and Regulation, a com­
mittee of bank supervisors from the
major industrialized countries. Dur­
ing the year, the Committee made
substantial progress toward develop­
ing an international system of measur­
ing risk-based capital and establishing
standards of adequacy.
In January 1987, bank regulators
from the United States and the United
Kingdom issued for public comment
a uniform proposal for risk-based
capital. The proposal facilitated fur­
ther discussion of the risk-based
capital concept among a broader
group of regulatory authorities, in­
cluding those from Japan, Canada
and several European countries. As a
result of these discussions, the Basle
Committee issued in December a con­
sultative paper setting forth a propos­
ed risk-based capital framework that
would establish minimum levels of
capital for international banks. The
framework assigns a bank's assets and
certain off-balance-sheet items to
broad risk categories that are
weighted according to relative risk. A
common framework is desired to help
strengthen the stability of the inter­
national banking system and to
remove an important source of com­
petitive inequality among banks aris­
ing from differences in national
supervisory requirements.
The FDIC frequently receives
visitors and official delegations from
foreign countries seeking an
understanding of U.S. bank regula­
tion, FDIC policies and procedures,
and methods of assessing risk. Dur­
ing 1987, 23 countries were
represented among those visitors and
delegations.

10

Banks R egistered Under the
Securities Exchange A ct o f 1934
The FDIC administers and enforces
the registration and reporting provi­
sions of the Securities Exchange Act
of 1934 for publicly-held insured
nonmember banks. All required
statements and reports filed by state
nonmember banks under implemen­
ting regulation Part 335 are public
documents and are available for in­
spection at FDIC headquarters in
Washington, D .C. A total of 1,863
individuals inspected these records
during 1987 and requested copies,
and an additional 2,621 requested
copies by telephone. Copies of 46,871
pages were provided in response to
these requests. At the end of 1987,
261 banks were registered with the
FDIC, down from 280 a year earlier.

Training
At its training center in Rosslyn,
Virginia, DBS continuously trains




examiners and other FDIC employees
in FDIC procedures and systems. By
year-end 1987, attendance at the
center had increased 57 percent and
enrollment in basic courses had
doubled since increased hiring began
in 1985. One important aspect of the
training center is to assess the skills
of candidates for commissioned bank
examiner. In 1987, 55 candidates for
com m issioned exam iner were
evaluated. Reflecting the increased
hiring begun in 1985, more than 200
will be evaluated in 1988. The assess­
ment center, which is part of the
training facility , expanded its
quarters in 1987 to accommodate the
increased activity.
A total of 275 FDIC instructors,
including Chairman Seidman as well
as speakers from banking, academia
and related business fields, taught at
the DBS training center during 1987.
More than 375 instructors will be
teaching at the center in 1988.

Classes were attended during 1987
by 2,227 FDIC examiners, 474 state
examiners, and 161 personnel from
other FDIC divisions, other federal
agencies and several foreign coun­
tries. An additional 120 state ex­
aminers participated in two courses
at several field locations. The total
of 2,982 is an increase of 204 par­
ticipants over 1986, and is expected
to grow to about 3,500 in 1988. (For
information about the FDIC's new
training facility, see page 19.)
Interagency training under the
auspices of the Federal Financial In­
stitutions Examination Council also
is conducted at the DBS training
center. In 1987, 42 FDIC instructors
taught at interagency programs while
801 FDIC examiners, 351 other FDIC
employees and 258 state examiners
under FDIC sponsorship attended the
20 programs offered on an inter­
agency basis.

Division of Liquidation
When an FDIC-insured bank fails,
its deposits and some or all of its
assets usually are purchased by a
healthy institution. In some cases, the
FDIC pays off depositors, or insured
deposits are transferred to a healthy
institution. Assets of any failed bank
that are not purchased are either col­
lected on or sold to third parties to
reimburse the FDIC and other
creditors for any outlay associated
with the failure and for expenses of
handling the failed bank's estate.
When sufficient funds are recovered
from the sale of assets, other creditors
of the failed bank are repaid. In rare
cases, shareholders of the failed in­
stitution receive payment as well,
again depending on the amount
recovered from the assets of the fail­
ed bank's estate. These functions are
carried out by the FDIC's Division of
Liquidation (DOL). At year-end
1987, DOL was managing the estates
of 684 failed banks, including the 184
institutions that failed during 1987.
The liquidation of a failed bank's
estate can take months or years,
depending on many factors, but
predominantly on the quality of the
failed bank's assets. In the case of First
National Bank and Trust Company
of Enid, Enid, Oklahoma, which fail­
ed in November 1986, for instance,
the liquidation was completed within
two months. But liquidating the estate
of a large failed bank frequently takes
years — the estates of Franklin Na­
tional Bank, which failed in October
1974, and the First National Bank and
Trust Company of Oklahoma City,
Oklahoma City, Oklahoma, which
failed in July 1986, are not likely to
be settled for some time. (Based on
asset size, the failures of Franklin Na­
tional and First National Bank and



TEN LARGEST BANK FAILURES
(By Asset Size)

Assets

Franklin National Bank
New York, New York

Deposits

Date

$3,655,662,000

$1,444,981,606

October 8, 1974

First National Bank and
Trust Company,
Oklahoma City, Oklahoma

1,419,445,375

1,006,657,507

July 14, 1986

The First National Bank of
Midland, Midland, Texas

1,404,092,000

1,076,217,000

October 14, 1983

United States National Bank
San Diego, California

1,265,868,099

931,954,458

October 18, 1973

United American Bank
in Knoxville,
Knoxville, Tennessee

778,434,000

584,619,000

February 14, 1983

Banco Credito y Ahorro
Ponceno, Ponce,
Puerto Rico

712,540,000

607,610,000

March 31, 1978

Park Bank of Florida
St. Petersburg, Florida

592,900,000

543,900,000

February 14, 1986

Yankee Bank for Finance
and Savings, FSB,
Boston, Massachusetts

521,700,000

474,800,000

October 16, 1987

Penn Square Bank, N.A.
Oklahoma City, Oklahoma

516,799,000

470,445,000

July 6, 1982

The Hamilton National
Bank of Chattanooga,
Chattanooga, Tennessee

412,107,000

336,292,000

February 16, 1974

Trust Company of Oklahoma City
were the two largest in U .S. banking
history. The table above lists the ten
largest bank failures through yearend 1987.)
Faced with mounting bank failures,
in 1982 DOL instituted a five-point
operating plan: decentralize its opera­
tions by delegating responsibility to
six regional offices and managers in
the field; consolidate liquidation sites;
set up form al training for its
employees; develop policies and pro­
cedures manuals; and, develop strong
asset m anagem ent and asset
marketing programs.
The success of the plan is evident
in DOL's strong performance in 1987:
the Division took in record collections

($2,415 billion) and sold a record
amount ($960 million) of assets;
despite 184 failed banks, total assets
under management at year-end in­
creased only $100 million over 1986;
and, in the face of an inordinate in­
crease in its activities, the Division
was able to reduce its staff to 4,400
by year-end 1987, or 264 positions
below the previous year-end total.
Some of the new approaches DOL
has used to attain these results are:
• Emphasizing settlements and
other alternatives to litigation (the
FDIC as receiver is heir to a fail­
ed bank's pending litigation);
• Ensuring maximum profits from
assets being operated until they
are sold; and,
• Installing or upgrading automated

12

Failed and Assisted Banks, 1934-1987
*.. .*,* "u . v • .
*
't

No. of Banks
200

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'64

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'69

'74

'79

'84

'87

■ Deposit Assumptions
fH Deposit Payoffs
and Assistance Transactions

systems to improve cash manage­
ment and to monitor assets under
the FDIC's control more closely.
As one part of its efforts to li­
quidate the estates of failed banks,
DOL uses a team of asset marketing
specialists who aggressively seek pur­
chasers for the "products" (general­
ly loans but also items such as real
property and equipment owned by
the bank) they are trying to sell.
DOL's asset marketing staff uses
techniques such as bundling —
packaging together from several
banks a specific type of loan that may
interest a prospective purchaser —
and incentives, where a purchaser in­
terested in buying a specific portfolio
or type of assets is offered a discount
on their book value provided the pur­
chase includes a "less desirable" group
of assets that the FDIC is particular­
ly anxious to divest.
In 1987, DOL added another ele­
ment to its aggressive marketing pro­
gram : a n atio n al p u blicatio n
available to investors now carries a



list of large ($500,000 or greater) com­
mercial real estate properties owned
by the FDIC, including pertinent
details on each parcel. DOL also ex­
perimented with public auctions as a
means to sell loans.
Using these and other creative
methods, in 1987 the asset marketing
staff closed 574 sales comprising
about 91,000 loans with an aggregate
book value of $860 million, compared
to 196 sales involving 129,000 loans

with an aggregate book value of $342
million in 1986.
By using aggressive asset
marketing, DOL achieved record
gross collections of about $3.5 billion
in 1987. Excluding Continental Il­
linois National Bank and Trust Com­
pany of Chicago and The First
National Bank and Trust Company
of Oklahoma City (where assets are
being serviced outside DOL under
contractual agreements), DOL col­
lected $2,415 billion from sales of
failed bank assets in 1987, a 38 per­
cent increase over the $1,749 billion
collected in the previous year. The
estimated book value of assets in li­
quidation at year-end 1987 was $11.0
billion, an increase of $100 million
since January 1, 1987.
The Division's operating expenses
for 1987, at $264 million, equaled
10.9 percent of collections, compared
to 13.2 percent for 1986. These and
other statistics for the Division are
shown in the table below.
DOL's performance in 1987 was
assisted by new ways of handling fail­
ed banks: the whole bank transaction
and the bridge bank. Both options
relieve DOL of the responsibility —
and expense — of liquidating a failed
bank's assets. In a whole bank

DOL STATISTICAL HIGHLIGHTS, 1987
Total Assets
Total
of Failed
Total
Failed
C ollections**
Banks*
Banks
(billions)
(billions)
1987
1986
1985
1984
1983

184
138
116
78
48

S 6.9
7.0
2.8
2.8
4.1

$ 2.415
1.749
1.282
1.538
1.008

Estimated
Book Value
of Assets in
Liquidation
(billions)
$ 11.0
10.9
9.6
10.0
4.1

Operating Number
of
Expenses*
(millions) Employees
$ 264.4(1)
230.8(1)
249.3(2)
232.5(2)
119.8(2)

4,400
4,706
3,318
2,158
1,153

* Excludes open bank assistance transactions and net worth certificates provided to mutual
savings banks.
Collection and D O L operating expense data exclude Continental Illinois National Bank and
First N ational Bank and Trust Com pany of O klahom a C ity, O klahom a, where asset ser­
vicing agreements are in place.
(1) D O L only.
(2) FDIC-wide expenses.

13

FDIC-Insured Failed and Assisted Banks, 1982-1987
East vs. West

$100,000 totaled $1.92 billion, to
continue their banking relationships
without interruption when their
deposits were transferred to a healthy
institution. In the 11 payoffs in 1987,
about 42,000 depositors, whose
deposits up to the insurance limit total­
ed $331.4 million, received their funds
generally on the next business day
following the failure of their bank.
Uninsured deposits (those exceeding
the $100,000 insurance limit) in insured
deposit transfer transactions totaled
$63.9 million, while uninsured deposits
in payoffs totaled $16.6 million.
However, about half of these unin­
sured deposits will be recovered
through liquidation of the failed banks'
assets and returned to their owners.

N o. of Banks

1982

1983

1984

transaction, an acquiring institution
buys most of the assets of a failed bank
on an "as is" basis (and the FDIC dis­
counts the purchase); when a bridge
bank is established, management is
appointed by the FDIC to run the
business of the failed bank, including
disposing of the assets.
Reflecting the concentration of bank
failures west of the Mississippi, the
geographic areas assigned to specific
DOL office locations were realigned
in 1987 when responsibility for Ken­
tucky, Michigan, Ohio, Tennessee
and West Virginia was shifted to the
New York Regional Liquidation O f­
fice. DOL closed field offices in In­
dianapolis, Indiana; New York, New
York; Portland, Oregon; and Lub­
bock, Texas.
While handling the 184 bank
failures in 1987, DOL staff personal­
ly came into contact with 42,000
depositors in 11 payoff cases involv­
ing total deposits of $331.4 million,
and arranged to transfer to other in­
stitutions the insured deposits of an




1985

1986

1987

additional 221,000 depositors with total
deposits of $1.9 billion in 40 failed
banks. DOL also handled 133 purchase
and assumption transactions — usually
on an overnight or over-the-weekend
basis.

When a failed bank shuts its doors
for the last time, DOL staff are there,
not only to prepare the bank's records
for payoff, deposit transfer or purchase
and assumption, but also to reassure
the bank's staff and anxious depositors.
In the past year, the Division of Li­
quidation also:

By assisting 19 banks and arranging
133 purchase and assumption transac­
tions in 1987, the FDIC protected more
than one billion depositors, who held
more than $6 billion in deposits, from
potential loss of their funds. The FDIC's
ability to arrange insured deposit
transfers for 40 failed banks in 1987
enabled about 221,000 depositors,
whose deposits up to the insurance limit

• Completed a full inventory of
assets of the 184 failed banks;
• Fielded about 250,000 telephone
inquiries;
• Handled a like amount of mail;
• Met with print and electronic
media on at least 200 occasions;
• Held town meetings in agricultural
communities; and,
• Provided speakers on liquidation
and payoff activities to numerous
business, civic and professional
organizations.

UNINSURED DEPOSITS OF FAILED BANKS, 1987

($000 omitted)
Assistance
Transactions
Total Deposits ($)
Number of Accounts
Uninsured Deposits ($)

Purchase &
Assumption
Transactions

Insured
Deposit
Transfers

Payoffs

2,118,000

4,020,700

1,929,400

331,400

358,700

695,500

221,000

42,000

N/A

N/A

63,972

16,593

N/A — Not applicable because all depositors are protected in this type of transaction.

Legal Division
A law office is a service organiza­
tion, which means the demands
placed on the FDIC, particularly by
record bank failures, were reflected in
the Legal Division's workload. At
year-end 1987, over 20,000 cases were
pending on the FDIC's litigation
docket, compared to over 27,000 a
year earlier; all but 344 of the 1987
total related to closed banks. About
45 percent of these cases are being
handled by the FDIC's Legal Division,
while the remainder are being han­
dled by outside counsel under the
supervision of the Division.
To meet the demands of a heavy
litigation docket and to serve its clients
more effectively, the Division has
gradually decentralized its operations.
In 1980, more than 80 percent of the
Division's employees were located in
Washington. Now, of the more than
400 attorneys on the Legal Division
staff, less than 20 percent are in the
headquarters office — a 180-degree
reversal in personnel distribution.
Staffing efforts in 1987 focused
mainly on bringing staff supporting
the Division of Bank Supervision
(DBS) to full strength by year-end. For
the Division of Liquidation (DOL),
Legal Division staffing was directed to
planning long-range personnel re­
quirements in the FDIC's regional and
consolidated offices. To meet the train­
ing needs of division staff, the Divi­
sion offered three major conferences
to its attorneys dealing with various
supervisory, litigation and liquidation
topics, while training courses for
managers and other staff covered sub­
jects such as performance evaluation
and problem-solving. For 1988, the
Division is developing more in-house
training and expanding current video
training programs.



CEASE-AND-DESIST ORDERS, 1984-1987
1987

1986

1985

1984

Cease-and-desist orders outstanding at
beginning of year—total
Section 8(b)
Section 8(c)

336
334
2

341
335
6

293
284
9

249
244
5

Cease-and-desist orders
issued during year—total
Section 8(b)
Section 8(c)

107
104
3

135
127
8

186
180
6

138
125
13

Cease-and-desist orders
terminated—total
Section 8(b)
Section 8(c)

148
147
1

152
145
7

111
108
3

89
84
5

Cease-and-desist orders
in force at end of year—total
Section 8(b)
Section 8(c)

295
292
3

336
334
2

360
355
5

293
284
9

CLIENT SUPPORT
The Legal Division's principal
clients are the Division of Bank
Supervision and the Division of Li­
quidation. The Legal Division also
represents other divisions and offices
within the FDIC primarily through
its Corporate Affairs Section.

Support for DBS
For DBS, the Legal Division in­
itiates enforcement proceedings,
prepares regulations for action by the
Board of Directors, drafts and
reviews proposed banking legisla­
tion, negotiates and drafts assistance
agreements, represents the FDIC in
litigation arising from its supervisory
role and provides legal opinions on
banking issues.
Cease-and-desist orders are
most common administrative
forcement tool. The FDIC also
assess civil money penalties and

the
en­
can
ter­

minate deposit insurance. In 1987,
the FDIC issued 107 cease-and-desist
orders compared to 135 in 1986, in­
itiated 91 termination of insurance
proceedings compared to 59 in 1986
and assessed money penalties against
16 officers and directors in three ac­
tions, compared to 82 officers and
directors in 14 actions in 1986.
The FDIC can also remove or pro­
hibit further participation by an of­
ficer, director or other participant in
the affairs of an FDIC-insured bank
for violation of a law, rule, regula­
tion or final cease-and-desist order,
or for unsafe or unsound banking
practices or a breach of fiduciary
duty. In 1987, 18 removal pro­
ceedings were initiated, compared to
14 in 1986.

BANK FRAUD AND ABUSE
In December of 1984, the Attorney
G eneral of the U nited States
established an interagency group to

15

deal with fraud and abuse in banking.
Several members of the Legal Division
are active participants in this task
force. This "teamwork" approach has
been very successful in coordinating
efforts at the headquarters level, and
establishing working relationships at
the local level, where the sharing of
information is critical to the success of
specific investigations and pro­
secutions.
Several major steps were taken dur­
ing 1987 to improve the FDIC's
response to fraud and abuse in the
banks it supervises. In coordination
with the interagency task force, the
FDIC completely revised the criminal
reporting system to require banks to
report apparent crimes to U.S. At­
torneys, to federal investigators and to
the FDIC on a standard referral form.
The FDIC also designated special
review examiners and regional counsel
in regional offices to prepare criminal
referrals, coordinate investigative
assistance and testimony and advise
banks and other examiners on criminal
laws and criminal referral re­
quirements.
Finally, the FDIC along with other
agencies, released final guidelines
under the Bank Bribery Statute en­
couraging banks to establish and
maintain effective codes of conduct.
The guidelines describe the prohibi­
tions of the federal bank bribery law
and also identify some situations
which, in the opinion of the FDIC, do
not constitute violations of the federal
bank bribery law.

OPEN BANK LITIGATION
In its corporate capacity, the FDIC
is often a party to litigation arising
from open bank matters. A summary
of the significant cases handled by the
Open Bank and Corporate Litigation
Section in 1987 follows.



FDIC v. Mallen
In February 1987, a Federal District
Court in Iowa held unconstitutional
the procedures used by the FDIC to
suspend bank officers indicted for
crimes. The FDIC appealed to the U.S.
Supreme Court and a decision is ex­
pected in 1988.

Investment Company
Institute v. FDIC
In January 1987, the U.S. Court of
Appeals for the District of Columbia
Circuit held that the Glass-Steagall Act
does not bar subsidiaries or affiliates
of state-chartered nonmember banks
from selling or underwriting securities.
The U.S. Supreme Court has declin­
ed to consider ICI's appeal.

Anheuser-Busch Employees'
Credit Union v. FDIC
In November 1987, the U.S. Court
of Appeals for the Eighth Circuit
clarified the status of credit unions
with deposits in insured failed banks.
The court affirmed a lower court rul­
ing favorable to the FDIC which held
that credit unions are corporations
under FDIC insurance regulations, and
thus each credit union with deposits
in an insured bank is limited to in­
surance coverage of $100,000.

First Acadiana Bank v. FDIC
In December 1987, the U.S. Court
of Appeals for the Fifth Circuit affirm­
ed an important FDIC decision enfor­
cing the Truth in Lending Act. The
court held that attorney fees which a
bank financed as part of car loan
transactions constituted part of the
statutory "finance charge" and should
have been so disclosed. The court fur­
ther upheld the FDIC's reimbursement
order to the bank even though the
bank's attorneys, rather than the bank,
received the fees.

U.S. v. LeMaire
In November 1987, the U.S. Court
of Appeals for the Fifth Circuit affirm­
ed a favorable Texas district court rul­
ing which the FDIC and the Office of
the Comptroller of the Currency had
sought to enforce Section 91 of the
National Bank Act to prevent a judg­
ment creditor from prematurely ex­
ecuting upon a $69 million state trial
court judgment against MBank
Abilene, N.A., before all appeals had
been exhausted.

Support for DOL
The major effort for DOL involves
assisting in the collection of assets
received by the FDIC when a bank
fails and pursuing related claims.
While much of the legal effort is
relatively straightforward, bank clos­
ings give rise to a number of complex
and difficult legal issues.

CLOSED BAN K LITIGATIO N
As receiver, the FDIC inherits any
existing litigation brought by or
against a closed bank, and is often a
party to litigation initiated as a result
of a bank's closing. The following is
a summary of major closed bank
litigation in 1987.
Langley et ux. v. FDIC
In a unanimous decision, the U.S.
Supreme Court held, in December
1987, that a debtor cannot assert
defenses against the FDIC based on
alleged mispresentations of existing
fact unless those alleged misrepresen­
tations are part of an agreement
which complies with 12 U .S.C.
1823(e), i.e., that they be in writing,
contemporaneous, approved by the
bank's board of directors or loan
committee, and continuously an of­
ficial bank record.

In re United American Bank
In September 1987, the Tennessee

16

Supreme Court found that when the
FDIC implements a purchase and
assumption transaction it is not re­
quired to pay all unassumed creditors
in full, but need only pay them the
amount they would have received in
a straight liquidation.

Woodbridge Plaza v. FDIC
The FDIC lost the final round of this
case which arose in Orange County,
California. Woodbridge Plaza was
sued by Bank of Irvine in Orange
County Superior Court for wrongfully
evicting the bank from one of Woodbridge's properties where the bank had
an office. W oodbridge Plaza
counterclaimed for approximately $2
million, claiming the bank breached its
lease agreement. The Bank of Irvine
was subsequently closed by the
California Superintendent of Banks
and the FDIC was appointed its
receiver. The FDIC in its capacity as
receiver entered into a purchase and
assumption agreement (P&A), selling
some of the Bank of Irvine's assets to
an assuming bank and the remaining
assets to the FDIC in its corporate
capacity. The Bank of Irvine's claim
against Woodbridge Plaza was among
the assets sold to FDIC-Corporate.
Woodbridge Plaza then initiated a
separate action against the FDIC in its
corporate capacity, claiming that the




P&A was illegal. The District Court
rejected this claim. On appeal, the
Ninth Circuit found that the P&A was
illegal because no provision was made
for Woodbridge Plaza's (as yet un­
proven) claim. The FDIC filed a mo­
tion for rehearing which was denied.
The staff is determining the ap­
propriate forum to have this issue
reconsidered.

BANKRUPTCY CASES
At year-end 1987, there were 7,819
active bankruptcy cases pending in
which the FDIC has a claim. Of these,
6,464, or 83 percent, are handled sole­
ly in-house by 59 attorneys and 28
paralegals located in 26 offices.
Throughout 1987, 7,897 cases were
reclassified from active to inactive or
closed while 8,069 new cases were
filed. Thus, old cases are steadily be­
ing moved to inactive status and the
active caseload is composed largely of
new filings.
O f the total caseload of the
bankruptcy unit, 58.1 percent consists
of liquidations under Chapter 7 of the
Bankruptcy Code, 27.9 percent of
business reorganizations under
Chapter 11, 2.9 percent of family
farmer bankruptcies under Chapter 12
and 11.3 percent of Chapter 13 wage
earner plans.

