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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
Total Insured Banks
Problem Banks
% Increase in
Number of
Problem Banks
1987
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
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
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
1985
1984
1983
0
1
0
0
0
0
1
0
1
2
0
0
0
Louisiana
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
mi
■n
- el
1050
111
900
IIS
750
ISIS
ills
842
1:1.
Ills
861
111(11
600
8118ill»
450
111!
402
382
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)
Franklin National Bank
New York, New York
Assets
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 •* .
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No. of Banks
200
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■ 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
($000 omitted)
Total Deposits ($)
Number of Accounts
Uninsured Deposits ($)
Assistance
Transactions
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
Si::;:
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
Notes receivable to:
Assist operating banks
Facilitate deposit assumptions
Facilitate merger agreements
Other receivables:
Special assistance
Allowance for losses
$
1986
0
0
$129,809
(74,503)
0
55,306
27,000
87,600
351,148
27,000
88,136
401,648
465,748
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
Loans and related assets
Promissory note
Dividend receivable
Preferred stock
Allowance for losses
1987
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
Depositors' claims paid
Depositors' claims unpaid
Assumption transactions in a fiduciary capacity
Assets purchased in a corporate capacity
1987
1986
$ 3,180,629
18,717
6,897,625
280,634
$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
Land
O ffice buildings
Accumulated depreciation
1987
1986
$28,283
54,281
(9,126)
$ 4,680
54,068
(7,738)
$73,438
$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
Federal indebtedness
Promissory (exchange) notes
1987
1986
$2,623,472
0
$2,904,299
129,809
$2,623,472
$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
Notes indebtedness
Depositors' claims unpaid
1987
1986
$185,405
18,717
$822,973
24,269
$204,122
$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
Net receivables from assistance to an insured bank
Prior year adjustments
Net receivables from failures of insured banks
Current year provision
Prior year adjustments
Termination adjustments
Corporation litigation
Current year provision
Prior year adjustments
Term ination adjustments
$
(74,503)
1986
$
(62,493)
1,236,952
73,300
0
191,805
0
(5,000)
1,310,252
186,805
(50,994)
349,846
1,961,947
(161,293)
17,165
1,854,632
505,014
0
1,817,819
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 FDIC
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
‘Dividend advanced by FDIC
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 FDIC
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
933
995
1,025
1,241
1939 ......
1940 ......
1941.....
1942 .....
1943 .....
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
1,355
3,214
378
396
1944 .....
1945 ......
1946 ......
1947 .....
1948 .....
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
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
1502
286
1,540
663
245
1,010
12
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
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
Recoveries Estimated
Disburse to Dec. 31 additional
1987 recoveries Losses'
ments
47 8,918,676 3,373,000 1,489,123 4,056,553
59
641
792
97
234
146
245
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
No.
of
banks
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
Directors, Guidelines fo r
Financial Institution
xiii, 8
16
Directors and Officers Liability
9, 29
Disclosure Statements
xiv, 21, 28
7, 19
Application Tracking System
Applications to the FDIC
7
Assessments
Asset Marketing
Assistance Transactions
Equal Employment Opportunity,
17
12
Examinations
2-3
Executive Secretary, O ffice of
Failed Banks
xiii, 2-3
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
Fair Housing, Proposed Regulation
22
Committee on Management
vii
Officials and Employees,
Number of
25
Organization Chart
Regional Offices and Directors
Foreign Banks, U .S. Branches
Fraud and Insider Abuse
Call Reports
9, 17-18
7
Capital Forbearance
Capital Requirements Regulation
29
Cease-and-Desist Orders
14
Clarke, Robert L.
iv, v
Competitive Equality Banking
xiii, xiv, 6, 21,28, 29
Comptroller General of the
United States
Consumer Affairs, O ffice of
Consumer Inquiries and Complaints
45
10, 19
23
29
xiii, 7-8, 14
20
30
General Accounting O ffice (GAO)
23, 44-45
Hope, C .C ., Jr.
Corporate Audits and Internal
23
Corporate Communications,
xiv, 28
xiii, 8
21
20
7, 20, 30
Consumer
23
Legal Division
Legislation Enacted in 1987
28
Off-Balance-Sheet Activities
3
Outside Audit
8
Payoffs
6, 11, 13, 50
Privacy Act of 1974
5-6, 13, 51
9
14-16
28
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
"Red Flag" Warning Signs
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
Securities Transfer Agents
30
Seidman. L. W illiam
iv. v, xii-xiv.
10. 18. 22. 23. 24
3
Shared National Credit Program
18
International
5, 12
Nonbank Banks
iv, v, 23
Call Reports
Insured Deposit Transfers
7
Mergers
Savings Banks
Hotlines
12, 38
M andate fo r Change: Restructuring
the Banking Industry
xiii-xiv, 22
Reports of Condition and Income
5, 21, 42
Guidelines fo r Financial
Institution Directors
15-16
Research and Strategic Planning,
G arn-St Germain Depository
Institutions Act of 1982
Gramm-Rudman-Hollings Act
Litigation
31
Freedom of Inform ation Reform
A ct of 1986
19
11-13
28
xiii, 23
Continental Illinois National Bank
and Trust Company of Chicago
Freedom of Inform ation Act,
Inform ation System (LAMIS)
Liquidation, Division of
Real Estate Appraisal Guidelines
Examination Council (FFIEC)
30
vi
ix
Federal Financial Institutions
22
Delegation of Authority
viii
Officials, List of
Budget and Planning, Office of
Corporate Support Offices
iv, v, 20
Budget
Financial Statements of the FDIC
21
Liquidation Asset Management
Personnel Management, O ffice of
Board of Directors
Brokered Deposits
O ffice of
30
FDIC
Federal Savings and Loan Insurance
6 ,1 2 ,1 7 ,2 1 ,2 8
Investigations, O ffice of
20
see Bank Failures
Corporation (FSLIC)
Legislative Affairs, O ffice of
Net W orth Certificates
25
8, 14
Bank Examinations
14
Enforcement Actions
O ffice of
xii, 4-5, 13, 60
Bank Bribery Statute
A ct of 1987
48
see Payoffs
Deposit Payoffs
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
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