N

ANNUAL REPORT OF THE

FEDERAL DEPOSIT INSURANCE CORPORATION

1976

V. J

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Federal Reserve Bank of St. Louis
Ill

LETTER OF TR AN SM ITTAL

FEDERAL DEPOSIT INSURANCE CORPORATION 

Washington, D.C., May 31, 1977

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 1976. This report is a reprint of 

the report issued on March 1 expanded to include bank merger decisions, 

statistical tables, and other updated information pertinent to the operations of 

the Corporation.

Very truly yours,

ET.

ROBERT E. BARNETT

Chairman

THE PRESIDENT OF THE SENATE

THE SPEAKER OF THE HOUSE OF REPRESENTATIVES

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IV

FEDERAL DEPOSIT INSURANCE CORPORATION

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Federal Reserve Bank of St. Louis
V

FEDERAL DEPOSIT INSURANCE CORPORATION

BOARD OF DIRECTORS

Chairm an...................................................................... .........Robert E. Barnett

D ire c to r........................................................................ , . .George A. LeMaistre

Comptroller o f the Currency (Acting) ...................... ............. Robert Bloom

OFFICIALS

Assistant to the Chairman (Policy)............................ ...........Paul M. Horvitz

Assistant to the Chairman

(Administration and Management) ........................ Alfred H. Teichler, Jr.

Assistant to the Director ........................................... John C. H. Miller, Jr.

Assistant to the Director

(Comptroller o f the Currency) .............................. ........... Joseph M. Ream

Executive Secretary.................................................... ............... Alan R. Miller

Director, Division of Bank Supervision...................... ............... John J. Early

General Counsel........................................................... ............... Miles A. Cobb

Controller...................................................................... . . Edward F. Phelps, Jr.

Chief, Division o f Liquidation ................................... .............George W. Hill

Director, Division o f Management Systems

and Economic Analysis........................................... .........Robert P. Rogers

Director, Office o f Corporate Planning...................... Stanley C. Silverberg

Director, Office o f Corporate A u d its ........................ Robert D. Hoffman

Director, Office o f Bank Customer A ffa irs ............... .........Thomas C. O'Neil

Director, Office o f Employee Relations.................... ............... Joe S. Arnold

Special Assistant to the Chairman .................................Robert F. Miailovich

Special Assistant to the Director ...................................C. F. Muckenfuss, 111

Executive Assistant to the B o a rd.............................. Timothy J. Reardon, Jr.

Decem ber 31, 1976

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Federal Reserve Bank of St. Louis
FEDERAL DEPOSIT INSURANCE CORPORATION REGIONS

VI

REGIONAL DIRECTORS

Atlanta

Lewis C. Beasley

2 Peachtree St., N.W., Suite 3030 

Atlanta, Georgia 30303 

Boston

Edwin B. Burr 

2 Center Plaza, Room 810 

Boston, Massachusetts 02108 

Chicago

James A. Davis

233 S. Wacker Drive, Suite 6116 

Chicago, Illinois 60606 

Columbus

John R. Curtis

37 West Broad Street, Suite 600 

Columbus, Ohio 43215 

Dallas

Quinton Thompson 

300 North Ervay Street, Suite 3300 

Dallas, Texas 75201 

Madison

Bernard J. McKeon 

1 South Pinckney Street, Room 813 

Madison, Wisconsin 53703 

Memphis

Roy E. Jackson

165 Madison Avenue, Suite 1010 

Memphis, Tennessee 38103

Minneapolis

Anthony S. Scalzi

730 Second Avenue South, Suite 266 

Minneapolis, Minnesota 55402 

New York

Claude C. Phillippe 

345 Park Avenue, 21st Floor 

New York, New York 10022 

Omaha

Burton L. Blasingame 

1700 Farnam Street, Suite 1200 

Omaha, Nebraska 68102 

Philadelphia

Frank T. Locki

5 Penn Center Plaza, Suite 2901 

Philadelphia, Pennsylvania 19103 

Richmond

John Stathos

908 E. Main Street, Suite 435 

Richmond, Virginia 23219 

St. Louis

Robert V. Shumway 

720 Olive Street, Suite 2909 

St. Louis, Missouri 63101 

San Francisco

Charles E. Doster

44 Montgomery Street, Suite 3600 

San Francisco, California 94104

December 31, 1976

FEDERAL DEPOSIT INSURANCE CORPORATION

M a i n O f f i c e : 5 5 0 1 7 t h S t r e e t , N. W., W a s h i n g t o n , D. C., 2 0 4 2 9

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Federal Reserve Bank of St. Louis
VII

CONTENTS

Chairman's statement................................................................................... xi

PART ONE 

OPERATIONS OF THE CORPORATION

Promoting sound banking............................................................................ 3

Protecting depositors................................................................................... 17

Enforcing consumer and investor legislation.............................................. 24

Administration of the Corporation............................................................. 27

Finances of the Corporation........................................................................ 30

PART TWO 

ENFORCEMENT PROCEEDINGS

Actions to terminate insured status ........................................................... 43

Cease-and-desist actions.............................................................................. 47

PART THREE 

MERGER DECISIONS OF THE CORPORATION

Bank absorptions approved by the Corporation....................................... 57

Bank absorption denied by the Corporation.............................................. 107

PART FOUR 

REGULATIONS AND LEGISLATION

Rules and regulations................................................................................... 113

Federal Legislation....................................................................................... 114

PART FIVE

STATEMENTS BY CORPORATION DIRECTORS

Selected addresses and Congressional testimony....................................... 119

PART SIX

STATISTICS OF BANKS AND DEPOSIT INSURANCE

Number of banks and branches ................................................................. 212

Assets and liabilities of banks...................................................................... 233

Income of insured banks ............................................................................ 255

Banks closed because of financial difficulties;

FDIC income, disbursements, and losses................................................ 271

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TABLES

NUMBER OF BANKS AND BRANCHES:

Explanatory note ............................................................................................................. 212

101. Changes in number and classification of banks and branches in the United

States (States and other areas) during 1976 .................................................. 214

102. Changes in number of commercial banks and branches in the United States

(States and other areas) during 1976, by S ta te .............................................. 216

103. Number of banking offices in the United States (States and other areas),

December 31, 1976 

Banks grouped by insurance status and class o f bank, and by State or

area and type o f o ffic e ................................................................................. 218

104. Number and assets of all commercial and mutual savings banks (States and

other areas), December 31, 1976

Banks grouped by class and asset size......................................................... 227

105. Number, assets, and deposits of all commercial banks in the United States

(States and other areas), December 31, 1976

Banks grouped by asset size and S ta te ....................................................... 228

ASSETS AND LIABILITIES OF BANKS:

Explanatory note ............................................................................................................. 233

106. Assets and liabilities of all commercial banks in the United States (States and

o th e r areas), June 30, 1976

Banks grouped by insurance status and class o f b a n k .............................. 235

107. Assets and liabilities of all commercial banks in the United States (States and

other areas), December 31, 1976

Banks grouped by insurance status and class o f b a n k ............................... 239

108. Assets and liabilities of all mutual savings banks in the United States (States

and other areas), June 30, 1976, and December 31, 1976

Banks grouped by insurance status............................................................. 243

109. Assets and liabilities of insured commercial banks in the United States (States

and other areas), December call dates, 1971-1976 ....................................... 245

110. Assets and liabilities of insured mutual savings banks in the United States

(States and other areas), December call dates, 1971-1976 ............................ 248

111. Percentages of assets, liabilities, and equity capital of insured commercial

banks operating throughout 1976 in the United States (States and other

areas), December 31, 1976

Banks grouped by amount o f assets........................................................... 250

112. Percentages of assets and liabilities of insured mutual savings banks operating

throughout 1976 in the United States (States and other areas), December

31, 1976

Banks grouped by amoun t o f assets........................................................... 251

113. Distribution of insured commercial banks in the United States (States and

other areas), December 31, 1976

Banks grouped according to amount o f assets and by ratios of selected

items to assets or deposits .......................................................................... 252

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INCOME OF INSURED BANKS:

Explanatory note ............................................................................................................. 255

114. Income of insured commercial banks in the United States (States and other

areas), 1971-1976 .............................................................................................. 258

115. Ratios of income of insured commercial banks in the United States (States

and other areas), 1971-1976 ............................................................................ 260

116. Income of insured commercial banks in the United States (States and other

areas), 1976

Banks grouped by class o f b a n k ................................................................. 261

117. Income of insured commercial banks operating throughout 1976 in the

United States (States and other areas)

Banks grouped by amount o f assets........................................................... 263

118. Ratios of income of insured commercial banks operating throughout 1976 in

the United States (States and other areas)

Banks grouped by amount o f assets........................................................... 265

119. Income of insured mutual savings banks in the United States (States and other

areas), 1971-1976 .............................................................................................. 267

120. Ratios of income of insured mutual savings banks in the United States (States

and other areas), 1971-1976 ............................................................................ 269

BANKS CLOSED BECAUSE OF FINANCIAL DIFFICULTIES;

FDIC INCOME, DISBURSEMENTS, AND LOSSES:

Explanatory note ............................................................................................................. 272

121. Number and deposits of banks closed because of financial difficulties,

1934-1976........................................................................................................... 273

122. Insured banks requiring disbursements by the Federal Deposit Insurance

Corporation during 1976 ................................................................................. 274

123. Depositors, deposits, and disbursements in failed banks requiring disbursements by the Federal Deposit Insurance Corporation, 1934-1976

Banks grouped by class o f bank, year of deposit payoff or deposit

assumption, amount o f deposits, and State .............................................. 276

124. Recoveries and losses by the Federal Deposit Insurance Corporation on

principal disbursements for protection of depositors, 1934-1976 ............... 279

125. Analysis of disbursements, recoveries, and losses in deposit insurance

transactions, January 1, 1934-December 31, 1976 ....................................... 280

126. Income and expenses, Federal Deposit Insurance Corporation by year, from

beginning of operations, September 11, 1933, to December 31, 1976 .... 281

127. Protection of depositors of failed banks requiring disbursements by the

Federal Deposit Insurance Corporation, 1934-1976 ..................................... 282

128. Insured deposits and the deposit insurance fund, 1934-1976 ............................ 283

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XI

CHAIRMAN'S STATEMENT

The last few years have been traumatic 

ones for the United States banking industry. The worst recession since the Great 

Depression of the 1930s, combined with 

double-digit inflation, imposed great 

strains on the banking system. More bank 

failures occurred in 1976 than in any year 

since 1942. The eight largest bank failures 

in the FDIC's history took place in the 

39-month period from October 1973 to 

December 1976—banks whose assets aggregated over 31/2 times as many assets as 

all the other insured banks that have been 

closed during the entire history of the 

FDIC. Yet, despite these strains, and the 

generation of a great deal of unfavorable 

publicity, the public's basic confidence in 

the banking system and the deposit insurance system appears to be unshaken. At 

all times during 1976, for example, at 

least 97-98 percent of all the insured 

banks in the country were not on the 

FDIC problem list; only around 2-3 percent of them were.

The strains on the banking system in 

the last few years were not at all insignificant. Not only did they lead to 16 insured bank failures in 1976, but they also 

raised the number of banks on our problem list to the highest level in 28 years. 

At the end of the year, there were 379 

FDIC-insured banks on our list of banks 

we feel supervisors should be paying particular attention to, the list we call our 

"problem" list, or about 214 percent of all 

insured banks. While this is a very low 

percentage, far fewer than that, considerably less than 1 percent of all banks in 

the country, are in our serious problem 

categories.

One new aspect of the problem list 

now, as distinct from a few years ago, is 

that the list includes some large banks 

(banks with over $500 million in deposits) and a few very large banks (over 

$1 billion in deposits). Of course, there 

are many more banks in those size categories now than there were in the past, so

the appearance of some of these banks on 

a problem list is more likely now than 

previously. But it must be recognized that 

in recent years larger banks assumed 

greater risks on both sides of their balance sheets. That fact, combined with the 

unsatisfactory performance of the economy, has led to problem status for a few 

of these larger banks.

The FDIC was not established, of 

course, to eliminate bank failures or to 

prevent banks from assuming risks. During periods such as the one we have been 

passing through, the FDIC has as its 

major function that of assuring that an 

individual bank failure does not lead to 

drastic repercussions. Our major function 

in these circumstances is one of maintaining confidence in the banking system so 

that the occasional failure, which is an 

essential part of a free enterprise system, 

can be handled with a minimum of disruption to the economy and the community.

The FDIC has successfully met the test 

which recent events have thrust upon it. 

If, 5 years ago, we could have forecast the 

most severe recession since the Depression of the '30s, simultaneous high unemployment and rapid inflation, the 

collapse of the multi-billion dollar REIT 

industry, bankruptcies of major industrial 

corporations, as well as failures of some 

larger banks, we might have had great 

concern about the ability of the banking 

system to avoid a major crisis of confidence.

Such a crisis has not developed. To be 

sure, this required massive action on an 

unprecedented scale by the FDIC. The 

concept of a "clean bank" purchase and 

assumption transaction, one in which a 

take-over bank purchases only good assets 

from the estate of the failed bank, with 

the FDIC substituting cash for the assets 

not taken by the take-over bank, has been 

applied in the past 3 years by the Corporation to larger banks. By doing so, the 

Corporation has removed from the banking system between October of 1973 and

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XII FEDERAL DEPOSIT INSURANCE CORPORATION

December 31, 1976, over $3.7 billion of 

questionable assets, including all the 

worst assets of all the failed insured 

banks. This represents a substantial removal of poor quality assets from the 

banking system.

Just as important as the "clean bank" 

purchase and assumption approach has 

been the Corporation's determination to 

attempt to arrange a purchase and assumption in each failed bank situation, 

rather than pay depositors their insured 

amounts. This approach, and our ability 

to implement it not only in all larger 

bank failures but in nearly all failures regardless of bank size, has contributed 

significantly to customer confidence in 

the banking system. Only three banks 

whose total deposits aggregated only about 

$18 million, were paid out in 1976.

The size and complexity of the Corporation have grown dramatically during 

the past few years. The Corporation now 

supervises 9,009 commercial and mutual 

savings banks, an increase of 86 during 

1976 and an increase of 798 during the 

past 5 years. These banks at year-end 

1976 had assets totaling $355.6 billion, 

an increase of $34.1 billion in assets of 

banks supervised by the Corporation 

from the end of 1975, and an increase of 

$151.4 billion during the preceding 5 

years. We now supervise three times as 

many banks with deposits over $100 million as the Federal Reserve System, and 

are approaching the number of banks of 

this size supervised by the Comptroller of 

the Currency. More banks with deposits 

of over $1 billion are supervised by the 

FDIC than by the Federal Reserve System.

We are currently liquidating over $2.6 

billion of assets in our Division of Liquidation. These assets are considerably larger and more difficult to liquidate than 

those in earlier liquidations and our recovery record will not be as high when 

the books are finally closed on these 

liquidations as it has been in the past.

The number of Corporation employees

now totals 3,535, an increase of 261 during 1976, and an increase of 928 during 

the past 5 years. Our expenditures, of 

which at least 83 percent are for employee compensation and examiners' travel, totaled $75 million for 1976, an increase of $8 million from the previous 

year and an increase of $33 million from

5 years ago. The increase in expenditures 

during the past 5 years is directly traceable to governmental pay and reimbursement increases, increases in number of 

employees, and inflation.

The largest part of the increase in 

number of employees is directly related 

to the increase in the number and size of 

banks supervised and to the number and 

size of liquidations we are administering. 

In addition, a number of employees have 

been added to deal with relatively new 

responsibilities that the Corporation has 

been given during the past few years. For 

example, while it is difficult to estimate 

precisely, it appears that the Corporation 

is spending the equivalent of 230 thousand man-hours each year in enforcing 

consumer laws.

There has not been a fundamental 

change in the deposit insurance system 

since its inception. The performance of 

the banking industry and the FDIC during this recent difficult economic period 

has been good and suggests that drastic 

change may be unnecessary. Nevertheless, 

in an attempt to confirm or refute this 

and to review systematically our entire 

operations, we launched during 1976 a 

major analysis of the premises and procedures of our system of Federal deposit 

insurance. This review covers the extent 

of deposit insurance, the financing of the 

deposit insurance system, and our methods of handling bank failures. In addition, 

we are giving special attention to the international aspects of deposit insurance 

to determine whether that change in the 

nature of that important segment of the 

banking business requires some change in 

the deposit insurance system. Any recommendations arising from our study will

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CHAIRM AN'S STATEMENT XIII

be reported during 1977.

We have also been reviewing the process of bank examination, which is our 

major tool for preventing bank failures. 

Some changes, which had been initiated 

by the FDIC on an experimental basis in

1975, were implemented more fully in

1976 and will be accelerated in 1977. A 

dramatically revised procedure for examining and supervising banks was adopted 

in November when amended General 

Memorandum No. 1 was approved. The 

new approaches to the examination function are designed to deploy more effectively the resources needed to meet an 

increasing work load, to marshal efforts 

in the appropriate areas, and to maintain 

technical competence in the face of increasing sophistication in operating and 

management systems of banks. Specific 

changes include the use of a modified 

examination for smaller banks that do 

not present supervisory problems, both 

computerized and manual monitoring 

techniques to anticipate problem bank 

situations and to keep banks under surveillance between examinations, more intensive use of statistical sampling techniques, and automated bank examination 

packages.

The FDIC has been experimenting 

since 1974 with the elimination of some 

FDIC bank examinations in three States 

deemed to have appropriate and effective 

State bank examination procedures, 

Georgia, Iowa, and Washington. A t the 

conclusion of that experiment in 1976, 

and as a result of what was learned, an 

agreement has been reached with the 

State of Georgia whereby examinations 

of a large portion of the total nonproblem State-chartered banks in Georgia will 

be conducted by the State and the FDIC 

on an alternate year basis. While it appears at this time that Iowa does not wish 

to continue the experimental program 

and instead wants the FDIC to return to 

the examination status that was in effect 

before the first year of the withdrawal 

experiment, the Corporation is in the process of discussing programs similar to the 

one to be begun in Georgia with Washington and other States. Agreements with 

other States should save substantial examination time by eliminating some duplication of State and FDIC examinations, it 

will permit State banking departments to 

improve both the quality and size of their 

examination staffs at a rate that can be 

absorbed by State budgets, and it will 

permit the FDIC to deploy its resources 

more vigorously in examining problem or 

more difficult banks.

This improved cooperation and coordination with the States, as well as the 

other changes in our examination procedures, are designed to permit the redeployment of more of our resources to 

banks that have problems, or that because 

of their size and scope of operations are 

of particular concern to the FDIC. Banks 

that warrant it will be examined more frequently and more intensively than in the 

past, while banks in good condition will 

be examined less frequently by the FDIC 

but will still be monitored through careful review of information supplied by the 

bank itself.

When our examination process detects 

weakness in a bank, we have several 

means of dealing with the situation, both 

formal and informal. Over the last few 

years, there has been a trend in the direction of more frequent initiation of formal 

actions, generally cease-and-desist orders 

issued pursuant to section 8(b) of the 

Federal Deposit Insurance Act. While informal approaches are often successful, 

the trend toward greater use of formal 

actions was accelerated in 1976. There 

were 41 cease-and-desist proceedings initiated in 1976, compared with 8 in 1975 

and only 7 as recently as 1971.

