36
natural and to be expected.
Bankers are looking for the capital ratio
that will maximize their shareholder's wealth.
tradeoffs between risk and return.
They do this by making
Greater returns are most frequently
achieved only by taking on greater degrees of risk.
On the other side
of the coin, bank supervisors try to aid society and act in the public's
best interest.
The supervisors are out to protect the depositor, to
encourage a competitive and efficient banking environment, and to promote
a stable money supply Which would aid in preventing any number of a kind
of financial panics.
Tradeoffs must be made in setting the capital require-
ment, because all three of these objectives cannot be met at the same time.
The supervisors are forced to carefully examine the social costs of achieving
107
the different objectives before setting capital requirements.
The level that current capital ratios are at can be attributed to four
factors.
These factors are:
1) federal deposit insurance, 2) greater
108
economic stability, 3) formation of bank holding companies, and 4) inflation.
All four of these factors put together led to a reduction in bank capital
ratios.
Banks acquired the ability to absorb losses and withstand some
unexpected changes.
Of great benefit to the banks was their ability to
have lower and lower capital ratios without being detrimental to the riskiness
of the banking industry.
Since the merits of the Federal Deposit Insurance
Corporation have already been presented, it should be quite clear the effect
that the insurance coverage has had on bank capital ratios.
After a clear look into capital adequacy, one reasons that this cannot
be the only factor Which plays a role in determining Whether a bank is safe
and sound.
The strength of individual banks and the banking system as a
whole is dependent upon asset quality, management quality, earnings, and
109
When all of the.se factors intermingle with the decreasing
liquidity.
37
capital ratios, the banking industry is at a greater risk because more
capital is needed to protect the system.
Many people also contend that
the role of bad management had been a key factor in many of the recent
bank failures.
Others argue that because of the increasing number of
high-technology techniques coming into play, bankers are better able to
make short-run investment decisions and long-term strategic decisions.
Because of this newly acquired knowledge, and improved management
techniques, the supporters of this theory feel that the improvements have
most likely reduced, even if slightly, the capital ratios that are needed
for a given protection level.
Once again, to reiterate the purpose of capital, it serves several
crucial functions.
No bank is capable to operate without capital.
It
protects depositors and other bank creditors in the event of failure.
How much capital a bank has and the resulting protection that capital
affords a bank's creditors are important determinants of a bank's ability
to attract funds and the rates it must pay for these funds.
Capital permits
a bank to withstand occasional losses, and also enables a bank to assume
risk.
If you take away those elements that involve no risk from banking,
then little is left.
Capital can then be said to be the essential element
110
that permits a bank to engage in banking.
Capital is then adequate when it reduces the chances of future insolvency
of an institution to some predetermined minimum level, or alternatively,
when the premium paid by the bank to the insurer fully covers the risks
borne by the insurer.
These risks depend upon the risk in the portfolio
111
selected by the bank, on its capital, and on the terms of the insurance.
There are two major groups of outside auditors which regulate the
banking system.
·1'
,
,I
These are the regulatory or bank examiners and also
38
certified public accountants.
The regulatory examiners are made up of
state banking department bank examiners, Federal Reserve bank examiners,
the National Bank examiners who serve under the direction of the Comptroller
of the Currency and examine national banks, and finally the Federal Deposit
112
State-chartered banks that are
Insurance Corporation bank examiners.
members of the Federal Reserve System are examined by the Federal Reserve
bank examiners as well as their own separate state banking department
examiners.
Aside from the fact that internal bank auditors are employees of the
Ii-
•
bank, the primary difference between internal and outside bank auditors
has to do with their respective functions and objectives.
The primary
concern of internal bank auditors is to prevent and detect loss.
There
are many ways in which losses can occur, namely through negligence, fraud,
or incompetence.
The internal auditor's duty is to guard against all
circumstances which may create loss.
The regulatory examiners, outside auditors and certified public
accountants have much in common in regards to the bank audit function.
They have a genuine interest in the financial soundness of the bank, the
competence of its management, its compliance with the applicable statutory
laws and regulations, the effectiveness of its internal auditing program,
and also the competence of the auditor responsible for the whole program.
Federal Reserve Examiners, National Bank Examiners, and State Examiners
usually have three separate groups of specialized examiners for commercial
113
banking, fiduciary functions, and electronic data processing.
The
examinations are usually conducted on an annual basis, except the Comptroller
of the Currency schedules examinations three times in a period of two years.
The Comptroller of the Currency also has the authority to examine a bank
39
more times than the minimum if he believes it to be necessary.
In some
states the Federal Reserve Examiners and the State Banking Department
Examiners lessen the burden on the auditing department of the bank by
arranging to go into a bank to examine it together.
Banks hire certified public accountants to certify the fairness and
accurateness of their annual statements of condition.
Certified public
accountants need to spend about six months at a bank and also use the
bank's auditing department to assess the bank's position with confidence.
It is important to note that regulatory examiners and certified public
accountants cannot be substituted for an internal auditing program within
a bank.
They are unable to spend enough time within the organization.
It is essential that there be close communication between the outside and
internal auditors.
The bank is the beneficiary of what each group has to
offer the other.
Over the years it became more and more obvious that the old tedious
auditing approaches would not make the auditor useful to management, nor
i
~
i
! .
, !
Ii
would it help to safeguard the bank.
Things were moving at a much faster
pace, and there was a greater volume of banks to deal with.
Management
needs an auditor who is an informed, skilled observer who can analyze the
bank's functions and their underlying systems and procedures.
In addition
to this, management needs an auditor who is also a banker with a need to
contribute to the profit picture.
The auditor must be able to weigh risks
in order to set priorities and decide whether the cost of auditing outweighs
the risks.
The function of the auditor as outlined in Internal Bank Auditing is
such that,
The auditor must make certain that the bank's accounting,
operating, and control systems provide maximum assurance
.~-------------~~---------.--.-
r ,
!
40
i,
that the bank's assets are accurately recorded and safeguarded; that liabilities are properly accounted for; that
income is collected and recorded; that expenses are in line,
authorized, and accounted for; that th e bank is complying
with applicable banking law and regulations; that bank
policies are being followed; and that personnel are following
prescribed procedures. 114
The auditor must be scanning all of these areas at the same time to be aware
of deviations from policy and procedure, and also the improper use of authority
which could lead to a potential loss.
Just recently the accounting firm of
Peat, Marwick, Mitchell and Company was ordered to disclose completely an
internal study of its 1981 audit of the Penn Square Bank.
The accounting
firm is being sued by at least ten parties for failing to spot financial
115
troubles at Penn Square.
The plaintiffs are suing for more than $400 million
because after Peat, Marwick, Mitchell and Company gave the bank a clean
bill of health, these people bought certificates of deposit offered by
116
Penn Square which became worthless when the bank failed.
Accounting
firms all across the nation fear self-incrimination could stem from all
of this.
There had always been a lot of controversy surrounding the auditor's
position in the bank's reporting structure.
This controversy has subsided
in the last decade and the internal bank auditor now holds the respect of
the banking, accounting, and financial world.
In the majority of large
commercial banks, the internal auditor reports to the chairman of the bank's
board of directors through a director's committee.