DIRECTORS AND OFFICERS
LIABILITY
Each bank failure is investigated to
determine whether claims should be
brought against directors and of­
ficers. At year-end 1987, the FDIC
was a party to more than 80 direc­
tors' liability suits, with about 300
failures still in an investigative stage.
To cope with the increased workload
resulting from record numbers of
bank failures, efforts are being made
by the Directors and Officers Liabili­
ty Section and the Investigation Units
to streamline the investigative and
decision-making processes. These ef­
forts should speed decisions to close
investigations where suit appears
unlikely, speed decisions to file suit
when suit is appropriate and speed
approval of settlements.
One case tried in 1987, FDIC v.
Caldwell, resulted in a substantial
judgment in favor of the FDIC. The
case involved the failure of the
Western National Bank in Santa
Ana, California. All defendants settl­
ed with the FDIC prior to the trial,
except one outside director who,
after a bench trial, was held liable to
the FDIC for an amount in excess of
$865,000. Total recoveries in 1987 on
claims against directors and officers
exceeded $59 million.

Division of Accounting and Corporate Services
Through its three branches, the
Division of Accounting and Cor­
porate Services (DACS) acts as the
FDIC's financial, computer and ser­
vice manager. The Financial Services
Branch carries out the FDIC's finan­
cial and accounting activities; the
Management Information Services
Branch develops, operates and
manages the FD IC's computer
systems; and the Corporate Services
Branch handles the space, supply and
service requirements of more than
9,000 FDIC personnel. DACS' over­
riding consideration in handling these
responsibilities is to ensure protection
of the FDIC's physical assets and the
$18.3 billion insurance fund.

Financial Services Branch
C orporate Accounting
The volume and complexity of ac­
counting data processed by DACS
financial systems increased dramati­
cally in 1987, primarily due to the
record number of bank failures and
assisted banks handled by the FDIC.
More than 2.7 million accounting
transactions were processed, an in­
crease of 42 percent over 1986.
The introduction of new methods
for handling failed banks, such as the
whole bank purchase and assump­
tion and the bridge bank, generated
many new accounting issues and re­
quired the development of new
policies and procedures. Ongoing
and additional liquidation activities
also contributed significantly to the
higher level of accounting activity ex­
perienced in 1987. At year-end, the
branch processed work from 26 na­
tionwide locations for 684 banks in
liquidation.
Nevertheless, by providing addi­
tional training for staff and increas­



ing the capability of many of the
FDIC's automated financial systems,
the additional volume of work was
absorbed and processed without any
increase in staff. Additionally, by im­
plementing program budgeting and
accounting in 1987, and revising the
method used to allocate liquidation
program overhead, the division was
able to heighten managers' awareness
of the results of their spending deci­
sions and thus gain more efficient
control over the use of the FDIC's
resources.
Other specific projects accomplish­
ed in 1987 included an extensive
reconciliation of both corporate and
liquidating bank assets, and con­
solid atio n of the FD IC 's tax
functions.

Assessments and
Financial Operations
In its role as insurer of the
depositors of more than 14,000 finan­
cial institutions in the U .S., the FDIC
assesses banks a fee, or insurance
premium. Assessments are set by law
at an annual rate of 1/12 of 1 per­
cent of total deposits. The FDIC's
assessment responsibilities require
verification, as well as collection, of
the assessments due from all insured
banks. To ensure that banks have
paid the correct amount, a staff of
field auditors conducts assessment
audits of the largest commercial
banks on a three-to-five year cycle.
During 1987, $1.7 billion in assess­
ment revenue was collected from
about 14,500 banks, up from $1.6
billion collected from about 14,800
banks in 1986. An additional $6.5
million was collected as a result of
field audits of 28 of the 300 largest
insured banks. By using portable

computers and by refining audit pro­
cedures, the FDIC plans to expand to
500 the number of banks subject to
routine assessment audit.
The Assessments and Financial
Operations section processed over
75,000 accounts payable documents,
nearly 65,000 travel reimbursement
documents, and approximately 4,700
relocation voucher documents dur­
ing 1987. In a continuing effort to
streamline its financial operations,
employee reimbursement for reloca­
tion operations will be converted to
the com puterized travel and
transportation system of the U. S.
Department of Agriculture's National
Finance Center during 1988.

Bank Financial Reporting
Insured banks file a quarterly
report of condition and report of in­
come and other types of financial in­
formation that are indicative of their
performance. The Bank Financial
Reporting section (BFR), which
receives and processes these data,
reviewed nearly 68,000 original and
amended call reports from approx­
imately 13,000 reporting banks in
1987. The percentage of call reports
containing errors declined seven per­
cent — from 84 percent in 1986 to 77
percent in 1987. This significant im­
provement is due to banks' increas­
ed awareness of the importance of
accuracy, call report analysts' closer
relationships with banks and educa­
tional programs.
To help bank personnel prepare
report of income and report of con­
dition forms, BFR and the Division
of Bank Supervision developed the
first satellite teleconference on call
report requirements, which was held
on March 24, 1987. The conference,

18

■ ■■ ■ ■ ■ ■ ■
■■■ ■ ■ ■ ■
introduced by Chairman Seidman
and conducted by senior staff of DBS
and DACS, was attended by 3,800
banks in 50 cities in 22 states. Another
satellite teleconference was held in
March 1988. Videotapes of the 1988
conference are available at a nominal
price. To further aid preparers of the
reports, BFR started a call report
review newsletter in 1987 and set up
a toll-free telephone "hotline" —
1-800-424-5101 — to quickly resolve
many inquiries.
To reduce call report processing
time, a pilot program permitting
banks to transmit call report data
electronically began in December
1987. Some banks began electronic
transmissions in March of this year.
March 1988 also marked the first
complete year of the Quarterly Bank­
ing Profile, a statistical compilation
issued quarterly that contains the
earliest official release of performance
data about the banking industry.
DACS compiles and provides the in­
formation included in the Quarterly
Banking Profile by the FDIC's Office
of Research and Strategic Planning.
In response to requests for call
report information, the BFR section
filled over 2,400 orders for about
21,000 call reports in 1987.

Financial Systems
As overseer of the FDIC's Financial
Information System — the computer
system that contains all of the FDIC's
general ledger items — the Financial
Systems section's activity increased
proportionately as the demand grew
throughout the FDIC for additional
fin an cial in fo rm atio n . M ajo r
enhancements to the Financial Infor­
mation System completed in 1987 in­
cluded a revision of the method used
to distribute computer reports to
regional offices. By sending reports
via computer to field offices rather
than mailing them, substantial savings



were realized in terms of both time
and money. The corporate procure­
ment and payment process became
more effective with the implementa­
tion of a new purchase order system,
and the FDIC gained the ability to
quickly calculate the reserve for loss
on banks in liquidation through a new
loan loss reserve system.
Financial Systems also developed
several new reports for managing and
controlling the payroll in 1987 after
systems operations were contracted
out to the U.S. Department of
A griculture's N ational Finance
Center.

Accounting Policy
and Fiscal Controls
The growth and decentralization of
the FDIC's accounting activities in
1987 led to an increased emphasis on
accounting policy and procedures. At
the same time, the design, implemen­
tation, documentation and mainte­
nance of a wide range of internal con­
trols was needed to safeguard the
FDIC's assets and to ensure accurate,
timely and reliable financial reporting.
The Accounting Policy and Fiscal
Controls section reviews existing
policies and procedures, analyzes their
effectiveness and establishes new ones
as required. In 1987, the section
automated routines for FDIC loan loss
reserves and began devising programs
for redistributing overhead costs.
The section also reviews all of the
FDIC's general ledger information to
ensure its proper use and effec­
tiveness, develops and publishes pro­
cedures manuals and conducts
extensive branch training programs.

Management Information
Services Branch (MISB)
As the FDIC's need for fast, depend­
able information grew in 1987, so did
its reliance on modem computer
technology. To meet this continual­
ly increasing need, MISB analyzed re­

quirements, developed systems and
provided computer processing for all
of the FDIC.

Computer Technology
In response to demands for com­
puter support in 1987, the number of
jobs handled on the FDIC's main­
frame computer — such as process­
ing call reports — rose 17 percent. To
increase computer productivity, the
FDIC's central processing unit was
replaced with a more advanced
model.
A new teleprocessing network
established in 1987 permits microcom­
puter operators, using a modem, to
gain access to the database files on the
FDIC's mainframe computer. Users
located in banks, regional offices and
elsewhere can update and retransmit
data files; examination personnel can
record examination data; and using
one of the special access systems, ex­
aminers in the field can refer to, for
example, a prior examination report
for comparison purposes.
To handle the increased workload
that developed in 1987, the FDIC's
central computer operations facility,
which began operating 24 hours a day
on weekdays in 1986, adopted a sixday week schedule in 1987.
In 1987, MISB developed an in­
troductory course about microcom­
puters in response to their increasing
popularity among FDIC personnel,
and continued serving as a clear­
inghouse for users requesting
microcomputer hardware and soft­
ware testing, acquisition and support.
Other MISB projects completed in
1987 include the DBS Training Center
System, which maintains such data as
course information, class rosters and
lodging reservations for classes held
at the DBS Training Center in
Rosslyn, Virginia, and the Application
Tracking System, which upgraded

19

a previous tracking system to provide
more information about the applica­
tions filed by banks. New information
includes the number of approvals,
disapprovals and outstanding applica­
tions in each regional office. MISB also
continued working on the Enforcement
Action System, which will track and
provide a historical record of enforce­
ment actions from initiation to com­
pletion.

System Development
and Maintenance
As in 1986, system development in
1987 was devoted mainly to support­
ing liquidation activities and financial
services operations. LAMIS — the Li­
quidation Asset Management Informa­
tion System — has been developed
over the past several years and is now
being used by liquidators and accoun­
tants at locations across the country to
manage assets acquired from failed
banks by the FDIC. Among other
things, the information provided by
LAMIS — location and type of asset,
for example — helps the Division of Li­
quidation to sort assets and package
them to suit the specific requirements
of prospective buyers.
The Financial Information System,
which controls all of the FDIC's public
payments, maintains budgets and
general ledgers, and produces financial
reports, was expanded in 1987. The
system now maintains all FDIC ac­
counting records as well as individual
ledgers for all failed banks in the pro­
cess of liquidation.

Corporate Services Branch
Like the other branches of DACS,
Corporate Services needed to meet in­
creased demands for support to
facilitate the FDIC's day-to-day
business operations in 1987. A major
accomplishment was the acquisition of
property near Washington, D .C.,
where facilities will be built to accom­
modate the FDIC's increased training
and office space requirements for the
foreseeable future.
For several years, developments in
the banking industry have substantially



Architect's view of proposed FDIC Center in Arlington, Virginia.

increased the FDIC's need for a larger
and more highly trained work force of
examiners. Existing training facilities
have been inadequate for some time.
Moreover, expanding supervisory and
liquidation activities created a pressing
need for additional office space. After
studying many alternatives, in July
1987 the FDIC purchased a nine-acre
site across the Potomac River in near­
by Arlington, Virginia, where addi­
tional office space and housing units for
personnel attending training classes will
be constructed. The Federal Financial
Institutions Examination Council will
lease space in the new facility for its
training needs.
In the first phase of the project, 350
housing units and 300,000 square feet
of office space will be built. The remain­
ing land area will accommodate future
expansion. The cost of the entire pro­
ject, including construction, tenant im­
provements and residential furnishings
is estimated at about $90 million. When
the first phase is completed, in 1991, the
FDIC will vacate several leased proper­
ties in the Washington area, saving a
projected $5-$6 million during the first
year. This savings will result from con­
solidating activities at one owned site in­
stead of continuing to use several leased
locations.

The Corporate Services Branch con­
tinued to provide support services for
maintaining the FDIC's property,
facilities and supplies in 1987, as well
as the FDIC's word-processing and
telephone systems, the FDIC library,
design and printing functions (all
design and typesetting for this report
were handled "in-house") and mail
distribution.
The FDIC library is relied on by
employees — and many other in­
dividuals and groups involved with
banking — as a highly valuable source
of information. In 1987, the library
reference staff responded to over 4,000
requests for information from FDIC
employees in Washington and the
regional o ffices. Am ong new
automated systems added in 1987, one
monitors acquisitions and holdings for
the liquidation libraries in various of­
fices. In addition, at the end of the
year, the library contracted for an in­
tegrated system to handle acquisitions
and indexing of its large collection of
banking literature, law publications
and other reference material. Plans for
the future include an automated
system for managing circulation ac­
tivities and an on-line catalogue of all
library holdings.

Corporate Support Offices
Standing Committees

Office of the Executive Secretary

Privacy Act systems of records.

Under the FDIC's bylaws, the
Board of Directors can establish stan­
ding or special committees and assign
functions and duties to them. In
1987, the Board abolished or restruc­
tured the existing com m ittees,
established new ones, and specified
their membership, functions and
duties, and procedures. The FDIC's
committees are: Committee on
Management; Bank Supervision
Review Committee; Committee on
Liquidations, Loans and Purchases of
Assets; Audit Committee; and Elec­
tronic Data Processing Steering
Committee.

Acting as the corporate secretary
for the FDIC, the Office of the Ex­
ecutive Secretary (OES) gives public
notice of meetings of the Board of
Directors, records all votes and
minutes of the meetings and main­
tains corporate records. OES also
acts as corporate secretary for certain
standing committees. In 1987, OES
performed those functions for 76
Board meetings and 130 committee
meetings.

OES also performs all editorial
w ork on the FDIC loose-leaf
reference service, which contains the
Federal Deposit Insurance Act, FDIC
rules and regulations, and related
statutes and regulations of interest to
the banking com m unity. Sup­
plements to the service are distributed
six times each year to insured banks,
FDIC employees, congressional com­
mittees, federal and state agencies
and private subscribers.

The standing committees meet
regularly and either review and sub­
mit recommendations to the Board
of Directors on matters over which
the Board has retained exclusive
authority, or take final action on
matters — relating mainly to the
FDIC's liquidation and receivership
a ctiv itie s — under au th o rity
delegated by the Board of Directors.
They submit reports to the Board of
Directors when requested to do so.
During 1987, the Board of Direc­
tors streamlined the FDIC's operations
by delegating many routine decisions
to the directors and other top officials
of the four divisions. Many of these
matters were formerly acted upon by
the Board of Review, which was
abolished in 1987, or the Committee
on Liquidations, Loans and Purchases
of Assets. By shifting some of the
decision making, the Board can
devote more time to major policy
considerations, while routine items
can be processed more quickly.




OES also maintains an index to of­
ficial actions taken by the Board of
Directors and by committees and of­
ficers of the FDIC exercising authori­
ty delegated by the Board of
D irectors. The index has been
automated since 1984 and eventual­
ly will reference all Board minutes
and delegated authority actions since
the FDIC was established in 1933.
In its extensive role in processing
administrative enforcement actions,
OES reviews documents, prepares
transmittal correspondence, estab­
lishes and maintains docket files and
responds to inquiries about the status
of administrative actions. A com­
puterized tracking system for these
cases began operating in 1987.
OES also ensures FDIC compliance
with the Freedom of Information Act
(FOIA) and the Privacy Act of 1974.
In 1987, the FDIC received 925 re­
quests under the Freedom of Infor­
mation Act, compared to 800 in
1986. A computerized tracking
system for FOIA requests began
operating in 1987. Also in 1987, OES
began a comprehensive review of its

As the FDIC's ethics counselor,
OES manages the FDIC's ethics pro­
gram. Through a network of 90
deputy ethics counselors, the OES
Ethics Unit reviews approximately
6,000 financial disclosure reports and
confidential statements of employ­
ment and financial interests filed by
FDIC employees. The Ethics Unit
also develops and conducts training
programs on standards of conduct
and related ethics matters. During
1987, over 2,000 FDIC employees
participated in these programs. An
orientation videotape developed in
1987 introduces new employees to
the laws and regulations that govern
employee conduct and conflicts of in­
terest. The videotape will be shown
to all new employees and will be
made available to all FDIC offices
during 1988. It also will be made
available to other interested govern­
ment agencies. Also during 1987, the
FDIC Ethics Unit began a major revi­
sion of the FDIC's regulations govern­
ing employee responsibilities and
conduct.
The O ffice of the Executive
Secretary also coordinates the FDIC's

21

compliance with the Paperwork
Reduction Act of 1980. In 1987, the
FDIC imposed a paperwork burden of
36,178 hours on the banks it super­
vises, but reduced the burden of its
other information collections by
16,630 hours, resulting in a net in­
crease of 19,548 hours. The increase
is primarily attributable to a new rule
requiring banks to establish and main­
tain procedures relating to compliance
with the Bank Secrecy Act, which was
amended on October 27, 1986, by the
Anti-Drug Abuse Act of 1986.

Office of Corporate
Communications
As the FDIC's liaison with the public
and the press, the Office of Corporate
Communications (OCC) notified the
public and provided follow-up infor­
mation concerning the 184 failures and
nine assistance transactions (involving
19 banks) that occurred in 1987.
To ensure prompt notification of the
public, the OCC contacts national and
local news media as soon as a bank
failure or assistance transaction takes
place. In response to inquiries from the
press and bank customers, the OCC
explains how failed banks are han­
dled and reassures customers, em­
phasizing that each depositor is insured
up to $100,000 and can gain prompt
access to insured funds on deposit
regardless of the method used by the
FDIC to handle the failure.
The OCC also responds to a con­
stant flow of general information in­
quiries from the public on topics such
as the condition of the U.S. banking
system, FDIC history, regulatory
policies and industry statistics. On
significant developments, including
bank failures, the FDIC communicates
with the media through press releases,
which are prepared and distributed by
OCC. When the FDIC needs to notify
banks of important developments,



such as changes to rules or regulations,
it communicates by means of a Bank
Letter, also prepared and distributed
by the OCC. The OCC also maintains
subscriber lists and handles distribu­
tion for all FDIC publications and the
loose-leaf service covering the Cor­
poration's rules and regulations.
To promote understanding of the
FDIC's role in the banking system, the
OCC interacts with industry groups
such as state bankers' associations, ar­
ranging meetings and providing
speakers to foster exchanges of infor­
mation and explanations of the FDIC's
policies and procedures. Toward the
same end, the OCC arranges the
Chairman's participation in meetings
with the press, and OCC staff appear
in person at some bank failure sites to
respond to press and customer in­
quiries.
With the goal of improving the
delivery of information about the
FDIC, the OCC conducts media train­
ing sessions for FDIC officials and ar­
ranges seminars for media represent­
atives to improve their understanding
of the FDIC's policies and procedures.

Office of Legislative Affairs
The Office of Legislative Affairs
(OLA) serves as the FDIC's congres­
sional liaison, advises the Board of
Directors on legislative issues, coor­
dinates the drafting of proposed
legislation, prepares testimony and
responds to congressional inquiries on
legislative and other matters.
In 1987, OLA responded to over
3 ,0 0 0 pieces of w ritten co r­
respondence, most from congressional
offices. OLA coordinates answers
with other FDIC divisions before pro­
viding timely replies. Telephone in­
quiries, which often require similar
coordination, were usually answered
within one day.

The Competitive Equality Banking
Act (CEBA) signed into law on August
10, 1987, provided the FDIC with two
important tools for handling failed
banks: the authority to sell failed and
failing banks and bank holding com­
panies interstate through reinstatement
and expansion of the lapsed emergency
acquisition provisions of the Gam-St
Germain Depository Institutions Act
of 1982; and bridge bank authority,
which permits the FDIC to run a fail­
ed bank for up to three years while
seeking a buyer for the institution.
CEBA also exempted the FDIC from
certain provisions of the GrammRudman-Hollings Act and the AntiDeficiency Act. These exemptions
reserve budget decisions to the FDIC's
Board of Directors.
In the upcoming year, OLA will at­
tempt to secure enactment of legisla­
tion dealing with:
— Financial industry reform. At
year-end, several bills were
under consideration in Congress.
OLA is working to promote
favorable legislation in this area
by providing testimony and
through congressional staff
discussions.
— Strengthened enforcement. Con­
gress is considering a legislative
package, developed jointly with
the other financial regulatory
agencies, that enhances enforce­
ment powers and provides
greater flexibility in conducting
bank supervision.
— Tax matters. Several tax prob­
lems have developed for the
FDIC related to the handling of
purchase and assumption and
open bank assistance transac­
tions and the filing of tax returns
in closed bank receiverships.
Discussions aimed at developing
legislation to remedy these
difficulties are under way.

22

Office of Research and
Strategic Planning
At the request of Chairman Seidman,
the Office of Research and Strategic
Planning (ORSP) undertook an indepth study relating to the need for
major reform of the banking system.
The Chairman's request was prompt­
ed by the concern that the rapidly
changing financial environment, com­
bined with existing restrictions on
banking activities, had resulted in the
inability of banks to remain com­
petitive in the U.S. financial system.
The study, entitled Mandate for
Change: Restructuring the Banking
Industry, examined the available
alternatives for improving the viabili­
ty of the banking industry: Maintain
strict regulatory constraints, but allow
banks to offer a wider variety of prod­
ucts; or remove the constraints, and
allow banks to compete in markets
that, in the individual judgment of
management, make good business
sense. The study concluded that
removal of constraints is appropriate,
provided banking entities can be in­
sulated from risks associated with
nonbank affiliates.
The major finding of the study was
that insulation can be achieved, with
only minor changes to existing rules
pertaining to the operations of banks.
Systemic risks to the banking industry
and potential losses to the FDIC will
not be increased if activity restrictions
and regulatory authority over bank
affiliates are abolished. The study
recommended that the Glass-Steagall
restrictions on affiliation s be­
tween commercial and investment
banking firms be eliminated, and the
current restrictions of the Bank
Holding Company Act on affiliations
between banking and nonbanking
firms be phased out.
Other studies conducted by ORSP
during 1987 dealt with off-balance


sheet obligations, interstate banking,
and risk-based capital requirements
for banks. In 1987, ORSP also con­
tinued to track bank earnings and the
causes of earnings deterioration,
noting that weaknesses have been
more pronounced in the western half
of the nation as profitability has been
impaired by asset-quality problems.
Many of O RSP's analyses are
reported in Regulatory Review and

Banking and Econom ic Review.
Beginning in 1988, these two publica­
tions will be merged and published
quarterly.
In 1987, ORSP began compiling a
new quarterly statistical publication,
the Quarterly Banking Profile. This
publication contains aggregate condi­
tion and income data for all FDICinsured commercial banks as well as
a brief discussion and graphical
presentation highlighting significant
developments and trends in the bank­
ing industry. Published within 75
days of the end of the reporting
period, the Quarterly Banking Pro­
file is the earliest official release of
industry-wide aggregate banking
data.

Office of Budget and Planning
The Office of Budget and Planning
(OBP) coordinates and oversees the
FDIC's annual budget process. Using
general guidance from senior manage­
ment, and specific instructions from
OBP, each FDIC office and division
prepares its own budget and submits
it to OBP for analysis. After formal
review of the individual submissions,
OBP combines all requests into a
unified FDIC budget that is presented
to the Board of Directors for ap­
proval.
Because of the increase in failed
banks over the past several years, and
the associated liquidation activities,
in 1987 some of the FDIC's regional

offices were expanded and con­
solidated offices were restructured.
These revisions raised the number of
budget submissions over the last five
years from about 45 to about 180.
The FDIC's 1988 budget (collected
in 1987) emphasized three concepts:
program budgeting, productivi­
ty/workload measurement and
capital expenditure analysis. OBP
plans to continuously monitor actual
expenses against budget estimates and
provide senior management with
periodic reports on significant
variances and emerging trends.

Program budgeting. For the first
time, all FDIC budgeted funds were
allocated to 16 FDIC programs in four
major categories: Corporate and
General Administrative, Regulation,
Supervision and Liquidation. Because
these programs frequently cut across
division and expense lines, program
budgeting will provide a high-level
functional perspective on the FDIC's
activities.
Productivity/w orkload measure­
ment. The FDIC's 1988 budget
reflected in detail p rod u ctiv i­
ty/workload statistics and goals of the
FDIC's divisions and offices. The
achievement of these productivity ob­
jectives will form an important part
of the new Quarterly Corporation
Report for senior management, slated
to be developed by the Office of
Budget and Planning.