Section 8(a) orders., withdrawal of insurance, have remained rather constant in 

numbers during similar periods with 8 

being initiated during 1976 and 5 each in 

the years 1975 and 1972. Federal deposit 

insurance was terminated in one bank 

during 1976, First State Bank & Trust

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XIV FEDERAL DEPOSIT INSURANCE CORPORATION

Co., Rio Grande City, Texas, and the 

bank failed shortly thereafter.

Major steps were taken by the FDIC 

during 1976 to increase efforts at enforcing bank customer oriented laws and regulations. Not only was a director for the 

Office of Bank Customer Affairs selected 

and the efforts of that office begun to be 

felt during 1976, but section 8(b) ceaseand-desist orders for violations of the 

Truth in Lending Law were issued for the 

first time since 1973. Also instituted was 

a sample survey aimed at improving enforcement of Fair Housing Lending (Title 

VIII of the Civil Rights Act of 1968), and 

based on what is learned from analysis of 

the sample survey, we plan to extend that 

program during 1977. Increased training 

for examiners was part of our program 

during 1976, as were changes and improvements in our consumer complaint 

investigation procedure.

Our analysis of bank problems in the 

past has led us to conclude that an increasing responsibility for bank safety 

and success must lie with the board of 

directors of the bank. During 1976 members of the Board of Directors of the Corporation and members of the FDIC staff 

participated in educational programs 

aimed at directors of banks and we have 

announced a policy of conducting meetings between the bank examiner and the 

board of directors of banks on a more 

frequent basis than previously. Since we 

have found that a number of bank failures and bank problems have resulted 

from improper dealings between the bank 

and its insiders, we issued a new regulation in 1976 requiring approval of significant insider transactions by the board of 

directors of each nonmember bank.

Under the present bank regulatory 

structure, the FDIC does not directly 

supervise all the banks it insures. Even 

though the Federal Deposit Insurance Act 

permits the Corporation to examine 

member banks "for insurance purposes," 

the Senate Banking Committee in its report accompanying the 1950 amendments to the FDI Act made it clear that 

this was not to mean that the Corporation would conduct any systematic examination program of member banks. Thus, 

the FDIC has a need for coordination between itself and the other supervisory 

agencies. There are several mechanisms 

for assuring this needed cooperation, one 

obvious one being the membership of the 

Comptroller of the Currency on the 

Board of Directors of the FDIC. This 

gives the Comptroller a good understanding of the status of major matters at the 

FDIC and provides the opportunity on a 

regular basis for other FDIC Board members to ask questions of the Comptroller 

concerning his operations. During 1976 

meetings were held on an approximate 

monthly basis of the Interagency Coordinating Committee, consisting of the 

Chairman of the Federal Deposit Insurance Corporation, the Comptroller of the 

Currency, the Chairman of the Federal 

Home Loan Bank Board, the Vice Chairman of the Board of Governors of the 

Federal Reserve System, and a representative of the Secretary of the Treasury. The 

Coordinating Committee considers all 

matters that involve more than a single 

agency's activities, and during 1976 considered such issues as interest rate ceilings, supervisory treatment of certain 

bank assets, regulations on pooling of 

deposits, transfers from savings to checking accounts, new deposit instruments, 

and many others.

The FDIC might know more about all 

the banks it insures if it had a representative in the offices or on the boards of the 

other bank regulatory agencies. But even 

absent such representation, we believe the 

opportunity for extensive cooperation 

and coordination not only exists but is 

taken frequently and extensively. Because 

of this, we feel that we have, in general, 

an accurate and current knowledge of 

banks not supervised by us that present a 

significant risk to the deposit insurance 

fund.

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CHAIRM AN'S STATEM ENT XV

formity, the Comptroller of the Currency 

launched a program in 1975 aimed at providing a uniform classification of certain 

large credits participated in by several 

banks in which a national bank was the 

lead bank. This assures that a loan to a 

given company will be treated in a consistent fashion by all national bank examiners. The FDIC had observers at the loan 

discussions in this program in 1976 and 

has concluded that the reviews were generally consistent with reviews Corporation examiners would have made were 

they faced with the same loans. We anticipate participating in such reviews in

1977 and are now applying the results to 

the same credits when they appear in 

State nonmember banks.

The FDIC has long had an extensive 

and sophisticated training program for 

examiners, including the most modern, 

spacious, and useful classrooms, as well as 

the most extensive curriculum, of all the 

banking agencies. Our long-run planning 

indicates a need for increased facilities to 

handle our growing needs for examiner 

training. In the interest of coordination 

and efficiency, we have proposed to the 

Comptroller of the Currency and the 

Federal Reserve that they consider participating with us in an expanded joint training facility. Along the same lines, we have 

proposed to the Comptroller of the Currency consideration of a joint computer 

facility. We have received responses from 

both agencies which encourage us to believe that some useful joint facility can be 

developed.

The process of bank supervision is 

facilitated by contact with executives of 

the supervised institutions and representatives of bank customer groups. In 1975

the FDIC began a series of meetings between officials of the FDIC and chief 

executive officers of insured nonmember 

banks. During 1976 two such meetings 

were held on a regional basis with commercial bankers and two with mutual savings bank officers. While these meetings 

covered a variety of topics, we gained a 

clear impression of the controversial 

m atters th a t most concern bankers 

around the country. Payment of interest 

on demand deposits and NOW accounts, 

as well as interest rate ceilings on time 

deposits and competition between commercial and th rift institutions, appeared 

to be the most important concern of the 

banking community. A close second was 

concern about the growth of regulations 

pertaining to consumer protection and 

the burden of government paperwork requirements generally. Preservation of the 

dual banking system also was a matter of 

great importance to the bankers who attended these meetings.

As yet, a program to get systematic 

input from bank customers has not been 

developed. We do hear frequently from 

customers (over 4,000 inquiries or comments were received during 1976 from 

bank customers), and FDIC representatives have both attended and hosted 

meetings of consumer groups. We hope 

that a more regular means of communication with bank customers can be developed in 1977.

^ X i B.

Robert E. Barnett 

Chairman

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OPERATIONS OF THE CORPORATION

PART ONE

V.

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3

The Corporation has some supervisory 

authority with respect to all insured 

banks, and has general supervisory responsibilities for insured banks that are 

not members of the Federal Reserve 

System. It also has authority, implemented in Part 329 of its Regulations, 

with respect to noninsured mutual savings 

banks to establish maximum rates of 

interest payable on time deposits. There 

has been rapid growth in the number, 

size, and complexity of the banks falling 

w ith in the Corporation's supervisory 

mandate over the past decade. Between 

year-end 1966 and year-end 1976, the 

number of insured nonmember commercial and mutual savings banks increased 

from 7,724 to 9,009. Assets of insured 

nonmember commercial banks totaled 

$234.8 billion as of December 31, 1976, 

representing 23.2 percent of all insured 

commercial bank assets (domestic) compared with just 16.6 percent in 1966. In 

December 1976, there were 329 mutual 

savings banks insured by the FDIC, with 

total assets of $115.3 billion.

Examinations. In 1976, the Corporation changed its policy of examining 

every insured nonmember bank every 

year and put into effect a system that 

recognizes the basic differences among 

banks associated with size and allocates 

more time to the examination of banks 

that require more attention. General 

Memorandum No. 1 set forth the new examination policy on examination priorities, frequency, and scope and clarified 

areas which allow the FDIC Regional 

Directors some discretion while still maintaining some uniformity of approach.

Top priority is accorded the examination of banks with known supervisory or 

financial problems. They will receive a 

full-scale examination at least once every 

12 months. For banks with assets of less 

than $100 million that do not present 

supervisory or financial problems, and 

that meet criteria indicating satisfactory

PROMOTING SOUND BANKING management, adequate capital, acceptable 

fidelity coverage, good earnings, and adequate internal routine and controls, a 

modified examination is permitted for 

alternate examinations. The time between 

examinations will be stretched out so 

there will be one examination in each 

18-month period, with no more than 24 

months between examinations. Emphasis 

in such modified examinations will be 

placed on management policies and performance; the evaluation of asset quality, 

distribution, and liquidity; capital adequacy; and compliance with laws and regulations. Banks with assets of $100 million or more that do not present supervisory or financial problems will continue 

to receive a full-scale examination during 

each 18-month period, again with no 

more than 24 months between examinations. But the examination is designed to 

make full use of the bank's own reporting 

capabilities and generally is tailored more 

to the size and the complexity of the 

bank than was the case heretofore.

The program of bank examination outlined in General Memorandum No. 1 

appears to be a better solution to effective allocation of examiner resources than 

the FDIC selective examination withdrawal program. This program, which was 

initiated in Georgia, Iowa, and Washington in 1974, was continued on a modified 

basis in 1976. Under this program, the 

Corporation had withdrawn in these three 

States from its usual examination of insured State nonmember banks and, for a 

specified number of such banks in each of 

the three States, agreed to rely heavily 

upon 1974 and 1975 examinations by the 

respective State banking departments for 

determination of their financial condition. In 1976, the Corporation examined 

the approximately 60 percent of insured 

nonmember banks in Georgia it had not 

examined in the previous 2 years, and 

also the 50 percent in Iowa and the 80 

percent in Washington it had not examined in 1974 or 1975. During these examinations in 1976, the FDIC analyzed

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4 FEDERAL DEPOSIT INSURANCE CORPORATION

NUMBERS AND ASSETS OF COMMERCIAL BANKS 

IN THE UNITED STATES 1966-1976

NUMBER OF BANKS

15.000 -

10.000 I

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PROMOTING SOUND BANKING 5

these banks' current condition and tried 

to gain some measure of what their condition was at the time of the 1974 and

1975 examinations. The FDIC did not 

examine in these three States the banks it 

had examined in 1974 and 1975, leaving 

their examinations solely to the respective State banking departments.

The evaluation of the 3-year experiment suggests the feasibility of agreements with various States whereby examinations of a large portion of the nonproblem State-chartered banks would be 

conducted by the State and the FDIC on 

an alternate year basis. The resultant substantial saving of time will permit the 

Corporation's examiner force to concentrate on the examination and follow-up 

supervision of banks with known or more 

complex problems. Recent experience 

suggests that the new policy delineated in 

General Memorandum No. 1 will be more 

likely to insure the Corporation's fu lfillment of its statutory responsibilities than 

withdrawal from examining banks in any

specific group of States.

In addition to the on-site examinations 

of nonmember insured banks to determine their current condition, to evaluate 

their management, and to discover and 

obtain correction of any unsafe and unsound practices or violations of laws and 

regulations, the Corporation conducts 

special investigations in connection with 

applications for Federal deposit insurance, mergers, establishment of branches, 

and other actions requiring the prior 

approval of the Corporation.

Compliance is an area of increasing 

importance. The Corporation examines 

banks for compliance with certain Federal laws, including the Truth-in-Lending 

Act, the Fair Credit Reporting Act, the 

Bank Protection Act, the Bank Secrecy 

Act, and certain disclosure and equal 

opportunity laws, using a Compliance Examination Report. This report was developed specifically for the purpose and was 

tested during 1974 on banks in the selective withdrawal program.

BANK EXAMINATION ACTIVITIES OF 

THE FEDERAL DEPOSIT INSURANCE CORPORATION 

IN 1975 AND 1976

Activity

Number

1976 1975

Field examinations and investigations—total.............................................. 29,713 28,254

Examinations of main offices-total................................................... 8,037 7,597

Regular examinations of insured banks not members of

Federal Reserve S ystem ........................................................................ 7,829 7,354

Reexaminations or other than regular examinations.............................. 187 207

Entrance examinations of operating noninsured banks........................... 19 26

Special examinations.................................................................................... 2 10

Examinations of departments and branches......................................... 9,691 8,884

Examinations of trust departments............................................................ 1,491 1,469

Examinations of branches........................................................................... 8,200 7,415

Investigations.................................................................................. 3,812 3,998

New bank investigations.............................................................................. 162 176

State banks members of Federal Reserve System.............................. 16 10

Banks not members of Federal Reserve System................................. 146 166

New branch investigations........................................................................... 952 709

Mergers and consolidations........................................................................ 118 124

Miscellaneous investigations........................................................................ 2,580 2,989

Compliance examinations................................................................. 8,173 7,775

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6 FEDERAL DEPOSIT INSURANCE CORPORATION

Enforcement proceedings. After an examination of an insured State nonmember bank, if the Corporation finds 

that the bank has been conducting its 

business in an unsafe or unsound manner, 

or has violated a law, rule, or regulation, 

or any agreement with a condition imposed in writing by the Corporation, it 

may initiate a cease-and-desist proceeding 

pursuant to section 8(b) of the Federal 

Deposit Insurance Act. The Corporation 

first attempts to correct the deficiencies 

through a consent cease-and-desist order. 

Bank management is given a proposed 

Notice of Charges detailing the objectionable practices, proposed Findings of Fact 

and Conclusions of Law, and a proposed 

Order to Cease and Desist which contains 

a program designed to put the bank in 

compliance. The bank is given a reasonable period of time to study the documents and consult with counsel. A meeting is then held with the bank and the 

appropriate State supervisory authority 

to negotiate a consent to the issuance of 

the notice, findings, and order. If these 

efforts fail, the Corporation will initiate 

formal proceedings by issuing the notice 

of charges and setting a date for a hearing 

before an administrative law judge. After 

the presentation of evidence by both the 

bank and the Corporation, the administrative law judge submits a written decision and recommended order to the 

Board of Directors of the Corporation. 

The subsequent order issued by the Corporation, which is based upon an independent review of the entire case, can be 

appealed to a Federal Circuit Court of 

Appeals. In 1976 the Corporation had no 

formal hearings under section 8(b).

Fifteen cease-and-desist orders against 

insured State nonmember banks were 

outstanding at the beginning of 1976. Because of substantial compliance, five of 

these orders were terminated during the 

year. During 1976, there were 49 staff 

recommendations to initiate cease-anddesist proceedings. Of these, 5 were withdrawn prior to Board action because of

substantial compliance or action by State 

authorities and 3 were in preparation at 

year-end and had not as yet been presented to the Board, leaving 41 ceaseand-desist proceedings actually initiated 

in 1976.

Of these 41, 5 were summary ceaseand-desist orders issued pursuant to section 8(c) of the Federal Deposit Insurance Act after a determination that 

continuation of certain practices would 

either cause substantial financial damage 

to the bank or prejudice the interest of its 

depositors. These summary orders took 

effect upon service on the bank and remained in effect until completion of 

cease-and-desist proceedings. Three of the 

summary orders were terminated during 

the year.

As to the remaining 36 cease-anddesist proceedings initiated under section 

8(b), 15 were still being negotiated with 

the banks affected at the end of 1976. 

Final orders were issued during the year 

with respect to the other 21 section 8(b) 

proceedings, in addition to 3 final orders 

issued during 1976 covering cease-anddesist proceedings initiated in 1975. This 

resulted in a total of 34 final section 8(b) 

orders outstanding at the end of 1976 (including the 10 carried over from 1975).

Listed below are some of the unsafe or 

unsound banking practices that were uncovered by the Corporation and cited in 

most of its findings and orders:

(1) inadequate capital in relation to 

the kind and quality of assets;

(2) inadequate provisions for liquidity;

(3) failure to diversify its portfolio resulting in a risk to capital;

(4) extension of credit to insiders and 

affiliates of the bank who were 

not creditworthy, sometimes at a 

preferred rate;

(5) weak and self-serving management;

(6) hazardous lending practices involving extension of credit with

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PROMOTING SOUND BANKING 7

BANK EXAMINATIONS AND INVESTIGATIONS

, FEDERAL DEPOSIT INSURANCE CORPORATION 1 9 6 6 -1 9 7 6 (T h o u s a n d s )

inadequate documentation or for 

the purpose of speculation in real 

estate;

(7) an excessive portfolio of poor 

quality loans in relation to capital; 

and

(8) violation of the Fair Credit Reporting Act and Regulation Z of 

the Federal Reserve.

Termination-of-insurance proceedings 

under section 8(a) of the Federal Deposit 

Insurance Act can be initiated when the 

Corporation determines that a bank has 

been conducting its affairs in an unsafe or 

unsound manner and is in an unsafe and

unsound financial condition. The bank 

and the proper regulatory authority are 

advised of the Corporation's findings and 

the bank is given a period of up to 120 

days to correct the deficiencies. If timely, 

satisfactory correction is not achieved, 

the Corporation may terminate the insured status of the bank after an administrative hearing and due deliberation. The 

depositors of the bank are then notified 

of the termination, but each deposit (less 

subsequent withdrawals) continues to be 

insured for 2 years.

A t the beginning of 1976, five termination-of-insurance proceedings were in 

progress. All five banks were closed by

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8 FEDERAL DEPOSIT INSURANCE CORPORATION

State authorities during the year. During 

1976, 15 recommendations were received 

to initiate proceedings to terminate deposit insurance. The Corporation issued 

eight Findings of Unsafe or Unsound 

Practices and Condition and Orders of 

Correction initiating section 8(a) termination proceedings. After issuance of these 

orders, two banks were closed by their 

chartering authorities. In five instances 

the recommendations were withdrawn because of merger or substantial improvement in the financial condition of the 

bank. Two banks were closed by the chartering authority prior to Board action. As 

a result, six deposit insurance termination 

proceedings were pending at year-end 

1976.

The Corporation also has statutory 

authority under section 8(e) of the Federal Deposit Insurance Act to remove an 

officer, director, or other person participating in the management of an insured 

State nonmember bank if it determines 

that the person has violated a law, rule, 

regulation, or final cease-and-desist order, 

has engaged in unsafe or unsound banking 

practices, or has breached his fiduciary 

duty. The act must involve personal dishonesty and entail substantial financial 

damage to the bank, or seriously prejudice the interests of the bank's depositors. The Corporation may also summarily suspend such a person pending the 

outcome of the removal proceeding in 

order to protect the bank and its depositors.

One removal proceeding, issued after 

an administrative hearing, which resulted 

in a summary suspension was challenged 

in a United States District Court in 1975, 

and this challenge to the summary suspension was withdrawn in 1976. During 

1976 no removal proceedings were initiated.

Section 8(g) of the Federal Deposit 

Insurance Act authorizes the Corporation 

to suspend or remove officers, directors, 

and other persons participating in the affairs of insured State nonmember banks

who are indicted for a felony involving 

dishonesty or a breach of trust. During 

1976, the statutory authority for suspending individuals was ruled unconstitutional by a three-judge Federal district 

court. (Feinberg v. FDIC, Civil Action 

No. 74-1150 (D.D.C. Aug. 13, 1976).) 

The decision will not be appealed to the 

Supreme Court. The Corporation's staff is 

working on legislation to propose to Congress to cure the constitutional defects 

found by the court.

Problem banks. By year-end 1976, the 

FDIC's problem bank list, which includes 

national banks and State member banks 

as well as nonmember banks, contained 

379 banks, after reaching a peak of 385 

during November 1976. Comparisons of 

time series on bank loan losses and number of banks on the problem list with 

broad economic indicators show a definite connection between those bank 

problems and the state of the economy. 