The bylaws of the bank
set up the guidelines for exactly who the internal auditor is to report to.
I
This system tends to separate the auditor from the personal and political
associations with banking operations, which is seen as a real plus by the
regulatory authorities.
Although the auditor tends to be independent, this
does not mean that he or she is not accountable to management.
The auditor
.----.
41
must be free to express his opinions of the operations, including its
systems and management, without fear of reprisal, and also be free to
audit or examine any area of the bank.
Because a bank's board of directors
is responsible for providing stable and profitable administration of the
bank, it is only natural that they seek out an auditor who is competent,
honest, and dedicated; and acts as an advisor and aid.
Management, or should we say mis-management has received much criticism
with regard to the bank failures in 1984.
quality of the bank's management.
Assessments can be made of the
By asking the following questions an
analysis can be made of a bank's management.
bank's strategy?
share?
What is known about this
Is it expansionary or static?
Is it innovative?
its overseas strategy?
and the Central Bank?
signs of one-man rule?
Is it defending its market
What business sectors does it cater to?
What is
What is its relationship with the regulatory agencies
What degree of competition is it facing?
Are there
Has there been continuity of management?
a great deal of management turnover?
Is there
Is this bank known for giving many
talented people to other banks?
Along with these questions, others must be posed as to the decision-
1, .
.
,
jl
making and control process.
manner are they made?
Who are the credit decisions made by?
Are single individuals allowed to approve large sums?
How does the internal control system function?
regulatory agencies?
In what
What is the strength of the
How often are in-depth audits conducted?
controlled is the foreign exchange function?
How well
Is there a limit to single
borrowers on loans?
.
,
I'
Another way management can be assessed is by its choice of accounting
policies.
Are the earnings on a cash basis or an accrual basis?
external auditing firm have much influence?
Does the
What is the policy on recognizing
,
r
1,
42
loan losses?
Are secret reserves allowable?
of their size?
If so, what is an estimate
Are capital projects capitalized and depreciated over
several years or expensed?
The final assessments can be made by looking at the bank management's
attitude towards risk.
relies on this attitude.
The bank's reputation in the marketplace often
Innovative banks tend to be risk takers, but in
commercial lending, these risks must be assessed.
All innovative bankers
are not risk takers in the sense that their innovations may be in the
telecommunications or marketing area.
Some danger signs to look out for
regarding management's attitude towards risk would be a large concentration
of assets in one business sector, unusually large foreign exchange activity
in relation to certain currencies, or an overreliance on purchased money
as a basis for expansion instead of relying on deposits.
Usually, very
rapid growth can be a cause for concern, especially when it is "lendingled" expansion.
When one puts all of the above mentioned assessments together,
117
a pretty good idea of the quality of management can be obtained.
Today, banking is a much more fast-paced, complex business in which
to compete.
As a result, it is a much more difficult business to supervise.
Banks can get into trouble in a multitude of ways, and it can happen so quickly
many people involved do not even know what the problem was.
The Federal Deposit Insurance Corporation currently spends $6 million
118
per year on training their skilled personnel.
They have made a definite
committment to upgrade the quality of their off-site analysis and monitoring
of banks.
One major step in the right direction is that the Federal Deposit
Insurance Corporation is targeting its supervisory efforts in those areas
where their exposure is the greatest.
institutions and troubled banks.
This area happens to be the larger
A breakthrough they have made was the
i
43
complete overhaul of the applications procedure to eliminate a lot of
unnecessary paperwork and speed the whole process up.
The Federal Deposit
Insurance Corporation's main goal is to be as efficient and effective as
humanly possible.
Many people are happy to see the regulatory agency
move forcefully against the small percentage of troubled banks, and get
off the backs of the majority of well-managed banks.
Competition in financial services was tightly controlled for most of
the last fifty years.
tightly regulated.
Entry and expansion into the business was very
The banking environment of today is radically different.
Banks are no longer sheltered from their competition, and this makes some
bankers very uneasy.
accomplished fact.
ulation.
For the most part, liability-side deregulation is an
The big controversy today is over the asset-side dereg-
The deregulation process is a long way from complete, despite the
small triumphs that have been made.
The area of bank powers requires special attention.
There are many
nondepository institutions such as Merrill Lynch, Sears, and American
Express which are now offering a wide array of services which compete
directly with those services offered by banks.
Yet, banks are prohibited
from entering into the so-called nonbanking markets in which the abovementioned firms operate.
There is clearly an inequality here.
Will the half-finished task of deregulation ever be completed?
Banks
and thrifts, by offering a broader range of financial services, would be
better able to meet and offset the huge cost of deposit deregulation.
Few will argue against the fact that complete deregulation would give the
,
American public access to more convenient services at more competitive prices.
\
There are those however, that do argue that consumers will suffer if product
j
expansion is permitted, because they feel that the larger banks will dominate
i
=
44
in the newly opened markets and restrict the levels of competition.
More
than likely, what will happen is that the competition will enhance the
banking environment if the barriers to the different financial markets
are removed.
Throughout banking history, new market participants have
developed creative new programs which resulted in important benefits to
the American public.
The benefits to the banking public clearly outweigh
the concerns that banks will be exposed to higher levels of risk.
There are steps that should be taken along the path toward deregulation
to protect against unsafe and abusive practices.
The most important step
in this direction would be a reform of the deposit insurance system.
A system is needed to help instill more private-sector discipline and
fairly handle large and small bank failures alike.
There are serious
problems in the way the deposit insurance system operates which require
urgent attention.
The system now if effect has been accused of being
grossly unfair to smaller banks and well-run banks.
The deposit insurance system has been successful beyond the imagination
of its originators, yet the fact remains that it is more than 50 years old
and the environment for which it was set up to protect and regulate has
changed.
The problem here is that while the times and financial environment
have changed, the deposit insurance system has not.
There has been a recommendation to Congress by the Federal Deposit
Insurance Corporation to replace the flat-rate deposit insurance assessments
with a system of risk related premiums.
This measure would allow the Federal
"1',
"
Deposit Insurance Corporation to more or less put a price tag on the coverage
to reflect the risk of individual banks.
Another proposal is to charge banks
for all above-normal costs of supervision such as the costs of more frequent
examinations which problem banks require.
This would provide a small, but
~
,
45
nonetheless important incentive for banks to promptly correct their
119
problems.
One of the most effective ways to control excessive risk-taking
is to expose banks to the discipline of the market.
system has taken away some of this effectiveness.
The deposit insurance
Those depositors with
balances over the $100,000 insured limit are the targeted source of the
market discipline.
If these "uninsured" depositors were to lose money,
it is reasoned that the next time they deposit money in a bank, they would
be more cautious and check that their deposits were in a sound institution.
The problem is that over the years, the Federal Deposit Insurance Corporation
has provided these "uninsured" depositors with de facto 100 percent coverage
120
in most bank failures, especially the failures of large institutions.
The 100 percent coverage is achieved by merging failed banks with other banks.
The externality of the deposit insurance system is that these uninsured
depositors at large commercial banks do not feel that they are at any risk
since they recognize that the Federal Deposit Insurance Corporation prefers
to handle large bank failures through mergers.