Capital expenditure analysis. As
part of an ongoing analysis, in 1987
OBP set plans to track outlays for
general office equipment, computers
and major building renovations. The
1988 budget package, distributed in
1987, included special forms for
isolating and reporting on these ex­
penses. In addition to its budgeting
role, OBP increasingly served as an
information source for other offices
and senior management in 1987

23

because of its access to, and con­
tinuous involvement with, FDIC
financial and staffing data.

Office of Corporate Audits and
Internal Investigations
The operations of the Office of
Corporate Audits and Internal In­
vestigations (OCAII), which is the
FDIC's professional internal auditor,
serve to safeguard the FDIC's assets,
perform a managerial control func­
tion for the Board of Directors and
eliminate waste, fraud and ineffi­
ciency.
OCAII recommends improvement
of fiscal and operational controls and
provides audit reports to the Board
and management. OCAII also coor­
dinates its work with the U.S. General
Accounting Office (GAO) and pro­
vides consultation to the GAO in the
conduct of its oversight activities.
In 1987, OCAII had audit and in­
vestigative responsibility for over $33
billion of FDIC assets, comprising over
$22 billion in the insurance fund and
about $11 billion in assets of liquida­
tion sites, and for the activities of over
9,000 FDIC employees. In 1987, audit
reports were issued regarding 112
receiverships, offices and corporate
functions.
A major OCAII initiative completed
in 1987 combined the audit activity
formerly performed at many liquida­
tion sites with the audits of Con­
solidated Liquidation Offices. The
Combined Audit of Liquidation Site
and Consolidated Office Program
(CALSCO) resulted in significant sav­
ings in audit resources. In addition to
CALSCO, OCAII established field of­
fices in Knoxville, Tennessee, Kansas
City, Missouri, and Costa Mesa,
California, in response to audit re­
quirements associated with liquidation
activities in those areas. These and
other productivity initiatives permit­
ted OCAII to expand audit coverage



while reducing fees for supplemental
audit services 25 percent from 1986
levels. At the same time, OCAII
reduced budgeted expenditures by 20
percent. OCAII plans to reduce fees
for supplemental audit services by an
additional 22 percent in 1988.

Office of Consumer Affairs
In recognition of the growing im­
portance of consumer issues in bank­
ing, the Office of Consumer Affairs
(OCA) was established as an indepen­
dent office in December 1986.
Previously, it was part of the Division
of Bank Supervision.
A primary function of OCA is to
take appropriate action on consumer
complaints about alleged unfair or
deceptive bank practices. OCA also
responds to inquiries from bank
customers and others. During 1987,
OCA received 8,613 calls on its
toll-free
telephone
"h o tlin e"
(1-800-424-5488), 80.3 percent of
which pertained to deposit insurance
coverage. The FDIC's regional offices
received 20,458 telephone inquiries.
OCA received 3,705 complaints and
28,899 inquiries in 1987, an increase

of 31.2 percent in complaints and 22
percent in inquiries over 1986.
As a new responsibility in 1987,
OCA began evaluating the adequacy
of the FDIC's compliance examination
program. The Office also proposed an
amendment to Part 338 (Fair Housing)
of the FDIC's rules and regulations,
which relates to limiting the definition
of a home loan.
In March 1987, OCA sponsored a
one-day consumer/community group
meeting, where Chairman Seidman,
Director Hope and senior staff met
with representatives of consumer
groups, including the National
A ssociation
of
Development
Organizations, the University of
Wisconsin Center of Consumer Af­
fairs, the American Association of
Retired Persons, National Association
of Women Business Owners, Con­
sumer Federation of America, and the
Association of Community Organiza­
tions for Reform Now (ACORN).
Some of the topics discussed were
basic banking services, the Home
Mortgage Disclosure Act and the
Community Reinvestment Act.

Complaints and Inquiries, 1983-1987
Written and Telephone

V olum e
3 0 ,0 0 0

2 5 ,0 0 0

20,000

1 5 ,0 0 0

10,000

5 ,0 0 0

1983
m Com plaints

24
S::;:
i

1 9 8 7 FDIC A W A R D W IN N E R S: (From left) P a t H am m ek e, D A C S , W a sh in g to n , D .C ., w in n e r o f
th e N a n c y K . R e c to r A w a rd , w ith d a u g h ter C a s e y ; M r s. H a m m ek e w ith so n B ren d a n ; C h a irm a n
Seid m an ; A g n es M . K n ig h t, D O L , A tla n ta , w inner o f the C h airm an 's A w ard ; M r s. K n ig h t's d au ghter,
L y n eil B . F lo w ers; M r s. B ern ie D o u g h e rty ; an d B ern ie D o u g h e rty , D B S , K a n sa s C ity , w in n e r o f the
E d w ard J . R o d d y A w a rd . M r. D o u g h e rty retired fro m the F D IC in D e c e m b e r 1 9 8 7 .

O ffice o f Personnel M anagem ent
The FDIC's Office of Personnel
Management (OPM) conducted an ac­
tive recruitment program in 1987, par­
ticularly for Bank Examiner (Trainee)
positions, and completed the conver­
sion of payroll and personnel records
to an automated system, shifting the
maintenance of these records to the
U.S. Department of Agriculture's Na­
tional Finance Center, which handles
payroll and records for many federal
government agencies. The conversion
is expected to result in a savings of
about $1 million over a five-year
period.
OPM processed over 3,500 Bank
Examiner (Trainee) employment ap­
plications, from which the Division of
Bank Supervision selected over 400
new hires. Most of those chosen



graduated from college with a grade
point average of 3.4 or better.
Training of FDIC employees in­
creased in 1987 along with an overall
rise in the Corporation's work force.
Individual training authorizations dur­
ing 1987 totaled more than 2,650.
OPM conducted 126 on-site training
sessions in regional and liquidation of­
fices around the country in 1987; that
number is expected to double in the
coming year. OPM also administers
an Executive Development Program,
including an Executive Leadership and
Management Seminar, and a twoweek residential program for senior
level staff, which will be offered for
the first time in 1988.
OPM's Employee Relations Branch
also experienced a significant increase
in its activities consistent with a higher

number of employees in 1987. Along
with
its
responsibilities
for
labor/management relations, benefits
and related activities, OPM coor­
dinates the nomination and selection
of outstanding employees for the
FDIC's annual awards. In 1987, Agnes
M . Knight, Bank Liquidation
Specialist, DOL, Atlanta, won the
Chairman's Award, which is presented
to a non-examiner employee who has
demonstrated devotion to duty, in­
tegrity and professional expertise; the
Edward J. Roddy Award, which
recognizes the exceptional career ex­
aminer who exhibits integrity, im­
agination and leadership, was
presented to Francis B. (Bernie)
Dougherty, Supervisor, Urbandale,
Iowa, Field Office; and Theodore P.
(Pat) Hammeke, Chief, Banking Ap­
plications Section, Management

25

Information Services Branch, was
selected for the Nancy K. Rector
Award, presented to an employee
who expands opportunities for per­
sonal or professional growth in
others. Each winner received a cash
award and a gift.
Each year the FDIC presents an
award to an outstanding handicapped
employee. In 1987, the winner was
James W. Meisser, a bank examiner
in the FDIC's Chicago Regional Of­
fice. Although born with a profound
hearing loss, Mr. Meisser, relying
solely on lipreading to comprehend
the speech of other people, gives free­
ly of his time to help other handi­
capped individuals.

NUMBER OF OFFICIALS AND EMPLOYEES OF THE FDIC,
December 31, 1987 and 1986
Washingt on
Office

TO TA L

Regional &
Field Offices

1987

1986

1987

1986

1987

1986

0

0

90

55

90

55

Division of Bank
Supervision

2521

2299

149

160

2372

2139

Division of Liquidation**

4400

4586

43

44

4357

4542

880

729

155

132

725

597

Executive Offices*

Legal Division
Division of Accounting
& Corporate Services

1017

969

520

532

497

437

O ffice of Research &
Strategic Planning

27

27

27

27

0

0

Office of Corporate
Audits & Internal Affairs

58

55

46

55

12

0

O ffice of Personnel &
Management

89

84

89

84

0

0

O ffice of Equal
Employment Opportunity

16

13

16

13

0

0

9098

8817

1129

1102

7963

7715

T O TA L

* Executive Offices include the Offices of the Executive Secretary, Corporate Com­
munications, Legislative Affairs, Budget and Planning and Consumer Affairs.
** Division of Liquidation totals include temporary employees, most of whom were
employed by failed banks and assigned to field liquidations.

O ffice o f Equal E m ploym ent
O pportunity

Ja m es W . M eisser, F D IC 's ou tstand ing
h a n d ic a p p e d e m p lo y e e o f 1 9 8 7 ,
received his aw ard fro m C h airm an
Se id m an in M a rch a fter a sn ow storm
in C h ic a g o k e p t h im fr o m th e
D ecem b er aw ard cerem o nies.

The FDIC's Health Unit, which
maintains medical facilities for the
health and safety needs of Washing­
ton employees, offered programs to
employees in 1987 such as high blood
pressure screening, bloodmobile,
cholesterol education, back injury and
flu shots. The unit also provided in­
dividual and referral assistance for
substance abuse as well as on a
counseling relating to mental health.



The Office of Equal Employment
Opportunity (OEEO), which manages
the FDIC's affirmative action pro­
grams for women, minorities, hand­
icapped individuals and disabled
veterans, initiated many awareness
and special interest programs in 1987,
such as National Afro-American
History Month, National Asian
American/Pacific Islander Heritage
Week, Hispanic Heritage Week,
American Indian Week and National
Employ the Handicapped Week.
To increase awareness of the FDIC's
mission and employment oppor­
tunities, OEEO participated in
workshops and job fairs at confer­
ences, universities and high schools.
The Office also maintained working
relationships with local and national
women, minority, handicap and veter­
ans organizations, and sent copies of
vacancy announcements to special em­
phasis organizations on a regular basis.

Efforts to help handicapped in­
dividuals in 1987 included purchas­
ing wheelchairs, providing special
equipment for hearing and visually
impaired employees and modifying
facilities in the headquarters and field
office buildings to accommodate
special needs.
To increase diversity in the FDIC's
work force, OEEO managed the
Community Outreach Program,
employing six high school students.
Under the FDIC's agreement with the
United South and Eastern Tribes,
Inc., of Nashville, four Native
Americans were hired under the Job
Training Partnership Act, a federal
grant program. OEEO also works
with the Veterans Administration to
employ disabled veterans. Under the
Veterans Readjustment Act, two in­
dividuals were trained; one was
subsequently hired.
The Office of EEO also administers
discrimination complaint procedures
involving FDIC employees. In 1987,

26

there were 102 incidents of
precomplaint counseling compared to
90 in 1986. Total discrimination com­
plaint investigations during the year
amounted to 27, compared to 25 the
previous year. Increases are at­
tributable to the growth in the FDIC's
work force.




O EEO developed and made
av ailab le to em ployees three
brochures in 1987: Recognizing and

Handling Sexual Harrassment in the
W ork Place; Your Application for
Federal Employment — Standard
Form 171 (available in large print for
the visually impaired and on a

cassette tape for the blind); and

Technical Application Guide for
Employment o f Disabled Veterans
and H andicapped Individuals.




Legislation and Regulations

Legislation Enacted in 1987
The Competitive Equality
Banking Act o f 1987
On August 10, 1987, the President
signed into law the Competitive
Equality Banking Act of 1987 (CEBA).
The new legislation contains several
provisions that are particularly signifi­
cant for the FDIC and state
nonmember banks.

Financial Institutions Emergency
Acquisitions. The Federal Deposit In­
surance Act is amended to permit: (1)
out-of-state holding companies to ac­
quire qualified stock institutions, as
well as mutual savings banks, before
they fail if they have assets of $500
million or more; (2) a holding com­
pany to be sold, in whole or in part,
to an out-of-state holding company if
the in-state holding company has a
bank or banks with aggregate bank­
ing assets of $500 million or more “in
danger of closing" and the bank or
banks represent 33 percent or more of
the holding company's banking assets;
and (3) an out-of-state holding com­
pany expansion rights in the state of
acquisition through the bank holding
company structure. This section also
prevents regional compact restrictions
from applying to a holding company
that makes an acquisition under the
emergency authority. The concur­
rence of the state bank supervisor of
the failing bank is required before the
interstate acquisition provisions may
be used.

Bridge Banks. CEBA permits the
FDIC to establish a bridge bank to
assume the deposits and liabilities and
purchase the assets of a failed bank if:
• The cost of establishing a bridge
bank does not exceed the cost of
a liquidation;
• The continued operation of the
failed bank is essential to provide
adequate banking services in the



bank's community; or,
• The continued operation of the
failed bank is in the best interest
of the depositors and the public.
The bridge bank must be a
separately chartered national bank
and it must be operated by a fivemember board of directors appointed
by the FDIC. The chairman of the
bridge bank's board serves as its chief
executive officer. The bridge bank
may operate for up to three years
while the FDIC seeks a purchaser.

Gramm-Rudman-Hollings Act and
the Anti-Deficiency Act. The FDIC
and other financial institution
regulatory agencies are exempt from
the apportionment provisions of the
Anti-Deficiency Act and the se­
questration provisions of the GrammRudman-Hollings Act.

Loan Loss A m ortization fo r
Agricultural Banks. Agricultural
banks may, under certain cir­
cumstances, write down their losses
on agricultural loans over seven years
rather than deduct the amount of loss
from capital as soon as the loss is
recognized. Agricultural banks are
defined as banks in economic areas
dependent on agriculture, with assets
of $100 million or less, which have at
least 25 percent of their loans in
agricultural loans.

Nonbank Banks. "Nonbank banks"
are prohibited by requiring companies
which acquired a nonbank bank after
March 5, 1987, to comply with the
Bank Holding Company Act or divest
their bank subsidiary. Existing non­
bank banks are grandfathered with
some restrictions: after a year they
must limit their asset growth to 7 per­
cent annually; they cannot begin any
new activities; and, they are subject
to certain cross-marketing pro­
hibitions.

Recapitalization o f the Federal Sav­
ings and Loan Insurance Corporation
(FSLIC). This section authorized a
newly established financing corpora­
tion funded by the Federal Home
Loan Banks to raise $10.8 billion for
the FSLIC by selling bonds in the
capital markets. FSLIC is limited to
spending up to $3.75 billion per year
in conjunction with failed thrift in­
stitutions. The financing corporation
is given authority to levy assessments
against insured savings and loan in­
stitutions. Among other things, the
section imposed a one-year
moratorium from the date of enact­
ment during which no insured institu­
tion may voluntarily leave the FSLIC.
A grandfather provision exempted in­
stitutions that had converted into or
merged with an FDIC-insured institu­
tion, or entered into a letter of intent
or memorandum of understanding to
do so, before March 31, 1987.

Moratorium on Certain N onbank­
ing Activities. A moratorium was im­
posed on insured banks with respect
to certain securities, insurance and
real estate activities. The moratorium,
retroactive to March 6, 1987, ended
on March 1, 1988.

Interlocking Directors and Affilia­
tions. Provisions of the Glass-Steagall
Act that prohibit affiliations and in­
terlocking directors, officers and
employees between banks and
securities firms were extended to
FDIC-insured nonmember banks (and
thrift institutions) until March 1,1988.
Other provisions of CEBA require
the FDIC to consider and minimize the
adverse economic impact of a liquida­
tion on the local community and re­
quire institutions offering adjustable
rate mortgages to include a maximum
interest rate that may apply during the
term of the loan.

Rules and Regulations Adopted in 1987
African Development Bank
(September 10, 1987).
The FDIC amended its regulations
governing FDIC-insured United States
branches of foreign banks to permit
those branches to pledge obligations
of the African Development Bank as
collateral to meet FDIC insurance re­
quirements. In the event the FDIC is
required to pay the insured deposits of
an insured United States branch of a
foreign bank, the pledged assets would
become the property of the FDIC to
be used to the extent necessary to pro­
tect the FDIC's deposit insurance fund.

Amortization o f Agricultural Loan
Losses (November 9, 1987).
The FDIC adopted an interim rule
which establishes eligibility re­
quirements and application procedures
for banks in distressed agricultural
regions of the country that are in­
terested in amortizing farm loan losses.
The FDIC's interim regulation is essen­
tially the same as interim regulations
adopted by the Office of the Comp­
troller of the Currency and the Federal
Reserve Board. The new seven-year
farm loan loss amortization program
was mandated by Congress in the
Competitive Equality Banking Act
(CEBA).
Title VIII of CEBA permits
agricultural banks to amortize (1)
losses on qualified agricultural loans
and (2) losses resulting from a reap­
praisal of other related assets. Losses
must have been incurred between
December 31, 1983 and January 1,
1992, and must not have involved
fraud or criminal abuse on the part of
the bank's officers, directors or prin­
cipal shareholders. Banks must request
to participate in the amortization plan
and must meet the following eligibili­
ty criteria:
•

The institution must qualify as
an agricultural bank, i.e., it must




•

•

•

be located in an area where the
economy depends on agriculture,
have $100 million or less in total
assets and have at least 25 per­
cent of its total loans in qualified
agricultural loans;
The institution's capital must
need replenishing, but the institution must nonetheless be
economically viable and fun­
damentally sound;
There must be no evidence that
fraud or criminal abuse led to
significant losses on qualified
agricultural loans and related
assets; and
A plan to restore capital to an ac­
ceptable level must have been
approved by the FDIC. The
FDIC is seeking public comments
prior to adopting a final regula­
tion. Comments were to be
received on or before January 8,
1988. Unless superseded, the in­
terim rule will expire on June 30,
1988.

Annual Disclosure Statements
(February 1, 1988).
The Board of Directors adopted a
new Part 350 to the FDIC's rules and
regulations requiring FDIC-insured
state-chartered banks that are not
members of the Federal Reserve
System and FDIC-insured, statelicensed branches of foreign banks to
prepare, and make available on re­
quest, annual disclosure statements
consisting of (1) required financial data
comparable to specified schedules in
call reports filed for the previous two
year-ends, (2) specific information that
the FDIC may require of particular
organizations, and (3) other optional
inform ation. The first annual
disclosure statement required by Part
350 is for year-end 1987, to be
prepared by March 31, 1988, or the
fifth day after an organization's annual
report covering the year 1987 is sent

to shareholders, whichever occurs first.
In place of call report data, a bank
may use audited financial statements
or reports prepared pursuant to other
regulations by the bank or a parent
one-bank holding company.

The Bank Secrecy Act
(January 27, 1987).
The five federal bank regulatory
agencies issued a rule requiring banks
to establish and maintain procedures
to assure and monitor compliance with
the Bank Secrecy Act and the im­
plementing regulations promulgated
thereunder by the Department of the
Treasury.

Capital Requirements
(December 2, 1987).
The FDIC amended its capital
regulations to (1) clarify and revise cer­
tain definitions, (2) reserve the authori­
ty of the FDIC with respect to the
definitions of "primary capital" and
"secondary capital," (3) specify that the
terms and conditions to which capital
instruments are subject must be con­
sistent with safe and sound banking
practices, and (4) limit, on the basis of
insurance status, the circumstances in
which the FDIC will not approve a
proposed merger transaction when the
resulting entity will not meet the
FDIC's minimum capital requirement.
These amendments will benefit both
the FDIC and insured banks by pro­
viding the FDIC with greater flexibili­
ty in administering its capital
regulation.

Foreign Bank Branches - Loan
Limits. (December 17, 1987).
Section 346.23 of the FDIC's Rules
and Regulations specifies that exposure
in loans to entities or individuals out­
side the United States by insured bran­
ches of foreign banks operating as such
on November 19,1984, must be within

30

prescribed limits by January 22,1988.
The Board of Directors extended the
time for compliance with these limits
until June 14, 1988.

The Freedom o f Information Reform
A ct o f 1986 (July 27, 1987).
The FDIC amended its regulations
to implement the provisions of the
Freedom of Information Reform Act
of 1986, and the Uniform Freedom
of Information Act Fee Schedule and
Guidelines adopted by the Office of
Management and Budget.

The Privacy A ct o f 1974
(September 9, 1987).
The FDIC amended its regulations
implementing the Privacy Act of 1974
so that appeals of adverse agency
determinations on requests for access
to or amendment of records will be
considered by the FDIC's General
Counsel (or designee). In addition,
the FDIC removed its “Legal Com­
pliance and Enforcement Records"
system from the list of systems of
records exempt by regulation from
certain provisions of the Privacy Act
because the system itself had become
obsolete.

R edelegation o f A uthority
(September 21, 1987).
The FDIC amended its regulations
(12 CFR Parts 303 and 308) to
redelegate authority to act on applica­
tions and administrative enforcement
matters formerly exercised by the
Board of Review to officials in the
FDIC's Division of Bank Supervision.
The amendments also delegate addi­
tional authority to act on certain ap­
plication s and adm inistrative
enforcement matters to officials within
the Division of Bank Supervision.

Reporting B rokered and Insured
D eposits (January 30, 1988).
The FDIC changed from monthly
to quarterly the frequency each FDICinsured bank with combined fullyinsured brokered deposits and fully


insured deposits placed directly by
depository institutions in excess of
either the bank's total capital and
reserves or five percent of the bank's
total deposits must report their
holdings of such deposits to the FDIC.
The purpose of this reporting require­
ment is to provide the FDIC with time­
ly information on each FDIC-insured
bank's involvement with insured
brokered deposits and insured deposits
of depository institutions.

Securities Activities o f Subsidiaries
and Affiliates
(December 14, 1987).
The FDIC amended its regulation
governing the securities activities of
certain subsidiaries of insured
nonmember banks and the affiliate
relationships of insured nonmember
banks with certain securities com­
panies. The amendments: (1) delete
the requirement that the offices of
securities subsidiaries and affiliates
must not be accessible through an en­
trance common to the bank and the
subsidiary or affiliate (the existing re­
quirement for physically separate of­
fices is retained); (2) delete the
prohibition against securities sub­
sidiaries and affiliates sharing a com­
mon name or logo with the bank,
and (3) establish a number of affir­
mative disclosure requirements to the
effect that such securities recommend­
ed, offered or sold by or through a
securities subsidiary or affiliate are
not FDIC-insured deposits unless
otherwise indicated and that such
securities are not obligations of, nor
are they guaranteed by the bank.

Securities Transfer Agents
(January 12, 1987).
The FDIC amended its regulations
concerning the registration requirement
of securities transfer agents. The change
requires that a bank, acting as a transfer
agent for covered securities, must file
an updated amendment on Form TA-1
when any information contained in the

form becomes inaccurate, misleading
or incomplete. This amendment will
conform the regulation with the instruc­
tions on Form TA-1 and with parallel
regulations of the Federal Reserve
Board, the Securities and Exchange
Commission and the Comptroller of the
Currency.

Proposed Rules and Regulations
Fair Housing.
The FDIC has proposed amending
its fair housing regulation, 12 CFR Part
338, which applies to insured state
nonmember banks. The proposed
amendment would eliminate home equi­
ty loans, as well as home improvement,
maintenance and repair loans from the
data-gathering requirement. According­
ly, the data-gathering requirement
would apply only to home purchase,
construction and refinancing loans. The
FDIC believes the proposed amendment
would reduce the paperwork burden
on the banking industry without im­
pairing enforcement of fair housing lend­
ing laws.