Management and policy deficiencies make 

banks vulnerable to recessions and their 

problems are reflected on the FDIC problem list—only with a lag, however. This 

lag is attributable in part to the time it 

takes to examine a bank and complete 

the review and analysis processes, as well 

as the period between examinations. In 

previous economic cycles, the lag has 

averaged about 12 months, but in the 

1974-75 downturn the lag has been somewhat longer—about 18 months. The condition of the loan portfolio at the time of 

the most recent examination is an important factor in assigning and retaining 

banks on the problem bank list, and because of the nature and severity of problems associated with REIT credits and 

other loans that were most affected by 

the 1974-75 recession, banks have needed 

a substantial amount of time to work out 

those problems. Taking all this into consideration, the condition of the banking 

system at year-end 1976 was considerably 

stronger than it was at the end of the 

previous year.

While the peak figure represented only

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Federal Reserve Bank of St. Louis
PROMOTING SOUND BANKING 9

about 21/2 percent of all insured commercial banks, it was nevertheless at its highest level in 28 years. It is important to 

note that at year-end 1976, 14,363 

banks, or about 97.4 percent of the total 

number of insured banks in the U.S., 

were not considered problem banks by 

the FDIC. Moreover, the overall experience in recent years has been that about 

75 percent of the banks listed on a given 

date will still be operating and will no 

longer be considered in the problem 

status 2 years later.

Because the information on problem 

banks has frequently been misinterpreted 

by observers outside the bank supervisory 

area, a description of the FDIC problem 

bank designations and a rundown of additions to the list during 1976 are in order. 

The Division of Bank Supervision maintains a list of problem banks for internal 

supervisory purposes which is divided 

into three separate categories:

Serious Problem-Potential Payoff: 

An advanced serious problem situation 

with an estimated 50 percent chance 

or more of requiring financial assistance from the FDIC.

Serious Problem: A situation that 

threatens ultimately to involve the 

FDIC in a financial outlay unless drastic changes occur.

Other Problem: A situation wherein 

a bank contains significant weakness 

but where the FDIC is less vulnerable. 

Such banks require more than ordinary concern and aggressive supervision.

Analysis of problem bank lists since 

year-end 1973 indicates that about 34 

percent of the banks that were at one 

time or another in the serious problempotential payoff category ultimately did 

fa il. An additional 11 percent were 

merged with other banks without financial assistance by the Corporation, 1 perSTATUS OF PROBLEM BANKS 

FEDERAL DEPOSIT INSURANCE CORPORATION 

DECEMBER 31, 1976 

(Dollar amounts in thousands)

Number of 

banks

Total

deposits

Estimated 

insured deposits

Total

assets

NONMEMBER

Serious Problem -PPO..................... 19 $ 454,680 $ 350,345 $ 519,980

Serious Problem................................. 72 4,389,359 3,715,936 4,878,592

Other Problem.................................... 210 8,347,986 6,842,976 9,187,538

S u b to ta l........................... 301 $13,192,025 $10,909,257 $14,586,110

STATE MEMBER

Serious P roblem -PPO..................... 1 $ 4,432 $ 3,767 $ 4,898

Serious Problem................................. 3 73,996 55,398 85,596

Other Problem.................................... 15 21,448,253 4,095,470 27,435,905

S ub to ta l........................... 19 $21,526,681 $ 4,154,635 $27,526,399

NATIONAL

Serious Problem -PPO..................... 4 $ 59,337 $ 40,243 $ 67,328

Serious Problem................................. 16 2,148,675 1,188,858 2,563,489

Other Problem.................................... 39 22,226,377 7,842,844 29,441,531

S u b to ta l........................... 59 $24,434,389 $ 9,071,945 $32,072,348

ALL PROBLEM BANKS

Serious P roblem -PPO..................... 24 $ 518,449 $ 394,355 $ 592,206

Serious Problem................................. 91 6,612,030 4,960,192 7,527,677

Other Problem.................................... 264 52,022,616 18,781,290 66,064,974

T o ta l................................. 379 $59,153,095 $24,135,837 $74,184,857

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1 0 FEDERAL DEPOSIT INSURANCE CORPORATION

cent received financial assistance from the 

FDIC, and the remaining 54 percent received a less severe rating or were removed from problem status.

Problem status generally is accorded 

after analysis of the most recent examination report of a bank or consideration of 

other pertinent information. The FDIC's 

problem list is not limited to the nonmember banks it supervises but also includes national and State member banks. 

This list overlaps but does not duplicate 

the watch lists maintained by the Office 

of the Comptroller of the Currency and 

the Federal Reserve of the banks they 

supervise. Their watch lists include some 

banks with supervisory problems that 

apparently pose little risk to the insurance fund. The FDIC maintains similar 

watch lists of banks at the regional level; 

such banks may require special supervision because of certain conditions that 

require corrections, but are not likely to 

involve any financial outlays by the 

FDIC.

During 1976, 188 banks were added to 

the list and 158 were removed (16 by 

actual failure). The net increase of 30 was 

represented by increases of 31 in the 

other problem and 3 in the serious problem groups, and a decrease of 4 in the 

serious problem-potential payoff group. 

These changes represent substantially 

lower rates of increase than the dramatic 

changes in 1975. Most banks were included because of loan portfolio weaknesses which were aggravated by the 

1974-75 recession and, due to the type of 

credit involved, could not be resolved 

quickly.

Of the 379 banks on the problem list 

at year-end, 60 had multi-bank holding 

com pany affiliations while 52 were 

owned by one-bank holding companies. 

From a deposit-size standpoint, 31 problem banks had deposits between $50 and 

$100 million, 30 between $100 and $500 

million, 7 between $500 million and $1 

billion, and 8 with $1 billion or more. 

Banks on the list had total deposits of

$59.2 billion, representing about IVi percent of the total deposits of all banks.

One hundred fifteen of the listed 

banks, compared with 116 at the end of

1975, were in the two most serious categories; however, 92 of these had deposits 

of less than $50 million. The remaining 

23 banks in these two categories included 

9 banks between $50 million and $100 

million, 10 between $100 and $500 million, 3 between $500 million and $1 billion, and 1 with deposits of $1 billion or 

more. There were no banks of over $200 

m illio n considered serious problempotential payoff; 19 banks in this category had deposits of less than $25 million, while 4 had deposits of $25 to $50 

million.

Applications for deposit insurance and

branches. Before approving an application 

for deposit insurance, the FDIC is required under section 6 of the Federal 

Deposit Insurance Act, to consider the 

financial history and condition of the 

bank, the adequacy of its capital structure, its future earnings prospects, the 

general character of its management, the 

convenience and needs of the community, and the consistency of the bank's corporate powers with the purposes of the 

act. National banks receive deposit insurance upon their chartering and State 

member banks upon joining the Federal 

Reserve System—in both cases after certification by the responsible Federal agency that the criteria mentioned were given 

consideration. State nonmember banks 

apply directly to the Corporation for deposit insurance.

The Corporation's Board of Directors 

considered 122 applications for Federal 

deposit insurance in 1976, approving 112 

and denying 10 (4 of which were subsequently approved following amendment 

to the applications). Two banks were 

denied again a fte r reconsideration. 

Forty-four of the approved applications 

came from the 13 unit-banking States. 

Applications from 22 State member 

banks for continuation of their insured

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PROMOTING SOUND BANKING 11

status following voluntary withdrawal of 

their membership from the Federal Reserve System were approved under delegated authority by the Corporation's 14 

Regional Directors, and 1 was approved 

by the Board of Directors.

The Federal Deposit Insurance Act requires the Corporation's approval before 

an insured nonmember bank may establish or change the location of a branch 

office. A "branch" is defined in section 

3(o) of the act as . . any branch place 

of business . . . at which deposits are received, or checks paid, or money lent." 

This definition includes tellers' windows 

and other limited service facilities that

may not be "branches" under the laws of 

the respective States.

O f 613 applications considered in 

1976 for the Corporation's prior consent 

to the establishment of new branches, 

135 were approved by the Corporation's 

Board of Directors and 476 were approved under delegated authority by the 

Director of the FDIC's Division of Bank 

Supervision or by the Corporation's 14 

Regional Directors. Two applications 

were denied because of asset and managerial problems.

O f 255 applications considered in 

1976 for the Corporation's prior consent 

to the operation of limited branch facilAPPLICATIONS FOR DEPOSIT INSURANCE AND BRANCHES APPROVED 

BY THE FEDERAL DEPOSIT INSURANCE CORPORATION 1 9 6 6 -1 9 7 6

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12 FEDERAL DEPOSIT INSURANCE CORPORATION

ities (125 of which were unmanned operations), 137 were approved by the Corporation's Board of Directors, 117 were 

approved under delegated authority, and

1 was denied. In addition, the Corporation accepted 116 notifications of unmanned remote service facilities which 

were to be established without the Corporation's approval but subject to publication and a 30-day waiting period. The 

Corporation also accepted notifications 

by 107 banks that they intended to share 

200 remote service facilities owned and 

operated by other banks, also without 

approval as branches. Such facilities not 

approved as branches may not be operated if and when there is a definitive future determination by statute, administrative action, or final court decision that 

these facilities constitute branches as defined in section 3(o). It is estimated that 

11,300 man-hours were saved in 1976 by 

the use of delegated authority for the 

approvaf of the 476 branches, and 2,300 

man-hours were saved in 1976 by the use 

of delegated authority for the 117 facilities.

Mergers. The Bank Merger Act of 

1960, amending section 18(c) of the 

Federal Deposit Insurance Act, requires 

the approval of a Federal bank supervisory agency before any insured bank 

may engage in a merger transaction, as 

defined in the act. If the surviving institution is to be an insured nonmember bank, 

or in any merger of an insured bank with 

a noninsured institution, the Corporation 

is the deciding agency.

The act, as amended in 1966, provides 

further that, before approving any proposed merger of an insured bank, the 

deciding Federal agency must consider 

the effect of the transaction on competition, the financial and managerial resources of the banks, the future prospects 

of the existing and proposed institutions, 

and the convenience and needs of the 

community to be served. A merger that 

would further an attempt to monopolize 

or that would result in a monopoly under

the Sherman Antitrust Act may not be 

approved. A merger that would substantially lessen competition in any section of 

the country, or tend to create a monopoly, may be approved, but only if the responsible agency finds these anticompetitive effects to be clearly outweighed in 

the public interest by the probable effects 

on the needs and convenience of the community to be served. Following approval 

of a bank merger by the Federal supervisory agency, the Justice Department 

may, within a 30-day period (or in emergency cases, within 5 days), bring an action under the antitrust laws to prevent 

the merger.

In past litigation over whether a proposed merger substantially lessens competition and thereby violates section 7 of 

the Clayton Act, the determination of the 

"line of commerce," or product market, 

that will be affected by the merger has 

been a major issue. In general, a product 

market consists of those products that are 

reasonably interchangeable in use or have 

significant cross-elasticity of demand with 

the products offered by the merging companies. For purposes of bank mergers, the 

Supreme Court has held that commercial 

banking and th rift institutions represent 

separate and distinct lines of commerce. 

In the view of the Court, commercial 

banking offers a unique cluster of products and services (such as demand deposits and commercial loans) as compared 

to th rift institutions. However, the Court 

has recognized that as the laws pertaining 

to th rift institutions evolve, the distinctions between the two forms of banking 

could eventually become nonexistent.

In the State of Maine, through recent 

legislation, the traditional competitive 

barriers separating th rift institutions from 

commercial banks have been diminished 

significantly. In the light of this, during 

1976, the Corporation's Board of Directors stated that "commercial realities require a viewing of a combined commercial bank-thrift institution market, as well 

as the traditional separate market" when

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determining the competitive impact of 

any proposed merger in that State (Basis 

for Corporation Approval of the Proposed Merger of Bangor Savings Bank, 

Bangor, Maine, and Piscataquis Savings 

Bank, Dover-Foxcroft, Maine, July 6, 

1976, pp. 77-79). Statutes similar to the 

one in Maine have been enacted in several 

States and there are proposals in many 

other States and at the Federal level to 

legislate greater parity between commercial banks and th rift institutions. As a 

result, future merger decisions may also 

require a determination of whether sufficient distinctions exist, for purposes of 

competitive analyses, to justify treating 

commercial banks and th rift institutions 

as separate lines of commerce.

The Corporation acted on 43 mergertype proposals under section 18(c) during 

1976, approving 41 (including 9 emergency cases) and denying two. The Corporation also approved 21 applications 

invo lvin g corporate reorganizations, 

which, as such had no competitive effect, 

including 17 in connection with the acquisitions of banks by holding companies. 

The act requires that descriptive material 

on each merger case that is approved, the 

basis for approval, and the Attorney General's advisory report be published in the 

deciding agency's annual report. This information for 1976 is published on pages 

57-109 of this report.

Included in the 41 approvals were 3 

applications involving the acquisition of 

mutual savings banks by their affiliated 

commercial banks. These were approved 

after the June 30, 1976 expiration of the 

statutory moratorium on approvals that 

would have the practical effect of permitting a conversion from the mutual to 

the stock form of organization. Although 

technically these transactions were not 

outright conversions from the mutual to 

the stock form of organization, they did 

have such a “ practical effect/'

The Bank Merger Act additionally requires that before deciding on any application, unless the agency finds that it

must act immediately to prevent the 

probable failure of one of the banks involved, the deciding agency shall request, 

from the other two Federal bank supervisory agencies and from the Attorney 

General of the United States, a report on 

the competitive factors involved in the 

case. In 1976, 70 advisory reports were 

filed on the competitive factors involved 

in merger transactions in which the resulting institution would be a national or 

State member bank. In four of these reports, the Comptroller of the Currency 

was informed that the Corporation considered the competitive factors presented 

to be adverse in one or more respects; the 

Comptroller nevertheless approved all 

four transactions.

There has been virtually no case in recent years where any significant competitive question raised in the reports to the 

Corporation was not brought to light by 

its own processing and fully considered in 

rendering a decision. The likelihood is 

that the other two Federal banking agencies' experience has been similar. In an 

effort to expedite processing, the Board 

of Directors during 1976 delegated to the 

Executive Secretary the authority on behalf of the Board of Directors to furnish 

reports to the other bank supervisory 

agencies if the proposed merger would 

have no significant competitive effects. 

Nonetheless, the advisory opinions required by the Bank Merger Act appear to 

be an expensive and time consuming exercise whose usefulness has diminished to 

near zero. It is apparent that this requirement could be eliminated with no effect 

on the careful consideration given to each 

case by the responsible agency.

In 1976, the mergers approved by the 

Federal bank supervisory agencies resulted in the absorption of 81 operating 

banks, compared to 67 in 1975. This 

number does not include corporate reorganizations of individual banking institutions, such as banks in process of forming one-bank holding companies, and 

other merger transactions which did not

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Federal Reserve Bank of St. Louis
14 FEDERAL DEPOSIT INSURANCE CORPORATION

have the effect of lessening the number of 

existing operating banks.

While mergers and the bank holding 

company movement have the potential 

for increasing the concentration of resources in the banking industry, current 

evidence suggests that this has not occurred to any important degree. For 

example, compared to 1960, when the 

Bank Merger Act was enacted, concentration ratios based on total deposits of the 

largest 100, the largest 10, and the largest 

1/2 of 1 percent of commercial banks and 

bank groups, all showed declines through 

June 30, 1976.

Change in bank control and loans secured by bank stock. A change in the outstanding voting shares, unless 10 percent 

or less of the outstanding stock is involved, which results in control or change 

in control of a bank must be reported by 

the chief executive officer of the bank. 

After a reportable change in outstanding 

voting shares has occurred, bank management must report all changes of its chief 

executive officer or directorate that take 

place in the next 12 months. With certain 

exceptions, lending banks are also required to report loans secured or expected to be secured by 25 percent or 

more of the outstanding voting stock of 

an insured bank. Reports required by 

section 7(j) of the Federal Deposit Insurance Act enable the appropriate Federal 

banking agency to investigate promptly 

changes in control and determine their 

effect on the bank and the need for any 

corrective action.

The Corporation received 468 notices 

of change in control involving insured 

nonmember banks during 1976, of which

54 came from the State of Texas. Citing 

the high turnover in the control of Texas 

banks in recent years, the Subcommittee 

on Financial Institutions Supervision, 

Regulation and Insurance of the House 

Committee on Banking, Finance and 

Urban Affairs held hearings in Texas in 

December 1976 to probe possible causes 

of the failure of four banks in the State

during the year.

Bank security. To combat an increasing and alarming number of crimes 

against financial institutions, Congress 

adopted the Bank Protection Act in 

1968. The act enabled the regulatory 

agencies to establish standards to guide 

banks in devising procedures to discourage external bank crimes and assist in the 

apprehension and identification of the 

person(s) committing such crimes. Under 

the Corporation's regulations, a report on 

security devices and procedures must be 

submitted within 30 days after a bank 

becomes insured; a form must also be 

submitted for each newly opened branch 

office. The Corporation's regulations also 

require that insured State nonmember 

banks report all robberies, burglaries, and 

nonbank employee larcenies. Both the 

Federal Reserve and the Comptroller of 

the Currency have similar regulations. 

During 1976, the Corporation received 

934 crime reports filed pursuant to its 

regulations.

Presently, the three regulatory agencies are revising these forms to simplify 

reporting by banks and to update information on banks' security devices. Also, a 

procedural change was made in 1976 

w hereby the certification statement, 

which previously had to be filed annually 

with the Corporation, can now be maintained at the bank.

On December 21, 1976, the Justice 

Department petitioned the Federal bank 

regulatory agencies to tighten the rules on 

physical security. In the petitions, the 

agencies were advised that the regulations 

adopted in the wake of the Bank Protection Act of 1968 are not as complete as 

Congress expected and, moreover, are not 

being fully met by the affected banks. 

The Justice Department did not recommend any specific types of hardware 

or procedures, leaving these recommendations to the discretion of the regulatory 

agencies.

Supervisory and other training activites. The C orporation has a wellDigitized for FRASER 

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Federal Reserve Bank of St. Louis
PROMOTING SOUND BANKING 15

established training program directed 

toward maintaining a highly qualified 

bank examination staff. Seven different 

schools of banking are conducted in the 

Division of Bank Supervision Training 

Center, a modern and complete training 

facility established in 1970 in Rosslyn, 

Virginia, a short commute from the Corporation's headquarters in Washington,

D.C. Each school has a 2- or 3-week 

course of study, administered by a permanent staff of 17 persons, but with an 

instruction staff augmented by FDIC 

field examination personnel brought in 

from the various FDIC regions. Certain 

Washington Office staff members also 

serve as instructors, bringing the number 

of instructors to more than 100 persons 

in a typical year. In addition, the Training 

Center occasionally brings in bankerlecturers as well as experts from the other 

Federal regulatory agencies for specialized topics.

The seven schools include, for new 

trainees, a course in the fundamentals of 

banking and bank examinations; for assistant examiners, a second course emphasizing accrual accounting, audit techniques, and bank operations, with a 

portion devoted to examination of computerized banks; and for senior assistant 

examiners, a program centering on credit 

analysis, asset appraisal, bank management simulations, and Corporation policies and objectives. For examiners beyond the senior assistant examiner level, 

there are an advanced course in the examination of computerized banks, basic and 

advanced courses in examining trust departments, and finally a course for commissioned examiners. In addition to the 

regular schools, some new projects were 

undertaken including a 1-week trust 

workshop and a 1-week fair housing 

workshop. Both are expected to be presented again in 1977. Also a week of instruction in the area of consumer protection was instituted in the school for 

senior assistant examiners. This instruction will be given nine times in 1977 and,

because of the nature of the material, will 

require constant attention and modification to keep abreast of changing events in 

consumer protection.