In conclusion, instead of hearing about everything that the United
States' banks are doing wrong, the following is an interesting list of
achievements which the Federal Deposit Insurance Corporation can boast:
1)
The Corporation has reduced bank failures to a very small number (con-
sidering the number before their existence), 2) Depositors enjoy an absolute
guarantee up to the prescribed limit against loss of an insured deposit
resulting from a bank's insolvency.
Losses on deposits exceeding the
insurance maximum have been minimal, largely because of the discipline
exerted by bank supervision, 3) An important part of the Nation's money
supply -- bank deposits -- is protected from erosion that otherwise would
46
occur because of bank failures, 4) Minimal insurance claims and good
recoveries on assumed assets have enabled the Corporation to build up
sizable insurance reserves, 5) Deposit confidence in the nation's banks
has been maintained at a high level, and 6) Banking policies and practices
have been improved, and overall safety and soundness of bank operations
121
have been strengthened.
William M. Isaac, Chairman of the Federal Deposit Insurance Corporation
says about banking,
Despite the economic and competitive environments and the
failure of Congress to give you the tools you need, 85 percent
of all banks are in good condition. Earnings are under
pressure, but last year the banking industry earned $15 bi1~
lion, up slightly from 1982, making it the third most profitable industry in the nation in terms of total earnings.
Banking's aggregate capital ratio has increased for four
successive years, and its loan loss reserve ratio has increased for six successive years. The failure rate is high,
but at less than one-half of one percent per year, it remains
well below any other industry with which I am familiar and
122
far lower than was typical even in banking prior to the 1930's.
The Chairman is the first to admit that there are problems in banking,
after all, the environment in which they've been forced to operate is not
the most serene.
While there may be many weaknesses in the banking system,
the strengths are gleaming1y visible.
Unfortunately, the media and everyone
else prefer to emphasize the weaknesses and faults rather than dwell on
the good, which is without a doubt present.
Finally, the banking system
as a whole may be temporarily down, but it is definitely not out.
As long
as the American public maintains confidence in the banking system, and
the regulatory agencies and management of the banks do their best to ensure
the soundness of the banking system, we can pull ourselves through this
crisis together -- down, but not out.
1.
Commercial Bank Suspension, 1921-33.
2.
Number of Banks Closed Because of Financial Difficulties, 1934-1984.
3.
Deposits of Banks Closed Because of Financial Difficulties, 1934-1983.
4.
1984 Bank Failures.
5.
Insured Banks Closed During 1983, Requiring Disbursements by the
Federal Deposit Insurance Corporation.
6.
Insured Deposits and the Deposit Insurance Fund, 1934-1983.
7.
Federal Bank Supervisors, and Proposed Capital Standards.
ii§
.;
(i.n
Nu!V\ 6E r<..
''lEAK
1921
1922
1923
1924
1925
1926
1927
1928
1929
1930
1931
1932
1933
(j~
LoSsES BeRNS
D£PCS\lS
0usP£NSIONS
506
366
646
775
617
975
669
498
659
1,350
2,293
1,453
4,000
BY DfPCSIT6KS
172,806
91, 182
149,601
210,150
166,937
260,153
199,332
142,386
230,643
837,096
1,690,232
706,187
3,596,708
~5<.>G;
+1.. lk0:,-,d6 i'"S
R~rc:..cnt- cf
Derc')1 h In f\ It
As (.\.
Cv,;H11er(lc./ 6,,,1 kS
59,967
38,223
62,142
79,381
60,799
83,066
60,681
43,813
76,659
237,359
390,476
168,302
540,396
.21%
.13
.19
.23
.16
.21
.15
.10
.18
:57
1.01
.57
2.15
n
~
'"....
.-
~
~.
-'
CHART lF2
NUMBER OF BANKS CLOSED BECAUSE
OF FINANCIAL DIFFICULTIES 124
1934-1984
N tj /vl Bt::. R
"-::L.-
f\JUI'I.i -
1~~t::::-
\j ,,":S l)
\IJ,+kvt-
\fCAR
TOTAL
~-j\tsljKtD
TOTAL
891
136
755
8
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
52
6
3
7
7
12
5
2
3
9
26
69
1
77
2
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
-iDTAL
~~'Iy\
4
1
3
1
1
2
1
1
5
1
4
2
1
4
1
1
2
LU"til
~ ,'Sbt'(",,(~ed(i
FDie \-roJlt='DI(
74
60
43
15
20
5
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
OJ
~1'jf)U(~"~"lk
2
1
1
r
1
747
9
25
69
75
74
60
43
15
20
5
2
1
1
5
3
4
4
"j
2
2
3
2
2
1
5
2
1
4
3
1
5
1
2
7
5
7
4
3
9
7
6
1
6
4
'"
NUM r36R
~[AP- IOiAL
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
14
17
6
7
10
10
10
42
48
79
(\J(j~-
INS v.. fQs D
v,Ji+h
d(s be ''Sel1,<, li f" ct<; t)~ ('.':J1l£r~
Vyr=:l)l( t't 1--1) Ie
V0 1+1 lCe't
~SLJ;,(ED
T6TAL
1
1
13
16
6
7
10
10
10
42
48
79
13
16
6
7
10
10
10
42
48
79
CHART 1F3
DEPOSITS OF BANKS CLOSED BECAUS~
OF FINANCIAL DIFFICULTIES
25
1934-1983
[)EPOS I TS (IN
-njM~A tJD'S vI"~.
-l--N S
'yEAR
TOTAL
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
N0N-
-IOTAL .INSURED ic;TAI25,584,821
143,501
25,441,321
37,332
13,988
28,100
34,205
60,722
160,211
142,788
29,796
19,540
12,525
1,915
5,695
494
7,207
10,674
9,217
5,555
6,464
3,3l3
45,101
2,948
11,953
11,690
12,502
10,4l3
2,593
7,965
10,611
4,231
23,444
23,867
45,256
106,171
10,878
22,524
40, l34
55,229
132,058
99,784
971,296
1,575,832
35,365
583
592
528
1,038
2,439
358
79
355
1,968
l3,405
27,508
33,677
59,684
157,772
142,430
29,717
19,185
12,525
1,915
5,695
347
7,040
10,674
6,665
5,5l3
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
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
D·ULu~f:>
c)
,,_-,
_
LJ R I::::-
vJ d-h 0,'+
({ (5bur:'j:;I) \£j
hyi=-DiC
41,147
85
328
1,190
26,449
10,084
D
«5
V'J,+h
~i"h.)I'j"./ riff lis
bf
roc
25,400,174
1,968
l3,320
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
5,5l3
3,408
3,170
18,262
998
11,953
11,330
1,163
8,240
2,593
6,930
8,936
3,011
23,444
23,438
43,861
103,523
10,878
22,524
40, l34
54,806
l32,058
20,480
971,296
1,575,832
•
'"
~ON-
._[OTAL
1975
1976
1977
1978
1979
1980
1981
1982
1983
340,574
865,659
205,208
854,154
110,696
216,300
3,826,022
9,908,379
5,441,608
~SUk'Ej)
1,000
800
339,574
864,859
205,208
854,154
110,696
216,300
3,826,022
9,908,379
5,441,608
339,574
864,859
205,208
854,154
llO ,696
216,300
3,826,022
9,908,379
5,441,608
'.