Rules and Regulations
Withdrawn
R eal Estate Activities.
The FDIC withdrew a proposed
amendment to Part 332 of its regula­
tions which would have, among other
things, prohibited insured banks, sub­
ject to certain exceptions, from directly
engaging in real estate development ac­
tivities or insurance underwriting ac­
tivities and would have established
certain restrictions on the indirect con­
duct of such activities. Based on the
amount of time that had passed since
the proposal was published for com­
ment (June 1985) and the lack of
substantial evidence regarding the
degree of risk to the insurance fund,
the Board of Directors determined to
withdraw the proposal to provide time
to reevaluate whether a broad-based
regulation for real estate investment is
necessary.




Federal Deposit Insurance Corporation

Financial Statements
December 31, 1987

Statements of Financial Position
a

l

„

.,

J\ S S etS (In thousands)

Cash
Investment in U.S. Treasury Obligations,
Net (Note 2)

December 31,
1987

18,499

1986

$

42,477

16,098,874

16,602,959

Accrued Interest Receivable on Investments
and Other Assets

464,292

503,557

Certificates, Notes and Other Receivables
from Insured Banks (Note 3)

557,638

735,390

Net Receivables from Assistance to an Insured
Bank (Note 4)

1,664,515

1,854,691

Net Receivables from Failures of Insured
Banks (Note 5)

3,549,268

2,617,542

73,438

51,010

$ 22,426,524

$ 22,407,626

Property and Buildings (Note 6)

Total Assets

The accompanying summary of significant accounting policies and notes to financial statements are
an integral part of these statements.




33

Liabilities and the
Deposit Insurance Fund (in

December 31,

thousands)

Accounts Payable, Accrued Liabilities
and Other
Liabilities Incurred in Assistance
to Insured Banks (Note 7)

1987

$ 1,296,488

1986

$

266,708

2,623,472

3,034,108

Liabilities Incurred from Failures of
Insured Banks (Note 8)

204,122

847,242

Estimated Losses from Corporation
Litigation (Note 9)

600

6,251

4,124,682

4,154,309

18,301,842

18,253,317

$ 22,426,524

$ 22,407,626

Total Liabilities

Deposit Insurance Fund

Total Liabilities and the
Deposit Insurance Fund

The accompanying summary of significant accounting policies and notes to financial
statements are an integral part of these statements.




Statements of Income and the Deposit Insurance Fund

(In thousands)

For the year ended
December 31,
1987
1986

Income:
Gross assessments earned
Provision for assessment credits (Note 13)
Net assessments earned
Interest on U .S. Treasury obligations
Other income
Total Income
Expenses and Losses:
Administrative operating expenses
Merger assistance losses and expenses (Note 10)
Provision for insurance losses (Notes 3, 4, 5, and 11)
Nonrecoverable insurance expenses (Note 12)
Total Expenses and Losses
Net Income
Deposit Insurance Fund—January 1

Deposit Insurance Fund—December 31

$ 1,697,208
1,250

$ 1,587,375
70,473

1,695,958

1,516,902

1,534,937

1,634,415

84,922

108,796

3,315,817

3,260,113

202,381
20,256
2,996,923
47,732

180,267
(86,043)
2,827,712
41,850

3,267,292

2,963,786

48,525

296,327

18,253,317

17,956,990

$18,301,842

$18,253,317

The accompanying summary of significant accounting policies and notes to financial statements
are an integral part of these statements.




Statements of Changes in Financial Position
For the year ended
December 31,
1987
1986

(In thousands)
Financial resources were provided from:
Operations:
Net Income
Add (deduct) items not involving cash in the period:
Amortization of U.S. Treasury obligations
Depreciation on buildings
Income maintenance agreement adjustments
Amortization of merger assistance agreements
Provision for insurance losses
Resources provided from operations
Other resources provided from:
Maturity and sale of U.S. Treasury obligations
Collections on certificates, notes and other receivables
Collections on receivables from assistance to an insured bank
Collections on receivables from failures of insured banks
Liabilities incurred from failures of insured banks
Decrease (increase) in cash

$

48,525

$

296,327

111,188
1,388
0
14,478
2,996,923

125,640
1,285
(83,700)
22,108
2,827,712

3,172,502

3,189,372

9,450,194
180,955
465,218
2,563,635
821,534
23,978

3,196,626
98,217
668,323
1,799,101
753,270
(19,291)

Total financial resources provided

$16,678,016

$9,685,618

Financial resources were applied to:
Purchase of U.S. Treasury obligations
Acquisition of certificates, notes and other receivables
Increased receivables from assistance to an insured bank
Increased receivables from failures of insured banks
Additions to property and buildings
Payments on liabilities incurred in assistance to insured banks
Payments on liabilities incurred from failures of insured banks
Disbursements for Corporation litigation
Other increases (decreases)

$ 9,057,297
2,000
224,048
5,318,732
23,816
410,636
1,474,495
0
166,992

$4,083,356
217,665
160,018
4,417,735
5,131
408,644
430,968
1,997
(39,896)

Total financial resources applied

$ 16,678,016

$9,685,618

The accompanying summary of significant accounting policies and notes to financial statements are
an integral part of these statements.




Notes to Financial Statements
D ec em b er 31, 1987 a n d 1986

1. Summary of Significant Accounting Policies:
General. These statements do not include accountability for assets and liabilities of closed insured banks for which
the Corporation acts as receiver or liquidating agent. Periodic and final accountability reports of the Corporation's
activities as receiver or liquidating agent are furnished to courts, supervisory authorities, and others as required.
U.S. Treasury Obligations. Securities are shown at amortized cost which is the purchase price of securities less the
amortized premium or plus the accreted discount. Such amortizations and accretions are computed on a daily basis
from the date of acquisition to the date of maturity. Interest is also calculated on a daily basis and recorded monthly
using the constant-yield method.
Deposit Insurance Assessments. The Corporation assesses insured banks at the rate of 1/12 of one percent per year
on the bank's average deposit liability less certain exclusions and deductions. Assessments are due in advance for
each six-month period and credited to income each month. Based on operational results, the Depository Institutions
Deregulation and Monetary Control Act of 1980 authorizes up to 60 percent of the net assessment income to be
transferred in the form of an assessment credit to insured banks each July 1 of the following calendar year. Addi­
tionally, the Act authorizes the Corporation's Board of Directors to make adjustments to this percentage within cer­
tain limits in order to maintain the Deposit Insurance Fund between 1.25 and 1.40 percent of estimated insured deposits.
If this ratio falls below 1.10 percent, the Corporation is mandated to reduce the percentage of net assessment income
credited to a limit of 50 percent. If this ratio exceeds 1.40 percent, the Corporation is mandated to increase the percentage
of net assessment income credited by such an amount as it determines will result in maintaining that ratio at not
more than 1.40 percent.
Allowance for Loss. The Corporation records as a receivable the funds advanced for assisting and closing insured
banks, and establishes an estimated allowance for loss shortly after the insured bank is assisted or closed. The allowance
for loss represents the difference between the funds advanced and the expected repayment, based on the estimated
cash recoveries from the assets of the assisted or failed bank, net of all liquidation costs. The Corporation does not
record the estimated loss related to future bank failures because such estimates depend upon factors which cannot
be assessed until after the bank is actually assisted or closed. The Corporation's entire Deposit Insurance Fund and
borrowing authority are available for any assistance or closing activity.
Depreciation. The Washington Office Buildings are depreciated on a straight-line basis over a 50-year estimated life.
The San Francisco Condominium Offices are depreciated on a straight-line basis over a 35-year estimated life. The
cost of furniture, fixtures, and equipment is expensed at time of acquisition.
Income Maintenance Agreements. The Corporation records its liability under an income maintenance agreement
at the present value of each estimated cash outlay at the time the agreement is accepted. Estimated cash outlays
are anticipated future payments the Corporation will provide to offset the difference between the assisted bank's
annualized cost of funds and the assisted bank's annualized return on the declining volume of earning assets acquired
in a merger transaction, plus an amount to cover overhead costs. The charge is recorded to insurance loss. The pre­
sent value of the liability is then accreted daily and recorded monthly over the term of the agreement. Any dif­
ferences between the estimated and actual cash outlays are recorded as payment adjustments. The present value
of remaining estimated cash outlays is also reviewed and adjusted each year when interest rate changes occurring
in the marketplace appear material or permanent in nature. The interest rate used in 1987 and 1986 to discount future
outlays was 6 .75% . The originally recorded loss, plus or minus any payment and present value adjustments, will
then be prorated between insured banks and the Deposit Insurance Fund as provided in Section 7(d) of the Federal

http://fraser.stlouisfed.org/
Deposit Insurance Act.
Federal Reserve Bank of St. Louis

37

Reclassifications. Reclassifications have been made in the 1986 Financial Statements to conform to the presentation
used in 1987.
2. U.S. Treasury Obligations:
All cash received by the Corporation not used to defray operating expenses or for outlays related to assistance to
banks and liquidation activities is invested in U.S. Treasury securities. The Corporation's investment portfolio con­
sists of the following (in thousands):
December 31, 1987

Maturity
One Day

Description

Yield to Maturity
at Market

Book
Value

Market
Value

Face
Value

Special Treasury
Certificates

6.60

$ 1,306,443

$ 1,306,443

$ 1,306,443

Less than
1 year

U .S .T . Bills,
Notes and Bonds

6.78

3,394,085

3,442,391

3,390,000

1-3 years

U .S .T . Notes and Bonds

7.81

5,158,332

5,355,063

5,080,000

3-5 years

U .S .T . Notes and Bonds

8.29

4,586,418

4,475,610

4,300,000

5-10 years

U .S .T . Notes and Bonds

8.55

1,653,596

1,613,677

1,700,000

$16,098,874

$16,193,184

$15,776,443

December 31, 1986

Maturity
One Day

Description

Yield to Maturity
at Market

Book
Value

Market
Value

Face
Value

Special Treasury
Certificates

17.28

$ 2,049,700

$ 2,049,700

$ 2,049,700

Less than
1 year

U .S .T . Bills,
Notes and Bonds

6.10

3,283,654

3,370,283

3,270,000

1-3 years

U .S .T . Notes and Bonds

6.43

6,162,104

6,610,032

6,070,000

3-5 years

U .S .T . Notes and Bonds

6.82

3,708,325

3,958,918

3,500,000

5-10 years

U .S .T . Notes and Bonds

7.04

1,399,176

1,450,868

1,200,000

$16,602,959

$17,439,801

$16,089,700

The unamortized premium, net of unaccreted discount, for 1987 and 1986 was $322,431,000 and $513,259,000, respec­
tively. The amortized premium, net of accreted discount, for 1987 and 1986 was $260,778,000 and $199,148,000,
respectively.
3. Certificates, Notes and Other Receivables from Insured Banks:
The Corporation's outstanding principal balances on certificates, notes and other receivables from insured banks
are as follows (in thousands):
December 31
1987
Certificates:
Net worth certificates
Allowance for losses

$

1986
0
0

$129,809
(74,503)

0

Other receivables:
Special assistance
Allowance for losses




55,306

27,000
87,600
351,148

27,000
88,136
401,648

465,748

Notes receivable to:
Assist operating banks
Facilitate deposit assumptions
Facilitate merger agreements

516,784

206,995
(115,105)

205,105
(41,805)

91,890

163,300

$557,638

$735,390

38

The net worth certificate program was established at the Corporation by authorization of the Garn-St Germain
Depository Institutions Act of 1982. Under this program, the Corporation would purchase a qualified institution's
net worth certificate and, in a non-cash exchange, the Corporation would issue its non-negotiable promissory note
of equal value. The total assistance outstanding to qualified institutions as of December 31, 1987 and 1986, is
$315,016,000 and $526,094,000, respectively. As of December 31, 1987 and 1986, the financial statements excluded
$315,016,000 and $396,285,000, respectively, of net worth certificates, for which no losses are expected because of
the non-cash exchange nature of the transactions. The original authority to issue net worth certificates expired O c­
tober 13, 1986. The Competitive Equality Banking Act of 1987 reinstated the net worth certificate program through
October 13, 1991.
4. Net Receivables from Assistance to an Insured Bank:
The Continental Illinois National Bank and Trust Company of Chicago (CINB) assistance program provided by
the Corporation, the Federal Reserve Board, the Comptroller of the Currency, and a group of major U .S. banks,
received final approval from Continental Illinois Corporation shareholders on September 26, 1984. The key aspects
of the assistance program applicable to the Corporation are embodied in an Assistance Agreement and an Implemen­
tation Agreement between the Corporation and CINB, Continental Illinois Corporation, and Continental Illinois
Holding Corporation. Discussed below are the major aspects of the Corporation's participation in the assistance
program.
After consummation of the assistance program on September 26, 1984, CINB transferred to the Corporation $2.0
billion in troubled loans. The Corporation also received a three year $1.5 billion promissory note from CINB which
was paid in full on September 26, 1987, by transferring additional troubled loans to the Corporation. The $3.5 billion
troubled loan portfolio was, in part, funded by the Corporation's assumption of $3.5 billion of Federal Reserve Bank
of Chicago (FRB) indebtedness on behalf of CINB. These borrowings bear interest at specified rates established by
the FRB and the U .S. Treasury. The range of rates paid on the debt for 1987 was 5.93% to 7.80% . The Corporation
repays these borrowings by making quarterly remittances of its collections, less expenses, on the troubled loans.
If there is a shortfall at September 26, 1989, the termination date of the assistance program, the Corporation will
make up such deficiency with its own funds.
Net receivables from the Corporation's assistance to CINB are as follows (in thousands):
December 31
1987
Loans and related assets
Promissory note
Dividend receivable
Preferred stock
Allowance for losses

1986

$2,531,644
0
9,973
763,750
(1,640,852)

$2,322,793
459,994
0
763,750
(1,691,846)

$1,664,515

$1,854,691

The Implementation Agreement provides for the Corporation to be reimbursed each quarter for its expenses related
to administering the transferred loan portfolio and for interest paid on the FRB indebtedness. According to the terms
of the Implementation Agreement, collections are to be applied quarterly in the following manner: 1) to the ad­
ministrative expenses paid by the Corporation; 2) to the interest owing on the assumed indebtedness; 3) to fund
the special reserve account such that this account plus accrued interest thereon is at least $75 million; and 4) to prin­
cipal owing under the FRB agreement.
Collection proceeds totaled $449,033,000 for the year ended December 31, 1987. The collection proceeds were ap­
plied to administrative costs and interest expense of $19,419,000 and $177,489,000, respectively, and to the payment
of principal owing under the FRB agreement amounting to $252,125,000. The Corporation estimated an allowance
for loss amounting to $1,640,852,000, as of December 31, 1987, representing the difference between the amount
the Corporation will pay the FRB and the collections on the loan portfolio after expenses.




39

The Corporation holds an option to acquire up to 40.3 million shares of Continental Illinois Corporation common
stock. The option is exercisable only if the Corporation suffers a loss on the transferred loan portfolio, including
unrecovered administrative costs and interest expense, and cannot be exercised prior to the fifth anniversary of the
commencement date, September 26,1989. The shares subject to the option are owned by Continental Illinois Holding
Corporation, which is owned by the former stockholders of Continental Illinois Corporation. If a loss occurs, the
Corporation will be entitled to retain any remaining transferred loans and to exercise the option for one share of
Continental Illinois Corporation common stock for every $20 of loss at the exercise price of $0.00001 per share of
common stock.
In addition to the $3.5 billion in troubled loans, the Corporation purchased $1 billion of two non-voting Continental
Illinois Corporation preferred stock issues. The Junior Perpetual Convertible Preference Stock amounted to $720
million and the Adjustable Rate Preferred Stock, Class A amounted to $280 million. The Corporation sold 10.5
million shares of the Junior Perpetual Convertible Preference Stock to an underwriting syndicate for proceeds of
$259,350,000 in December 1986. Cash dividends received for the year ended December 31, 1987 on the Junior Perpetual
Convertible Preference Stock and the Adjustable Rate Preferred Stock, Class A were $6,450,000 and $19,819,000,
respectively.
The Junior Perpetual Convertible Preference Stock had a market value at December 31, 1987, of $268,750,000, which
was lower than its $483,750,000 cost. The $215 million reduction in carrying value is included in the allowance for losses.

5. Net Receivables from Failures of Insured Banks:
Net receivables from failures of insured banks are as follows (in thousands):
December 31
1987
$ 3,180,629
18,717
6,897,625
280,634

Depositors' claims paid
Depositors' claims unpaid
Assumption transactions in a fiduciary capacity
Assets purchased in a corporate capacity

1986
$1,829,709
24,269
5,563,758
568,308

10,377,605
(6,828,337)

Allowance for losses

$ 3,549,268

7,986,044
(5,368,502)
$2,617,542

of the changes in the allowance for losses by account groups is a follows (in thousands)
Depositors'
claims
paid

Fiduciary
capacity

Corporate
capacity

Total

$4,005,253
1,072,323
(4,791)

$388,101
68,610
(336,021)

$5,368,502
1,800,654
(340,819)

1987
Balance, January 1
Provision for insurance losses
W rite-off at termination

$

975,148
659,721

Balance, December 31

$1,634,862

$5,072,785

$120,690

$6,828,337

Balance, January 1
Provision for insurance losses
W rite-off at termination

$465,887
509,261
0

$2,154,103
1,851,150
0

$388,866
(765)
0

$3,008,856
2,359,646
0

Balance, December 31

$975,148

$4,005,253

$388,101

$5,368,502

(7)

1986




40

6. Property and Buildings:
Property and buildings consist of (in thousands):
December 31
1987
$28,283
54,281
(9,126)

$ 4,680
54,068
(7,738)

$73,438

Land
O ffice buildings
Accumulated depreciation

1986

$51,010

The Corporation's 1776 F Street property is subject to notes payable totaling $6,131,000 and $6,314,000 at December
31, 1987 and 1986, respectively.
7. Liabilities Incurred in Assistance to Insured Banks:
The Corporation's outstanding principal balances on liabilities incurred in assistance to insured banks are as follows
(in thousands):
December 31
1987
$2,623,472
0

$2,904,299
129,809

$2,623,472

Federal indebtedness
Promissory (exchange) notes

1986

$3,034,108

Maturities of long-term liabilities for each of the next five years and thereafter are:
1988

$

1989

0

$2,623,472

1990

$

0

1991

$

0

1992

$

1993/Thereafter

0

$

0

8. Liabilities Incurred from Failures of Insured Banks:
The Corporation's outstanding principal balances on liabilities incurred from failures of insured banks are as follows
(in thousands):
December 31
1987
$185,405
18,717

$822,973
24,269

$204,122

Notes indebtedness
Depositors' claims unpaid

1986

$847,242

Maturities of long-term liabilities for each of the next five years and thereafter are:
1988

1989

1990

1991

1992

1993/Thereafter

$60,654

$5,824

$6,647

$7,586

$5,397

$99,297

Depositors' claims unpaid of $18,717 are current in nature and are not considered long-term liabilities.




41

9. Estimated Losses from Corporation Litigation:
The Corporation is involved in both its receivership and corporate capacity in numerous law suits. The merits of
each case and the expected outcome have been evaluated by the Corporation's General Counsel, and, where ap­
propriate, a contingent loss has been established. This estimated loss was $112,700,000 in 1987. O f that amount,
$112,100,000 was included in the allowance for losses relating to receivables from assistance to an insured bank
and from failed banks. The remaining $600,000 is included on the financial statements as estimated losses from cor­
poration litigation.
10. Merger Assistance Losses and Expenses:
The Corporation's merger assistance losses and expenses represent (1) the original income maintenance agreement
losses recorded at present value and any adjustments resulting from interest rate changes occurring in the marketplace
and (2) outright assistance to merged insured banks. These amounts were $20 million and $(86) million in 1987 and
1986, respectively.
11. Provision for Insurance Losses:
An analysis of the provision for insurance losses is as follows (in thousands):
December 31
1987
Provision for insurance losses
Net worth certificates
Prior year adjustments
Special assistance
Current year provision
Prior year adjustments
Termination adjustments

$

(74,503)

1986

$

(62,493)

Corporation litigation
Current year provision
Prior year adjustments
Term ination adjustments

186,805

(50,994)

349,846

1,961,947
(161,293)
17,165

1,854,632
505,014
0

1,817,819

Net receivables from failures of insured banks
Current year provision
Prior year adjustments
Termination adjustments

191,805
0
(5,000)

1,310,252
Net receivables from assistance to an insured bank
Prior year adjustments

1,236,952
73,300
0

2,359,646

500
(6,151)
0

470
(2,559)
(4,003)

(5,651)

(6,092)

$2,996,923

$2,827,712

12. Nonrecoverable Insurance Expenses:
The Corporation's nonrecoverable insurance expenses primarily represent costs associated with (1) preparing and
executing the activity in payoff cases and (2) administering and liquidating the assets purchased in a corporate capacity.

13. Assessment Credits Due Insured Banks:
Contingent upon a legislatively specified ratio of the Corporation's Deposit Insurance Fund to estimated insured
bank deposits, the Corporation credits a legislatively authorized percentage (currently 60 percent) of its net




42

assessment income to insured banks. This credit is distributed, pro rata, to each insured bank as a reduction of the
following year's assessment. Net assessment income is determined by gross assessments less administrative operating
expenses and expenses and losses related to insurance operations. Certain income and expense amounts in the 1987
and 1986 assessment income credit computation do not correspond to amounts reported on the financial statements
because of legislatively mandated adjustments and other adjustments made to reflect results solely related to insurance
operations. The provision for assessment credits in the 1987 and 1986 statements of income represents adjustments
resulting from audits to prior years' assessment credits.
The Garn-St Germain Depository Institutions Act of 1982 amended Section 7(d)(1) of the Federal Deposit Insurance
Act and authorized the Corporation to include certain lending costs in the computation of the net assessment in­
come. The lending costs are the amounts by which the amount of interest earned on each loan made by the Corpora­
tion under Section 13 of the Federal Deposit Insurance Act after January 1, 1982, is less than the amount of interest
the Corporation would have earned for the calendar year if interest had been paid on the loans at a rate equal to
the average current value of funds to the U .S. Treasury for the calendar year.
The Corporation will not pay an assessment credit to insured banks for calendar years 1987 and 1986 based on the
net assessment income credit computations for the respective years shown below (in thousands):

Net Assessment Income Credit Com putation—Calendar Year 1987
Computation:
Gross assessment income—C .Y . 1987
Less: Carry-over of net losses and expenses from C .Y . 1986
Administrative operating expenses
Merger assistance losses and expenses
less am ortization and accretion
Provision for insurance losses
Nonrecoverable insurance expenses
Lending costs

$1,691,647
$2,548,411
202,381
5,779
2,996,010
42,508
13

Excess of losses and expenses over gross assessment income

5,795,102
4,103,455

Assessment credit adjustment—prior years

( 1 , 022 )

Net excess of losses and expenses over
gross assessment income—C .Y . 1987
$4,102,433
Net Assessment Income Credit Com putation—Calendar Year 1986
Computation:
Gross assessment income—C .Y . 1986
Less: Carry-over of net losses and expenses from C .Y . 1985
Administrative operating expenses
Merger assistance losses and expenses
less amortization and accretion
Provision for insurance losses
Nonrecoverable insurance expenses
Lending costs
Excess of losses and expenses over gross assessment income
Assessment credit adjustment—prior years
Net excess of losses and expenses over
gross assessment income—C .Y . 1986




$1,578,200
$ 1,113,954
180,267
(99,746)
2,827,012
36,783
3,061

4,061,331
2,483,131
65,280

$2,548,411

43

14. Lease Commitments:
Rent for office premises charged to administrative operating and liquidation overhead expenses was $33,570,000
in 1987 and $27,914,000 in 1986. Minimum rentals for each of the next five years and for subsequent years thereafter
are as follows (in thousands):

1988

1989

1990

1991

1992

1993/Thereafter

$27,699

$15,842

$12,922

$11,576

$9,460

$39,592

Most office premise lease agreements provide for increase in basic rentals resulting from increased property taxes
and maintenance expense.