Over the years there has been an expansion in the number of schools and 

sessions as well as the student population. 

In 1976, 46 school sessions were held involving nearly 1,200 students, compared 

with 189 sessions and 5,100 students in 

the 6-year period 1970-1975. While training is directed primarily toward FDIC 

personnel, 157 State bank examiners, 22 

students nominated by foreign government banking authorities, and 13 Federal 

Reserve examiners attended FDIC schools 

in 1976.

The Training Center also handles enrollment and processing of senior examiners in 10 different graduate schools of 

banking. Annual new enrollments presently amount to about 45 with approximately 95 students in attendance each 

year. New annual enrollments are expected to expand somewhat in the near 

future. The FDIC Office of Education, 

through the Corporation's Tuition Reimbursement Policy, provides the opportunity for examiners to enroll in American Institute of Banking and other 

correspondence courses, career-related 

college training, seminars and workshops 

in specialized areas, and other job-related 

training.

Effort is made to update courses to 

match current banking developments. 

Course administrators and Washington 

Office personnel review current bank 

legislation, periodicals, and literature, 

keeping up to date with present banking 

trends and watching for the need to 

change existing material or expand into 

new areas. The approximately 100 field 

instructors who teach in the schools given 

at the Training Center assist in this effort.

Conferences. During 1976, as part of a 

continuing effort to establish more meaningful dialogue between bankers and bank 

regulators, the Corporation jointly sponsored with the American Bankers AssociaDigitized for FRASER 

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Federal Reserve Bank of St. Louis
16 FEDERAL DEPOSIT INSURANCE CORPORATION

tion two seminars for the chief executive 

officers of insured State nonmember 

banks headquartered in Florida, Georgia, 

Illinois, North Carolina, Puerto Rico, 

South Carolina, Virginia, and Wisconsin, 

at which issues concerning the economy, 

bank structure, and bank examination 

and supervision were discussed. Similarly, 

the Corporation jointly sponsored with 

the National Association of Mutual Savings Banks two seminars for the chief 

executive officers of savings banks, at 

which issues concerning supervision and 

examination, proposed legislation, deposit interest rate ceilings, and banking 

structure were discussed. The seminars 

were open to members of the press, and 

press reports of the activities of the seminars further facilitated communications 

between the Corporation and bankers.

Members of the Board of Directors 

and staff of the Corporation also met 

with representatives of 31 State bankers 

associations throughout the year to discuss Corporation policies, plans, and 

programs and other matters of concern to 

bankers.

These seminars and meetings provided 

a forum for informing bankers of the 

basis for such Corporation policies and 

actions as its increasing reliance upon the 

issuance of cease-and-desist orders as a 

means of bringing about correction of unsafe or unsound practices or conditions 

and its expanded efforts at enforcing the 

ever-growing number of consumer protection laws and regulations. They also provided a forum for advising bankers of 

trends developing in the industry, observed by the Corporation in the course 

of its examination and supervisory activities, that were a matter of concern to the 

Corporation, for example, the much 

higher losses and significant increase in 

the number, size, and geographical dispersion of "problem" banks. Moreover, the 

observations and comments of bankers 

present at the seminars and meetings 

helped the Corporation to gauge the practical effect of certain of its policies and

actions—such as its adoption of "insider" 

transaction regulations and its proposals 

for variable-rate time deposits, for restricting the payment of negotiated rates 

of interest on pooled time deposits of 

$100,000 or more, and for sanctioning 

preauthorized withdrawals from savings 

deposits to cover insufficient funds items.

Additionally, the Corporation sponsored two conferences, attended by 26 

State bank supervisors, on trends and 

developments in the banking industry, 

the regulatory agencies, and the Congress. 

Similar conferences were conducted for 

senior staff of the Corporation's Regional 

Offices.

Reports and surveys. Bank reports and 

surveys are important to the bank supervisory function and provide a valuable 

source of data useful in studying economic conditions and trends. Since its 

beginning, the Corporation has received 

Reports of Condition from insured banks 

on the mid-year and year-end dates, and a 

Report of Income once each year. Condition reports have been received from noninsured banks since the mid-1930s, permitting tabulation of condition data for 

all banks. Beginning in 1961, as a result 

of statutory changes in the method of 

computing deposit insurance assessments, 

each insured bank has filed four Reports 

of Condition each year.

Some significant changes in bank reporting occurred during 1976. After several years of discussions, the three Federal 

bank agencies put into effect revised Reports of Condition and I ncome for insured 

commercial banks which contain more 

meaningful information for supervisory 

purposes as well as for investors in bank 

securities. In addition, the treatment of 

certain concepts in these reports was made 

more consistent with the latest views in the 

accounting profession; for example, the 

revised reports provide a better picture of 

bank reserves for loan losses and their 

relationship to bank capital and Federal 

tax liability. Besides the revised forms, 

the frequency of reporting of the Report

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PROTECTING DEPOSITORS 17

of Income was increased from once a year 

to twice a year for all insured banks, and 

to four times for "large" commercial 

banks having total assets of $300 million 

or more. The latter group of banks are 

newly required also to provide certain information supplemental to the basic condition and income reports.

The FDIC in particular implemented 

certain actions to provide more accurate 

and timely reporting. For the first time in 

its history, the Corporation began a 

policy of fining insured State nonmember 

banks submitting late reports. In September 1976, the Corporation's Board of 

Directors notified 89 State nonmember 

banks that they were subject to fines for 

not submitting reports within the required period. Also, a toll-free telephone 

number was made available for banks 

seeking assistance in the completion of 

their Call Reports.

Subjects of on-going surveys continued 

in 1976 included accounts and deposits in 

all banks, trust assets of insured commercial banks, mortgage rates and mortgage 

lending by banks, interest rates paid on 

savings and time deposits, and income 

and deposit flows of mutual savings 

banks. During the year the Corporation 

also conducted surveys of insured nonmember banks relating to Individual Retirement Accounts and Keogh Accounts, 

and to provisions of the Fair Housing Act 

of 1976.

PROTECTING DEPOSITORS

Incorporated banks and trust companies that receive deposits are eligible 

for Federal deposit insurance. For national banks and State bank members of 

the Federal Reserve, participation in Federal deposit insurance is required by the 

Federal Deposit Insurance Act. As of 

December 31, 1976, about 98 percent of 

all commercial banks in the United 

States, and 69 percent of all mutual savings banks, were covered by Federal

deposit insurance. All mutual savings 

banks not having Federal deposit insurance were located in Massachusetts and 

were covered under the deposit insurance 

program of that State.

Under section 11 (as amended) of the 

Federal Deposit Insurance Act, each depositor is protected by insurance up to 

$40,000 in each insured bank. Time and 

savings deposits held by government units 

(except deposits held in out-of-State 

banks) are insured up to $100,000 for 

each depositor.

The Corporation uses two principal 

methods to protect depositors: assisting 

the absorption of failed or failing institutions into other insured banks and paying 

insured deposits in failed banks that are 

closed and liquidated.

In recent years, the Corporation has 

attempted to arrange purchase and assumption transactions as often as possible 

in bank failures. The Corporation is 

authorized under section 13(e) of the 

Federal Deposit Insurance Act to assist 

financially in the absorption of an insured 

bank in financial difficulty by another insured bank, whenever the Board of Directors finds that the Corporation's risk or 

loss will be reduced. This assistance may 

be accomplished in various ways. The 

Corporation may purchase the assets or 

grant a loan secured by the assets of a 

distressed or closed bank. It may also 

indemnify the absorbing insured bank 

against loss due to its assuming the liabilities and acquiring the assets of a distressed bank. The deposit assumption 

method has the significant advantage of 

providing full protection to all depositors 

with minimal disruption of banking services to the community.

In those instances when the deposit 

payoff method is used, immediately after 

the bank is closed by its chartering 

authority the Corporation's claim agents 

are sent to the bank to prepare for the 

payment of insured deposits. The claims 

presented by depositors and the records 

of the bank are used to determine the

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Federal Reserve Bank of St. Louis
18 FEDERAL DEPOSIT INSURANCE CORPORATION 

INSURED BANK FAILURES, 1 934-1976

NO. OF BANKS

1

t)

;

i

I ?

1 il

0_________________________________________________________________ : 1 i.„iiii.ii.i__ii_i-.IiliilKi_iiII _■- lllli

1934 '36 3 8 '40 '42 '44 '46 '48 '50 '52 '54 '56 '58 '60 '62 '64 '66 '68 70 72 74 76

total amount of deposits held by each 

depositor. From this total, matured debts 

owed by the depositor to the bank may 

be deducted. The net amount eligible for 

deposit insurance is then paid by the Corporation. In recent years, this process has 

usually begun within 5 to 7 days of the 

bank closing.

Since 1934, a total of 535 failure cases 

involving insured banks have required the 

Corporation's disbursements, including 

303 direct payoff cases and 232 deposit 

assumption cases. Although the number 

of failures of insured banks in the past 

few years has averaged only slightly above 

the average number each year since the

early 1940s, these recent failures have 

included several quite large institutions, 

requiring substantial increases in the Corporation's disbursements in failure cases.

Bank failures in 1976. The Corporation advanced $469.1 million in cash to 

protect depositors and take questionable 

assets out of the banking industry in 

connection with 16 insured banks that 

failed during 1976. The failing banks, 

which ranged in deposit size from $555 

thousand to $336 million, were located in

11 States and had combined deposits of 

$865 million. While the number of closings increased in 1976, the total asset size 

of the failed banks declined from the

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Federal Reserve Bank of St. Louis
PROTECTING DEPOSITORS 19

record-setting years of 1973 and 1974. 

Most of the cash advanced by the Corporation will be recovered as the remaining assets of the banks are liquidated. In 

the 16 failures, the Corporation used the 

statutory payoff method in 3 cases and 

assisted sound banks to assume deposits 

in 13 cases.

In the three failures which resulted in 

s ta tu to ry payoffs, the Corporation's 

Board of Directors decided to proceed 

only after extensive efforts to arrange a

deposit assumption transaction had 

proved unsuccessful. In one of the three 

cases the Corporation was unable to effect a purchase and assumption transaction because of a substantial lapse of 

time between the banking commissioner's 

finding of insolvency and the court's decision supporting that finding and also 

because the general disarray in the bank's 

records made it impossible to determine 

accurately the amount of the bank's 

assets and liabilities. In the other two

INSURED BANKS CLOSED DURING 1976 REQUIRING DISBURSEMENTS 

BY THE FEDERAL DEPOSIT INSURANCE CORPORATION

Name and location

Date of closing 

or deposit 

assumption

Number of 

depositors 

or accounts

Amount of 

deposits (In 

thousands)

Deposit payoff

Coronado National Bank 

Denver, Colorado

June 25, 1976 3,770 2,606

Mt. Zion Deposit Bank 

Mt. Zion, Kentucky

June 25,1976 388 555

Citizens State Bank 

Carrizo Springs, Texas

June 28,1976 4,088 15,698

Deposit assumption

The Bank of Bloomfield 

Bloomfield, New Jersey

January 10, 1976 15,700 25,969

Bank of Woodmoor 

Woodmoor, Colorado

January 12,1976 3,590 3,549

The Hamilton National Bank of Chattanooga 

Chattanooga, Tennessee

February 16, 1976 120,000 336,292

South Texas Bank 

Houston, Texas

February 25, 1976 6,498 7,074

First State Bank of Northern California 

San Leandro, California

May 21,1976 34,760 53,405

Northeast Bank of Houston 

Houston, Texas

June 3, 1976 9,652 17,452

First State Bank o f Hudson County 

Jersey City, New Jersey

June 14,1976 15,759 13,790

The New Boston Bank and Trust Company 

Boston, Massachusetts

September 14,1976 2,660 5,335

American Bank & Trust Company 

New York, New York

September 15, 1976 26,000 165,079

The Hamilton Bank and Trust Company 

Atlanta, Georgia

October 8, 1976 8,128 32,022

Centennial Bank 

Philadelphia, Pennsylvania

October 19,1976 13,756 12,312

First State Bank & Trust Co. 

Rio Grande City, Texas

November 19, 1976 8,982 12,082

International City Bank and Trust Company 

New Orleans, Louisiana

December 3, 1976 67,000 161,639

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2 0 FEDERAL DEPOSIT INSURANCE CORPORATION

cases, the banks were declared insolvent 

as of the close of business on a Friday 

and the payoffs began the following Monday morning. The ultimate loss to the 

depositors in the three cases is expected 

to be minimal; the uninsured deposits in 

two of the banks were less than $600.

In the failures resulting in deposit 

assumptions, the 13 assuming banks paid 

purchase premiums totaling $37.5 million 

for the right to acquire the failed banks' 

deposit liabilities. When a significant price 

for a transaction is paid by the acquiring 

bank, this is added to the capital cushion 

available to the FDIC to absorb losses and 

may mean the difference between some 

recovery and none for shareholders and 

noteholders of the failed bank. In connection with the three largest failures, The 

Hamilton National Bank of Chattanooga, 

Chattanooga, Tennessee; American Bank

& Trust Company, New York, New York; 

and International City Bank and Trust 

Company, New Orleans, Louisiana; the 

Corporation purchased capital notes of 

$24 million, $10 million, and $7.5 million, respectively, from the banks acquiring the deposits to alleviate the capital 

needs resulting from the sudden expansion in their deposit liabilities. Also in 

1976, the Corporation received payment 

in full of the $8-miilion capital note it 

purchased from Southern Bancorporation, Inc., Greenville, South Carolina, 

whose subsidiary bank assumed the liabilities and purchased certain assets of 

American Bank & Trust, Orangeburg, 

South Carolina, which failed in 1974. The 

obligation to the FDIC was to mature on 

September 24, 1977, but the holding 

company was able to arrange a 10-year 

refinancing for the full amount through 

First Union National Bank of North 

Carolina, Charlotte, North Carolina. As a 

result of the refinancing, the Corporation 

on December 9, 1976, received payment 

in full of the $8 million owed to it by 

Southern. In exchange for the repayment, 

the Corporation agreed to guaranty 75 

percent of the principal of the First

Union National Bank loan, the amount of 

the guaranty to be reduced pro rata as 

regular principal reductions are made.

Following the closing of International 

City Bank and Trust Company, the FDIC 

followed its normal practice of asking 

several groups to submit bids for an 

FDIC-assisted transaction. When no bids 

were submitted, the FDIC began negotiations with two parties that had expressed 

some interest, and a mutually acceptable 

contract between the FDIC and The Bank 

of New Orleans and Trust Company was 

finally arranged. The greatest obstacle in 

negotiations, and the primary reason that 

no bids were received in the first instance, 

was approximately $44 million in "wild 

card" certificates of deposit issued by 

ICB in 1973. These deposits carried interest rates substantially higher than those 

currently obtainable. Therefore, any bank 

assuming these deposits could be expected to incur substantial losses and 

suffer a negative impact upon its earnings. 

To avoid placing this large financial risk 

on Bank of New Orleans, the FDIC 

agreed to reimburse Bank of New Orleans 

for certain of its anticipated losses, indemnifying the bank in an amount equaling the difference between interest accruing on the wild card deposits and the 

amount of income Bank of New Orleans 

could earn during the same period on 

money prudently invested in U.S. Treasury 

bills. In addition to assuming approximately $160 million in deposits and other 

liabilities, The Bank of New Orleans and 

Trust Company agreed to pay a purchase 

premium of $800,000. To facilitate the 

transaction, the FDIC advanced cash 

amounting to $116.9 million and retained 

book assets of the failed bank of $129.9 

million.

Direct assistance to operating insured

banks. Direct assistance by the FDIC to 

an operating insured bank, initially 

authorized in 1950 under section 13(c) of 

the Federal Deposit Insurance Act, may 

be employed if a bank is both in danger 

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PROTECTING DEPOSITORS 21

quate banking services in the community. 

The Corporation first used this authority 

in 1971 and has used it on three occasions since then. The most recent use was 

in 1976 to assist Farmers Bank of the 

State of Delaware. The Corporation and 

the State of Delaware (which owns 49.4 

percent of the bank's common stock) 

developed a program of financial assistance after it became evident that the 

bank was in danger of closing primarily 

due to a deterioration in the quality of its 

real estate loan portfolio.

Farmers Bank, with $370 million in 

deposits at the time of the announcement 

of this transaction, was the second largest 

commercial bank in Delaware and is the 

sole depository for State funds under 

Delaware law. The Corporation, the State 

of Delaware, and the bank entered into 

an assistance agreement on June 10, 

1976, whereby the State purchased a 

$20-million new issue of preferred voting 

stock of the bank, and the Corporation 

purchased, for $32 million, poor quality 

loans and other assets of the bank having 

a book value of approximately $40 million. In addition, the State of Delaware 

agreed to keep certain minimum balances 

with the bank and certain managerial 

changes were made to facilitate the 

bank's return to profitability.

Also in 1976, the FDIC and Bank of 

the Commonwealth, Detroit, Michigan, 

agreed to a financing plan for the bank. 

The plan involves the sale of an additional 

$10 million of common stock underwritten by First Arabian Corporation and 

the extension of the maturity of the existing $35.5-million capital note from the 

FDIC to the bank. The note, which is 

scheduled to mature in April 1977, will 

be extended for a minimum of 5 years. 

Interest payments on the note, fixed at 

5.5 percent, were increased to 6.6 percent per annum, the rate earned on the 

FDIC insurance fund, payable for the 

first 5 years only to the extent of onehalf of the bank's net income for any 

year. The remaining income will be added

to the bank's equity capital. Amortization of the note will begin in 1979. The 

new financing program is designed to 

make Bank of the Commonwealth a competitive force in the Detroit banking 

market. Financial assistance was originally given to the bank by the FDIC in 

1972 under section 13(c). While the original assistance averted the danger of Bank 

of the Commonwealth failing, recovery of 

the bank's position has been retarded by 

the bank's large holdings of low-yielding 

assets acquired by prior management as 

well as by the unfavorable economic climate of recent years. Detroit, the primary 

market served by the bank, has been particularly hard hit by the recent recession 

and unemployment has been substantially 

higher than the national average.

The Corporation also agreed to extend 

until June 30, 1982, the $1.5-million 

capital note of Unity Bank and Trust 

Company, Boston, Massachusetts, which 

was scheduled to mature on December 

31, 1976. Amortization of the note will 

begin on June 30, 1980. The loan was 

part of an assistance program initiated in 

July 1971 which prevented the failure of 

Unity Bank and Trust Company and 

assured continued banking service for the 

black community in Roxbury and Dorchester. The bank's full recovery has been 

inhibited to a large extent by adverse 

economic conditions.

Protection of depositors, 1934-1976.