.,
:i'
-,
E
'~-.-'
.'O-"",,~
1984 BANK FAILURES 126
NAME AND LOCATION
Farmers Bank & Trust Company
DATE OF CLOSING
OR
DEPOSIT ASSUMPTION
TOTAL
DEPOSITS
January 6, 1984
I
LI~UIDATION
~~!.I0D _.
$49 million
deposit assumption
Winchester, Tennessee
Mid-South Bank & Trust Company
Murfreesboro, Tennessee
City & County Bank of Jefferson
County
White Pine, Tennessee
January 20, 1984
Indian Springs State Bank
January 27, 1984
1$25.7 millionl deposit transfer
The Brotherhood Bank & Trust Co.
Kansas City, Kansas
Tucker County Bank
Parsons, West Virginia
February 3, 1984
1$15.7 millionl deposit assumption
Citizens Nat~onal Bank of Elkins
Elkins, West Virginia
Emerald Empire Banking Company
Springfield, Oregon
February 3, 1984
1$20.7 million I deposit assumption
Citizens Valley Bank
Albany, Oregon
Heritage Bank of Bureau County
DePue, Illinois
February 8, 1984
I $8
The Colonial Trust and Savings
Bank of Bureau County
DePue, Illinois
West Olympia Bank
Los Angeles, California
February 10, 1984
I $19
$22 million
deposit assumption
" Brownfield State Bank & Trust Co.
Brownfield, Texas
United Bank of Oregon
Milwaukie, Oregon
Merchants & Planters Bank of
Newport
Newport, Tennessee
Kansas City, Kansas
I.
RECEIVER OR LIQUIDATING
AGENT OR ASSUMING BANK
million
million
February 17, 1984 1$36.9 million
I
deposit assumption
I deposit
assumption
Wilshire State Bank
Los Angeles, California
deposit assumption
Brownfield State Bank
Brownfield, Texas
United States National Bank
of Oregon
Portland, Oregon
\
March 2, 1984
1$14.5 million
deposit assumption
March 2, 1984
$11.4 million
I deposit assumption
("J
lO, All American National Bank
Virginia Gardens, Florida
Capital Bank
North Bay Village, Florida
~
.,.
%
----------------------------------------------------------',=
l. Nationa1 Bank and Trust Company of
Traverse City
I March
9,
1984
deposit assumption
$66 million
NBD Northwest Bank, N.A.
Traverse City, Michigan
Traverse City, Michigan
~.
I deposit
March 16, 1984
$41.3 million
March 16, 1984
$153.3 millio~
First Security Bank
Erwin, Tennessee
April 6, 1984
$21.8 million
I deposit assumption
Bank of Tennessee
Kingsport, Tennessee
Watauga Valley Bank
Elizabethton, Tennessee
April 6, 1984
$13.4 million
i deposit assumption
Carter County Bank
Elizabethton, Tennessee
Security National Bank of Lubbock
Lubbock, Texas
April 13, 1984
$40.6 million I deposit transfer
The Shelby National Bank of
Shelbyville
Shelbyville, Indiana
April 19, 1984
$60 million
I
1deposit
Gamaliel Bank
Gamaliel, Kentucky
April 19, 1984
$21.6 million
~
United of America Bank
Chicago, Illinois
April 26, 1984
$29 million
II depos it
Citizens Bank of Monroe County
Tellico Plains, Tennessee
April 27, 1984
$20.8 mill ion
April 27, 1984
$154.8 milli01
State Bank of Mills
Mills, Wyoming
May 4, 1984
$6 million
Western National Bank of Casper
Casper, Wyoming
May 4, 1984
$22 mill ion
Seminole State National Bank
transfer
Seminole, Texas
I. Heritage Bank
payoff
Anaheim, California
1. West Coast Bank
Los Angeles, California
f
!
I
assumption
deposit transfer
transfer
i
Ii
deposit assumption
payoff
Seminole National Bank
Midland, Texas
Federal Deposit Insurance
Corporat ion
City Bank, N.A.
Lubbock, Texas
American Fletcher National
Bank and Trust Co.
Indianapolis, Indiana
Deposit Bank of Monroe County
Tompkinsville, Kentucky
Mid-City National Bank of Chicago
Chicago, Illinois
Bank of Oak Ridge
Oak Ridge, Tennessee
Federal Deposit Insurance
Corporation
! depos it
ass umpt ion
Mountain plaza National Bank
Casper, Wyoming
I deposit
assumption
Wyoming National Bank of
West Casper
Casper, Wyoming
I
-------------- ------T---- ------------
$20 million
24a The First National Bank of Rushfor1 May 4, 1984
Rushford, Minnesota
I May
I deposit assumption
----------
Goodhue County National Bank
Red Wing, Minnesota
4, 1984
$15.2 million I deposit transfer
American State Bank of Snyder
Snyder, Texas
26. The National Bank of Carmel
Carmel-By-The-Sea, California
May 8, 1984
$70.8 million I deposit transfer
County Bank and Trust
Santa Cruz, California
27. The Mississippi Bank
Jackson, Mississippi
May 11, 1984
$167.6
28. First Continental Bank & Trust
Company of Del City
Del City, Oklahoma
May 11, 1984
29. Bledsoe County Bank
Pikeville, Tennessee
May 18, 1984
lO. Planters Trust & Savings Bank
May 18, 1984
25. First National Bank
Snyder, Texas
12. Bank of Irvine
Irvine, California
13. First National Bank of Prior Lake
Prior Lake, Minnesota
1$92.3 million
1
1$4.9 mill ion
i
of Opelousas
Opelousas, Louisiana
31. Washington National Bank
of Chicago
Chicago, Illinois
millio~deposit
!
$57 million
deposit transfer
Grenada Bank
Grenada, Mississippi
United Oklahoma Bank of Del City
IDel City, Oklahoma
,
I,
i depos it assumption
I
I
I
i deposit
assumption
I,•
I
Citizens Bank of Dunlap
i,Dunlap, Tennessee
I
:First National Bank of St.
,Landry Parish
, Opelousas, Louisiana
:' Banco Popular de Puerto Rico
i San Juan, Puerto Rico
t
\
'i
II
$14.2 million \ deposit assumption
: May 18, 1984
!;
i
assumption
$28.4 mi 11 ion! depos it assumption
May 18, 1984
May 24, 1984
i
,, $13.4 million
"
I
It
deposit assumption
I
I deposit
June 1, 1984
35. Cherokee County Bank
Centre, Alabama
June 5, 1984
I
$36.7 million I deposit assumption
l6. Stewardship Bank of Oregon
Portland, Oregon
June 8, 1984
$5.4 million
I
I
payoff
iFirst National Bank of Shakopee
Shakopee, Minnesota
I
l4. Garden Grove Community Bank
Garden Grove, California
$37 million
'Security Pacific State Bank
: Irvine, California
assumption
:Capital Bank
tDowney, California
r
First Alabama Bank, N.A.