15. Pension Plan and Accrued Annual Leave:
The Corporation's eligible employees are covered by the Civil Service Retirement and Disability Fund. Total Cor­
poration (employer) matching contributions to the Civil Service Retirement and Disability Fund for all eligible employees
were approximately $12,194,000 and $9,662,000 for the calendar years ending December 31,1987 and 1986, respectively.
Although the Corporation funds a portion of pension benefits under the Civil Service Retirement and Disability
Fund relating to its eligible employees and makes the necessary payroll withholdings from them, the Corporation
does not account for the assets of the Civil Service Retirement and Disability Fund nor does it have actuarial data
with respect to accumulated plan benefits or the unfunded liability relative to its eligible employees. These amounts
are reported by the U. S. Office of Personnel Management (OPM) for the Civil Service Retirement and Disability
Fund and are not allocated to the individual employers. The OPM also accounts for all health and life insurance
programs for retired Corporation eligible employees.
The Corporation's liability to employees for accrued annual leave is approximately $13,763,000 and $10,445,000
at December 31, 1987 and 1986, respectively.
16. Commitments and Contingencies:
The Corporation insures total deposits of about $1.7 trillion in over 13,700 insured commercial banks. The Cor­
poration does not estimate the loss for either the potential assistance to insured banks that the regulatory process
has identified as distressed or other insured banks that are financially weak but have not yet been identified by the
regulatory process. Rather, as described in Note 1, Allowance for Loss, the Corporation establishes an allowance
For loss when assistance is granted or a bank is closed. The allowance for loss on the financial statements includes
all banks which were assisted or failed through 1987. The Corporation believes that it is impractical to estimate
losses for future bank failures with any reasonable certainty. The Corporation's entire Deposit Insurance Fund and
borrowing authority are available for any assistance or closing activity.
17. Subsequent Events:
Subsequent to December 31, 1987, the Corporation, in conjunction with the Federal Reserve Board and the Comp­
troller of the Currency, entered into discussions with First RepublicBank Corporation regarding its financial condi­
tion. These discussions may lead to the development of an assistance program which could be significant. However,
the cost of the assistance program cannot be estimated at this time.




GAO




United States
General Accounting Office
Washington, D.C. 20548
Comptroller General
o f the United States

B -1 1 4 8 3 1

To the Board of D ir e c to rs
F ed eral

D e p o s it

In su ra n c e

C o r p o r a tio n

We h a v e e x a m i n e d t h e s t a t e m e n t s o f f i n a n c i a l p o s i t i o n o f
th e F e d e r a l D e p o s it In s u r a n c e C o r p o r a tio n a s o f
D ecem b er 3 1 , 1 9 8 7 and 1 9 8 6 , and t h e r e l a t e d s t a t e m e n t s o f
in c o m e an d t h e d e p o s i t i n s u r a n c e f u n d , an d o f t h e c h a n g e s
in f i n a n c i a l p o s it io n f o r th e y e a r s th e n e n d e d .
Our
e x a m i n a t i o n s w e re m ade i n a c c o r d a n c e w ith g e n e r a l l y
a c c e p te d g o v ern m en t a u d itin g sta n d a rd s a n d , a c c o r d in g ly ,
in c lu d e d s u c h t e s t s o f t h e a c c o u n tin g r e c o r d s and su ch
o t h e r a u d i t i n g p r o c e d u r e s a s we c o n s i d e r e d n e c e s s a r y i n t h e
c ir c u m s ta n c e s .
In a d d itio n t o t h i s r e p o r t on ou r
e x a m in a t io n o f t h e C o r p o r a t i o n 's 1 9 8 7 and 1 9 8 6 f i n a n c i a l
s t a t e m e n t s , we a r e a l s o r e p o r t i n g o n o u r s t u d y a n d
e v a l u a t i o n o f i n t e r n a l a c c o u n tin g c o n t r o l s and c o m p lia n c e
w ith la w s an d r e g u l a t i o n s .
D u r i n g o u r e x a m i n a t i o n , we
i d e n t i f i e d m a tt e r s t h a t do n o t a f f e c t t h e f a i r
p r e s e n ta tio n o f th e f i n a n c i a l s ta te m e n ts , b u t n o n e th e le s s
w a r r a n t m a n a g e m e n t 's a t t e n t i o n .
We a r e r e p o r t i n g th e m
s e p a r a t e ly t o th e C o r p o r a tio n .
S i n c e t h e e a r l y 1 9 8 0 's , t h e c o m m e r c ia l b a n k in g i n d u s t r y 's
p e r f o r m a n c e h a s b e e n a d v e r s e l y a f f e c t e d b y tw o p r i m a r y
fa c to rs .
F i r s t , p r o b le m s i n t h e e n e r g y and a g r i c u l t u r a l
s e c t o r s o f t h e eco n o m y , and t h e i r r e s u l t i n g im p a c t on t h e
r e a l e s ta te s e c to r , have s e v e r e ly a ffe c te d th e
p r o f i t a b i l i t y a n d f i n a n c i a l c o n d i t i o n o f m any U . S . b a n k s ,
e s p e c i a l l y i n t h e S o u th w e s t an d M id w e s t.
In 1 9 8 7 , 2 ,3 6 6 o f
t h e n a t i o n 's 1 3 ,6 5 4 F D I C - in s u r e d c o m m e r c ia l b a n k s w ere
u n p ro fita b le .
A lm o s t t w o - t h i r d s o f t h e u n p r o f i t a b l e b a n k s
w e re l o c a t e d i n t h e S o u th w e s t and M id w e s t.
Secon d ,
c e r t a i n l e s s d e v e lo p e d c o u n t r i e s (L D C s) h a v e b e e n
e x p e r ie n c in g s i g n i f i c a n t d i f f i c u l t y in s e r v ic in g t h e i r d e b t
t o m an y o f t h e l a r g e r c o m m e r c i a l b a n k s .
In 1 9 8 7 , b a n k s
p r o v id e d $ 2 0 . 6 b i l l i o n i n l o a n l o s s r e s e r v e s o n t h e i r m o re
t h a n $ 8 0 b i l l i o n i n LDC l o a n s a n d p l a c e d m a n y o f t h o s e
l o a n s o n n o n a c c r u a l s t a t u s , w h e r e b y i n t e r e s t in c o m e i s n o t
re c o rd e d u n t il paym ent i s r e c e iv e d .
T hese a c tio n s
s i g n i f i c a n t l y lo w e re d b a n k p r o f i t s .
T he i n d u s t r y 's n e t
p r o f i t d e c l i n e d fro m $ 1 7 .5 b i l l i o n i n 1 9 8 6 t o o n ly
$ 3 .7 b i l l i o n in 1 9 8 7 , a r e t u r n on a s s e t s o f o n ly
0 .1 3 p e r c e n t , t h e lo w e s t r e t u r n s in c e 1 9 3 4 .
T h e b a n k in g i n d u s t r y 's p r o b le m s h a v e r e s u l t e d in a
s u b s t a n t i a l i n c r e a s e i n t h e nu m ber o f F D IC -in s u r e d b an k
f a i l u r e s an d p r o b le m b a n k s o v e r t h e l a s t s e v e r a l y e a r s and
a s u b s t a n t i a l d e c r e a s e in t h e C o r p o r a t i o n 's n e t in c o m e .
In
1 9 8 2 , 42 in s u r e d b a n k s f a i l e d o r w ere a s s i s t e d , a t a c o s t
o f a b o u t $ 1 .2 b i l l i o n ; in 1 9 8 7 , 2 0 3 in s u r e d b a n k s f a i l e d o r
w ere a s s i s t e d , a t an e s t im a t e d c o s t o f a b o u t $ 2 .1 b i l l i o n .
A t t h e end o f 1 9 8 7 , 1 ,5 5 9 o f t h e 1 3 ,6 5 4 F D IC -in s u r e d
c o m m e r c ia l b a n k s w e re o n t h e C o r p o r a t i o n 's p ro b le m b an k
l i s t , a 3 7 8 p e r c e n t i n c r e a s e i n t h e n u m ber o f p r o b le m b a n k s
s i n c e t h e end o f 1 9 8 2 .
T h e i n d u s t r y 's p r o b le m s h a v e
c a u se d t h e C o r p o r a tio n t o s u b s t a n t i a l l y in c r e a s e i t s
e x p e n d it u r e s f o r a s s i s t a n c e and r e g u l a t o r y a c t i o n s .
B e tw e e n 1 9 8 0 an d 1 9 8 5 , t h e C o r p o r a t i o n 's n e t in c o m e
e x c e e d e d $1 b i l l i o n e a c h y e a r , b u t , in 1 9 8 6 , n e t in c o m e
d e c lin e d t o l e s s th a n $ 3 0 0 m i l l i o n , and f u r t h e r d e c lin e d t o
l e s s th a n $50 m il l i o n in 1 9 8 7 .
T h e d e p o s i t i n s u r a n c e fu n d
i n c r e a s e d fro m $ 1 1 . 0 b i l l i o n a t t h e en d o f 1 9 8 0 t o a lm o s t
$ 1 8 .0 b i l l i o n a t t h e end o f 1 9 8 5 , and h a s re m a in e d a t a b o u t




t h a t l e v e l th ro u g h 1 9 8 7 .
H o w ev er, t h e r a t i o o f t h e
i n s u r a n c e fu n d t o i n s u r e d d e p o s i t s h a s d e c l i n e d fro m
1 .2 4 p e r c e n t a t t h e en d o f 1 9 8 1 t o 1 .1 0 p e r c e n t a t t h e end
o f 1 9 8 7 , t h e lo w e s t r a t i o in t h e C o r p o r a t i o n 's h i s t o r y , a s
i n s u r e d d e p o s i t s h a v e g ro w n a t a f a s t e r r a t e t h a n t h e
in s u r a n c e fu n d .
A lth o u g h t h e C o r p o r a t io n e x p e c t s t h a t o v e r a l l i n d u s t r y
p r o f i t s w i l l im p ro v e in 1 9 8 8 , i t w i l l n e e d t o c o n t i n u e
p r o v id in g s u b s t a n t i a l f i n a n c i a l a s s is t a n c e t o f i n a n c i a l l y
tr o u b le d b a n k s.
The C o r p o r a tio n e x p e c t s t h e p e r s i s t e n t
p r o b le m s i n t h e e n e r g y and r e a l e s t a t e s e c t o r s o f t h e
e c o n o m y , e s p e c i a l l y i n t h e S o u t h w e s t , t o c o n t in u e and t h e
n u m ber o f in s u r e d b a n k f a i l u r e s t o r e m a in h i g h .
In
a d d i t i o n , c e r t a i n l a r g e U .S . c o m m e rc ia l b a n k s c o n t in u e t o
f a c e p r o b le m s t h a t c o u ld s e r i o u s l y a f f e c t t h e i r f i n a n c i a l
c o n d i t i o n and r e s u l t in s u b s t a n t i a l c o s t s t o t h e d e p o s i t
in s u r a n c e fu n d .
As a r e s u l t o f t h e s e f a c t o r s , th e
C o r p o r a t i o n i s c u r r e n t l y a n t i c i p a t i n g t h a t i t m ay i n c u r a
n e t l o s s in 1 9 8 8 .
F u r th e r , a lth o u g h b a n k s s i g n i f i c a n t l y
i n c r e a s e d LDC l o a n l o s s r e s e r v e s i n 1 9 8 7 , t h e d e b t
s e r v i c i n g p r o b l e m s o f so m e LDC d e b t o r s p r e s e n t a c o n t i n u i n g
and lo n g - t e r m f i n a n c i a l c o n c e r n f o r t h e i n d u s t r y and t h e
in s u r a n c e fu n d .
T h e a c c o m p a n y in g f i n a n c i a l s t a t e m e n t s r e f l e c t t h e e s t i m a t e d
lo s s e s r e la te d to a l l ban k s t h a t have been c lo s e d o r th a t
h a v e e n te r e d i n t o f i n a n c i a l a s s i s t a n c e a g r e e m e n ts w ith t h e
C o r p o r a tio n th r o u g h D ecem b er 3 1 , 1 9 8 7 .
The C o r p o r a tio n
m o n ito r s b a n k s t h a t h a v e m a r g in a l o r d e t e r i o r a t i n g
f i n a n c i a l c o n d i t i o n s and f o l l o w s a p o l i c y o f m in im iz in g t h e
c o s t t o t h e i n s u r a n c e fu n d b y p r o m p tly p r o v id in g a s s i s t a n c e
o r p a r t i c i p a t i n g i n t h e c l o s i n g o f a b a n k w h e n e v e r an
in s u r e d b an k h a s f i n a n c i a l d i f f i c u l t i e s t h a t t h r e a t e n i t s
e x i s t e n c e o r w hen a c t i o n i s n e e d e d t o l i m i t t h e i n s u r a n c e
f u n d 's e x p o s u r e .
A t D ecem b er 3 1 , 1 9 8 7 , t h e C o r p o r a t io n had
$ 1 8 .3 b i l l i o n i n i t s i n s u r a n c e fu n d a v a i l a b l e t o a s s i s t o r
c l o s e m a r g in a l o r d e t e r io r a t in g b a n k s .
S u b se q u e n t to D ecem ber 3 1 , 1 9 8 7 , in a d d itio n t o c lo s in g o r
a s s i s t i n g 4 6 s m a l le r b a n k s , t h e C o r p o r a tio n p ro v id e d
f in a n c ia l a s s is ta n c e to s u b s id ia r y b an k s o f F i r s t
R e p u b lic B a n k C o r p o r a t io n o f D a l l a s , T e x a s , t h r o u g h a
$1 b i l l i o n 6 -m o n th l o a n .
T he C o r p o r a tio n a l s o s t a t e d t h a t
a l l d e p o s i t o r s , i n c l u d i n g t h o s e w ith a c c o u n t s o f m o re t h a n
$ 1 0 0 , 0 0 0 , a n d g e n e r a l c r e d i t o r s w o u ld b e f u l l y p r o t e c t e d .
T he u lt im a t e c o s t t o th e C o r p o r a tio n o f r e s o lv in g F i r s t
R e p u b l i c B a n k 's p r o b le m s i s n o t c u r r e n t l y k n o w n .
V ery
p r e l i m i n a r y e s t i m a t e s o f t h e c o s t r a n g e up t o $ 2 b i l l i o n ,
a lt h o u g h , d e p e n d in g upon t h e s t r u c t u r e o f t h e t r a n s a c t i o n ,
i n i t i a l o u t l a y s m ay b e m u ch g r e a t e r t h a n $ 2 b i l l i o n .
M o re
d e fin it iv e e s tim a te s o f th e c o s t w ill n o t be a v a ila b le fo r
s e v e r a l m o n th s .
In ou r o p in io n , th e f i n a n c i a l s ta te m e n ts r e f e r r e d t o ab o v e
p re s e n t f a i r l y th e f in a n c ia l p o s itio n o f th e F e d e ra l
D e p o s it I n s u r a n c e C o r p o r a t io n a s o f D ecem b er 3 1 , 1 9 8 7 and
1 9 8 6 , and t h e r e s u l t s o f i t s o p e r a t io n s and t h e c h a n g e s in
i t s f i n a n c i a l p o s it io n f o r t h e y e a r s th e n e n d e d , in
c o n fo r m ity w ith g e n e r a lly a c c e p te d a c c o u n tin g p r i n c i p le s
a p p lie d on a c o n s i s t e n t b a s i s .

C h a r le s A. B ow sh er
C o m p tr o lle r G e n e r a l
o f t h e U n ite d S t a t e s
M arch

14,

1988







Statistics

Statistics
Banks Closed Because of Financial Dif­
ficulties: FDIC Income, Disburse­
ments and Losses
The following tables are included in
the 1987 FDIC Annual Report:
— Table 122, Number and Deposits
of Banks Closed Because of
Financial Difficulties, 1934-1987;
— Table 123, Insured Banks Re­
quiring Disbursements by the
Federal Deposit Insurance Cor­
poration During 1987;
— Table 125, Recoveries and Losses
by the Federal Deposit Insurance
Corporation on Disbursements
for Protection of Depositors,
1934-1987;
— Table 127, Income and Expenses,
Federal Deposit Insurance Cor­
poration, by Year, From Begin­
ning of Operations, September
11, 1933 to December 1987; and,
— Table 129, Insured Deposits and
the Deposit Insurance Fund,
1934-1987.

D eposit Insurance Disbursements
Disbursements by the Federal
Deposit Insurance Corporation to pro­
tect depositors are made when the in­




sured deposits of failed banks are paid
off, or when the deposits of a failed
or failing bank are assumed by
another insured bank with the finan­
cial aid of the FDIC. In deposit payoff
cases, the disbursement is the amount
paid by the FDIC on insured deposits.
In the insured deposit transfer, an
alternative to a direct deposit payoff,
the FDIC transfers the failed bank's in­
sured and secured deposits to another
bank while uninsured depositors must
share with the FDIC and other general
creditors of the bank in any proceeds
realized from liquidation of the failed
bank's assets. In certain deposit
payoffs, the FDIC may determine that
an advance of funds to uninsured
depositors and other creditors of a fail­
ed bank is warranted.
In deposit assumption cases, the
principal disbursement is the amount
paid to facilitate a purchase and
assumption transaction with another
insured bank. Additional disburse­
ments are made in those cases as ad­
vances for protection of assets in pro­
cess of liquidation and for liquidation
expenses. In deposit assumption cases,
the FDIC also may purchase assets or
guarantee an insured bank against loss

by reason of its assuming the
liabilities and purchasing the assets
of an open or closed insured bank.
Under its Section 13(c) authority, the
FDIC made a disbursement or ap­
proved other forms of assistance in
1987 for 19 operating banks.

N oninsured Bank Failures
Statistics in this report on failures
of noninsured banks are compiled
from information obtained from state
banking departments, field super­
visory officials and other sources.
The FDIC received no official reports
of noninsured bank closings due to
financial difficulties in 1987. For
detailed data regarding noninsured
banks that were suspended in the
years 1934-1962, see the 1962 FDIC
Annual Report, pages 27-41. For
1963-1987, see Table 122 of this
report and previous reports for
respective years.

Sources o f Data
Insured banks: books of specific
banks at date of closing and books
of the FDIC, December 31, 1987.

49

Table 122.

N U M B E R A N D D EPO SITS O F B A N K S C L O S E D BECAUSE O F F IN A N C IA L D IFFIC U LTIES , 1 9 3 4 -1 9 8 7
Number

Deposits (in thousands o f dollars)
Insured

Year
NonInsured1

Total

Total

1,333

136

1,197

1934
1935
1936
1937
1938
1939
1940
1941
1942
1943
1944
1945
1946
1947
1948
1949
1950
1951
1952
1953
1954
1955
1956
1957
1958
1959
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
19856
19867
19877

61
32
72
84
81
72
48
17
23
5
2
1
2
6
3
9
5
5
4
5
4
5
3
3
9
3
2
9
3
2
8
9
8
4
3
9
8
6
3
6
4
14
17
6
7
10
10
10
42
48
79
120
138
184

52
6
3
7
7
12
5
2
3

9
26
69
77
74
60
43
15
20
5
2
1
1
5
3
5
4
2
3
4
2
5
2
2
4
3
1
5
1
2
7
5
7
4
3
9
7
6
1
6
4
13
16
6
7
10
10
10
42
48
79
120
138
184

"f
1
" a
1
3
1
1
2
"l
1
5
” i
4
2
" i
4
1

" i

8

Assets4

Insured

With
Without
disbursements disbursements
by FDIC2
by FDIC3

Total Total

NonInsured1

Total

1,189

49,280,025

143,501

49,136,524

9
25
69
75
74
60
43
15
20
5
2
1
1
5
3
4
4
2
3
2
2
5
2
1
4
3
1
5

37,333
13,988
28,100
34,205
60,722
160,211
142,788
29,796
19,540
12,525
1,915
5,695
494
7,207
10,674
9,217
5,555
6,464
3,313
45,101
2,948
11,953
11,690
12,502
10,413
2,593
7,965
10,611
4,231
23,444
23,867
45,256
106,171
10,878
22,524
40,134
55,229
132,058
99,784
971,296
1,575,832
340,574
865,659
205,208
854,154
110,696
216,300
3,826,022
9,908,379
5,441,608
2,883,162
8,059,441
6,471,100
6,281,500

35,365
583
592
528
1,038
2,439
358
79
355

1,968
13,405
27,508
33,677
59,684
157,722
142,430
29,717
19,185
12,525
1,915
5,695
347
7,040
10,674
6,665
5,513
3,408
3,170
44,711
998
11,953
11,330
11,247
8,240
2,593
6,930
8,936
3,011
23,444
23,438
43,861
103,523
10,878
22,524
40,134
54,806
132,058
20,480
971,296
1,575,832
339,574
864,859
205,208
854,154
110,696
216,300
3,826,022
9,908,379
5,441,608
2,883,162
8,059,441
6,471,100
6,281,500

"2
7
5
7
4
3
9
7
6
1
6
4
13
16
6
7
10
10
10
42
48
79
120
138
184

147
167
2,552
42
3,056
143
390
1,950
360
1,255
2,173
1,035
1,675
1,220
429
1,395
2,648

423
79,304

1,000
800

Without
With
disbursements disbursements
by FDIC2
by FDIC3
41,147

85
328

1,190

26,449

10,084

(in
Thousands
Dollars)

49,095,377

58,850,328

1,968
13,320
27,508
33,349
59,684
157,772
142,430
29,717
19,185
12,525
1,915
5,695
347
7,040
10,674
5,475
5,513
3,408
3,170
18,262
998
11,953
11,330
1,163
8,240
2,593
6,930
8,936

2,661
17,242
31,941
40,370
69,513
181,514
161,898
34,804
22,254
14,058
2,098
6,392
351
6,798
10,360
4,886
4,005
3,050
2,388
18,811
1,138
11,985
12,914
1,253
8,905
2,858
7,506
9,820

23,444
23,438
43,861
103,523
10,878
22,524
40,134
54,806
132,058
20,480
971,296
1,575,832
339,574
864,859
205,208
854,154
110,696
216,300
3,826,022
9,908,379
5,441,608
2,883,162
8,059,441
6,471,100
6,281,500

26,179
25,849
58,750
120,647
11,993
25,154
43,572
62,147
196,520
22,054
1,309,675
3,822,596
419,950
1,039,293
232,612
994,035
132,988
236,164
4,859,060
11,632,415
7,026,923
3,276,411
8,741,268
6,991,600
6,850,700

3 ,o i f

5

'F o r inform ation re garding each o f these banks, see table 22 in the 1963 A nn ual R eport(] 963 and p rio r years), and explanatory notes to tables regarding banks closed because o f financial
difficulties in subsequent annual reports. O ne noninsured bank placed in receivership in 1934, with no deposits at tim e o f closing, is om itted (see table 22 note 9). Deposits are unavailable
fo r seven banks.
2For inform ation regarding these cases, see table 23 o f the A n n u a l R eport fo r 1963.
3For inform ation regarding each bank, see the A n n u a l R eport fo r 1958, pp. 48-83 and pp. 98-127, and tables re garding deposit insurance disbursements in subsequent annual reports.
Deposits are adjusted as o f Decem ber 31,1982.
4lnsured banks only.
5N ot available.
‘ Includes data fo r one bank granted fin ancial assistance although no disbursement was required until January, 1986.
7Exdudes data fo r banks granted financial assistance under Section 13(c)(1) o f the Federal Deposit Insurance Act to prevent failu re. Data fo r these banks are included in table 123.




50

INSURED BAN KS R E Q U IR IN G DISBURSEM ENTS BY THE FEDERAL DEPOSIT IN S U R A N C E C O R P O R A T IO N
D U R IN G 1987

Table 123.