The Corporation makes disbursements 

when it pays depositors up to the insurance lim it in payoff cases and acquires 

their claims against the failed banks, 

when it assists deposit assumptions 

through loans or purchases of assets, and 

when it provides assistance to enable an 

operating bank to remain open. From 

January 1, 1934 through December 31, 

1976, the Corporation disbursed approximately $2.3 billion for 539 insured banks 

requiring assistance. These banks had 

aggregate deposits of about $6.2 billion. 

In the 535 closed banks, at the end of 

1976 over 99.8 percent of the depositors

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2 2 FEDERAL DEPOSIT INSURANCE CORPORATION

had received or were assured of payments 

of their deposits in full, and 99.6 percent 

of the total deposits had been paid or 

made available to them. Banks whose 

deposits were assumed by other insured 

banks with the Corporation's assistance 

accounted for almost 72 percent of the 

deposits in the closed banks. By far the 

largest proportion of the amount recovered by depositors in payoff cases has 

been provided by FDIC payments of insured deposits, with additional payments 

received from the proceeds of liquidated 

assets, offsets against indebtedness, and 

pledged assets.

Including the amounts disbursed in 

failure cases and assistance to operating 

banks, and all losses and provision for 

losses on assets being liquidated, the Corporation's losses of $285.0 million have 

amounted to 12.4 percent of its disbursements in all insurance operations.

Liquidation activities. A t year-end 

1976, the FDIC's Division of Liquidation 

was administering over 72,000 assets with 

an aggregate book value of approximately 

$2.6 billion. The largest portion of those 

assets, over $900 million, was real estate 

related. To liquidate those assets the 

Corporation employs approximately 600 

persons in the Division of Liquidation. 

During 1976, the Division of Liquidation 

collected approximately $740 million 

from the assets of the closed banks held 

by the Corporation either directly or as 

receiver. The complexity of those assets 

has increased significantly during the past 

few years as a result of the larger bank 

closings.

In the Franklin National Bank (FNB) 

liquidation, the FDIC's largest, as of 

December 31, 1976, the Corporation had 

collected $1,124.7 million on assets held, 

and had paid $1,073.5 million of this 

amount to the Federal Reserve Bank of 

New York, thereby reducing the principal 

amount due on the "window" loan extended to FNB from $1,723.5 million at 

the time of the bank's closing on October 

8, 1974, to $650 million at year-end

1976. Interest at the rate of 7.52 percent 

per annum will not be due until the note 

matures on October 8, 1977. The principal book value of assets remaining to be 

liquidated as of December 31, 1976, is 

approximately $1,208.6 million compared with the principal and accrued 

interest on the FDIC's outstanding debt 

to the Federal Reserve Bank of New York 

of $848.8 million.

On October 8, 1977, it is estimated 

that the Corporation will be required to 

advance approximately $465 million to 

$665 million to pay the Federal Reserve 

Bank the remaining balance due on the 

origin al $ 1,723.5-m ill ion obligation 

which was owed by Franklin as of its 

closing. Based on a number of assumptions as to the duration of the receivership, the pace of collections, and the results of matters in litigation, it is unlikely 

that the Corporation will suffer a loss in 

this very large failure.

Charters for two deposit insurance 

national banks established in 1975 were 

scheduled to terminate in 1977 according 

to the statute authorizing their establishment; and before the expiration of each 

charter, the FDIC must make arrangements to dispose of the bank's business. 

Deposit insurance national banks (DINB) 

were organized in accordance with section 11 of the Federal Deposit Insurance 

Act to deal with the failures in 1975 of 

Swope Parkway National Bank, Kansas 

City, Missouri, and The Peoples Bank of 

the Virgin Islands, St. Thomas, Virgin 

Islands. In such cases, the receiver of the 

closed bank immediately transfers to the 

new bank all insured and fully secured 

deposits in the closed bank, and those 

funds are available to their owners to the 

same extent that they were available before the bank's closing. By establishing a 

deposit insurance national bank the FDIC 

hopes to encourage local communities to 

consider the establishment and capitalization of a new bank.

The FDIC is authorized to dispose of a 

deposit insurance national bank's business

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PROTECTING DEPOSITORS

DEPOSITS AND LOSSES IN ALL INSURED BANKS 

REQUIRING DISBURSEMENTS BY FDIC 1934-1976

TO TA L DEPOSITS 

$6.23 billion

Recovered by depositors 

$6 21 billion

Lost or not yet available 

to depositors $19.7 million

D IS B U R SEM E N T S BY FDIC

$2.30 billion

Recovered by FDIC 

$2.01 billion

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Federal Reserve Bank of St. Louis
24 FEDERAL DEPOSIT INSURANCE CORPORATION

either by offering capital stock in the 

bank for sale or by transferring its business to any insured bank within the same 

community. Stockholders of the former 

bank have the first opportunity to purchase such stock. The FDIC made a stock 

offering in 1976 in connection with the 

deposit insurance national bank created 

in the Swope Parkway failure and conducted meetings with the stockholders of 

the former The Peoples Bank of the 

Virgin Islands. Former stockholders of 

Swope Parkway National Bank did not 

reorganize a new bank; therefore, the 

Corporation on December 18, 1976, entered into a transaction transferring the 

remaining business of the DINB to Laurel 

Bank of Kansas City, Kansas City, Missouri. The decision to transfer the remaining business to Laurel Bank was made 

because of that bank's willingness to 

enter into such a transaction, because 

Laurel Bank already had a significant volume of business from the trade area of 

the DINB, and because the location of 

Laurel, among those available, was the 

most geographically convenient to the 

transferred depositors. In addition, Laurel 

agreed to pay the FDIC a $3,000 premium for the transaction.

The FDIC has received expressions of 

interest from various groups in connection with the DINB in the Virgin Islands. 

The interest of these groups will be pursued and hopefully the result will be proposals for a new bank that will include 

the participation and support of the local 

community.

ENFORCING CONSUMER AND INVESTOR LEGISLATION

The FDIC is responsible for enforcing 

a number of consumer protection laws 

and regulations, including the Truth in 

Lending Act, the Fair Credit Reporting 

Act, the Real Estate Settlement Procedures Act, the Equal Credit Opportunity 

Act, the Civil Rights Act, and the Home

Mortgage Disclosure Act, with respect to 

the insured nonmember banks within its 

supervisory and regulatory jurisdiction. In 

most cases, this responsibility is explicit, 

that is, the result of an explicit direction 

in a governing statute. In some cases however, the responsibility is implicit, that is, 

it arises by virtue of the FDIC's supervisory responsibility to see to it that the 

banks it supervises operate within the 

confines of applicable Federal law.

P u b lic ly held insured State nonmember banks fall under the Corporation's explicit regulatory authority for 

public reporting, proxy solicitations, and 

trading by insiders of their own bank 

stock. The Corporation also supervises 

disclosure with respect to take-over 

attempts and other purchases of publicly 

held securities of banks subject to its primary jurisdiction. Newer statutory responsibilities have engaged the Corporation in the regulation of insured nonmember banks that act as transfer agents 

and deal in municipal securities.

These increasing statutory responsibilities in the securities disclosure area have 

coincided with the Corporation's increased interest and concern in securities 

disclosure problems even where it has no 

explicit statutory mandate. The Corporation, for example, has actively encouraged the use of offering circulars in 

connection with bank stock and debenture offerings and has become more concerned with general questions of bank 

accounting and disclosure by bank holding companies regulated by the Securities 

and Exchange Commission. It has also 

monitored banks' securities marketing 

devices and banks' involvement in the 

market for their own stock.

Compliance examinations and related

activities. The FDIC carries out its responsibility to enforce various consumer 

laws primarily through the examination 

and supervisory process. FDIC examiners 

checked for compliance with the requirements of such laws during regular bank 

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Federal Reserve Bank of St. Louis
ENFORCING CONSUMER AND INVESTOR LEGISLATION 25

cept Georgia, Iowa, and Washington, 

where as noted, the FDIC was engaged in 

the selective withdrawal program for a 

certain number of insured nonmember 

banks. Separate compliance examinations 

of the banks involved in the experiment 

were conducted in these three States. All 

banks within the FDIC's supervisory jurisdiction are generally examined for compliance at least once every 18 months. 

Such examinations are normally done by 

reviewing a sample of pertinent transactions and documents and through discussions with bank management. Violations and other exceptions discovered in 

the process are reported and followed up 

by the staffs of the various Regional Offices to assure that appropriate corrective 

measures are taken by the bank involved.

As a matter of practice, each Regional 

Office staff makes every effort to resolve 

exceptions and obtain compliance with 

applicable requirements on a voluntary 

basis. If this cannot be accomplished, 

resort is made to a formal administrative 

proceeding under section 8(b) of the Federal Deposit Insurance Act looking toward the issuance, by the FDIC's Board 

of Directors, of a cease-and-desist order 

against the objectionable practices. During 1976, the Board initiated four such 

orders relating in whole or in part to violations of Truth in Lending and Equal 

Credit Opportunity requirements.

Certain consumer protection laws, 

notably the Truth in Lending Act, provide for criminal sanctions against those 

who w illfully and knowingly violate its 

requirements. During 1976, the FDIC referred one case of apparently willful and 

knowing violation of the Truth in Lending act to the appropriate U.S. Attorney 

for possible criminal prosecution.

With regard to Truth in Lending, the 

FDIC, during the latter part of 1976, 

withdrew from examining for compliance 

with State Truth in Lending requirements 

in the exempt States of Connecticut, 

Maine, Massachusetts, Oklahoma, and 

Wyoming. This was an effort to both conserve man-hours and avoid unnecessary 

duplication of activities already being performed by State examiners in these five 

States. FDIC examiners are, nevertheless, 

continuing to examine for compliance 

with those Federal Truth in Lending requirements from which the five States 

have not received an exemption and 

which therefore continue to be applicable 

in these States.

In the area of fair housing, the FDIC, 

in conjunction with the Office of the 

Comptroller of the Currency, began testing a program to identify possible discriminatory lending practices. During this 

test phase, approximately 300 banks were 

asked to use a specially designed two-part 

form. One part requires the banks to retain certain basic economic data on each 

loan applicant. The other part, to be completed by applicants for mortgage loans 

and forwarded directly to the agencies, 

calls for data on race, sex, religion, and 

certain other personal characteristics. The 

separate parts of the form have identifying numbers so that the data can be 

readily analyzed together. It is anticipated that the data retained by a bank 

will be reviewed during regular bank examinations and when a profile of that 

data fails to meet certain tests in specially 

designed computer programs, it will signal 

the examiner to conduct a closer review 

of the bank's housing lending practices 

for evidence of discrimination.

Also in furtherance of its commitment 

to fair housing lending on the part of the 

banks it supervises, the FDIC has begun 

to collect copies of the Mortgage Loan 

Disclosure Statements which certain of 

the banks it supervises are required to 

compile and make available to the public 

pursuant to the Home Mortgage Disclosure Act. These data will later be analyzed for evidence of "redlining" and 

possible discriminatory lending practices.

Office of Bank Customer Affairs. The 

Office of Bank Customer Affairs, which 

was created in 1975, is responsible for 

coordinating FDIC efforts to protect the

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Federal Reserve Bank of St. Louis
26 FEDERAL DEPOSIT INSURANCE CORPORATION

interests of bank customers. The first 

priority in 1976 was staffing. Four staff 

members were added, including a permanent director. The process of establishing 

consumer affairs specialists in the Regional Offices was begun during the year 

with the designation of five individuals to 

these positions. It is expected that the 

remaining consumer affairs specialists will 

be selected in early 1977.

The office processes bank customer 

complaints and inquiries received directly 

and reviews and coordinates the activities 

of the Regional Offices in responding to 

consumer complaints. In addition to 

alleged violations of consumer protection 

laws, consumers' letters dealt with a variety of other banking matters. Although 

many inquiries did not deal with alleged 

violations of either Federal or State laws, 

the office made a conscientious effort to 

provide informative and timely responses 

to all consumers. Use of a standardized 

complaint form which may aid the complaint process is currently under study.

The Office of Bank Customer Affairs 

also reviews proposed legislation and 

regulations to assess their impact on bank 

customers. It reviews compliance reports 

on a selected basis. During the year, the 

office recommended four cease-and-desist 

actions involving consumer laws.

To improve examiners' effectiveness in 

investigating discrimination complaints 

and conducting fair lending examinations, 

the office jointly sponsored a 1-week fair 

housing workshop during the year, and 

plans are being formulated to conduct a 

similar workshop in 1977. In addition, 

comprehensive instructions for investigating fair housing complaints were developed for examiners. A brochure describing the FDIC's complaint handling 

function and giving information on consumer laws is being prepared and publication of a series of pamphlets on consumer 

laws and various banking practices is being considered.

Securities Exchange Act — Registration and reporting. Under the Securities

Exchange Act of 1934, the Corporation 

exercises all "the powers, functions, and 

duties" otherwise vested in the Securities 

and Exchange Commission "to administer 

and enforce" the registration, companyreporting, and related provisions of that 

act with respect to insured nonmember 

banks. These provisions are applicable to 

banks with more than $1 million in assets 

that have 500 or more holders of any 

class of equity security. Under these provisions and the Corporation's regulations 

thereunder, the banks are required to file 

an initial registration statement and periodic reports (annually, semi-annually, and 

quarterly) as well as a special report 

covering any material event which occurred in the preceding month. Any 

matter presented for a vote of security 

holders must be effectuated through a 

proxy statement, or an information statement if proxies are not solicited, complying with the Corporation's regulations; 

and where directors are to be elected, the 

proxy or information statement must be 

accompanied or preceded by an annual 

report disclosing the financial condition 

of the bank. Officers and directors of a 

bank whose securities are registered and 

any person or related group of persons 

holding more than 5 percent of such 

securities must report their holdings and 

any changes in their holdings to the Corporation.

All required statements and reports 

filed with the Corporation under the 

Securities Exchange Act are public documents. All such statements and reports 

are available for inspection at the Corporation's headquarters and copies of 

registration statements and company reports, proxy statements, and annual reports to shareholders are also available at 

the New York, Chicago, and San Francisco Federal Reserve Banks as well as at 

the Reserve Bank of the district in which 

the bank filing the report is located.

During 1976, 22 banks filed registration statements, 1 bank withdrew from 

the Federal Reserve System, and 1 bank

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ADM IN ISTR ATIO N OF THE CORPORATION 27

converted from a national to a State charter. Nine banks terminated registration 

due to mergers and bank holding company acquisitions. The year-end total of 

registered banks was 336 compared to 

321 the year earlier.

Banks acting as municipal securities

dealers and transfer agents. The Securities 

Acts Amendments of 1975 imposed, for 

the first time, registration requirements 

and a scheme of Federal regulation upon 

municipal securities dealers and transfer 

agents, including banks that act in those 

capacities. Both the Securities and Exchange Commission and the Corporation 

have responsibilities for enforcing compliance by insured State nonmember 

banks with the enacted provisions. As of 

December 31, 1976, 55 State nonmember 

banks had registered as municipal securities dealers with the Securities and Exchange Commission and 444 State nonmember banks had registered with the 

Corporation as transfer agents.

During 1976, the Corporation worked 

closely with the Securities and Exchange 

Com m ission, the Municipal Securities 

Rulemaking Board, the Federal Reserve, 

and the Comptroller of the Currency in 

developing rules, forms, regulation guidelines, and examination procedures. A 

special compliance report and new regulations are presently being drawn up to 

properly supervise the activities of banks 

acting as municipal securities dealers.

ADMINISTRATION OF THE CORPORATION

Organizational structure. Mr. Robert

E. Barnett was appointed a member of 

the Board of Directors on March 18, 

1976. On the same date, he was elected 

unanimously by the Board of Directors to 

be Chairman, succeeding Chairman Frank 

Wille whose 6-year term expired on 

March 16, 1976.

Director George A. LeMaistre, also 

serving a 6-year term which began on

August 1, 1973, continued his service as a 

director. Comptroller of the Currency 

James E. Smith, an ex officio member of 

the Board, who began a 5-year term of 

office on July 5, 1973, resigned on July

30, 1976, and was succeeded by Acting 

Comptroller of the Currency Robert 

Bloom, pending appointment and confirmation of a successor to Mr. Smith.

Corporation officials, Regional Directors, and Regional Offices are listed on 

pages v and vi.

Organizational changes. Effective June 

20, 1976, the Division of Research and 

the Office of Management Systems were 

consolidated into the resulting Division of 

Management Systems and Economic 

Analysis. The consolidation brought the 

administration of statistical reports and 

the economic research and analysis functions into closer coordination with the 

computer and data processing support 

operation. DMSEA is stressing particularly a broader utilization of financial, 

statistical, and economic data for several 

Corporation purposes, including the continuing development of systems to detect 

unfavorable trends in bank operations as 

a tool in the Corporation's bank supervisory activities.

The Office of Employee Relations was 

created on May 17, 1976, for the purpose 

of centralizing some personnel-related 

activities that had been scattered throughout the Corporation. Offices currently 

operating in the FDIC that were made a 

part of OER include the Personnel Office, 

Office of Education, Equal Employment 

O p p o rtu n ity , and Upward Mobility. 

Other reasons for establishing the new 

office were: to provide an improved mechanism through which the Board of Directors can focus on matters relating to the 

environment in which Corporation employees work, and which will provide a 

focal point through which employees 

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28 FEDERAL DEPOSIT INSURANCE CORPORATION

dations to the Board of Directors in areas 

related to employee relations matters not 

currently being handled by any office in 

the Corporation, or which may be relatively new to the Corporation. OER is 

primarily responsible for creating and implementing recommendations relating to 

career development at the Corporation, 

job counseling, employee benefits, grievance administration, equal employment 

opportunity, upward mobility opportunity, education and training, recruitment, 

merit promotion, and related technical 

personnel office operations. Three new 

professional positions, including staffing 

in career counseling and employee and 

labor relations, will be added in 1977.

Change in location of Regional Office.

On December 16, 1976, based on a supporting study by the Division of Bank 

Supervision, the Board of Directors approved the transfer of regional headquarters for the existing St. Louis Region 

(States of Missouri and Kansas) from St. 

Louis, Missouri, to Kansas City, Missouri. 

It is expected that the transfer will be

effective no later than mid-year 1977.

Number of employees. Total employment increased by 261 in 1976 with approximately 9 out of every 10 new employees added to the Division of Bank 

Supervision and the Division of Liquidation. The year-end 1976 total includes 

624 nonpermanent employees serving on 

a short-term appointment or on a whenactually-employed basis. Of the year-end 

total, an estimated 58 percent and 9 percent respectively were assigned to regional or other field offices of the Division of Bank Supervision and of the 

Division of Liquidation.

For the 6-year period 1971-1976, the 

Corporation's total workforce increased 

from 2,508 to 3,535, or 41 percent, with

55 percent of the increase in the Division 

of Bank Supervision and 32 percent in 

the Division of Liquidation.

The percentage of women and minorities in the professional job series group, 

including student cooperatives, increased 

from 9.3 percent and 5.9 percent respectively as of December 31, 1974, to 12.2

NUMBER OF OFFICERS AND EMPLOYEES 

OF THE FEDERAL DEPOSIT INSURANCE CORPORATION 

DECEMBER 31, 1975 AND 1976

Unit

Total

Washington

office

Regional and 

other field offices

1976 1975 1976 1975 1976 1975

T o ta l............................................................... 3,5351 3,2741 1,110 971 2,425 2,303

Directors................................................... 32 3 32 3 0 0

Executive Offices3 ................................. 57 51 57 51 0 0

Legal D ivision.......................................... 92 83 79 72 13 11

Division of Bank Supervision............... 2,450 2,282 389 300 2,061 1,982

Division of Liquidation...........................