Anniston, Alabama
Ii
iFederal Deposit Insurance
Corporation
.,
M
.........
".----
$23.7 million Ideposit assumption
~.---~
7. The Lawrence County Bank
Lawrenceburg, Tennessee
June 15, 1984
8. Farmers State Bank
Lyons, South Dakota
June 15, 1984
$3 million
9. The Corning Bank
Corning, Arkansas
June 15, 1984
$31.8 million !deposit assumption
The Corning Bank
Corning, Arkansas
>0. Republic Bank of Kansas City
Kansas City, Missouri
June 18, 1984
$37.7 million ~deposit transfer
Landmark Bank of Kansas City
Kansas City, Missouri
>1. The Farmers National Bank of
Aurelia
Aure 1 ia , Iowa
June 21, 1984
$18.8 million
.!
deposit assumption
>2. American Bank
Saint Joseph, Tennessee
June 27, 1984
$30.7 mill ion
:1
depos it transfer
·3. East Texas Bank & Trust Company
June 29, 1984
~
.
$91.2 million "!!~ d epos~t
assumption
Lawrenceburg, Tennessee
Longview, Texas
July 12, 1984
>4. The Coffeen National Bank
Coffeen, Illinois
5. Guaranty State Bank of Saint Paul
Saint Paul, Minnesota
>6. Coalmont Savings Bank
Coalmont, Tennessee
,7. Jackson County National Bank
Tuckerman, Arkansas
·8. Peoples State Bank of Clay County
Poland, Indiana
9. The Tingley State Savings Bank
Mount Ayr, Iowa
Farmers Bank of Lawrence County
$9.3 million
I deposit assumption
!!
depos it assumption
!I
J July
19, 1984
I
I
$25.2 million
! deposit
assumption
I
Ii
July 24, 1984
$23.5 million : deposit assumption
August 9, 1984
$13.2 million
IAUgUst 10, 1984
$12.8 million
I
$18 million
•
August 10, 1984
deposit assumption
I
I
depos it assumption
, deposit
assumption
Dakota State Bank
Colman, South Dakota
Heritage Bank, N.A.
, Aure 1 ia, Iowa
Commercial and Industrial Bank
Memphis, Tennessee
Texas National Bank
Longview, Texas
Coffeen State Bank
ICoffeen, Illinois
I She lard
National Bank
1St. Louis Park, Minnesota
,First Bank of Marion County
Tennessee
ISouth Pittsburg,
I
First State Bank of Newport
Newport, Arkansas
First State Bank
Poland, Indiana
Hawkeye Bank and Trust
Mount Ayr, Iowa
!"""'"-~
U"
_
••
•
.0''''
.-------.-.---.-.. -........---...-.--~
.._--_.
1
iO. American National Bank in McLean
McLean, Texas
August 16, 1984
$13.1 mi11ionldeposit assumption
McLean Bank of Commerce
McLean, Texas
1. Girod Trust Company
August 16, 1984
$258 million Ideposit assumption
Citibank, N.A.
New York, New York
,2. The First State Bank
Thayer, Kansas
August 22, 1984
$11 million
,3. Hereford State Bank
Hereford, Colorado
August 24, 1984
$2.5 million
,4. Bank of the Northwest
Eugene, Oregon
August 31, 1984
$16 million
,5. David City Bank
David City, Nebraska
September 6, 1984
$17.4 mi11ionideposit assumption
,6. Oakland Savings Bank
Oakland, Iowa
September 7, 1984
San Juan, Puerto Rico
Ideposit assumption
, First State Bank
i; Thayer, Kansas
payoff
Federal Deposit Insurance
Corporation
deposit assumption
First Interstate Bank of Oregon,NA
portland, Oregon
The First National Bank of Omaha
Omaha, Nebraska
!
$19.2 mi11ion!deposit assumption
Oakland State Bank
Oakland, Iowa
,
I
September 14, 1984: $25.2 millionldeposit assumption
,7. Community Bank and Trust Company
Enid, Oklahoma
The First National Bank and Trust
Company of Enid
Enid, Oklahoma
°"""1,,,00,' moo..,".,
i8. Bank of Verdigre and Trust Company
Verdigre, Nebraska
September 19, 1984
,'2.6
i9. Century National Bank
Jacksonville, Florida
September 20, 1984
$15.2 mi11ionldeposit assumption
The National Bank of Neligh
Neligh, Nebraska
Barnett Banks of Florida, Inc.
Jacksonville, Florida
,
;0. Security State Bank
Weatherford, Oklahoma
: September 21, 1984' $45.3 million Ideposit assumption
'1. Orange Savings Bank
Livingston, New Jersey
j
2. The Farmers and Merchants Bank
Tecumseh, Oklahoma
September 28, 1984
,,i October 5, 1984
United Community Bank
Weatherford, Oklahoma
$513 millioil"!deposit assumption
(in assets) ,
Hudson City Savings Bank
Paramus, New Jersey
$28 million
Republic Bank of Tecumseh
Oklahoma City, Oklahoma
Ideposit assumption
I
,.
i
~
~~' ~~it-.v
_i.!ift ~ j'~.,; .... !.~
,,' ....... ;.~
,--~ ~ '9'
"....,....,...-.. ",',~".--.~
.•---~---~-~~
The Energy Bank
Oak Ridge, Tennessee
United Missouri Bank of Brookfield,
Brookfield, Missouri
The Bank of Thomas
Thomas, Oklahoma
State Bank of Madison
Madison, Minnesota
The First National Bank of
Valentine
Valentine, Nebraska
The Guardian State Bank
Alliance, Nebraska
Farmers National Bank of Gaylord
Gaylord, Kansas
Inland Empire Bank
Hermiston, Oregon
Chase County Bank
Strong City, Kansas
First National Bank and
Trust Company
Rockwood, Tennessee
Golden Spike State Bank
Tremonton, Utah
Security National Bank
Holyoke, Colorado
.. ruw
""'""r-<
448XZCXQ ·54?0:;0
;;0
---..;.;...;......=='='~"',"'"
G
*
-~.-.-~~-~-
I.
,sa,
••
0
ow.
.-
. ,.~~. ~'".~':-",::=.::.7.-:::.::;: ~~:~::-_..-""
December 11, 1984
$4.7 million
I deposit
assumption
I Charter
7. Uehling State Bank
Uehling, Nebraska
December 18, 1984
$3.3 million
I deposit
transfer
! Uehling
s.
December 20, 1984
$13.8 million
I deposit assumption : Selden State Bank
j.
University Bank of Wichita
Wichita, Kansas
The Farmers State Bank
Selden, Kansas
9. First Security Bank
Sandwich, Illinois
Bank, N.A.
Wichita, Kansas
State Bank
Uehling, Nebraska
'Selden, Kansas
I, December
22, 1984
$10.4 million! deposit assumption
First National Bank of Sandwich
Sandwich, Illinois
r
l1!'ifTI""k-i,..!
it
!'.ihF.
"",,4
O't ,4i.!V¥YJ!'''.
_
L
~___._____
NAME AND LOCATION
~-
....