NAME A N D LO C ATIO N

Class
o f Bank

N um ber of
Depositors
or Accounts

Total
Assets
(SOOO's)

Total
Deposits
(SOOO's)

FDIC
Disburse­
ments
(SOOO's)

Date o f Closing,
Deposit Assumption,
M erger, o r Assistance

Receiver, Assuming Bank,
Transferee Bank, or
M erging Bank and Location

Insured Deposit Payoffs

NM

1,700

5,700

5,500

5,451

January 29,1987

Federal Deposit Insurance C orporation

Sunbelt N ational Bank*
Dallas, Texas

N

3,500

11,200

11,100

13,609

February 5 ,19 87

Federal Deposit Insurance C orporation

Security N ational Bank
M id la nd, Texas

N

2,400

7,800

7,700

7,143

February 12,1987

Federal Deposit Insurance C orporation

Federated N ational Bank
Live O ak, Texas

N

1,400

13,400

11,400

10,102

February 12,1987

Federal Deposit Insurance C orporation

The First N ational Bank o f W eslaco
W eslaco, Texas

N

13,000

69,500

69,200

64,488

February 20 ,1 987

Federal Deposit Insurance C orporation

Plaza N ational Bank
Del Rio, Texas

N

2,500

34,800

30,400

34,128

M arch 12,1987

Federal Deposit Insurance C orporation

NM

1,500

6,200

6,600

6,344

A p ril 16,1987

Federal Deposit Insurance C orporation

Empire N ational Bank
Los Angeles, C alifo rnia

N

700

9,200

7,600

8,479

July 30 ,1 987

Federal Deposit Insurance C orporation

Central N ational Bank o f N ew York
N ew York, N ew York

N

13,400

178,800

170,000

119,900

September 11,1987

Federal Deposit Insurance C orporation

First State Bank o f Pattonsburg
Pattonsburg, M issouri

First State Bank o f Forest City
Forest City, M issouri

The Timken State Bank
Timken, Kansas

NM

600

3,300

3,300

2,861

N ovem ber 19,1987

Federal Deposit Insurance C orporation

The A lexander State Bank
Alexander, Kansas

NM

1,300

8,400

8,600

8,167

N ovem ber 19,1987

Federal Deposit Insurance C orporation

'Dividend advanced by FD
IC




51

INSURED BAN KS R E Q U IR IN G DISBURSEMENTS BY THE FEDERAL DEPOSIT IN S U R A N C E C O R P O R A T IO N
D U R IN G 1987

Table 123.

NAM E A N D LO C ATIO N

Class
o f Bank

N um ber o f
Depositors
or Accounts

Total
Assets
(SOOO's)

Total
Deposits
(SOOO's)

FDIC
Disburse­
ments
(SOOO's)

Date o f Closing,
Deposit Assumption,
M erger, or Assistance

Receiver, Assuming Bank,
Transferee Bank, or
M erging Bank and Location

Insured Deposit Transfers

Am erican N ational Bank o f G rand
Junction
G rand Junction, C olorado

N

1,300

7,400

7,100

6,786

January 8,19 87

Intrawest Bank o f G rand Junction, G rand
Junction, C olorado

N ational Bank o f Frederick
Frederick, O klahom a

N

3,500

24,800

23,300

21,262

January 22 ,1987

First N ational Bank and Trust Company,
Frederick, O klahom a

The First N ational Bank o f M a rlb o ro
M arlb oro ugh, Massachusetts

N

13,000

55,600

47,200

44,890

January 23, 1987

W orcester County Institution fo r Savings,
W orcester, Massachusetts

NM

4,400

23,300

23,000

31,709

January 23,1987

Security Pacific N ational Bank,
Los Angeles, C alifo rnia

First Sierra Bank’
Bishop, C alifo rnia
M arket N ational Bank
Denver, C olorado

N

800

9,000

8,900

8,743

February 5, 1987

W om en's Bank, N, A., Denver, C olorado

First N ational Bank in West C oncord
West Concord, M innesota

N

2,100

9,100

8,800

8,483

M arch 5, 1987

Farmers State Bank, West Concord,
Minnesota

Beaver Creek State Bank
Beaver Creek, M innesota

NM

1,900

7,300

7,300

6,626

M arch 13,1987

Citizens State Bank o f Silver Lake, Silver
Lake, M innesota

The Citizens State Bank
Brownstown, Indiana

NM

7,200

30,800

28,100

27,007

A p ril 10,1987

M onroe County Bank, Bloom ington,
Indiana

N

1,900

23,300

22,200

21,307

A pril 23, 1987

G re ater Texas Bank N orth, N ational
Association, Austin, Texas

Heritage Bank & Trust
Salt L a le County, Utah

SM

4,000

17,600

16,000

5,934

A p ril 29, 1987

First Interstate Bank o f Utah, N. A., Salt
Lake City, Utah

Unitedbank-Houston
Houston, Texas

NM

13,400

217,900

161,100

179,340

A p ril 30, 1987

Am erican Bank, Houston, Texas

N

2,800

10,300

8,900

7,392

M ay 7,19 87

FirstBank o f C olorado, N. A., Littleton,
C olorado

NM

2,300

11,800

11,600

10,952

M ay 8, 1987

Ramsey N ational Bank & Trust Company,
Devils Lake, N orth Dakota

Texas Investment Bank, N ational
Association
Houston, Texas

N

1,200

15,100

13,400

12,198

M ay 21 ,1987

River O aks Bank, Houston, Texas

Texas N ational Bank-W estheimer
Houston, Texas

N

1,200

27,500

26,700

26,392

M ay 28, 1987

Texas C apital Bank-W estwood, N ational
Association, Houston, Texas

First N ational Bank o f W ilm ont
W ilm ont, M innesota

N

2,500

14,900

11,600

10,937

M ay 29, 1987

Farmers State Bank o f M ountain Lake,
M ountain Lake, M innesota

United Bank o f Texas
Austin, Texas

NM

16,800

202,100

163,100

155,828

June 4, 1987

M Bank Austin, N ational Association,
Austin, Texas

Bank o f G ranite
G ranite, O klahom a

NM

1,800

13,900

12,700

12,012

July 30, 1987

Farmers and M erchants Bank, M aysville,
O klahom a

N

7,800

37,800

38,500

36,222

July 30,1987

Bank o f O klah om a, N ational Association,
Tulsa, O klahom a

Bayshore Bank o f Florida
M iam i, Florida

SM

5,100

40,400

35,900

37,078

August 7,19 87

Eagle N ational Bank o f M iam i, M iam i,
Florida

First State Bank
Blanchard, O klahom a

NM

4,500

23,200

21,400

20,666

August 13,1987

First State Bank, Hinton, O klah om a

The First State Bank
W illow , O klahom a

NM

900

6,100

5,500

5,441

August 2 0 ,1 987

The G uarantee State Bank, M angum ,
O klahom a

North Central N ational Bank
Austin, Texas

North Am erican N ational Bank
Littleton, C olorado
Farmers State Bank
M addock, North Dakota

The First N ational Bank o f Yukon
Yukon, O klahom a

‘D
ividend advanced by FD
IC




52

INSURED B AN KS R E Q U IR IN G DISBURSEMENTS BY THE FEDERAL DEPOSIT IN S U R A N C E C O R P O R A T IO N
D U R IN G 1987

Table 123.

NAM E A N D LO C ATIO N

Class
o f Bank

N um ber o f
Depositors
o r Accounts

Total
Assets
(SOOO's)

Total
Deposits
(SOOO's)

FDIC
Disburse­
ments
(SOOO's)

Date o f Closing,
Deposit Assumption,
M erger, o r Assistance

Receiver, Assuming Bank,
Transferee Bank, or
M erging Bank and Location

N

1,800

8,500

8,300

6,373

August 20 ,1987

Pioneer Bank o f Evanston, Evanston,
W yom ing

People's State Bank o f M azeppa
M azeppa, M innesota

NM

2,900

16,500

15,300

21,900

August 21 ,1987

The First State Bank o f Red W ing, Red
W ing, M innesota

Bank o f N orth Am erica
Houston, Texas

NM

5,100

33,300

30,000

26,652

August 27, 1987

Texas Com m erce Bank, N ational
Association, Houston, Texas

A m erican N ational Bank o f Evanston
Evanston, W yom ing

The First N ational Bank o f Hammon
Ham m on, O klahom a

N

800

6,000

5,500

5,301

September 3,19 87

Am erican N ational Bank, Elk City,
O klahom a

The First N ational Bank o f Tipton
Tipton, O klahom a

N

1,400

8,200

7,100

6,563

September 3,19 87

The First N ational Bank in Altus, Altus,
O klahom a

Stockmen's Bank and Trust C om pany
G illette, W yom ing

SM

16,500

127,500

96,700

105,338

September 18,1987

First Interstate Bank o f G illette, G illette,
W yom ing

The M ayfield State Bank
M ayfield, Kansas

NM

1,100

19,000

20,300

20,319

September 24 ,1987

First N ational Bank in H arper, H arper,
Kansas

The M urdock State Bank
M urdock, Kansas

NM

1,300

20,700

22,100

21,614

September 24 ,1987

Farmers State Bank o f N orw ich, N orw ich,
Kansas

W estern Bank-W estheimer
Houston, Texas

NM

14,500

290,900

259,900

204,180

O ctober 1,1987

C harter N ational Bank-Houston, Houston,
Texas

State Bank o f G reenw ald
G reenw ald, M innesota

NM

4,900

18,700

18,900

18,403

O ctober 2,19 87

Rural Am erican Bank o f G reenw ald,
G reenw ald, M innesota, a new statechartered bank

Citizens Bank o f Krebs
Krebs, O klahom a

NM

1,300

14,200

13,200

11,698

O ctob er 8,19 87

First N ational Bank & Trust Com pany of
M cAlester, M cAlester, O klahom a

United Services Bank
Hartshorne, O klahom a

NM

2,100

15,200

13,500

11,606

O ctob er 8 ,19 87

First N ational Bank & Trust C om pany o f
M cAlester, M cAlester, O klahom a

N

2,600

10,600

9,900

7,869

O ctob er 15,1987

Star Valley State Bank, Afton, W yom ing

NM

32,000

521,700

474,800

451,426

O ctob er 16, 1987

The Boston Five Cents Savings Bank, FSB,
Boston, Massachusetts

W estern N ational Bank
Bryan, Texas

N

6,000

19,500

15,400

19,779

O ctob er 22, 1987

First State Bank in C aldw ell, C aldw ell,
Texas

Alaska N ational Bank o f the North
Fairbanks, Alaska

N

21,000

214,900

201,300

153,622

O ctob er 22, 1987

N ational Bank o f A laska, Anchorage,
Alaska

Tri-State N ational Bank
Belle Fourche, South Dakota

N

4,300

11,000

10,800

10,536

N ovem ber 10, 1987

The First W estern Bank, Sturgis, South
D akota

First State Bank at Shoshoni
Shoshoni, W yom ing

SM

800

5,100

4,100

2,732

Decem ber 18,1987

First State Bank o f Therm opolis,
Therm opolis, W yom ing

Am erican N ational Bank o f Afton
Afton, W yom ing
Yankee Bank fo r Finance & Savings,
FSB
Boston, Massachusetts

'Dividend advanced by FD
IC




53

INSURED BAN KS R E Q U IR IN G DISBURSEM ENTS BY THE FEDERAL DEPOSIT IN S U R A N C E C O R P O R A T IO N
D U R IN G 1987

Table 123.

NAME A N D LO C ATIO N

Class
o f Bank

N um ber o f
Depositors
or Accounts

Total
Assets
(SOOO's)

Total
Deposits
(SOOO's)

FDIC
Disburse­
ments
(SOOO's)

Date o f Closing,
Deposit Assumption,
M erger, o r Assistance

Receiver, Assuming Bank,
Transferee Bank, or
M erging Bank and Location

D eposit Assumptions

Bowie N ational Bank
Bowie, Texas

N

2,900

12,600

12,600

1,933

January 8,19 87

Bowie State Bank, Bowie, Texas, a newlychartered subsidiary o f M ontague
Bancshares, Inc., W eatherford, Texas

The Security N ational Bank and Trust
Com pany o f Norm an
N orm an, O klahom a

N

31,000

204,500

174,400

161,658

January 8,1987

A newly-chartered national bank o f the
same name, jointly owned by First
Com m ercial C orporation, Little Rock,
Arkansas, and N orthwest Arkansas
Bancshares, Inc., Bentonville, Arkansas.

State Bank o f Cuba
Cuba, Illinois

NM

3,800

17,500

17,600

7,871

January 9,19 87

N ational Bank o f Canton, Canton, Illinois

Latimer Bank & Trust
Latimer, Iowa

NM

3,400

23,000

21,900

10,707

January 15,1987

The First N ational Bank o f C larion, Clarion,
Iowa

N

3,000

12,900

12,500

5,916

January 15,1987

First N ational Bank o f M aysville, M aysville,
O klahom a

SM

1,900

9,500

9,000

6,336

January 15,1987

Century Bank and Trust, Denver, C olorado

N

2,500

14,800

13,800

8,601

January 15,1987

Am erican Exchange Bank, C ollinsville,
O klahom a

Peoples Bank & Trust Com pany
H oldenville, O klahom a

NM

2,700

20,200

19,300

13,738

January 29, 1987

The Bank, N. A., M cAlester, O klahom a

The Farmers N ational Bank o f
Remington
Remington, Indiana

N

5,500

34,600

33,600

18,496

January 29 ,1 987

Lafayette N ational Bank, Lafayette,
Indiana

Bear Creek N ational Bank
Bear Creek, Texas

N

5,500

26,200

25,600

13,570

January 29 ,1 987

Jersey V illag e Bank, Houston, Texas

M ontgom ery County Bank, N. A.
The W oodlands, Texas

N

9,700

45,400

44,300

39,420

January 29 ,1 987

Texas Com m erce Bank, N ational
Association, Houston, Texas

The La Pryor State Bank
La Pryor, Texas

NM

1,400

5,400

5,000

2,712

January 29 ,1987

Zavala County Bank, Crystal City, Texas

Boulevard State Bank
W ichita, Kansas

NM

19,800

99,000

84,900

46,795

February 5 ,1 9 8 7

Union Boulevard N ational Bank, W ichita,
Kansas, a newly-chartered subsidiary of
Union Bancshares, Inc., W ichita, Kansas

State Bank o f Allison
Allison, Iowa

NM

5,200

17,400

16,700

5,988

February 5, 1987

Lincoln Savings Bank, Reinbeck, Iowa

Community Bank
Seiling, O klahom a

NM

800

5,600

5,400

4,076

February 11, 1987

First N ational Bank o f Seiling, Seiling,
O klahom a

First City Bank o f Atoka
A toka, O klahom a

NM

3,100

12,700

12,400

4,668

February 12, 1987

The A toka State Bank, A toka, O klahom a

First State Bank o f King City, M issouri
King City, M issouri

NM

2,700

13,500

13,800

11,105

February 13, 1987

Citizens Bank & Trust Com pany,
C hillicothe, M issouri

The County Bank
M anatee County, Florida

NM

10,500

163,900

163,200

120,729

February 13, 1987

NCNB N ational Bank o f Florida, Tam pa,
Florida

First State Bank o f Atm ore
Atm ore, Alabam a

NM

3,300

11,500

11,400

6,417

February 19,1987

The First N ational Bank o f Atm ore, Atm ore,
Alabam a

Hub City Bank and Trust Com pany
Lafayette, Louisiana

NM

8,400

36,400

37,500

23,072

February 20, 1987

The H ibernia N ational Bank, N ew O rleans,
Louisiana

The First N ational Bank o f Rush Springs
Rush Springs, O klahom a
First Charter Bank
Denver, C olorado
The First N ational Bank o f S kiatook
Skiatook, O klahom a




54

INSURED BAN KS R E Q U IR IN G DISBURSEMENTS BY THE FEDERAL DEPOSIT IN S U R A N C E C O R P O R A T IO N
D U R IN G 1987

Table 123.

NAME A N D LO C ATIO N

Class
o f Bank

N um ber of
Depositors
or Accounts

Total
Assets
(SOOO's)

Total
Deposits
(SOOO's)

FDIC
Disburse­
ments
(SOOO's)

Date o f Closing,
Deposit Assumption,
M erger, o r Assistance

Receiver, Assuming Bank,
Transferee Bank, or
M erging Bank and Location

NM

1,800

9,600

9,000

5,123

February 26, 1987

H ale County State Bank, Plainview, Texas

N

1,900

8,200

8,100

5,731

February 26, 1987

A new ly-chartered subsidiary o f Central
Bancshares o f the South, Inc., Birm ingham ,
A labam a, having the same name as the
fa ile d bank.

The Lewistown Bank
Lewistown, Illinois

NM

2,500

14,400

14,000

8,354

February 27,1987

The N ational Bank o f Canton, Canton,
Illinois

The First State Bank
Rockford, Iowa

NM

3,300

15,100

14,600

6,328

M arch 4 ,19 87

First Security Bank & Trust Com pany,
Charles City, Iowa

Liberty Bank
Houston, Texas

NM

7,000

59,900

50,500

44,165

M arch 5, 1987

Central Bank o f Houston, Houston, Texas

Sealy N ational Bank
Sealy, Texas

N

1,100

8,000

7,800

4,679

M arch 5, 1987

Austin County State Bank, B ellville, Texas

First N ational Bank o f Sapulpa
Sapulpa, O klahom a

N

1,400

7,600

7,500

4,680

M arch 5,19 87

Am erican N ational Bank and Trust
Com pany, Sapulpa, O klahom a

The First N ational Bank o f O lney
O lney, Texas

N

2,700

15,000

13,400

6,098

M arch 12,1987

First N ational Bank o f O lney, a newlychartered subsidiary o f O lney Bancshares,
Inc., O lney, Texas

Western Bank
El Paso, Texas

NM

4,900

39,700

39,000

33,113

M arch 12,1987

M Bank El Paso, N ational Association, El
Paso, Texas

Expressway Bank
O klahom a City, O klahom a

SM

2,400

20,600

17,600

14,438

M arch 12,1987

First Interstate Bank o f O klah om a, N. A.,
O klahom a City, O klah om a

United O klah om a Bank
O klahom a City, O klahom a

SM

13,000

148,900

94,100

123,340

M arch 17,1987

United Bank o f O klah om a, a newlychartered subsidiary o f United Bank
Shares, Inc., O klah om a City, O klahom a

N

4,700

22,600

22,500

12,403

M arch 19,1987

State Bank o f DeKalb, D eKalb, Texas

NM

4,800

17,700

17,600

10,355

M arch 19,1987

The First State Bank o f Louise, Louise, Texas

N

1,500

8,200

7,800

2,741

M arch 19,1987

Yellow stone Bank, Laurel, M ontana

The M a d ill Bank and Trust Com pany
M a d ill, O klahom a

NM

7,200

37,000

36,800

23,168

M arch 20 ,1 987

First Am erican N ational Bank, Tishom ingo,
O klahom a

M orocco State Bank
M orocco, Indiana

NM

2,700

15,000

14,100

5,483

M arch 20 ,1 987

DeM otte State Bank, DeM otte, Indiana

New City Bank
O range, C alifo rnia

SM

2,300

20,900

20,300

13,352

M arch 20 ,1 987

C olonial Bank, N ational Association,
O range, C alifo rnia, a newly-chartered
national bank

The First State Bank in Billings
Billings, O klahom a

NM

1,800

10,100

9,400

4,392

M arch 26 ,1 987

First N ational Bank and Trust Com pany,
Perry, O klah om a, o f Perry, O klahom a

Tallulah State Bank & Trust Com pany
Tallulah, Louisiana

NM

4,400

28,600

30,200

17,891

M arch 27 ,1 987

Bank o f St. Joseph, St. Joseph, Louisiana

The First N ational Bank o f Herington
Herington, Kansas

N

4,400

21,500

19,900

9,288

A p ril 2, 1987

The Bank o f H erington, H erington, Kansas

The Southwestern Bank, N ational
Association
Houston, Texas

N

800

14,800

14,300

12,089

A p ril 9,19 87

O M N IB A N C North Belt, N ational
A ssociation, Houston, Texas

Farmers State Bank
Hart, Texas
First N ational Bank o f Crosby
Crosby, Texas

Red River N ational Bank in C larksville
C larksville, Texas
Sweeney Bank
Sweeney, Texas
C larks Fork N ational Bank
From berg, M ontana




55

INSURED BAN KS R E Q U IR IN G DISBURSEM ENTS BY THE FEDERAL DEPOSIT IN S U R A N C E C O R P O R A T IO N
D U R IN G 1987

Table 123.

NAM E A N D LO C ATIO N

Class
o f Bank

N um ber of
Depositors
or Accounts

Total
Assets
(SOOO's)

Total
Deposits
(SOOO's)

FDIC
Disburse­
ments
(SOOO's)

Date o f Closing,
Deposit Assumption,
M erger, o r Assistance

Receiver, Assuming Bank,
Transferee Bank, or
M erging Bank and Location

N

1,800

12,300

11,900

7,546

A p ril 9, 1987

Com m unity Bank, Shidler, O klahom a

Com m onwealth Bank
G lendale, C olorado

NM

1,200

6,200

5,900

3,118

A p ril 9, 1987

Prudential Bank, Denver, C olorado

Deer Lodge Bank and Trust C om pany
Deer Lodge, M ontana

NM

3,800

14,800

13,600

3,375

A p ril 9, 1987

Peoples Bank o f Deer Lodge, N. A., Deer
Lodge, M ontana, a newly-chartered
subsidiary o f Sandquist C orporation,
Bozeman, M ontana

Bank o f Iron County
Parowan, Utah

NM

6,300

20,100

19,900

3,819

A p ril 10,1987

D ixie State Bank, St. G eorge, Utah

First Bank o f Saginaw
Saginaw, Texas

NM

6,400

30,700

30,000

17,537

A p ril 16, 1987

Southwest Bank, Fort W orth, Texas

800

4,600

4,700

3,663

A p ril 16,1987

O M N IB A N C N orth Belt, N ational
Association, Houston, Texas

First N ational Bank o f Braman
Braman, O klahom a

First Com m ercial Bank o f Texas,
N ational Association
Houston, Texas

N

The Bank o f North M ississippi
O akla nd, M ississippi

NM

4,800

14,600

13,700

4,786

A p ril 22, 1987

Bank o f M ississippi, Tupelo, M ississippi

The Peoples Bank
C ollinsville, Alabam a

NM

3,300

12,900

12,000

3,091

A p ril 22 ,1 987

Bank o f G eraldine, G eraldine, Alabam a

O sceola State Bank & Trust Com pany
O sceola, Iowa

NM

2,200

9,500

8,400

4,689

A p ril 23, 1987

Am erican State Bank, O sceola, Iowa, a
new ly-chartered subsidiary o f Osceola
Bancorporation, O sceola, Iowa

Peoples State Bank
Turkey, Texas

NM

1,200

6,000

5,900

3,219

A p ril 30, 1987

M em phis State Bank, M em phis, Texas

Am erican Bank o f Commerce
Denver, C olorado

SM

1,900

25,300

22,200

18,674

M ay 6, 1987

The Professional Bank o f C olorado,
Englewood, C olorado

First State Bank o f Sisseton
Sisseton, South D akota

NM

4,100

21,200

19,700

10,999

M ay 7, 1987

Farmers & M erchants Bank and Trust Co.,
A berdeen, South D akota

M oreauville State Bank
M oreauville, Louisiana

NM

4,600

16,800

16,900

3,237

M ay 8,1987

M ansura State Bank, M ansura, Louisiana

N

7,600

44,300

42,500

29,718

M ay 14, 1987

Bank o f Longview, N. A., Longview, Texas

Todd County State Bank
Long Prairie, M innesota

NM

4,600

14,300

14,100

6,264

M ay 14, 1987

First N ational Bank o f Long Prairie, Long
Prairie, M innesota

United Bank
Libby, M ontana

SM

4,900

15,800

14,500

4,757

M ay 14, 1987

First N ational Bank in Libby, Libby,
M ontana

N

2,800

17,500

16,200

15,234

M ay 14, 1987

First N ational Bank o f Fergus Falls, Fergus
Falls, M innesota

NM

4,800

23,300

22,900

12,609

M ay 21, 1987

West C arroll N ational Bank o f O a k G rove,
O a k G rove, Louisiana

N

4,300

42,500

37,000

28,113

M ay 21, 1987

G re ater Texas Bank Southwest, N. A.,
Austin, Texas

The First State Bank
Frisco, Texas

NM

5,900

40,100

39,300

23,172

June 4, 1987

Promenade N ational Bank, Richardson,
Texas

The Benton State Bank
Benton, Kansas

NM

2,100

9,100

8,400

5,575

June 11,1987

First N ational Bank & Trust Com pany, El
D orado, Kansas

First State Bank
M ilfo rd , Texas

NM

1,400

6,600

6,400

2,436

June 11,1987

Ellis County State Bank, M ilfo rd , Texas, a
newly-chartered state nonm em ber bank.