Division of Management Systems

501 423 165 128 336 295

and Economic Analysis..................... 192 1944 192 1944 0 0

Office of the C o n tro lle r........................ 175 219 160 204 15 15

Office of Corporate A u d its .................. 24 19 24 19 0 0

Office of Employee Relations............... 41 0 41 0 0 0

includes 624 nonpermanent employees on short term appointment or when actually employed in 1976, and 508 in 

1975.

2As of December 31, 1976, Mr. Robert Bloom was serving as Acting Comptroller of the Currency (see text).

3 Includes Office of Bank Customer Affairs and Office of Corporate Planning.

4Aggregate figures for Division of Research and Office of Management Systems. These two organizational entities were 

consolidated as a result of a reorganization in 1976.

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Federal Reserve Bank of St. Louis
AD M INISTRATIO N OF THE CORPORATION 29

percent and 9.3 percent as of mid-year 

1976. Continuing progress in increasing 

the numbers of women and minorities to 

more representative levels in the Corporation's professional workforce is largely 

attributable to recruitment efforts cited 

as action items in past and current Equal 

Employment Opportunity Plans. In particular, the hiring of bank examinersstudent cooperatives contributes to both 

short-and long-term gains through retention of many such student cooperatives as 

permanent bank examiners. The Student 

Cooperative Education Program, through 

which college students are appointed as 

bank examiners-student assistants and 

after completion of a work-study program may qualify as assistant bank examiners, was continued in 1976 with 264 

such employees as of December 4, 1976. 

While technically assigned to the Washington Office, such employees have actual 

duty stations in various regions where 

they gain experience through tours of 

duty with bank examiners on actual bank 

examinations. As of December 4, 1976, 

the combined bank examiner workforce, 

including student assistants, included 9.3 

percent minorities and 11.0 percent 

women. Approximately 80 percent of 

professional group positions in the Corporation are bank examiners.

Employee and personnel programs.

The Corporation's Equal Employment 

Opportunity and Upward Mobility Programs are each administrated by a fulltime professional. The equal opportunity 

specialist is assisted by approximately 60 

employees assigned part-time duties and 

responsibilities, and the upward mobility 

coordinator is assisted by a task force of 

division and office representatives. During 

1976 under the Upward- Mobility Program, opportunities were announced and 

bridge positions filled for bank examiner 

aide, auditor-technician, computer aide, 

writer-editor aide, and computer programmer trainee. The bank examiner aide 

bridge position, of which seven were

filled during 1976, is structured to provide the qualifying work experience and 

academic courses for a target position of 

assistant bank examiner. In December 

1976, recruitment was initiated for the 

Federal Women's Program coordinator 

who will serve on the staff of the Director 

of the Office of Employee Relations (also 

designated as Director of Equal Employm ent Opportunity) devoting approximately 60 percent of available time to 

coordinating Federal Women's Program 

activities in liaison with existing Federal 

Women's Program committees, and the 

remainder of time to operational employee relations duties and responsibilties.

Elections of members of Employee Advisory Councils were conducted in February 1976. Members of the Councils are 

elected by the employees they represent. 

The Councils, whose establishment was 

announced in late 1975, are intended to 

provide employees with a regular opportunity to make recommendations on matters of administrative policy and practice 

affecting FDIC employees.

Negotiations with a union local in the 

Corporation's New York Region during

1976 led to the signing of a contract 

agreement on November 19, 1976. The 

union local serves as the exclusive representative of the unit of bank examiners in 

the New York Region under the provisions of Executive Order 11491, as 

amended.

The Corporation's Tuition Reimbursement Policy provides for reimbursement 

of costs for job- and career-related training for employees. The Periodical Subscription Program, provided for field 

employees who do not have ready access 

to the Corporation's head office library, 

permits examiners, liquidators, and auditors to subscribe to selected job-related 

periodicals at Corporation expense.

A t the Corporation's Awards Ceremony on December 14, 1976, 74 employees received recognition for 15, 25,

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Federal Reserve Bank of St. Louis
30 FEDERAL DEPOSIT INSURANCE CORPORATION

35 or more, and 40 years of service. At 

the same ceremony, three employees received special awards:

Chairman's Award Exceptional Walter W.

service by a Tibbs

nonexaminer

employee

Edward J. Roddy Exceptional Robert T.

Award service by an Dial

examiner

Nancy K. Rector 

Award

Exceptional Patricia Ann 

service of a Riley 

humanitarian 

nature

Implementation and administration of

the Freedom of Information Act. During

1976, the Corporation responded to 124 

requests under the Freedom of Information Act for access to or copies of records 

in its possession. Twelve of the requests 

were either misdirected to the Corporation or the records requested were not in 

the Corporation's possession, and the requesters were notified accordingly.

Of the remaining 112 requests, the 

Corporation granted in full 52 requests. 

Thirty-six requests were wholly denied; 

23 requests were granted in part and denied in part. One request was outstanding 

as of December 31, 1976. The Board of 

Directors received only 10 appeals from 

initial denials. After considering those 

appeals, the Board reversed one initial 

denial, thereby directing that the records 

requested be made available to the requester; sustained seven other initial 

denials; and granted in part and denied in 

part the appeal from one initial denial; 

one appeal had not been acted upon as of 

December 31, 1976.

In wholly or partially denying certain 

requests, the Corporation invoked those 

provisions of the Freedom of Information 

Act which authorize an agency to exempt 

from disclosure matters that are (1) contained in or related to examination, operating, or condition reports prepared by, 

on behalf of, or for the use of an agency 

responsible for the regulation or supervision of financial institutions; (2) trade

secrets and commercial or financial information obtained from a person and privileged or confidential; (3) inter-agency or 

intra-agency memorandums or letters 

which would not be available by law to a 

party other than an agency in litigation 

with the agency; and (4) personnel and 

medical files and similar files the disclosure of which would constitute a clearly 

unwarranted invasion of personal privacy.

To expedite the processing of requests 

for records pursuant to the Freedom of 

Information Act, the Board of Directors 

delegated authority to initially deny such 

requests to the Executive Secretary or his 

designee on September 22, 1976. That 

authority had previously been vested in 

the Chairman of the Corporation.

Audit. The Corporation's Office of 

Corporate Audits has the responsibility of 

performing independent audits of all financial and operational activities within 

the Corporation, and for reporting audit 

results and recommendations to executive 

management. During the year the office 

conducted numerous audits relating to 

the administration of the insurance fund, 

the proper conduct of Corporation business, and the multi-billion-dollar liquidation activities in which the FDIC is involved. Qualified CPA firms were used to 

supplement the resources of the Office of 

Corporate Audits when unusual and nonrecurring requirements arose. In addition 

to our continuing internal audit activity, 

the financial transactions of the Corporation are audited annually by the General 

Accounting Office and audit results are 

reported to the Congress. This external 

audit review provides additional assurance 

as to the fairness of our financial statement presentation and the appropriateness of our accounting practices.

FINANCES OF THE CORPORATION

During 1976 the Corporation's consistent financial growth continued. Its 

total assets, its cash flow for the year, its

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FINANCES OF THE CORPORATION 31

deposit insurance fund, and the yield on 

its portfolio of government securities all 

reached new highs.

Notwithstanding substantial outlays in 

connection with a larger-than-normal 

number of bank failures, the Corporation's financial position on December 31,

1976, testified to the basic strengths of 

its statutory funding and investment 

operations.

A t the close of business in 1976 the 

Corporation's assets totaled $8.6 billion. 

Cash and United States Government securities valued at amortized cost plus accrued interest were $6.8 billion. Equity in 

assets acquired from failed banks in purchase and assumption and depositor payoff transactions, in notes purchased to 

facilitate deposit assumptions and mergers, and in direct assistance to operating 

banks totaled $2.0 billion before deducting reserves for losses. Of this total, 

approximately $849 million represented 

equity in assets acquired as a result of the 

closing of Franklin National Bank on October 8, 1974.

On the same date, the Corporation's 

liabilities totaled $1.3 billion; nearly 

$849 million of these liabilities consisted 

of the unpaid balance of a note, including 

accrued interest, held by the Federal 

Reserve Bank of New York, which had 

provided financial assistance to Franklin 

National Bank before the assumption of 

certain of Franklin National's liabilities in 

1974 by European-American Bank & 

Trust Company. The remaining liabilities 

consisted largely of assessment credits 

due insured banks, most of which will 

become available on July 1, 1977.

The Corporation's total gross revenues 

in 1976 amounted to $1.1 billion, an increase of $92 million over 1975. Of this 

total, $676 million was derived from the 

gross assessments payable by insured 

banks during the year; $445 million was 

received as interest on the Corporation's 

portfolio of United States Government 

securities, in which the Federal Deposit 

Insurance Act requires that its surplus

funds must be invested; and $24 million 

from other sources.

During 1976, the Corporation continued to take action to improve yields 

on its investments and to compress the 

maturity structure of its investment portfolio. In this process, with the assistance 

of the Department of the Treasury, the 

Corporation sold approximately $748 

million face value of low-yield marketable 

bonds which the Corporation purchased 

many years ago. These particular bonds, 

characterized by long maturities and low 

interest rates, had served in recent years 

as an obvious drag on the Corporation's 

efforts to improve the average yield on its 

total portfolio. Although this sale resulted in an expected immediate book 

loss to the Corporation of approximately 

$106 million, the proceeds of the sale, 

totaling $641 million, were immediately 

reinvested in shorter-term securities with 

an average annual yield on cost 7.74 percent.

This sale, which the Corporation had 

been pursuing for a considerable period, 

enabled the Corporation to increase its 

revenues derived from interest by approximately $22 million annually, and increased its average annual portfolio yield 

on cost from 6.47 percent as of December 31, 1975, to 7.11 percent as of 

December 31, 1976. The Corporation 

estimates that it will recover the book 

losses from this transaction over a period 

of 7 years or less, through reinvestment 

of the proceeds in markedly higheryielding securities.

The Corporation's administrative and 

operating expenses during 1976, including a net increase of approximately $28 

million in the reserve for insurance losses 

and other expenses incurred to protect 

depositors, totaled $107 million.

As to the annual assessments required 

by the Federal Deposit Insurance Act to 

be paid by insured banks, the basic assessment rate since 1935 has been 1/12 of 1 

percent of total assessable deposits. In 

1950, legislation was enacted which had

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Federal Reserve Bank of St. Louis
32 FEDERAL DEPOSIT INSURANCE CORPORATION

B illio n s of d o lla rs 

9 0 0 ------------------------------------

DEPOSITS IN INSURED BANKS,

AND THE DEPOSIT INSURANCE FUND, 19 5 0-19 7 6

8 0 0 -

7 0 0 -

TOTAL DEPOSITS X

6 0 0 -

5 0 0 -

4 0 0 ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

3 0 0 -

200 -

100 -

INSURED DEPOSITS (estimated)

i i i i i i i i i i— I— i— i— i— i— i— i— i— i— i— i— i— i— i— i— i— i 

1 95 0'51 ’52 '5 3 '5 4 '5 5 '56 '57 '5 8 '59 '60 '61 '6 2 '63 ’6 4 '6 5 '6 6 '67 '6 8 '6 9 '70 '71 '72 '73 '74 ’75 ’76

DEPOSIT INSURANCE FUND

8--------------------------------------------------------------------------------------------------------------

the effect of reducing the statutory rate 

of assessment by providing a credit to be 

applied against the gross assessments levied each year. Following another legislative change, this credit to insured banks 

has been 66-2/3 percent since December

31, 1961. This percentage is applied to 

the gross assessments due from banks in 

the calendar year after subtracting the 

Corporation's administrative and operating expenses, insurance losses, and additions to reserve for losses in that calendar 

year. Gross assessments payable by insured banks in 1976 amounted to $35 

million more than in 1975. The statutory

credit to banks amounted to approximately $380 million, an increase of $17 

million over the previous year. This made 

the net assessment paid by insured banks 

equal to approximately 1/27 of one percent of assessable deposits in 1976, compared to 1 /28 of one percent in 1975.

The deposit insurance fund, in effect 

the excess of the Corporation's assets 

over its liabilities, represents its accumulated net income since the beginning of 

deposit insurance in 1933. This fund, 

which is the Corporation's basic resource 

for the protection of depositors, amounted to $7.3 billion at the end of 1976, an

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Federal Reserve Bank of St. Louis
FINANCES OF THE CORPORATION 33

increase of $553 million from year-end 

1975. Although it is not possible to state 

actuarially what the deposit insurance 

fund should be, it is clearly symbolic of 

the Corporation's financial integrity and 

independence, and it has been more than 

adequate to meet the Corporation's requirements during its 43-year history. 

Additionally, the Corporation is authorized to borrow up to $3 billion from the 

Department of the Treasury, although it 

has never exercised this authority.

By any standards, the Corporation's 

finances remained strong in 1976, in spite 

of the necessity of increasing the number 

of its employees, the impact of rising 

costs, and financial involvement in more 

than the usual number of failed bank situations. Healthy and continuing financial 

growth is forecast for the future and it is 

expected that most key financial figures 

at the end of 1977 will exceed those recorded at the close of 1976.

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34 FEDERAL DEPOSIT INSURANCE CORPORATION

COMPARATIVE STATEMENT

OF FINANCIAL CONDITION (in thousands)

ASSETS: Calendar year ended December 31,

1976 1975

Cash $ 22,860 $ 17,359

U.S. Government obligations 6,760,229 6,472,294

Assets acquired in failures of insured banks:

Depositors claims paid $ 62,598 $ 65,686

Depositors claims unpaid 1,280 900

Equity in assets acquired 1,664,321 1,790,443

Assets purchased outright 35,160 4,477

$1,763,359 $1,861,506

Less reserve for losses 240,601 1,522,758 213,150 1,648,356

Notes purchased:

Principal $ 200,500 $ 1 6 3 ,0 0 0

Accrued interest 4,127 204,627 3,518 166,518

Assistance to operating insured banks:

Principal $ 37,000 $ 37,000

Accrued interest 7 37,007 1 37,001

Miscellaneous assets 1,869 1,645

Land and office building less

depreciation on building 6,553 6,688

Total Assets $8,555,903 $8,349,861

Notes to financial statements on pages 38-39 are an integral part of this statement.

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FINANCES OF THE CORPORATION 35

FEDERAL DEPOSIT INSURANCE CORPORATION

LIAB ILITIES AN D THE 

D EP O SIT IN S U R A N C E FUND:

Calendar year enc

1976

Jed December 31,

1975

Accounts payable and accrued liabilities

Earnest money, escrow funds, and

collections held for others

Accrued annual leave

$ 3,927

3,963

3,791

$ 4,053

2,137

3,359

Due insured banks:

Net assessment income credits 

Available July 1, 1976 

Available July 1, 1977 

Other

$ 0 

379,595 

27,185 406,780

$ 362,428 

0

1,098 363,526

Liabilities incurred in failures of insured banks:

F.R.B. indebtedness 

Principal 

Accrued interest 

Other notes payable 

Principal 

Depositors claims unpaid

$ 650,000

198,846 848,846

18,691

1,280

$1,125,000

134,847 1,259,847

0

900

Deposit insurance fund,

net income accumulated since 

the beginning of the Corporation 7,268,625 6,716,039

Total Liabilities and Deposit Insurance Fund $8,555,903 $8,349,861

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Federal Reserve Bank of St. Louis
36 FEDERAL DEPOSIT INSURANCE CORPORATION

COMPARATIVE STATEMENT OF INCO M E

AND THE DEPOSIT INSURANCE FUND (In thousands)

Calender Year En<

1976

dec! December 31,

1975

Revenues:

Assessments earned

Interest on U.S. Government securities 

Amortization and discounts earned, net 

Net profit on sales of U.S. Government securities 

Interest earned on notes receivable 

Other income

$ 676,065 

444,699 

4,995 

0

17,697

1,001

$ 641,233 

390,558 

3,752 

45 

15,720 

304

Total revenues $1,144,457 $1,051,612

Expenses, losses, and assessment credits:

Assessment credits returned to banks 

P rovision fo r insurance losses 

Administrative and operating expenses 

Nonrecoverable insurance expenses 

Net loss on sales of U.S. Government securities

$ 379,565 

28,001 

74,849 

3,861 

105,595

$ 362,304 

27,619 

67,688 

2,152 

0

Total expenses $ 591,871 $ 459,763

Net Income - Addition to the deposit insurance fund $ 552,586 $ 591,849

Deposit insurance fund - January 1 $6,716,039 $6,124,190

Deposit insurance fund - December 31 $7,268,625 $6,716,039

Notes to financial statements on pages 38-39 are an integral part of this statement.

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Federal Reserve Bank of St. Louis
FINANCES OF THE CORPORATION 37

COM PARATIVE STATEMENT OF CHANGES

IN FINANCIAL POSITION (In thousands)

FEDERAL DEPOSIT INSURANCE CORPORATION

Calendar year ent

1976

ded December 31,

1975

Resources provided from :

Net assessment income

Interest on U.S. Government obligations

Interest on notes receivable

Other income

Less: administrative and insurance expenses

$ 296,500 

444,699 

17,697 

1,001

78,575

$ 278,929 

390,558 

15,720 

304

69,704

Total resources provided by operations $ 681,322 $ 615,807

M aturity and sale of U.S. Government obligations 

Collections on assets acquired in failures of insured banks 

Increase (decrease) in assessment credits and other 

liabilities

2,606,985

362,579

45,386

1,723,976

135,383

73,708

Total resources provided $3,696,272 $2,548,874

Resources applied to:

Purchase of U.S. Government obligations 

Acquisition of assets in failures of insured banks 

Increase (decrease) in other assets

$2,971,611

695,027

29,634

$2,211,895

323,124

13,855

Total resources applied $3,696,272 $2,548,874

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Federal Reserve Bank of St. Louis
38 FEDERAL DEPOSIT INSURANCE CORPORATION

NOTES TO FINANCIAL STATEMENTS

These statements:

a) Do not include accountability for 

the assets and liabilities of the 

closed insured banks for which the 

Corporation acts as receiver or liquidating agent. Periodic and final 

accountability reports of its activities as receiver or liquidating agent 

are furnished by the Corporation to 

the courts, supervisory authorities, 

and others as required.

b) Include transactions in unaudited 

collection and disbursement reports 

from liquidators of Franklin National Bank, Northeast Bank of 

Houston, The Hamilton Bank and 

Trust Company, and Centennial 

Bank, of Philadelphia, for the 

month of December 1976.

ACCOUNTING POLICIES

Securities. U.S. Government securities 

are shown at amortized cost which is the 

purchase price of the securities less the 

amortized premium or plus the amortized 

discount. As of December 31, 1976, 

amortized premiums amounted to $8.4 

million and amortized discounts $8.5 million. Premiums and discounts are amortized on a daily straight-line basis from 

the date of acquisition to the date of 

maturity.