~
FED~~~I;;;~~~~S~~=~~S ~~~P~~TION
DATE OF DEPOSIT
PAYOUT OR
ASSUMPTION
127
NUMBER OF DEPOSITORS
OR ACCOUNTS
AMOUNT OF DEPOSITS
(in millions of do11a~o\
The Madison County Bank
Fredericktown, Missouri
January 21, 1983
7,100
6.6
State Bank of Barnum
Barnum, Minnesota
February 9, 1983
3,043
12.6
Dry Dock Savings Bank
New York, New York
February 9, 1983
302,531
2,038.0
American State Bank
Bradley, Illinois
February 12, 1983
4,868
12.5
United American Bank in Knoxville
Knoxville, Tennessee
February 14, 1983
134,945
584.6
Merchants and Farmers State Bank
Blythe, California
February 18, 1983
1,500
5.2
American City Bank
Los Angeles, California
February 25, 1983
25,749
254.5
Newport Harbour National Bank
Newport Beach, California
March 11, 1983
2,219
44.2
Columbia Pacific Bank and Trust Company
Portland, oregon
March 18, 1983
2,000
31.6
March 18, 1983
9,900
31.3
O. Pan American National Bank
Union City, New Jersey
1. Prairie County Bank
Hazen, Arkansas
(")
March 24, 1983
3,062
15.5
...,~
""'"
~---.-----.------------------------------------------------.-~---------------------------------------------
,if. :lllJ"~'I)
"""""-'C',"$
tn'
''-
5'g
m -·I~t
•
-,
-""jr:'~
:r:":1':V/d
'
.... .:,
..i
'j_
~--,.".-,
~.""-.-
~,~.-.-,.--~---.,.--,
~~.--.-.,
March 25, 1983
1,973
I
10.9
13. The Ina State Bank
Ina, Illinois
April 8, 1983
4,627
I
15.9
14. Bank of San Marino
San Marino, California
April 8, 1983
2,248
I
12.7
15. Sparta-Sanders State Bank
Sparta, Kentucky
April 15, 1983
769
16. Heritage Bank
Ashland, Oregon
April 29, 1983
3,342
L7. First National Bank of Oak Lawn
April 29, 1983
12. Bear Creek Valley Bank
Phoenix, Oregon
I
118.3
25,172
I
119.4
May 6, 1983
5,118
I
27.2
May 27, 1983
32,016
I
227.5
May 27, 1983
14,880
I
96.3
May 27, 1983
48,248
I
106.0
12. City and County Bank of Roane County
Kingston, Tennessee
May 27, 1983
7,000
I
36.5
13. City and County Bank of Anderson County
Lake City, Tennessee
May 27, 1983
5,871
I
139.6
14. The Commercial Bank of California
Los Angeles, California
May 27, 1983
5,158
I
23.1
Oak Lawn, Illinois
L8. Smith County Bank
Carthage, Tennessee
L9. City and County Bank of Knox County
KnOXVille, Tennessee
10. United Southern Bank of Nashville
Nashville, Tennessee
~1.
United American Bank in Hamilton County
Chattanooga, Tennessee
14.6
oJ
.r:-~~l.
.t'.~~.r::
"'-1
rog..
---.-~-'-'------;>"""",-~=~,
","",",..it
..
"" ... -....
.....
.,......
----------
25. Community Bank
Hartford, South Dakota
June 17, 1983
8,355
39.3
26. Western National Bank of Lovell
Love 11, Wyoming
June 24, 1983
2,300
17.4
27. Mineral Bank of Nevada
Las Vegas, Nevada
June 30, 1983
1,639
10.5
28. Union National Bank of Chicago
Chicago, Illinois
July 8, 1983
13,441
24.5
29. The First Central Bank
Smithville, Tennessee
July 8, 1983
3,222
18.2
30. Bank of Niobrara
Niobrara, Nebraska
July 8, 1983
773
6.2
31. First Peoples Bank of Washington County
Johnson City, Tennessee
July 29, 1983
20,334
176.5
32. Metro Bank
Midland, Texas
July 29, 1983
2,500
28.8
33. Oregon Mutual Savings Bank
Portland, Oregon
August 5, 1983
47,745
251.3
34. The First National Bank of Danvers
Danvers, Illinois
August 5, 1983
2,560
10.8
35. First Commerce Bank of Hawkins County
Rogersville, Tennessee
August 12, 1983
8,821
43.7
16. United Southern Bank of Clarksville
Clarksville, Tennessee
August 26, 1983
3,666
10.4
17. The Douglass State Bank
Kansas City, Kansas
September 2, 1983
7,200
26.5
"';j'~
"t,"dh...... hOJ:"t..'?! '!!"'"'!'fi':,,"
'_>n'~_'
iii
Wi
,; ... -
-
~
.... "..-....
__ , ___ .•
38. Warren County Bank
McMinnville, Tennessee
I
September 16, 1983
I
4,019
I
18.8
39. Dominion Bank of Denver
Denver, Colorado
I
September 30, 1983
I
2,653
I
11.9
40. National Bank of Odessa
Odessa, Texas
I
September 30, 1983
I
19,527
I
76.2
41. Auburn Savings Bank
Auburn, New York
I
October 1, 1983
I
38,014
I
131.4
42. The Deschutes Bank
Redmond, Oregon
I
October 7, 1983
I
2,800
I
9.2
43. The First National Bank of Midland
Midland, Texas
I
October 14, 1983
I
76,400
I
574.2
+4. First National Bank of Browning
Browning, Montana
I
November 10, 1983
I
4,000
I
11.6
45. Atkinson Trust and Savings Bank
Atkinson, Illinois
I
November 25, 1983
I
3,929
I
18.9
46. Union Trust Company
San Juan, Puerto Rico
I
December 9, 1983
I
1,267
I
23.3
47. Bank of Hackleburg
Hackleburg, Alabama
I
December 13, 1983
I
2,005
I
6.8
.8. The Bank of Red Oak
Red Oak, Oklahoma
I
December 16, 1983
I
3,514
I
10.4
%.~
...
~:T:~):;'";. :,.:;'o-l':+i;C ~-. ~'-i:{
--.&';-:::--$ii";;"'''-j¥
,-t'"
.. -,'
~,~~-"-~--" ..--~.,---.,
tt
..
~..".,~-~--.-~.
~~'--i934:: 1983~~~1·2·tl
..
"-"'.-~~.~".