M a rlin N ational Bank
M arlin, Texas

The First N ational Bank o f Elbow Lake
Elbow Lake, M innesota
Bank o f O a k G rove
O a k G rove, Louisiana
Lake Austin N ational Bank
Austin, Texas




56

INSURED BAN KS R E Q U IR IN G DISBURSEMENTS BY THE FEDERAL DEPOSIT IN S U R A N C E C O R P O R A T IO N
D U R IN G 1987

Table 123.

NAME A N D LO C ATIO N

Class
o f Bank

N um ber o f
Depositors
o r Accounts

Total
Assets
(SOOO's)

Total
Deposits
(SOOO's)

FDIC
Disburse­
ments
(SOOO's)

Date o f Closing,
Deposit Assumption,
M erger, o r Assistance

Receiver, Assuming Bank,
Transferee Bank, or
M erging Bank and Location

N

1,600

12,100

12,100

4,347

June 11,1987

Jersey V illa g e Bank, Houston, Texas

W hittier Thrift and Loan
W hittier, C alifo rnia

NM

2,100

15,500

14,800

3,151

June 12,1987

Liberty Thrift and Loan, a newly-chartered
subsidiary o f Investors Bancor, O range,
C alifornia

H am ilton County State Bank
Lockland, O h io

NM

2,600

8,700

7,300

1,939

June 12,1987

The Provident Bank, C incinnati, O hio

First M idw est Bank
M aryville, M issouri

NM

7,200

25,200

25,100

3,011

June 18,1987

First Bank o f M aryville , M aryville,
M issouri, a newly-chartered subsidiary of
Citizens Bancshares Co., C hillicothe,
M issouri

Pelican State Bank
M ansfield, Louisiana

NM

1,700

6,900

6,800

4,057

June 24, 1987

Peoples State Bank, M any, Louisiana

Eighty N iner Bank o f Coyle
Coyle, O klahom a

NM

1,200

5,900

5,400

3,827

June 25 ,1987

O klahom a State Bank o f M u lhall, M ulhall,
O klahom a

South Denver N ational Bonk
G lendale, C olorado

N

7,500

54,400

47,700

40,111

June 25, 1987

First N ational Bank o f Southeast Denver,
Denver, C olorado

Liberty Bank & Trust C om pany
G reenw ood, Louisiana

NM

3,000

11,800

11,500

10,013

June 26, 1987

Peoples State Bank, M any, Louisiana

Lanesboro State Bank
Lanesboro, M innesota

NM

3,200

11,000

10,700

5,337

June 26, 1987

The G oodhue County N ational Bank of Red
W ing, Red W ing, M innesota

Bank o f Brazoria
B razoria, Texas

NM

4,300

25,200

24,200

11,127

July 2,19 87

M oulton State Bank, M oulton, Texas

Citizens Bank
Bryan, Texas

NM

9,600

39,100

36,300

30,450

July 2,19 87

UnitedBank-C ollege Station, N ational
Association, C ollege Station, Texas

Red O a k State Bank
Red O a k , Texas

NM

8,300

40,500

37,700

11,303

July 9,19 87

The Red O a k State Bank, a newlychartered subsidiary o f ROSB Bancorp,
Inc., Red O a k , Texas

N

1,000

7,600

5,700

3,795

July 9,19 87

V alley Bank, Security, C olorado

NM

3,100

14,400

13,800

10,574

July 23 ,1987

Citizens N ational Bank & Trust o f
M uskogee, M uskogee, O klahom a

N

11,600

11,400

11,300

6,853

July 23,1987

Bank o f the West, San Francisco, C alifornia

Farmers State Bank
Kanawha, Iowa

NM

2,900

15,400

14,300

14,789

July 30,1987

The First N ational Bank o f C larion, C larion,
Iowa

Security State Bank
Roosevelt, O klahom a

NM

4,000

18,100

16,100

16,837

August 6,19 87

First N ational Bank in Altus, Altus,
O klahom a

The Security State Bank
Davenport, O klahom a

NM

1,900

9,200

8,600

7,517

August 6,19 87

First State Bank, H arrah, O klahom a

The First N ational Bank o f Luther
Luther, O klahom a

N

2,700

17,800

17,600

15,766

August 13,1987

First W agon er Bank and Trust Com pany,
W agoner, O klahom a

The First N ational Bank o f Navasota
N avasota, Texas

N

4,200

30,800

28,200

25,877

August 13,1987

First Bank, Navasota, Texas, a newlychartered subsidiary o f Am erican C apital
C orporation, Centerville, Texas

NM

7,800

50,000

49,900

31,597

August 14, 1987

Barnett Bank o f Pinellas County, St.
Petersburg, Florida

N orthwest Com m ercial Bank, N . A.
Houston, Texas

First Continental Bank o f Rockrimmon,
N ational Association
C olorado Springs, C olorado
Farmers & M erchants Bank
Eufaula, O klahom a
Bank o f Los G atos, N ational
Association
Los G atos, C alifo rnia

M cN ulty Bonking Company
St. Petersburg, Florida




57

INSURED BAN KS R E Q U IR IN G DISBURSEMENTS BY THE FEDERAL DEPOSIT IN S U R A N C E C O R P O R A T IO N
D U R IN G 1987

Table 123.

Class
o f Bank

N um ber of
Depositors
o r Accounts

Total
Assets
(SOOO's)

Total
Deposits
(SOOO's)

FDIC
Disburse­
ments
(SOOO's)

NM

17,000

98,400

94,800

71,170

August 20 ,1 987

Bank o f O klah om a, N ational Association,
Tulsa, O klahom a

Citizens Bank o f G lendale
Denver, C olorado

SM

1,200

3,700

3,100

3,091

August 27,1987

Prudential Bank, Denver, C olorado

Rocky M ountain State Bank
Salt Lake City, Utah

SM

7,000

17,600

16,300

5,397

August 28 ,1 987

C itibank (Utah), Salt Lake City, Utah

La M arque Bank
La M arque, Texas

NM

1,800

5,600

6,100

3,881

September 10,1987

The First Bank o f La M arque, La M arque,
Texas

W axahachie Bank and Trust
Com pany, W axahachie, Texas

NM

7,900

65,800

62,300

36,035

September 10,1987

M erchants State Bank, D allas, Texas

First State Bank o f Rollingstone
Rollingstone, M innesota

NM

4,500

14,500

13,700

5,444

September 11,1987

Eastwood Bank St. Charles, St. Charles,
M innesota

The Talm age State Bank
Talm age, Kansas

NM

1,500

6,700

6,600

2,725

September 17,1987

The A bilene First N ational Bank, Abilene,
Kansas

Breaux Bridge Bank and Trust
Company, Breaux Bridge, Louisiana

NM

5,600

23,200

28,900

21,295

September 17, 1987

M idSouth N ational Bank, Lafayette,
Louisiana

N

1,400

14,600

9,900

9,557

September 17,1987

Cypress N ational Bank, Houston, Texas

M ustang N ational Bank
M ustang, O klahom a

SM

2,900

11,500

10,800

2,648

September 17,1987

The First N ational Bank o f M oore, M oore,
O klahom a

The Citizens Bank
Drum right, O klahom a

NM

3,800

33,400

30,600

28,099

September 24, 1987

The Am erican N ational Bank o f Bristow,
Bristow, O klahom a

Com m onwealth Bank
Torrance, C alifornia

NM

7,900

75,100

78,000

23,057

September 25 ,1 987

C apital Bank o f C alifo rn ia , Los Angeles,
C alifo rnia

Valley State Bank
Los Angeles, C alifornia

NM

8,800

76,500

76,300

30,129

September 28 ,1 987

C apital Bank o f C alifo rnia, Los Angeles,
C alifo rnia

Security State Bank
O xford, N ebraska

NM

2,900

11,300

11,000

7,448

O ctob er 1,1987

Union Bank and Trust Com pany, Lincoln,
Nebraska

C lay County State Bank
D ilw orth, M innesota

NM

3,700

10,500

10,200

1,503

O ctob er 1,1987

N orthwestern State Bank, Ulen, M innesota,
Ulen, M innesota

N

2,300

44,800

43,800

33,082

O ctob er 1,1987

Texas Com m erce Bank N ational
Association, Houston, Texas

N

1,900

46,900

44,800

34,127

O ctob er 1,1987

Texas Com m erce Bank N ational
Association, Houston, Texas

N

4,400

22,300

21,300

10,093

O ctob er 8,19 87

The Fort Lupton State Bank, Fort Lupton,
C olorado

Citizens Bank o f Ray
Ray, N orth D akota

NM

2,400

12,100

11,400

3,875

O ctober 15, 1987

First N ational Bank & Trust Com pany o f
W illiston, W illiston, N orth Dakota

Pioneer Bank o f Fountain
Fountain, C olorado

NM

3,600

11,000

10,400

1,133

O ctob er 21, 1987

Green M ountain Bank, Lakewood,
C olorado

First State Bank o f Bovina
Bovina, Texas

NM

1,900

16,400

14,400

4,098

O ctob er 22,1987

First Bank o f M uleshoe, Muleshoe, Texas

N ew W orld N ational Bank
Pittsburgh, Pennsylvania

N

2,300

12,500

10,800

9,042

O ctob er 22 ,1 987

Lincoln N ational Bank, a newly-chartered
subsidiary o f Equimark C orporation,
Greensburg, Pennsylvania

NAME A N D LO C ATIO N
Am erican Exchange Bank and Trust
Com pany
N orm an, O klahom a

Steeplechase N ational Bank
Houston, Texas

W estern Bank-N orth W ilcrest,
N ational Association
Houston, Texas
Western Bank-W estwood, N ational
Association
Houston, Texas
The First N ational Bank o f Brush
Brush, C olorado




_

Date o f Closing,
Deposit Assumption,
M erger, o r Assistance

Receiver, Assuming Bank,
Transferee Bank, or
M erging Bank and Location

58

INSURED BAN KS R E Q U IR IN G DISBURSEM ENTS BY THE FEDERAL DEPOSIT IN S U R A N C E C O R P O R A T IO N
D U R IN G 1987

Table 123.

NAME A N D LO C ATIO N

Class
o f Bank

N um ber o f
Depositors
o r Accounts

Total
Assets
(SOOO's)

Total
Deposits
(SOOO's)

FDIC
Disburse­
ments
(SOOO's)

Date o f Closing,
Deposit Assumption,
M erger, o r Assistance

Receiver, Assuming Bank,
Transferee Bank, or
M erging Bank and Location

Delta Pacific Bank
Pittsburg, C a lifo rnia

NM

3,200

18,200

17,600

3,411

O ctob er 30,1987

Central Bank, San Francisco, C alifo rnia

Am erican Security Bank
North Platte, N ebraska

NM

6,300

24,700

24,000

17,941

O ctob er 30,1987

North Platte N ational Bank, N orth Platte,
Nebraska

C apital Bank & Trust Co.
Baton Rouge, Louisiana

NM

54,600

372,200

308,700

118,656

O ctob er 30,1987

C apital Bank & Trust Co., N ational
Association, Baton Rouge, Louisiana, a
new "b rid g e " bank organized by the
Federal Deposit Insurance C orporation.

M id d le Park Bank
G ranby, C olorado

NM

5,500

33,600

29,500

13,499

N ovem ber 10,1987

Bank o f Krem m ling, Krem m ling, C olorado

Bank o f W inter Park
W inter Park, C olorado

NM

2,900

25,000

22,300

19,571

N ovem ber 10,1987

The Bank o f Aspen, Aspen, C olorado

West Texas State Bank o f Canyon
Canyon, Texas

NM

6,100

19,900

19,100

3,748

N ovem ber 13,1987

First N ational Bank o f A m a rillo , A m arillo,
Texas

NM

12,900

76,100

77,700

18,160

N ovem ber 19, 1987

The N ew Iberia Bank, a subsidiary o f New
Iberia Bancorp, Inc., N ew Iberia, Louisiana

Republic Bank
O klahom a City, O klah om a

NM

7,900

56,300

55,400

44,410

N ovem ber 19,1987

First N ational Bank in Bartlesville,
Bartlesville, O klahom a

M adison Bank and Trust C om pany
Richmond, Louisiana

NM

1,400

9,800

10,400

3,601

Decem ber 3,19 87

G uaranty Bank & Trust Com pany o f Delhi,
Delhi, Louisiana

State Bank o f Commerce
Slidell, Louisiana

NM

3,300

47,800

46,300

14,269

Decem ber 3, 1987

Peoples Bank & Trust Com pany o f St.
Bernard, Chalm ette, Louisiana

Center State Bank
Center, Nebraska

NM

2,000

8,400

7,800

5,914

Decem ber 3 ,1 9 8 7

Farmers & M erchants State Bank,
B loom field, Nebraska

Crofton State Bank
Crofton, N ebraska

NM

3,500

11,300

10,600

7,356

Decem ber 3 ,1 9 8 7

Farmers & M erchants State Bank,
Bloom field, Nebraska

State Bank o f Jansen
Jansen, N ebraska

NM

1,200

4,900

4,600

1,109

Decem ber 3,1987

Security N ational Bank, Superior,
Nebraska

First State Bank
O akdale, N ebraska

NM

1,400

5,900

5,600

2,366

Decem ber 3 ,1 9 8 7

First United Bank, N eligh, N ebraska

N

4,600

69,100

60,200

55,003

Decem ber 3,19 87

First N ational Bank and Trust Com pany,
W eatherford, O klahom a

C lim bing H ill Savings Bank
C lim bing H ill, Iowa

NM

1,000

5,300

5,100

2,944

Decem ber 3 ,1 9 8 7

First Trust & Savings Bank, M o ville , Iowa

The Peoples Bank
O live H ill, Kentucky

NM

6,200

39,700

38,600

25,013

Decem ber 3 ,1 9 8 7

The C om m ercial Bank o f Grayson,
Grayson, Kentucky

Louisiana Bank & Trust C om pany
Crow ley, Louisiana

NM

4,200

17,900

20,200

7,429

Decem ber 10,1987

The Evangeline Bank and Trust Co., V ille
Platt, Louisiana

Am erica Bank in Louisiana
M organ City, Louisiana

NM

3,400

16,400

15,700

4,080

Decem ber 10,1987

The St. M a ry Bank and Trust Com pany,
Franklin, Louisiana

The First N ational Bank in Rhome
Rhome, Texas

N

2,900

9,400

9,400

1,674

Decem ber 10,1987

Continental State Bank, Boyd, Texas

Bancfirst-Austin, N ational Association
Austin, Texas

N

3,900

25,700

23,700

22,779

Decem ber 10,1987

Texas C apital Bank-Fort Bend, Richmond,
Texas

Heritage N ational Bank
Austin, Texas

N

5,800

50,200

48,400

44,833

Decem ber 10,1987

Com m unity N ational Bank, Austin, Texas

The Peoples Bank and Trust o f Iberia
Parish
N ew Iberia, Louisiana

The Farmers N ational Bank o f C ordell
C ordell, O klahom a




59

INSURED BAN KS R E Q U IR IN G DISBURSEMENTS BY THE FEDERAL DEPOSIT IN S U R A N C E C O R P O R A T IO N
D U R IN G 1987

Table 123.

NAM E A N D LO C ATIO N

Class
of Bank

Num ber of
Depositors
o r Accounts

Total
Assets
(SOOO's)

Total
Deposits
(SOOO's)

FDIC
Disburse­
ments
(SOOO's)

Date o f Closing,
Deposit Assumption,
M erger, o r Assistance

Receiver, Assuming Bank,
Transferee Bank, or
M erging Bank and Location

Lewis and C lark Slate Bank
Lake O sw ego, O regon

NM

3,300

19,000

19,000

2,550

Decem ber 11,1987

Key Bonk o f O regon, Portland, O regon

First Interstate Bank o f Alaska
Anchorage, Alaska

NM

37,000

375,400

368,300

135,715

Decem ber 11,1987

N ational Bank o f A laska, Anchorage,
Alaska

Am erican Bank o f Commerce
Lake Charles, Louisiana

NM

6,300

33,500

34,500

9,291

Decem ber 17,1987

N ational Bank o f Com m erce o f Lake
Charles, Lake Charles, Louisiana

USBank
Denton, Texas

NM

25,600

88,000

84,700

21,057

Decem ber 17,1987

United N ational Bank, D allas, Texas

Bank o f M abank
M aba nk, Texas

NM

6,400

44,100

43,200

8,021

D ecem ber 17,1987

First State Bank, Athens, Texas




60

INSURED BAN KS R E Q U IR IN G DISBURSEMENTS BY THE FEDERAL DEPOSIT IN S U R A N C E C O R P O R A T IO N
D U R IN G 1987

Table 123.

NAM E A N D LO C ATIO N

Class
o f Bank

N um ber o f
Depositors
o r Accounts

Total
Assets
(SOOO's)

Total
Deposits
(SOOO's)

FDIC
Disburse­
ments
(SOOO's)

Date o f Closing,
Deposit Assumption,
M erger, o r Assistance

Receiver, Assuming Bank,
Transferee Bank, or
M erging Bank and Location

Assistance Transactions

N

2,900

10,300

9,100

723

February 25, 1987

First N ational Bank o f Johnston County,
Tishom ingo, O klahom a

Central Bank and Trust Com pany
G lenm ora, Louisiana

NM

7,300

28,300

28,000

6,928

February 26 ,1987

Peoples Bank and Trust Com pany,
Natchitoches, Louisiana

Syracuse Savings Bank
Syracuse, N ew York

NM

258,000

1,200,000

1,100,000

0

M ay 13, 1987

N orstar Bancorp Inc., Albany, N ew York

Security Bank o f Rich H ill
Rich H ill, M issouri

NM

2,500

12,900

12,700

767

June 5,19 87

Financial Assistance to an O pen Bank,
under Section 13(c) o f the FDI Act, to
prevent failure.

BancTexas Dallas, N. A .***
Dallas, Texas

N

8,100

461,500

248,200

150,000

July 17,1987

Financial Assistance to an O pen Bank,
under Section 13(c) o f the FDI Act, to
prevent failure.

BancTexas Richardson, N. A .*”
Richardson, Texas

N

11,300

104,100

89,000

0

July 17,1987

Financial Assistance to an O pen Bank,
under Section 13(c) o f the FDI Act, to
prevent failure.

BancTexas M cKinney, N. A .“ *
M cKinney, Texas

N

8,800

186,700

168,000

0

July 17, 1987

Financial Assistance to an O pen Bank,
under Section 13(c) o f the FDI Act, to
prevent failure.

BancTexas C arrollto n, N . A . * "
C arrollto n, Texas

N

9,700

63,200

59,600

0

July 17,1987

Financial Assistance to an O pen Bank,
under Section 13(c) o f the FDI Act, to
prevent failure.

BancTexas Q uorum , N. A . " *
Addison, Texas

N

2,600

29,800

28,400

0

July 17,1987

Financial Assistance to an O pen Bank,
under Section 13(c) o f the FDI Act, to
prevent failure.

BancTexas W hite Rock, N. A .” '
D allas, Texas

N

11,000

101,200

92,200

0

July 17,1987

Financial Assistance to an O pen Bank,
under Section 13(c) o f the FDI Act, to
prevent failure.

NM

3,400

70,000

50,100

0

July 17,1987

Financial Assistance to an O pen Bank,
under Section 13(c) o f the FDI Act, to
prevent failure.

N

14,100

71,700

66,900

0

July 17,1987

Financial Assistance to an O pen Bank,
under Section 13(c) o f the FDI Act, to
prevent failure.

NM

7,300

52,700

47,100

0

July 17,1987

Financial Assistance to an O pen Bank,
under Section 13(c) o f the FDI Act, to
prevent failure.

BancTexas Allen Parkway, N. A ,***
Houston, Texas

N

4,000

30,300

30,100

0

July 17,1987

Financial Assistance to an O pen Bank,
under Section 13(c) o f the FDI Act, to
prevent failure.

BancTexas Sulphur Springs, N. A .***
Sulphur Springs, Texas

N

21,400

20,400

0

July 17,1987

Financial Assistance to an O pen Bank,
under Section 13(c) o f the FDI Act, to
prevent failure.

Am erican N ational Bank
Durant, O klahom a

BancTexas H o u s to n *"
Houston, Texas
BancTexas N orthside Houston, N, A .***
Houston, Texas

BancTexas W estheim er***
Houston, Texas

V alley Bank o f Belgrade
Belgrade, M ontana
Com m ercial Bank, N ational
Association
O klahom a City, O klahom a

NM

4,500

18,600

16,900

3,025

July 31,1987

M ountain Bank Systems, Inc., W hitefish,
M ontana

N

3,200

23,800

22,200

4,500

O ctob er 16,1987

Financial Assistance to an O pen Bank,
under Section 13(c) o f the FDI Act, to
prevent failure.

D ecem ber 3,19 87

Financial Assistance to an O pen Bank,
under Section 13(c) o f the FDI Act, to
prevent failure.

D ecem ber 29,1987

Farmers State Bank o f G alva , G alva,
Kansas

Crossroads Bank
V ictoria, Texas

NM

26,000

26,100

2,000

Falun State Bank
Falun, Kansas

NM

3,100

3,000

50

“ N ot Available.
“ *FDIC contributed a total o f S I50 m illion to enhance the capital o f all subsidiary banks o f BancTexas




61

Table 125. R EC O VE R IE S A N D LOSSES BY TH E FEDER AL D E P O S IT IN S U R A N C E C O R P O R A T IO N
O N D IS B U R S E M E N T S F O R P R O T E C T IO N O F D E P O S IT O R S , 1 9 3 4 -1 9 8 7 (A m o u n ts in th o u s a n d s o f d o lla rs )
Liquidation
status and
year of
depcsit
payoff or
No.
deposit
of
assumption banks
Total.....

All cases

Deposit payoff coses

Recoveries Estimated
Disburse­ to Dec. 3! additional
1987 recoveries Losses'
ments

1,216 31,157,273 14,985,612 5,419,974 10,751,687

No.
of
banks

Deposit assumption cases5

Recoveries Estimated
Disburse­ to Dec. 31 additional
1987 recoveries Losses'
ments2

464 5,344,917 2,086,473 1,670,461 1,587,983

No.
of
banks

Assistance Transactions6

Recoveries Estimated
Disburse­ to Dec. 31 additional
1987 recoveries Losses'
ments3

705 16,893,680 9,526,139 2,260,390 5,107,151

Year4 ..
1934 .....
1935 .....
1936 .....
1937 ......
1938 .....