Deposit insurance assessments. The

Corporation assesses insured banks at the 

rate of 1/12 of 1 percent per year on the 

bank's average deposit liability less certain exclusions and deductions. Assessments are due in advance for a 6-month 

period and credited to income when 

earned each month. Each July 1, 66-2/3 

percent of the Corporation's net assessment income for the prior calendar year 

is made available to insured banks as a 

pro-rated credit against the current assessment due.

Depreciation. The office building is depreciated on a straight-line basis at the 

rate of 2 percent per year over a 50-year

estimated life. Furniture, fixtures, and 

equipment are fully depreciated at the 

time of acquisition.

ASSETS ACQUIRED IN RECEIVERSHIPS AND DEPOSIT ASSUMPTIONS

Equity in assets acquired under agreements with insured banks totaled $1,664 

million. Of this total approximately $849 

million represents equity in assets acquired as a result of the closing of Franklin National Bank on October 8, 1974.

Notes purchased to facilitate deposit

assumptions. As of December 31, 1976, 

the Corporation's outstanding notes receivable, purchased to facilitate deposit 

assumptions and mergers under section 

13(e) of the Federal Deposit Insurance 

Act are:

Crocker National Corporation $ 50,000,000 

European-American B ank& 100,000,000 

Trust Company 

Clearing Bank 1,500,000

Marine National Exchange 2,500,000

Bank of Milwaukee 

First Tennessee National 16,000,000

Corporation 

First Tennessee National Bank 8,000,000 

Bank Leumi Trust Company of 10,000,000 

New York

Southeast Banking Corporation 5,000,000 

New Orleans Bancshares, Inc. 7,500,000

ASSISTANCE TO OPERATING

INSURED BANKS

As of December 31, 1976, the Corporation had two outstanding notes receivable purchased under authority of section 

13(c) of the Federal Deposit Insurance 

Act: one for Bank of the Commonwealth 

with a principal balance on the note of 

$35.5 million and the other for Unity 

Bank and Trust Company with a principal 

balance of $1.5 million.

Bank of the Commonwealth. Maturity 

dates of the Bank of the Commonwealth 

notes were extended in 1976 from 1977 

to 1982-87. In addition to changing the 

basis of computing interest from a fixed 

rate to a formula related to net income, 

the new terms provide for a prepayment

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Federal Reserve Bank of St. Louis
FINANCES OF THE CORPORATION 39

incentive discount. As a condition of the 

extension and modification agreement, 

the bank agreed to a recapitalization plan 

which was in progress but not fully completed at year-end.

Unity Bank and Trust Company. On

December 27, 1976, the Federal Deposit 

Insurance Corporation announced that 

the Board of Directors had agreed to extend until June 30, 1982, the $1.5 million capital note of Unity Bank and Trust 

Company, Boston, Massachusetts, which 

matured on December 31, 1976. Payment 

of principal and interest on the note will 

be in accordance with the terms of the 

amended note.

LIABILITIES INCURRED IN RECEIVERSHIP AND DEPOSIT ASSUMPTION

TRANSACTIONS

Federal Reserve Bank of New York

indebtedness. As of December 31, 1976, 

the principal outstanding balance due the 

Federal Reserve Bank of New York was 

$650 million. Accrued interest payable of 

$199 million represents interest for 817 

days at the rate of 7.52 percent simple 

interest per annum on the unpaid principal balances, since inception, due to the 

Federal Reserve Bank of New York and 

after deducting $5 million for certain 

out-of-pocket expenses incurred by the 

Corporation as provided for in the agreement of sale.

Other notes payable. This amount represents the unpaid principal on the Corporation's unsecured notes designated 

"5.775% Series A Notes due January 1,

1988" and "5.775% Series B Notes due 

January 1, 1990" as set forth in the consents, exchange agreement, and agreements of release and satisfaction related 

to the sale of Franklin Buildings, Inc. to 

European-American Bank & Trust Company.

CONTINGENT LIABILITIES

Savings certificates, 8-% percent

growth and savings certificates, 8-% percent income. In accordance with the indemnification agreement between the 

Corporation and The Bank of New Orleans and Trust Company, the Corporation agreed to indemnify the bank, by 

paying to the bank on a monthly basis, an 

amount equal to the difference between 

the interest accrued on the outstanding 

principal and interest balances on certain 

specified savings certificates (referred to 

collectively as the "w ild card indebtedness") and the interest that would accrue 

during the month at the Treasury bill 

rate.

Southern Bancorporation — Note receivable. On December 9, 1976, Southern 

Bancorporation repaid in full the $8 million note that the Corporation had purchased on September 24, 1974. Southern 

Bancorporation financed this transaction 

by obtaining a loan from First Union 

National Bank of North Carolina. To 

induce FUNB to enter the loan agreement, the FDIC agreed to guarantee the 

payment of 75 percent of the principal 

amount of the loan on the terms and conditions set forth in the guarantee agreement.

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Federal Reserve Bank of St. Louis
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Federal Reserve Bank of St. Louis
-------------

ENFORCEMENT PROCEEDINGS

PART TWO

v J

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Federal Reserve Bank of St. Louis
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Federal Reserve Bank of St. Louis
43

ACTIONS TO TERMINATE INSURED STATUS

Actions to Terminate Insured Status

Federal Deposit Insurance Act - Section 8(a)

The Corporation has issued 27 termination of 

insurance actions since January 1971. In each case, 

the bank was found to be in unsafe and unsound 

condition.

Also, a number of other termination of insurance actions have been recommended but were 

withdrawn prior to action by our Board because of 

favorable interim affirmative actions on the part of 

either the banks or management-shareholders. As 

in the case of cease-and-desist actions, the threat 

of termination of insurance has caused many affirmative action programs on the part of banks 

which negated the need for finalizing the actions.

Su m m ary o f cases

Deposits—$11.1 million

Notice of intention to terminate insured status issued on January 22,

1971. Bank was ordered to provide an 

active and capable management, eliminate by charge-off or otherwise certain 

classified assets, correct all violations 

of law listed in the report of examination, and adopt and strictly follow 

written loan policies if continued insured status was desired.

The action was terminated on June 

30, 1971, when subject was merged 

with another bank.

Deposits—$13.4 million

Notice of intention to terminate insured status issued on March 12, 1971. 

Bank was ordered to provide an active 

and capable management, eliminate 

certain assets from its books by 

charge-off or otherwise, correct all violations of law listed in the examination 

report, adopt and strictly follow w ritten loan policies, pay no cash dividends without the prior consent of the 

Banking Commissioner and the FDIC, 

reduce the loan-to-deposit ratio, not 

accept or acquire directly or indirectly 

brokered deposits, eliminate from its 

capital accounts all income collected 

but not earned, and provide adequate 

capital and reserves if continued insured status was desired.

The action was terminated on December 17, 1971, based upon substantial compliance with the corrective 

orders.

Deposits—$3.8 million

Notice of intention to terminate insured status issued on June 30, 1971. 

Bank was ordered to provide an active 

and capable management, eliminate 

certain assets from its books by 

charge-off or otherwise, reduce the remaining classified assets, correct all 

violations of law listed in the report of 

examination, adopt and strictly follow 

satisfactory written loan policies, pay 

no cash dividends without the prior 

consent of the Commissioner of Banking and the FDIC, and put the assets 

of the bank in such form and condition as to be acceptable to the Commissioner of Banking and the FDIC if 

continued insured status was desired.

The action was terminated on April 

6, 1973, based upon substantial compliance with the corrective orders.

Deposits—$5.9 million

Notice of intention to terminate insured status issued on November 19,

1971. Bank was ordered to provide an 

active and capable management, eliminate from its books certain assets by 

charge-off or otherwise, refrain from 

extending credit directly or indirectly 

for the benefit of a director, reduce 

the remaining classified assets, adopt 

and strictly follow satisfactory written 

loan policies, pay no cash dividends 

without the prior consent of the Commissioner of Banking and the FDIC, 

and put the assets of the bank in such 

form and condition as to be acceptable 

to the Commissioner of Banking and 

the FDIC if continued insured status 

was desired.

The action was terminated July 7,

1972, based upon substantial compliance with the corrective orders.

Deposits—$12.6 million

Notice of intention to terminate insured status issued on December 17,

1971. Bank was ordered to eliminate 

from its book assets, by charge-off or 

otherwise, certain classified assets, to 

put other assets of the bank in a satisfactory form and condition, and to 

provide acceptable capital funds if 

continued insured status was desired.

The action was terminated on July 

14, 1972, based upon substantial compliance with the corrective orders.

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Federal Reserve Bank of St. Louis
44 FEDERAL DEPOSIT INSURANCE CORPORATION

Bank No.

6 Deposits—$8.2 million

Notice of intention to terminate insured status issued on January 27,

1972. Bank was ordered to provide 

acceptable management, eliminate or 

reduce adversely classified assets, 

adopt acceptable loan policies, correct 

violations of law, and provide acceptable capital funds if continued insured 

status was desired.

The action was terminated on May 

14, 1973, based upon substantial compliance with the corrective orders. 

Deposits-$4.1 million

Notice of intention to terminate insured status issued on March 17, 1972. 

Bank was ordered to provide acceptable management, eliminate or reduce 

adversely classified assets, adopt acceptable loan policies, correct violations of law, and provide acceptable 

capital funds if continued insured status was desired.

The action was terminated on December 4, 1972, based upon substantial compliance with the corrective 

orders.

8 Deposits—$1.9 million

Notice of intention to terminate insured status issued on May 1, 1972. 

Bank was ordered to provide acceptable management, eliminate or reduce 

adversely classified assets, adopt acceptable loan policies, and provide acceptable capital funds if continued insured status was desired.

The action was terminated on June

11, 1973, based upon substantial compliance with the corrective orders.

9 Deposits—$12.6 million

Notice of intention to terminate insured status issued on October 30,

1972. Bank was ordered to eliminate 

or reduce adversely classified assets, 

obtain supporting documents prior to 

extending credits, adopt acceptable 

loan policies, and provide acceptable 

capital funds if continued insured status was desired.

The action was terminated on 

March 1, 1974, based upon substantial 

compliance with the corrective orders.

10 Deposits—$5.5 million

Notice of intention to terminate insured status issued on November 21,

1972. Bank was ordered to provide acceptable management, eliminate or 

reduce adversely classified assets, obtain supporting documents prior to

Bank No.

extending credits, strictly adhere to its 

written loan policies, correct violations 

of laws, and provide acceptable capital 

funds if continued insured status was 

desired.

The action was terminated on May 

29, 1974, based upon substantial compliance with the corrective orders.

11 Deposits—$3.9 million

Notice of intention to terminate insured status issued on May 14, 1973. 

Bank was ordered to eliminate or reduce adversely classified assets, adopt 

acceptable loan policies, correct violations of law, and provide acceptable 

capital funds if continued insured status was desired.

The action was terminated on 

August 11, 1975, based upon substantial compliance with the corrective 

orders and a change in control ownership.

12 Deposits—$18.6 million

Notice of intention to terminate insured status issued on June 28, 1974. 

Bank was ordered to provide acceptable management, eliminate or reduce 

adversely classified assets, adopt acceptable loan policies, and correct violations of law if continued insured status was desired.

The action to terminate insured status was in the hearing stage when the 

bank was closed on June 14, 1976.

13 Deposits—$13.8 million

Notice of intention to terminate insured status issued on August 12,

1974. Bank was ordered to provide acceptable management, eliminate or reduce adversely classified assets, adopt 

acceptable loan policies, pay no cash 

dividends without prior written consent, provide acceptable capital, and 

correct violations of law if continued 

insured status was desired.

The action was terminated on 

August 11, 1975, because of temporary compliance; however, due to further deterioration and the length of 

time since the issuance of the initial 

order, a new order was simultaneously 

issued.

14 Deposits—$6.6 million

Notice of intention to terminate insured status issued on August 12,

1974. Bank was ordered to provide acceptable management, eliminate or reduce adversely classified assets, adopt 

acceptable loan policies, lim it investDigitized for FRASER 

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Federal Reserve Bank of St. Louis
ACTIONS TO TERMINATE INSURED STATUS 45

ment in securities to U.S. Government 

or Agency obligations maturing within 

5 years, cease paying preferential rates 

of interest on certificates of deposit or 

other obligations to ownership interests, and correct violations of law if 

continued insured status was desired.

The action to terminate insured status was in the hearing stage when the 

bank was closed on May 30, 1975.

15 Deposits—$4.2 million

Notice of intention to terminate insured status issued on June 19, 1975. 

Bank was ordered to provide acceptable management, eliminate or reduce 

adversely classified assets, reduce its 

loan volume, adopt and comply with a 

loan policy, discontinue cash dividends, and obtain a certain level of 

capital if continued insured status was 

desired.

The bank was closed on January

12, 1976.

16 Deposits—$0.8 million

Notice of intention to terminate insured status issued on July 25, 1975. 

Bank was ordered to provide acceptable management, eliminate or reduce 

adversely classified assets, define an acceptable trade area, curtail direct and 

indirect loans to insiders, restrict its 

loan volume, comply with certain investment restrictions, comply with all 

applicable laws, rules, and regulations, 

discontinue cash dividends, and obtain 

a certain level of capital if continued 

insured status was desired.

The action to terminate insured status was in the hearing stage when the 

bank was closed on June 25, 1976.

17 Deposits—$13.8 million

Notice of intention to terminate insured status issued on August 11,

1975. Bank was ordered to provide acceptable management, eliminate or reduce adversely classified assets, reduce 

and maintain loan volume at a certain 

level, eliminate all adversely classified 

insider loans and reduce and maintain 

all such loans at a certain level, adopt 

and comply with a loan policy, discontinue cash dividends, obtain a certain 

level of capital, comply with all applicable laws, rules, and regulations, and 

refrain from participating in any transactions with a certain affiliate if continued insured status was desired.

During the hearing stage, the bank 

signed an undated Voluntary Termination of Insurance which could be 

dated by the bank or the Corporation 

after 90 days. After this period, an examination indicated both further deterioration and continued noncompliance, and the Corporation dated the 

document on August 16, 1976. The 

bank was closed on November 22, 

1976.

18 Deposits—$16.1 million

Notice of intention to terminate insured status issued on September 16,

1975. Bank was ordered to provide acceptable management, eliminate or reduce adversely classified assets, adopt 

and comply with a loan policy, provide for an orderly liquidation of certa in stock holdings, comply with 

applicable laws, rules, and regulations, 

appoint a committee to approve and 

control expenses, discontinue cash 

dividends, and obtain a certain level of 

capital if continued insured status was 

desired.

The action to terminate insured status was in the hearing stage when the 

bank was closed on October 20, 1976.

19 Deposits—$15.9 million

Notice of intention to terminate insured status issued on October 9,

1975. Bank was ordered to provide acceptable management, eliminate or reduce adversely classified assets, reduce 

and maintain loan volume at a certain 

level, reduce its overdue loans not to 

exceed a certain percentage of outstanding loans, maintain a primary and 

secondary reserve position equal to a 

certain percentage of total resources, 

adopt and comply with loan and investment policies, and obtain a certain 

level of capital if continued insured 

status was desired.

The bank was closed on October 

24, 1975.

20 Deposits—$18.9 million

Notice of intention to terminate insured status issued on April 8, 1976. 

Bank was ordered to provide acceptable management, eliminate or reduce 

adversely classified assets, reduce overdue loans to a specified level, reduce 

the book value of other real estate in 

accordance with statutory provisions, 

comply with applicable laws, rules, 

and regulations, discontinue cash dividends, and obtain a certain level of 

capital if continued insured status was 

desired.

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Federal Reserve Bank of St. Louis
46 FEDERAL DEPOSIT INSURANCE CORPORATION

Bank No. 

21

22

23

Bank No.

The bank was closed on June 3, 

1976.

Deposits—$33.1 million

Notice of intention to terminate insured status issued on June 16, 1976. 

Bank was ordered to provide acceptable management, eliminate or reduce 

adversely classified assets, eliminate 

adversely classified loans to insiders 

and certain shareholders of the bank 

and holding company, eliminate concentrations of credit, discontinue cash 

dividends and management fees, comply with applicable laws, rules, and 

regulations, adopt and follow acceptable loan policies, and obtain a certain 

level of capital if continued insured 

status was desired.

An examination to determine the 

extent of correction was made and the 

bank was found not to be in compliance with the order. The action is in 

the hearing stage.

Deposits—$2.9 million

Notice of intention to terminate insured status issued on July 6, 1976. 

Bank was ordered to provide acceptable management, eliminate or reduce 

adversely classified assets, reduce loan 

volume to a specific level, lim it investments in securities to U.S. Treasury or 

Agency obligations, eliminate adversely classified loans to insiders, provide 

adequate liquidity, comply with applicable laws, rules, and regulations, 

adopt and follow acceptable loan policies, discontinue cash dividends, and 

obtain a certain level of capital if continued insured status was desired. 

Deposits—$68.0 million

Notice of intention to terminate insured status issued on July 22, 1976. 

Bank was ordered to provide acceptable management, comply with applicable laws, rules, and regulations, eliminate or reduce adversely classified 

assets, reduce overdue loans to a specific level, adopt and follow acceptable 

loan policies, discontinue cash dividends, refrain from the purchase or 

sale of loan participations or extending 

credit to insiders of closely related 

banks, refrain from extending credit to 

or secured by stock of the holding 

company, and obtain a certain level of 

capital if continued insured status was 

desired.

Deposits—$ 11.4 million

Notice of intention to terminate insured status issued on September 7, 

1976. Bank was ordered to provide acceptable management, eliminate or reduce adversely classified assets, reduce 

overdue loans to a specific level, comply with applicable laws, rules, and 

regulations, adopt and follow acceptable loan policies, discontinue cash 

dividends, adopt and follow acceptable 

internal control and audit procedures, 

refrain from preferential treatment of 

insiders, and obtain a certain level of 

capital if continued insured status was 

desired.

25 Deposits—$4.2 million

Notice of intention to terminate insured status issued on September 7,

1976. Bank was ordered to provide acceptable management, eliminate or reduce adversely classified assets, reduce 

overdue loans to a specific level, eliminate adversely classified loans to insiders, reduce the volume of extensions of credit to insiders to a specific 

level, comply with applicable laws, 

rules, and regulations, reduce the book 

value of other real estate in accordance 

with statutory requirements, and obtain a certain level of capital if continued insured status was desired.

26 Deposits—$7.9 million

Notice of intention to terminate insured status issued on October 19,

1976. Bank was ordered to provide acceptable management, eliminate or reduce adversely classified assets, reduce 

overdue loans to a specific level, comply with applicable laws, rules, and 

regulations, discontinue cash dividends, adopt and follow acceptable 

loan policies, actively seek fidelity insurance coverage, and obtain a certain 

capital level if continued insured status 

was desired.

27 Deposits—$163.5 million

Notice of intention to terminate insured status issued on November 19,

1976. Bank was ordered to provide acceptable management, eliminate or reduce adversely classified assets, adopt 

a plan to control expenses, eliminate 

concentrations of credit, comply with 

applicable laws, rules, and regulations, 

reduce overdue loans to a specific 

level, adopt and follow acceptable loan 

policies, discontinue cash dividends, 

and obtain a certain level of capital if 

continued insured status was desired.

The bank was closed on December 

3, 1976.