(in millions)
T
' c k')'~r~-I,',,\)
A k_/::'_
'(EAR
(i)tuj libel
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
31)
CC'JE..{~A
$100,000
$100,000
$100,000
$100,000
$40,000
$40,000
$40,000
$40,000
$40,000
$40,000
$20,000
$20,000
$20,000
$20,000
$20,000
$15,000
$15,000
$15,000
$10 ,000
$10,000
$10,000
$10 ,000
$10,000
$10,000
$10,000
$10,000
$10,000
$10,000
$10,000
$10,000
$10,000
$10,000
$10,000
$10,000
0f-
Oe{'J'o,'t5 In
ICTAL
1,690,332
1,544,697
1,409,322
1,324,463
1,226,943
1,145,835
1,050,435
941,923
875,985
833,277
766,509
697,480
610,685
545,198
495,858
49l,513
448,709
401,096
377,400
348,981
313,304
297,548
281,304
260,495
247,589
242,445
225,507
219,393
212,226
203,195
193,466
188,142
178,540
167,818
f
sured bunks Pcc:I(C£IiT7-1.C'i:::
fT:
,C'vSc.: f~~[)
I rJS ,J«F () DE.flo:: iTS
1,268,332
1,134,221
988,898
948,717
808,555
760,706
692,533
628,263
569,101
520,309
465,600
419,756
374,568
349,581
313,085
296,701
261,149
234,150
209,690
191,787
177,381
170,210
160,309
149,684
142,131
137,698
127,055
121,008
116,380
110,973
105,610
101,841
96,713
91,359
75.0
73.4
70.2
71.6
65.9
66.4
65.9
66.7
65.0
62.5
60.7
60.2
61.3
64.1
63.1
60.2
58.2
58.4
55.6
55.0
56.6
57.2
57.0
57.5
57.4
56.8
56.3
55.2
54.8
54.6
54.6
54.1
54.2
54.4
D0eCS 11
1r-.:5U2fil\j:L
FuIJD
$15,429. 1
13,770.9
12,246.1
11,019.5
9,792.7
8,796.0
7,992.8
7,268.8
6,716.0
6,124.2
5,615.3
5,158.7
4,739.9
4,379.6
4,051.1
3,749.2
3,485.5
3,252.0
3,036.3
2,844.7
2,667.9
2,502.0
2,353.8
2,222.2
2,089.8
1,965.4
1,850.5
1,742.1
1,639.6
1,542.7
1,450.7
1,363.5
1,282.2
1,243.9
PQf-, D of if!.5VtU/'(£lond+oTOTAL
lI.£pf2E'D
C'E~'OS
.91
.89
.87
.83
.80
.77
.76
.77
.77
.73
.73
.74
.78
.80
.82
.76
.78
.81
.80
.82
.85
.84
.84
.85
.84
.81
.82
.79
.77
.76
.75
.72
.72
.74
,-1'5
DE 05(T$
1. 22
1. 21
1.24
1.16
1. 21
1.16
1.15
1.16
1. 18
1.18
1. 21
1.23
1.27
1.25
1.29
1.26
1.33
1.39
1.45
1.48
1.50
1.47
1.47
1.48
1.47
1.43
1.1,6
1.1+4
i
1. .t~ 1
1. 39
1.37
1.34
1.33
1. 36
n
~
H
~
'"
••.••'••.•.~><'.
~'-
""",,,
----:""
, .... 1'
lJ4.?JW~JL,!!~,ht.4.l.uS
•
1W¥ft:rorh!~(
v';"~tJ v-f~
i.L.:Jv r:. .........,--"'.:,.."
~~--"--:
'(LAf'
(C"'CCfJ' [7<,' fl I)
1949
1948
1947
1946
1945
1944
1943
1942
1941
1940
1939
1938
1937
1936
1935
1934
-LN'_; 0 ~? ,-\ /J C
)
•
c
O~!vSk_,A 6<::,
$5,000
$5,000
$5,000
$5,000
$5,000
$5,000
$5,000
$5,000
$5,000
$5,000
$5,000
$5,000
$5,000
$5,000
$5,000
$5,000
Dq)D"'-l~5 in
1-
TC)TAL
156,786
153,454
154,096
148,458
157,174
134,662
111,650
89,869
71,209
65,288
57,485
50,791
48,228
50,281
45,125
40,060
i n",Je,,,
<'"j 1.,,1,1,
'-"" i:::'S
f-l'(':j\.)T~\C::tt. ,--,,_t,
~
-.- jJl::-.
C'r
t 'CC IT-
S 1,)_)uj,U_
' < , -I) .It~'SL\!<-f\l,..!c2
FUI,J j)
lNsu~El) n:
Ir=
~ t:- fC=
--'
76,589
75,320
76,254
73,759
67,021
56,398
48,440
32,837
28,249
26,638
24,650
23,121
22,557
22,330
20,158
18,075
48.8
49.1
49.5
49.7
42.4
41.9
43.4
36.5
39.7
40.8
42.9
45.5
46.8
44.4
44.7
45.1
1,203.9
1,065.9
1,006.1
1,058.5
929.2
804.3
703.1
616.9
553.5
496.0
452.7
420.5
383.1
343.4
306.0
291.7
Kh'hc or 1Il-5craOCt"t;.t"'(Ltv"
---0 ~;tL
~c
v:':olT5
.77
.69
.65
.71
.59
.60
.63
.69
.78
.76
.79
.83
.79
.68
.68
.73
::r/JG(i2LD
112\J?CE iTS
1.57
1.42
1.32
1.44
1.39
1.43
1.45
1.88
1.96
1.86
1.84
1.82
1. 70
1.54
1.52
1.61
I
CHART 117
FEDERAL BANK SUPERVISORS 129
FEDERAL DEPOSIT INSURANCE CORPORATION--Supervises all federally insured state banks that are not members of the Federal Reserve System
in cooperation with state authorities.
COMPTROLLER OF THE CURRENCY--Supervises all national banks.
FEDERAL RESERVE--Supervises all member state banks in conjunction
with state authorities, plus all holding companies.
PROPOSED CAPITAL STANDARDS
PRIMARY CAPITAL--The minimum ratio of primary capital to adjusted
assets proposed by all three agencies is 5.5 percent.
TOTAL CAPITAL--The minimum ratio of total capital to total assets
proposed by the Federal Deposit Insurance Corporation and the Comptroller of the Currency is 6 percent. The Federal Reserve proposes
to gear the nature and intensity of its supervisory action to the zone
within which a bank's ratio of total capital to adjusted assets falls.
Zone 1
Zone 2
Zone 3
at least 7 percent
6 to 7 percent
below 6 percent
Banks in Zone 1 have adequate capital provided the primary capital
requirement is met. Banks in Zone 2 will be presumed to have adequate
capital provided they are sound in all other respects. Banks in
Zone 3, absent extenuating circumstances, will be presumed to have
inadequate capital, even jf the primary capital requirement is met.
NOTES
All three federal supervisors regard the minimum ratio as a floor and
expect most banks to maintain capital ratios above the minimum.
The three federal bank supervisors define primary capital, total assets,
and adjusted assets identically. Primary capital is essentially
equity plus loan loss reserves. Adjusted assets are total assets less
intangible assets.
The supervisors define total capital, the sum of primary and secondary
capital, differently. Debt with an original weighted average maturity
of seven years essentially composes secondary capital for the FDIC and
the Comptroller. All debt with at least five years to maturity, 80
percent of debt with four to five years to maturity, 60 percent of debt
with three to four years to maturity, 40 percent of debt with two to
three years to maturity, and 20 percent of debt with one to two years to
maturity essentially composes secondary capital for the Federal Reserve,
subject to the limitation that secondary capital not exceed 50 percent
of primary capital.
r
4
ENDNOTES
1
See appendix, chart 114
2
See appendix, chart 112
3
See appendix, chart 111
4
See appendix, chart 114
5
6
See appendix, chart 113
See appendix, chart 114
7Robert
A. Bennett, "Bleak Year for U.S. Banking," The New York Times,
December 27, 1984.