9
25
69
75
74

941
9,108
15,206
20,204
34394

734
6,423
12,873
16,532
31,969

207
2,685
2,333
3,672
2,425

9
24
42
50
50

941
6,026
7,735
12,365
9,092

734
4,274
6,397
9,718
7,908

207
1,752
1,338
2,647
1,184

1
27
25
24

3,082
7,471
7,839
25,302

2,149
6,476
6,814
24,061

60
43
15
20
5

81,828
87,899
25,061
11,684
7,230

74,676
84,103
24,470
10,996
7,107

7,152
3,796
591
688
123

32
19
8
6
4

26,196
4,895
12,278
1,612
5,500

20,399
4,313
12,065
1,320
5,377

5,797
582
213
292
123

28
24
7
14
1

55,632
83,004
12,783
10,072
1,730

54,277
79,790
12,405
9,676
1,730

2
1
1
5
3

1,532
1,845
274
2,038
3,150

1,492
1,845
274
1,979
2,509

40

1

404

364

40

1
1
1
5
3

1,128
1,845
274
2,038
3,150

1,128
1,845
274
1,979
2,509

1949 .....
1950 ......
1951.....
1952 .....
1953 ......

4
4
2
3
2

2,685
4,404
1,986
1,525
5359

2,316
3,019
1,986
733
5,359

369
1,385

4
4
2
3
2

2,685
4,404
1,986
1,525
5,359

2,316
3,019
1,986
733
5359

369
1,385

1954 ......
1955 ......
1956 ......
1957 ......
1958 ......

2
5
2
1
4

1,029
7315
3,499
1,031
3,051

771
7,085
3,286
1,031
3,023

258
23C
213

2
1
1

1,029
2,877
704

771
2,877
704

258

230
213
28

1

255

255

1959 ......
1960 .....
1961......
1963 .....

3
1
5
2

1,835
4,765
6,201
19,172

1,738
4,765
4,699
18,886

97

1964....
1965 ......
1966 .....
1967 .....
1968 .....

7
5
7
4
3

13,712
11,479
10,020
8,097
6,476

12,171
10,816
9,541
7,087
6,464

1
0
234
0
0

2
6

571
9,285

425
8,806

3

6,476

6,464

1969 ......
19/0.....
1971......
1972 .....
1973 ......

9
7
6
1
6

42,072
51,244
171,502
16,189
435,131

41,928
50,972
171,299
13,874
366,561

5
3
1

34,476
21,979
117,735

34,415
21,979
117,725

61
0
10

3

418,360

349,790

1,538

67,032

1974 ......
1975 .....
1976 .....
1977 ......
1978 ......

142,993
22,739
38,642
3,517
25,182

635
16,224
248
2,566
11,840

1979 ......
1980 ......
1981......
1982 .....
1983 ......

5,262
9,760
7,743
28,011
2,417
43,678
94,189
30,072
275,914 1,442,359

47 8,918,676 3,373,000 1,489,123 4,056,553

1,355
3,214
378
396

1944 .....
1945 ......
1946 ......
1947 .....
1948 .....

Recoveries Estimated
Disburse­ to Dec. 31 additional
1987 recoveries Losses'
ments

933
995
1,025
1,241

1939 ......
1940 ......
1941.....
1942 .....
1943 .....

No.
of
banks

19847 ....
1985 .....
1986 .....
1987 .....

59
641

792

4
1
1
3

4,438
2,795
1,031
2,796

4,208
2,582
1,031
2,768

3
1
5
2

1,835
4,765
6,201
19,172

1,738
4,765
4,699
18,886

0
0
0
0

7
3
1
4

13,712
10,908
735
8,097

12,171
10,391
735
7,087

1
0

1,540
517

62
0
10
491
1,538

82
272
193
1,824
67,032

4
4
5
1
3

7,596
29,265
53,767
16,189
16,771

7,513
28,993
53,574
13,874
16,771

1
0
0
491
0

82
272
193
1,824

4 2,403,048 2,259,420
13 331,786 292,754
16 598,746 558,100
20,539
6
26,622
7 544,580 507354

142,993
22,740
40,325
3,517
25,182

635
16,292
321
2,566
12,044

3
3

25,918
11,416

25,849
9,660

1
1,683

68
73

1

817

613

0

204

4 2,403,048 2,259,420
10 305,868 266,905
13 587,330 548,440
26,622
20,539
6
6 543,763 506,741

89,609
10
73,590
10 151,804 113,057
10 998,288 362,560
42 2,152,580 557,924
48 3,454,544 1,625,767

10,584
5,435
8,435
30,312
46,826 588,902
323,853 1,270,804
307,602 1,521,175

3
3
2
7
9

9,936
13,732
35,735
276,728
147,214

8,939
10,739
30,744
192,318
108,702

173
692
3,148
12,914
12,290

824
2,301
1,843
71,497
26,222

7
79,673
64,651
7 138,072 102,318
79,064
5
32,969
26 407,867 283,606
36 3,235,338 1,517,065

525,494 121,675
285,562 110,757
482,097 223,852
141,101 1,182,783

124,103
117,855
461,120
759,904

792

1502
286

1,540
663
245
1,010
12

59
641

80
120
145
203

28

1,502
286

7,574,965 4,137,674 1,145,771 2,291,521
2,637,967 1,109,567 602,914 925,485
4,488,523 1,716,349 913319 1,858,854
4,572,038 623,565 1,828,726 2,119,747

1.
2.
3.
4.
5.
6.

16 771,273
29 514,174
40 1,167,069
51 2,083,788

0

97

234

1,010

62
87
98
133

1,296366 714,404
1,538,427 733,972
3,086,929 1,230503
2,320,257 481,869

12

103,672 478,290
271,772 532,683
581,632 1,274,794
641,612 1,196,776

Included estimated losses in active cases. Not adjusted (or interest or allowable return, which was collected in some coses in which the disbursement was fully recovered.
Includes estimated additional disbursements in active cases.
Excludes excess collections turned over to banks as additional purchase price at termination of liquidation.
No case in 1962 required disbursements.
Deposit Assumption Cases include S34/.6 million of disbursements for advances to protect assets and liquidation expenses which had been excluded in prior years.
"Assistance transactions' include: a) Banks merged with financiol assistance from FDIC to prevent probable failure through 1987.
b) $2,753.3 million of recorded liabilities at book value payable over future years.
for FRASER
7. Includes CINB Assistance Agreement which had been previously excluded.

Digitized


146
245

3 883,489
9 1,467,985
3
71,992

298,847
82,000
0

0 584,642
216,750 1,169,235
19398
52594

2 5,507326 2,897,776
4 585,366
90,033
7 234,525
3,749
19 167,993
595

920,424 1,689,128
220,385 274,947
107,835 122,940
4331 163,067

62

Table 127.

I N C O M E A N D E X PE N SE S , F E D E R A L D E P O S IT IN S U R A N C E C O R P O R A T IO N , BY Y E A R , F R O M B E G I N N IN G O F O P E R A T IO N S ,
S E P T E M B E R 1 1 ,1 9 3 3 T O D E C E M B E R 1 9 8 7 [ in m illio n s )
Incom e

Expenses an d losses

Year
Total
Total .......................

32,955.1

1987 .....................
1986 .....................
1985 .....................
19846 .....................
1983 .....................
1982 .....................
1981 .....................
1980 .....................
1979 .....................
1978 .....................
1977 .....................
1976 .....................
1975 .....................
1974 .....................
1973 .....................
1972 .....................
1971 .....................
1970 .....................
1969 .....................
1968 .....................
1967 .....................
1966 .....................
1965 .....................
1964 .....................
1963 .....................
1962 .....................
1961 .....................
1960 .....................
1959 .....................
1958 .....................
1957 .....................
1956 .....................
1955 .....................
1954 .....................
1953 .....................
1952 .....................
1951 .....................
1950 .....................
1949 .....................
1948 .....................
1947 .....................
1946 .....................
1945 .....................
1944 .....................
1943 .....................
1942 .....................
1941 .....................
1940 .....................
1939 .....................
1938 .....................
1937 .....................
1936 .....................
1935 .....................
1933-34 ...............

3,315.8
3,260.1
3,385.4
3,099.5
2,628.1
2,524.6
2,074.7
1,310.4
1,090.4
952.1
837.8
764.9
689.3
668.1
561.0
467.0
415.3
382.7
335.8
295.0
263.0
241.0
214.6
197.1
181.9
161.1
147.3
144.6
136.5
126.8
117.3
111.9
105.7
99.7
94.2
88.6
83.5
84.8
151.1
145.6
157.5
130.7
121.0
99.3
86.6
69.1
62.0
55.9
51.2
47.7
48.2
43.8
20.8
7.0

Assessment
Incom e

Assessment
Credits

Investment and
other sources1

21,471.9

6,709.1

18,192.3

1,696.0
1,516.9
1,433.4
1,321.5
1,214.9
1,108.9
1,039.0
951.9
881.0
810.1
731.3
676.1
641.3
587.4
529.4
468.8
417.2
369.3
364.2
334.5
303.1
284.3
260.5
238.2
220.6
203.4
188.9
180.4
178.2
166.8
159.3
155.5
151.5
144.2
138.7
131.0
124.3
122.9
122.7
119.3
114.4
107.0
93.7
80.9
70.0
56.5
51.4
46.2
40.7
38.3
38.8
35.6
11.5
(4)

164.0
96.2
117.1
521.1
524.6
443.1
411.9
379.6
362.4
285.4
283.4
280.3
241.4
210.0
220.2
202.1
182.4
172.6
158.3
145.2
136.4
126.9
115.5
100.8
99.6
93.0
90.2
87.3
85.4
81.8
78.5
73.7
70.0
68.7

1,619.8
1,743.2
1,952.0
1,778.0
1,577.2
1,511.9
1,152.8
879.6
734.0
585.1
518.4
468.4
410.4
366.1
315.0
278.5
239.5
223.4
191.8
162.6
142.3
129.3
112.4
104.1
97.7
84.6
73.9
65.0
57.9
53.0
48.2
43.7
39.6
37.3
34.0
31.3
29.2
30.6
28.4
26.3
43.1
23.7
27.3
18.4
16.6
12.6
10.6
9.7
10.5
9,4
9.4
8.2
9.3
7.0

Total
14,653.3

3,267.3
2,963.7
1,957.9
1,999.2
969.9
999.8
848.1
83.6
93.7
148.94
113.6
212.34
97.5
159.2
108.2
59.7
60.3
46.0
34.5
29.1
27.3
19.9
22.9
18.4
15.1
13.8
14.8
12.5
12.1
11.6
9.7
9.4
9.0
7.8
7.3
7.8
6.6
7.8
6.4
7.0
9.9
10.0
9.4
9.3
9.8
10.1
10.1
12.9
16.4
11.3
12.2
10.9
11.3
10.0

Deposit insurance
losses and
expenses
12,208.2

Interest on
ca pita l stock2
80.6

3,064.9
2,783.4
1,778.7
1,848.0
834.2
869.9
720.9
(34.6)
(13.1)
45.6
24.3
31.9
29.8
100.0
53.8
10.1
13.4
3.8
1.0
0.1
2.9
0.1
5.2
2.9
0.7
0.1
1.6
0.1
0.2
0.1
0.3
0.3
0.1
0.1
0.8
1.4
0.3
0.7
0.1
0.1
0.1
0.1
0.2
0.5
0.6
3.5
7.2
2.5
3.7
2.6
2.8
0.2

0.6
4.8
5.8
5.8
5.8
5.8
5.8
5.8
5.8
5.8
5.8
5.8
5.8
5.8
5.6

Administrative
an d operating
expenses

Net Incom e
a d d e d to deposit
insurance fund3

2,364.5

18,301.8

202.4
180.3
179.2
151.2
135.7
129.9
127.2
118.2
106.8
103.3
89.3
180.45
67.7
59.2
54.4
49.6
46.9
42.2
33.5
29.0
24.4
19.8
17.7
15.5
14.4
13.7
13.2
12.4
11.9
11.6
9.6
9.1
8.7
7.7
7.2
7.0
6.6
6.4
6.1
5.7
5.0
4.1
3.5
3.4
3.8
3.8
3.7
3.6
3.4
3.0
2.7
2.5
2.7
4.25

48.5
296.4
1,427.5
1,100.3
1,658.2
1,524.8
1,226.6
1,226.8
996.7
803.2
724.2
552.6
591.8
508.9
452.8
407.3
355.0
336.7
301.3
265.9
235.7
221.1
191.7
178.7
166.8
147.3
132.5
132.1
124.4
115.2
107.6
102.5
96.7
91.9
86.9
80.8
76.9
77.0
144.7
138.6
147.6
120.7
111.6
90.0
76.8
59.0
51.9
43.0
34.8
36.4
36.0
32.9
9.5
-3.0

'Includes S664.5 m illion o f interest and allo w a b le return received on funds advanced to receivership and deposit assumption cases and S538.6 m illion o f interest on capital notes and
advanced to facilitate deposit assumption transactions and assistance to open banks,
2Paid in 1950 and 1951, but allocated am ong years to which it applied. Initial capital o f S289 m illion was retired by payments to the U.S. Treasury in 1947 and 1948.
3Assessments collected from members o f the tem porary insurance funds which became insured under the perm anent plan w ere credited to their accounts at the term ination o f the tem porary
funds and were ap plie d tow ard paym ent o f subsequent assessments becom ing due under the permanent insurance funding, resulting in no income to the C orporation from assessments
during the existence o f the tem porary insurance funds.
in c lu d e s net loss on sales o f U.S. G overnem ent securities o f SI 05.6 m illion in 1976 and S3.6 m illion in 1978.
sN et after deducting the portion o f expenses and losses charged to banks w ithdraw ing from the tem porary insurance funds on June 30,1934.
6Revised due to restatement o f Decem ber 3 1 ,1 984 financial statements.




63

Table 129.

INSURED DEPOSITS A N D THE DEPOSIT IN S U R A N C E F U N D , 1934-1987 (in m illio n s)

Year
(Decem ber 31)

Insurance
Coverage

Deposits in insured banks1
Total

Insured

Percentage o f
insured deposits

Deposit insurance
fund

Ratio o f deposit insurance fund to—
Total Deposits

Insured deposits

1987 .............................

100,000

2 ,201,549

1,658,802

76.9

18,301.8

.83

1.10

1986
1985
1984
1983
1982
1981
1980

...........................
...........................
...........................
...........................
...........................
...........................
...........................

100,000
100,000
100,000
100,000
100,000
100,000
100,000

2,167,596
1,974,512
1,806,520
1,690,576
1,544,697
1,409,322
1,324,463

1,634,302
1,503,393
1,389,874
1,268,332
1,134,221
988,898
948,717

75.4
76.1
76.9
75.0
73.4
70.2
71.6

18,253.3
17,956.9
16,529.4
15,429.1
13,770.9
12,246.1
11,019.5

.84
.91
.92
.91
.89
.87
.83

1.12
1.19
1.19
1.22
1.21
1.24
1.16

1979
1978
1977
1976
1975

...........................
...........................
...........................
...........................
...........................

40,000
40,0006
40,0005
40,000
40,000

1,226,943
1,145,835
1,050,435
941,923
875,985

808,555
760,706
692,533
628,263
569,101

65.9
66.4
65.9
66.7
65.0

9,792.7
8,796.0
7,992.8
7,268.8
6,716.0

.80
.77
.76
.77
.77

1.21
1.16
1.15
1.16
1.18

1974
1973
1972
1971
1970

...........................
...........................
...........................
...........................
...........................

40,000
20,000
20,000
20,000
20,000

833,277
766,509
697,480
610,685
545,198

520,309
465,600
419,756
374,568
349,581

62.5
60.7
60.2
61.3
64.1

6,124.2
5.615.3
5,158.7
4,739.9
4,379.6

.73
.73
.74
.78
.80

1.18
1.21
1.23
1.27
1.25

1969
1968
1967
1966
1965

...........................
...........................
...........................
...........................
...........................

20,000
15,000
15,000
15,000
10,000

495,858
491,513
448,709
401,096
377,400

313,085
296,701
261,149
234,150
209,690

63.1
60.2
58.2
58.4
55.6

4,051.1
3,749.2
3,485.5
3,252,0
3,036.3

.82
.76
.78
.81
.80

1.29
1.26
1.33
1.39
1.45

1964
1963
1962
1961
1960

...........................
...........................
...........................
...........................
...........................

10,000
10,000
10,000
10,000
10,000

348,981
313,3042
297,5483
281,304
260,495

191,787
177,381
170,210
160,309
149,684

55.0
56.6
57.2
57.0
57.5

2,844.7
2,667.9
2,502.0
2,353.8
2,222.2

.82
.85
.84
.84
.85

1.48
1.50
1.47
1.47
1.48

1959
1958
1957
1956
1955

...........................
...........................
...........................
...........................
...........................

10,000
10,000
10,000
10,000
10,000

247,589
242,445
225,507
219,393
212,226

142,131
137,698
127,055
121,008
116,380

57.4
56.8
56.3
55.2
54.8

2.089.8
1,965.4
1,850.5
1,742.1
1,639.6

.84
.81
.82
.79
.77

1.47
1.43
1.46
1.44
1.41

1954
1953
1952
1951
1950

...........................
...........................
...........................
...........................
...........................

10,000
10,000
10,000
10,000
10,000

203,195
193,466
188,142
178,540
167,818

110,973
105,610
101,841
96,713
91,359

54.6
54.6
54.1
54.2
54.4

1,542.7
1,450.7
1,363.5
1,282.2
1,243.9

.76
.75
.72
.72
.74

1.39
1.37
1.34
.133
1.36

1949
1948
1947
1946
1945

...........................
...........................
...........................
...........................
...........................

5,000
5,000
5,000
5,000
5,000

156,786
153,454
154,096
148,458
157,174

76,589
75,320
76,254
73,759
67,021

48.8
49.1
49.5
49.7
42.4

1,203.9
1,065.9
1,006.1
1,058.5
929.2

.77
.69
.65
.71
.59

1.57
1.42
1.32
1.44
1.39

1944
1943
1942
1941
1940

...........................
...........................
...........................
...........................
...........................

5,000
5,000
5,000
5,000
5,000

134,662
111,650
89,869
71,209
65,288

56,398
48,440
32,837
28,249
26,638

41.9
43.4
36.5
39.7
40.8

804.3
703.1
616.9
553,5
496.0

.60
.63
.69
.78
.76

1.43
1.45
1.88
1.96
1.86

1939
1938
1937
1936
1935
1934

...........................
...........................
...........................
...........................
...........................
...........................

5,000
5,000
5,000
5,000
5,000
5,000“

57,485
50,791
48,228
50,281
45,125
40,060

24,650
23,121
22,557
22,330
20,158
18,075

42.9
45.5
46.8
44.4
44.7
45.1

452.7
420.5
383.1
343.4
306.0
291.7

.79
.83
.79
.68
.68
.73

1.84
1.82
1.70
1.54
1.52
1.61

’ Deposits in foreign branches are om itted from totals because they are not insured. Insured deposits are estimated by ap plying to deposits at the re gular C all dates the percentages as
determ ined from the June C all Report submitted by insured banks.
D e c e m b e r 20, 1963.
3Decem ber 28, 1962.
4lnitial coverage was $2,500 from January 1 to June 30,1934.
5S100,000 fo r tim e and savings deposits o f in-state governm ental units provided in 1974.
6$100,000 fo r Individual Retirement accounts and Keogh accounts provided in 1978.




Index
Accounting and Corporate Services,
Division of

Deposit Insurance Disbursements
17-19
29

African Development Bank
Agricultural Banks

xii, 6, 28

Agricultural Loan Losses,
Amortization of

6, 28, 29

Annual Disclosure Statements

29

Anti-Deficiency A ct

Deposit Transfers

see Insured Deposit Transfers

7, 19

Applications to the FDIC

7

Directors, Guidelines fo r
Financial Institution

xiii, 8
16

Directors and Officers Liability

9, 29

Disclosure Statements

14

Enforcement Actions
Equal Employment Opportunity,
O ffice of

25

12

Asset Marketing
Assistance Transactions

Examinations
Executive Secretary, O ffice of
Failed Banks

8, 14
xiii, 2-3

Bank Examinations
Bank Failures

xii, 5-6, 11-13
7-8

Causes

5, 6, 11, 13

Locations
Number of

6

Ten Largest

11

Bankruptcy

16
8, 29

Bank Secrecy Act
Bank Supervision, Division of

2-10, 30

BancTEXA S Group Inc., Dallas

4

Basle Committee on Banking
Supervision and Regulation

9

Bridge Banks

6 ,1 2 ,1 7 ,2 1 ,2 8

see Bank Failures

Fair Housing, Proposed Regulation

22

Committee on Management

vii

Officials and Employees,
Number of

25

Organization Chart
Regional Offices and Directors

9, 17-18
7

Capital Requirements Regulation

29

Cease-and-Desist Orders

14

Clarke, Robert L.

10, 19

Corporation (FSLIC)

Competitive Equality Banking
xiii, xiv, 6, 21,28, 29

Comptroller General of the
United States

Consumer Inquiries and Complaints

M andate fo r Change: Restructuring
the Banking Industry
xiii-xiv, 22
7

Mergers

5, 12

Financial Statements of the FDIC

Freedom of Inform ation Act,

45

23

29
xiii, 7-8, 14
20
30

23, 44-45

Hope, C .C ., Jr.

xiv, 28

23

Corporate Communications,

xiii, 8

21
20
7, 20, 30

23

Legal Division
Legislation Enacted in 1987

24
30
xii, 3-4

Problem Banks
Purchase and Assumption

5-6, 13, 53-59

Transactions (P&As)

Quarterly Banking Profile

xiii, 18, 22
30

Real Estate Activities

3

Redelegation of Authority

30
xiii, 8
9, 17-18
22

O ffice of
Risk-Based Capital

3, 9

Rules and Regulations
Adopted in 1987

29
17-18

Satellite Teleconferences

5

Securities Activities of
Subsidiaries and Affiliates

30

Securities Exchange Act of 1934

10
30

Seidman. L. W illiam

iv. v, xii-xiv.
10. 18. 22. 23. 24
3

Shared National Credit Program
18

International

Privacy Act of 1974

iv, v, 23

Call Reports

Insured Deposit Transfers

6, 11, 13, 50

Securities Transfer Agents

Consumer

Corporate Audits and Internal

Payoffs

Savings Banks

Hotlines
12, 38

8

Reports of Condition and Income

5, 21, 42

Guidelines fo r Financial
Institution Directors

3

Outside Audit

Research and Strategic Planning,

G arn-St Germain Depository
Institutions Act of 1982

Gramm-Rudman-Hollings Act

Off-Balance-Sheet Activities

31

Freedom of Inform ation Reform
A ct of 1986

28

Nonbank Banks

"Red Flag" Warning Signs

xiii, 23

Continental Illinois National Bank
and Trust Company of Chicago

15-16

28

General Accounting O ffice (GAO)

iv, v

Consumer Affairs, O ffice of

Litigation

Real Estate Appraisal Guidelines

Examination Council (FFIEC)

Fraud and Insider Abuse




vi
ix

Federal Financial Institutions

Foreign Banks, U .S. Branches

Delegation of Authority

viii

Officials, List of

30

Corporate Support Offices

iv, v, 20

Budget

22

Capital Forbearance

19
11-13

Personnel Management, O ffice of

Board of Directors

Budget and Planning, Office of

O ffice of

30

FDIC

Brokered Deposits

Investigations, O ffice of

20

Federal Savings and Loan Insurance

Call Reports

Inform ation System (LAMIS)

2-3

xii, 4-5, 13, 60

Bank Bribery Statute

21

Liquidation Asset Management

Net W orth Certificates

17

Assessments

Legislative Affairs, O ffice of

Liquidation, Division of

xiv, 21, 28

Application Tracking System

A ct of 1987

48

see Payoffs

Deposit Payoffs

5-6, 13, 51
9
14-16
28

Standing Committees of the FDIC

20

Training
10

DBS

xiii, 19

New FDIC Training Center
U .S. Department of Agriculture's
National Finance Center
W hole Bank Transaction

17, 18, 24
xiii , 5, 12, 17