8
Ibid.
9See appendix, chart 114
10
11
Robert A. Bennett, Loc.Cit.
Ibid.
12 Ibid .
13Federal Deposit Insurance Corporation, 1983 Annual Report, 50 Years
of Confidence (Washington, D.C.), 41.
14 Ibid .
15
16
Ibid., 42.
Ibid.
17 Ibid.
18 Ibid .
19 Ibid ., 43.
20 Ibid .
21
Ibid.
22 Ibid .
23 Ibid .
24 Ibid .
25 Ibid •
26
Ibid.
27 Ibid ., 44.
28 Ibid .
29 Ibid .
30 Ibid .
31Ibid.
32See appendix, chart #1
33
Federal Deposit Insurance Corporation, FDIC Symbol of Confidence
(Washington, D.C.), 1.
34 Ibid ., 2.
35
Ibid., 16.
36 Ibid .
37 S ee appen d'1X, cart
h
j"6
,
38
Federal Deposit Insurance Corporation, Loc.Cit.
39 Ibid.
40Ibid.
41
Ibid.
42 Ibid .
43
Ibid.
44 Ibid . , 17.
45 Ibid . , 4.
46 Ibid •
47 Ibid .
48 Ibid .
49 Ibid .
q
r
50 Ibid ., 5.
5l Ibid .
52William A. Lovett, ~B~a~n~k~i~n~g~a~n~d~F~1~'n~a~n~c~i~a~1~i~n~s~t~i~t~u~t~i~0~n~s~L~a7w~~in~
a Nutshell (St. Paul, Minnesota: West Publishing Company, 1984), 119.
53Federal Deposit Insurance Corporation, "FDIC Announces Deposit
Assumption of City and County Bank of Jefferson County, White Pine,
Tennessee," FDIC News Release (Washington, D.C.), 1.
54 Ibid .
55
Federal Deposit Insurance Corporation, "FDIC Transfers Insured
Deposits of Seminole State National Bank, Seminole, Texas, to Seminole
National Bank, Seminole, Texas," FDIC News Release (Washington, D.C.), 1.
56 Ibid ., 2.
57 Ibid .
58
Federal Deposit Insurance Corporation, "FDIC To Pay Off Deposits
in Stewardship Bank of Portland, Portland, Oregon," FDIC News Release
(Washington, D.C.), 1.
59 Ibid .
60Federal Deposit Insurance Corporation, FDIC Symbol of Confidence
(Washington, D.C.), 12.
61 Ibid .
62Roger H. Hale, Credit Analysis:
John Wiley & Sons, 1983), 167.
A Complete Guide (New York, New York:
63 Ibid .
64 Ibid ., 264.
65 Ibid ., 265.
66
67
Ibid., 269.
Ibid., 270.
68 Ibid ., 275.
69 Lester C. Thurow, "America's Banks in Crisis," The New York Times
Magazine, September 23, 1984, 33.
70
Ibid.
7lRene O. Branch, and Marcia L. Stigum, Managing Banks Assets and
Liabilities (Homewood, Illinois: Dow Jones, 1983), 390.
72Lester C. Th urow, Loc. Cit .
73 Ibid .
74 Ibid .
75William M. Isaac, "Some Straight Talk About Penn Square," FDIC
News Release (Washington D.C.), 1.
76Ibid., 2.
77 Ibid.
78 W~' 11 lam
'
M. Isaac, " Statement on .Fe dera 1 Assistance to Continenta 1
Illinois Corporation and Continental Illinois National Bank," Federal Deposit
Insurance Corporation (Washington, D.C.), 1.
79~.,
b' d
2.
80"Can a New Team Cure Continental Illinois' Woes?" Business Week,
March 12, 1984, 29.
81 Ibid .
82Robert E. Norton, "Continental's Blow to A Safer Banking System,"
Fortune, June 11, 1984, 93.
83 Ibid .
84 Ibid .
85 Ibid .
86 Ibid .
87 Ibid .
88 Ibid .
89"The Dividend Dilennna That Haunts Continental Illinois' Recovery,"
Business Week, May 21, 1984, 152.
9° Robert E. Norton, Loc.Cit.
91Lester C. Thurow, Loc.Cit.
92 Ibid .
93
:tbid.
94
William M. Isaac, "Statement on Federal Assistance to Continental
Illinois Corporation and Continental Illinois National Bank," Federal Deposit
Insurance Corporation (Washington, D.C.), 2.
95
96
Ibid. , 3.
Ibid.
97 Ibid .
98
Ibid. , 4.
99Federa1 Deposit Insurance Corporation, Federal Reserve Board, and
the Office of the Comptroller of the Currency, Permanent Assistance Program
for Continental Illinois National Bank and Trust Company, Chicago, Illinois, 1.
100 Ibid .
101
Ibid., 8.
102 Ibid ., 9.
103Federal Deposit Insurance Corporation, "FDIC Transfers Insured
Deposits of Seminole State National Bank, Seminole, Texas, to Seminole
National Bank, Seminole, Texas," FDIC News Release (Washington, D. C.), l.
104Karlyn Mitchell, "Capital Adequacy at Corrnnercial Banks," Economic
Review, September/October, 1984, 19.
,,
i
105 Ibid ., 18.
106 Ibid ., 19.
107
108
109
Ibid., 24.
Ibid.
Ibid., 27.
110Rene O. Branch and Marcia Stigum, Op.Cit., 181.
111 Sherman J. Maisel, Risk and Capital Adequacy in Corrnnercial Banks
(Chicago, Illinois: University of Chicago Press, 1981), 20.
112Esther M. Shont, Internal Bank Auditing (New York, New York:
Wiley & Sons, 1982), 16.
John
113 Ibid ., 17.
114 Ibid ., 2l.
115
Lee Berton, "Peat Loses plea on Internal Study of Penn Square,"
Wall Street Journal, December, 1984.
116
Ibid.
117
Roger H. Hale, Op.Cit., 177.
118wil1iam M. Isaac, "Reflections," FDIC News Release (Washington,
D.C.), 2.
119Wil1iam M. Isaac, "What's Needed Now:
]ankers Monthly Magazine, December, 1983, 13.
View of Bank Regulator,"
120 Ibid .
121Federa1 Deposit Insurance Corporation, FDIC Symbol of Confidence,
(Washington, D.C.), 21.
122William M. Isaac, "Reflections," FDIC News Release (Washington, D.C.), l.
123Federa1 Deposit Insurance Corporation, 1983 Annual Report, 50
Years of Confidence (Washington, D.C.), 41.
124 Ibid ., 53.
J,
I
I
l
125 Ibid ,
126 Federal Deposit Insurance Corporation, 1984 Bank Failures
(Washington, D.C.)
127
Federal Deposit Insurance Corporation, 1983 Annual Report, 50
Years of Confidence (Washington, D.C.), 11.
128
Ibid., 58.
129
Karlyn Mitchell, Op.Cit., 21.
q
r
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