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Federal Reserve Bank of St. Louis
CEASE-AND-DESIST ACTIONS 47

Cease-and-Desist Actions Bank No.

Federal Deposit Insurance Act - Section 8(b) ^

The Corporation has issued 61 cease-and-desist 

actions since January 1971. In addition, five temporary cease-and-desist orders were issued in 1976.

In each case, the bank was ordered to cease and 

desist from unsafe and unsound practices and to 

take affirmative action to correct certain conditions. Several such actions are now in various 

stages of processing.

In addition to these cases, a number of other 1

cease-and-desist actions have been authorized by 

the Corporation's Board of Directors which were 

never consented to by banks or adopted in final 

form by our Board because of favorable interim 

affirmative actions by either the banks or management-shareholders. In effect, the threat of a ceaseand-desist action has caused many banks to undertake favorable affirmative action programs, which 

negated the need for finalizing the authorized 

cease-and-desist actions.

In three other cases, formal written agreements 

between banks and the Corporation were ratified 

by our Board of Directors. Noncompliance with 

these formal written agreements can be enforced 

by a subsequent cease-and-desist action.

Section 8 (m) of the Federal Deposit Insurance 

Act provides the State supervisory authorities with 

the opportunity to initiate independent corrective 

action after the Corporation has served notice of 

intent to take formal action. While in most cases 5

the State supervisory authorities choose to join the 

Corporation in any such action, some State banking laws do provide for independent cease-anddesist actions which have been utilized in a 

number of instances—either prior or subsequent to 

notice of intent by the Corporation. A compilation of these State supervisory authority ceaseand-desist actions is not maintained by the FDIC, 

but the corrective orders are analyzed and checked 

for compliance on a case-by-case basis at each g

examination of the involved banks.

Su m m ary o f cases

Bank No.

1 Deposits—$64.6 million

Cease-and-desist order entered on 

June 17, 1971. Bank ordered to reduce the volume of municipal bonds, 

realign other assets to improve liquidity, curtail direct and indirect loans to 

insiders, provide acceptable management, and inject new capital funds.

Order terminated on December 10,

1971, following the sale of controlling 

interest by the unsatisfactory management, sale of new capital funds, substantial compliance with the ceaseand-desist order, and designation of 

new management.

Deposits—$46.1 million

Cease-and-desist order entered on 

July 12, 1971. Bank ordered to eliminate transactions with self-serving 

ownership.

Order terminated on January 12,

1973, following change of stock control and a revamping of the board of 

directors.

Deposits—$7.3 million

Cease-and-desist order entered on 

July 12, 1971. Bank ordered to eliminate transactions with self-serving 

ownership.

Order terminated on May 1, 1972, 

following the sale of controlling interest by the unsatisfactory management 

and restoration of the capital accounts 

to an acceptable level.

Deposits—$1.0 million

Cease-and-desist order entered on 

July 12, 1971. Bank ordered to eliminate transactions with self-serving 

ownership.

Order terminated on April 17,

1972, following the sale of controlling 

interest by the unsatisfactory management and restoration of the capital 

accounts to an acceptable level. 

Deposits—$20.2 million

Cease-and-desist order entered on 

July 12, 1971. Bank ordered to eliminate transactions with self-serving 

ownership.

Order terminated on December 10, 

1971, following the sale of controlling 

interest by the unsatisfactory management and restoration of the capital to 

an acceptable level.

Deposits—$5.1 million

Cease-and-desist order entered on 

July 12, 1971. Bank ordered to correct violations of laws and regulations, 

correct operating deficits, and restore 

capital accounts to an acceptable level.

Order terminated on July 8, 1974, 

following substantial compliance with 

corrective orders, favorable trends, 

improved prospects, and augmented 

capital.

Deposits—$4.6 million

Cease-and-desist order entered on 

November 19, 1971. Bank ordered to 

eliminate transactions with a selfserving ownership and management.

Order terminated on May 2, 1974, 

following change of control and management and asset improvement.

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Federal Reserve Bank of St. Louis
48 FEDERAL DEPOSIT INSURANCE CORPORATION

Bank No.

8

9

10

11

12

Bank No.

Deposits—$6.5 million

Cease-and-desist order entered on 

January 6, 1972. Bank ordered to provide its shareholders with adequate information pertaining to the conditions 

and activities of the bank in full compliance with various requirements of 

sections 12, 13, and 14 of the Securities Exchange Act of 1934 and section 335 of the Federal Deposit Insurance Corporation's Rules and Regulations.

Deposits—$5.1 million

Cease-and-desist order entered on 

February 15, 1972. Bank ordered to 

correct misuse of credit facilities by 

controlling stockholders.

Order terminated on May 29, 1974, 

when compliance with the condition 

was accomplished.

Deposits—$18.9 million

Cease-and-desist order entered on 

March 31, 1972. Bank ordered to correct hazardous lending policies and inadequate capital caused by incompetent active management and a complacent directorate.

Order terminated on August 28,

1973, when substantial compliance 

with almost all conditions had been accomplished.

Deposits—$1.8 million

Cease-and-desist order entered on 

May 5, 1972. Bank ordered to correct 

its sharply declining asset condition 

and capital inadequacy resulting from 

tw o successive inept managementownership groups.

O rder terminated on June 25,

1973, following change of management-ownership, improved asset condition, and substantial compliance with 

other parts of the order.

Deposits—$3.6 million

Cease-and-desist order entered on 

May 5, 1972. Bank ordered to take 

affirmative action with respect to an 

excessive volume of high-risk loans, 

sizable loan losses, and inadequate capital which resulted from policies of a 

liberal, self-serving, and domineering 

controlling owner and a weak, ineffective management.

Order terminated on April 8, 1976, 

when substantial compliance with all 

conditions had been accomplished. 

Deposits—$60.0 million

Cease-and-desist order entered on 

August 18, 1972. Bank ordered to correct repeated and flagrant violations of 

applicable laws and regulations.

Order terminated on May 14, 1973, 

upon compliance with requirements 

contained therein.

14 Deposits—$3.7 million

Cease-and-desist order entered on 

November 21, 1972. Bank ordered to 

correct excessive risk in the loan account, inadequate capital, willful and 

continued violations of applicable statutes, and generally unsatisfactory 

operations resulting from liberal lending policies of self-serving controlling 

interests.

O rder terminated on June 19,

1974, fo llo w in g substantial compliance with the corrective requirements.

15 Deposits—$4.7 million

Cease-and-desist order entered on 

November 21, 1972. Bank ordered to 

reduce excessive exposure in the loan 

account and increasing loan losses and 

to correct an inadequate and diminishing level of capital and unsatisfactory 

operations under the self-serving domination of the controlling interests.

Order terminated on February 8,

1974, after substantial improvements 

in the bank's asset-capital condition 

and operations within the constraints 

of the cease-and-desist order.

16 Deposits—$2.0 million

Cease-and-desist order entered on 

December 4, 1972. Bank ordered to 

correct excessive risk in the loan account, increasing losses, and a shrinking level of capital which resulted from 

liberal lending policies fostered by the 

bank's management-ownership.

Order terminated on February 8,

1974, following examinations which 

disclosed improvements, and full or 

substantial compliance with all corrective provisions.

17 Deposits—$1.3 million

Cease-and-desist order entered on 

December 18, 1972. Bank ordered to 

reduce an excessive volume of classified loans and improve inadequate capital and poor liquidity resulting from 

expansionary and liberal policies of 

inexperienced management-ownership.

18 Deposits—$2.5 million

Cease-and-desist order entered on 

February 12, 1973. Bank ordered to 

correct excessive adversely classified 

loans and an inadequate capital strucDigitized for FRASER 

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Federal Reserve Bank of St. Louis
CEASE-AND-DESIST ACTIONS 49

ture which developed as a result of 

liberal lending policies and the weak 

management ability of ownership and 

its subservient staff.

Order terminated on February 11,

1975, following substantial improvement in the bank's asset-capital condition.

19 Deposits—$28.0 million

Cease-and-desist order entered on 

April 23, 1973. Bank ordered to eliminate heavy and severe adverse classifications of loans extended to a group 

of related construction firms which 

resulted in violations of law, heavy 

losses, deterioration of other segments 

of the loan portfolio, and capital inadequacy.

Order terminated on December 23,

1974, following the elimination of the 

adversely classified concentrations of 

credit and the injection of new capital 

funds.

20 Deposits—$3.8 million

Cease-and-desist order entered on 

May 21, 1973. Bank ordered to correct excessive risk in the loan account, 

a declining level of capital protection, 

deficit earnings resulting from heavy 

loan losses, and other problems stemming from a management dispute resulting in the resignation of three 

directors including the former executive officer. The order to cease and 

desist included requirements for management improvements, rehabilitation 

of asset condition, a capital improvement program, and adoption of w ritten lending and internal operating 

policies.

Order terminated on September 7,

1976, following substantial compliance with the corrective provisions.

21 Deposits—$3.1 million

Cease-and-desist order entered on 

June 25, 1973. Bank ordered to take 

affirmative action with respect to 

excessive adversely classified credits involving several out-of-area or selfserving loans, potential losses from 

irregularities, and inadequate capital 

protection.

Order terminated on August 11,

1975, as conditions were fulfilled including the injection of new equity 

capital.

22 Deposits—$2.9 million

Cease-and-desist order entered on 

July 31, 1973. Bank ordered to end

unsound securities transactions and reduce excessive municipal bond holdings which threatened the solvency of 

the bank through the resulting market 

depreciation, illiquid position, and 

trading losses incurred.

23 Deposits—$5.5 million

Cease-and-desist order entered on 

July 31, 1973. Bank ordered to comply with Federal Reserve Regulation 

Z.

Order terminated on November 26, 

1975, after bank was found to be in 

compliance with the corrective provisions.

24 Deposits—$51.6 million

Cease-and-desist order entered on 

September 24, 1973. Bank ordered to 

provide acceptable management; implement and maintain lending, investment, and operating policies in accord 

with sound banking practices; conform 

to all applicable laws, rules, and regulations; and reduce the excessive volume 

of weak credits.

Order terminated on November 26, 

1975, when the bank was found to be 

in compliance with the corrective provisions.

25 Deposits—$4.1 million

Cease-and-desist order entered on 

October 15, 1973. Bank ordered to 

reduce the high volume of adversely 

classified loans and an excessive delinquency ratio, to end continued violations of laws and regulations, and to 

improve a deteriorated capital position 

which resulted from the increasingly 

liberal lending policies of the controlling stockholder and executive officer, 

coupled with a complacent directorate 

and incompetent staff.

Order terminated on September 2,

1975, following improvements in asset 

quality, substantial compliance with 

requirements included in the order to 

cease and desist, and the revitalization 

of sincere concern to effect improvements by the staff and directorate.

26 Deposits—$13.9 million

Cease-and-desist order entered on 

January 29, 1974. Bank ordered to 

take affirmative action with respect to 

excessive loan classifications, inept and 

self-serving management, violations of 

law, concentrations of credit, and uncontrolled expenses.

Order terminated on July 24, 1974, 

following the sale of control of the

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Federal Reserve Bank of St. Louis
50 FEDERAL DEPOSIT INSURANCE CORPORATION

Bank No.

27

28

29

30

Bank No.

bank to a new group and injection of 

capital funds.

Deposits—$3.9 million

Cease-and-desist order entered on 

April 11, 1974. Bank ordered to take 

affirmative action with respect to 

serious asset problems which devel- 32

oped as total loan volume was rapidly 

expanded, capital inadequacy which 

developed as the loan portfolio deteriorated in credit quality, hazardous 

lending and collection policies, and 

violations of laws and regulations.

Order terminated on July 6, 1976, 

following compliance with the corrective provisions.

Deposits—$2.9 million

Cease-and-desist order entered on 

June 7, 1974. Bank ordered to reduce 

the heavy volume of adverse classifications, end speculative land contracts to 

out-of-territory borrowers, implement 

sound lending, investment, and operating policies, and correct an inadequate capital structure.

The bank was closed on December 

19, 1975.

Deposits—$49.5 million

Action begun on July 22, 1974, 

and cease-and-desist order entered on 

June 11, 1975, following a hearing.

Bank ordered to reduce the large volume of adversely classified loans which 

far exceeded capital and reserves and 

centered in two massive concentrations of credit. Other weaknesses consisted of an overloaned and illiquid 

position, inadequate capital protection, and numerous, frequent, and 

flagrant violations.

Deposits $15.1 million

Cease-and-desist order entered on 

October 15, 1974. Bank ordered to 

take affirmative action with respect to 

the massive volume of weak loans and 

loan losses taken in recent years, an 

inadequate margin of capital protection, an overloaned and illiquid position, poor earnings, and a pattern of 

numerous and repeated violations.

Order terminated on April 8, 1976, 

following substantial compliance with 

the corrective provisions.

Deposits—$18.4 million

Cease-and-desist order entered on 

March 26, 1975. Bank ordered to discontinue unauthorized and unlawful 

acts by its officers, directors, or employees, including the exceeding of

lending limits and the acceptance of 

securities collateral without observing 

prudent banking practices, and to prepare for the lawful and orderly disposition of such securities in the event 

such disposition became necessary. 

Deposits—$9.9 million

Cease-and-desist order entered on 

May 9, 1975. Bank ordered to provide 

acceptable management; reduce adversely classified assets and loan volume; adhere to loan policy; comply 

with laws, rules, and regulations; improve loan documentation, internal 

routine, and controls; inject new capital funds; and discontinue cash dividends.

33 Deposits—$7.2 million

Cease-and-desist order entered on 

May 9, 1975. Bank ordered to provide 

acceptable management, reduce adversely classified assets, curtail loans to 

insiders, inject new capital, reduce borrowings and loan volume, comply with 

laws, rules, and regulations, adopt and 

comply with a loan policy, and discontinue cash dividends.

Order terminated on July 22, 1976, 

following substantial compliance with 

the corrective provisions.

34 Deposits—$6.5 million

Cease-and-desist order entered on 

June 19, 1975. Bank ordered to provide acceptable management, reduce 

adversely classified assets, inject new 

capital, comply with laws, rules, and 

regulations, adopt and comply with a 

loan policy, provide adequate liquidity, reduce borrowings, and discontinue cash dividends.

35 Deposits—$1.8 million

Cease-and-desist order entered on 

August 11,1975. Bank ordered to provide acceptable management and management policies, reduce adversely 

classified assets, provide adequate capital and liquidity, comply with laws, 

rules, and regulations, and adopt and 

comply with a loan policy.

36 Deposits—$6.0 million

Cease-and-dssist order entered on 

August 28, 1975. Bank ordered to provide acceptable management, reduce 

adversely classified assets, inject new 

capital, comply with laws, rules, and 

regulations, and adopt and comply 

with a loan policy.

37 Deposits—$5.3 million

Cease-and-desist order entered on

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Federal Reserve Bank of St. Louis
CEASE-AND-DESIST ACTIONS 51

October 17, 1975. Bank ordered to 

reduce adversely classified assets, comply with laws, rules, and regulations, 

and adopt and comply with a loan 

policy.

38 Deposits—$7.7 million

Cease-and-desist order entered on 

January 29, 1976. Bank ordered to 

provide acceptable management, reduce adversely classified assets, inject 

new capital, lim it advances of credit to 

borrowers, comply with laws, rules, 

and regulations, retain credit life and 

accident insurance commissions, discontinue cash dividends, and eliminate 

a concentration of credit.

39 Deposits—$9.1 million

Cease-and-desist order entered on 

February 18, 1976. Bank ordered to 

reduce adversely classified assets; refrain from participating in any new 

loans and in any extension, renewal, 

refinancing, or additional extension of 

loans acquired from closely related 

banks; comply with laws, rules, and 

regulations including Financial Recordkeeping Regulations and the Fair 

Credit Reporting Act; inject new capital; and discontinue dividends.

40 Deposits—$5.9 million

Cease-and-desist order entered on 

March 30, 1976. Bank ordered to reduce adversely classified assets, inject 

new capital, comply with laws, rules, 

and regulations, adopt and comply 

with a loan policy, and discontinue 

cash dividends.

41 Deposits—$3.1 million

Cease-and-desist order entered on 

June 3, 1976. Bank ordered to provide 

acceptable management, reduce adversely classified assets, inject new 

capital, comply with laws, rules, and 

regulations, adopt and comply with a 

loan policy, and discontinue cash dividends.

42 Deposits—$6.4 million

Cease-and-desist order entered on 

July 22, 1976. Bank ordered to provide 

acceptable management, reduce adversely classified assets, inject new 

capital, comply with laws, rules, and 

regulations, adopt and comply with 

loan and investment policies, and discontinue cash dividends.

43 Deposits—$4.2 million

Cease-and-desist order entered on 

September 7, 1976. Bank ordered to 

provide acceptable management, reduce adversely classified assets, inject 

new capital, comply with laws, rules, 

and regulations, adopt and comply 

with a loan policy, and discontinue 

cash dividends.

44 Deposits—$44.6 million

Cease-and-desist order entered on 

September 7, 1976. Bank ordered to 

provide acceptable management, reduce adversely classified assets, inject 

new capital, eliminate transactions 

w ith affiliates, comply with laws, 

rules, and regulations, adopt and comply with loan and investment policies, 

and discontinue cash dividends.

45 Deposits—$35.7 million

Cease-and-desist order entered on 

September 7, 1976. Bank ordered to 

provide acceptable management, reduce adversely classified assets and 

overdue loans, discontinue cash dividends, inject new capital, comply with 

laws, rules, and regulations, adopt and 

comply with a loan policy, and eliminate loan transactions with affiliates.

46 Deposits—$4.8 million

Cease-and-desist order entered on 

September 22, 1976. Bank ordered to 

eliminate loans to an insider, reduce 

adversely classified assets, provide 

acceptable management, comply with 

laws, rules, and regulations, adopt and 

comply with a loan policy, implement 

an audit program, and obtain fidelity 

coverage.

47 Deposits—$13.0 million

Cease-and-desist order entered on 

September 22, 1976. Bank ordered to 

provide acceptable management, reduce adversely classified assets and 

overdue loans, discontinue cash dividends, inject new capital, comply with 

laws, rules, and regulations, adopt and 

comply with a loan policy, and eliminate loan transactions with affiliates.

48 Deposits—$87.9 million

Cease-and-desist order entered on 

October 6, 1976. Bank ordered to 

eliminate, collect, or establish repayment programs for overdrafts and 

loans to insiders, and comply with 

laws, rules, and regulations.

49 Deposits—$24.7 million

Cease-and-desist order entered on 

October 6, 1976. Bank ordered to 

eliminate, collect, or establish repayment programs for overdrafts and 

loans to insiders, and comply with 

laws, rules, and regulations.

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Federal Reserve Bank of St. Louis
52 FEDERAL DEPOSIT INSURANCE CORPORATION

Bank No.

50

51

52

53

54

Bank No.

Deposits—$21.6 million

Cease-and-desist order entered on 50

October 6, 1976. Bank ordered to provide acceptable management, reduce 

adversely classified assets, inject new 

capital, obtain collateral for loans to 

certain insiders and related interests, 

lim it total credit extended to an individual or concern and reduce such 

credits to the limitations set, comply 

with laws, rules, and regulations, adopt 

and comply with loan and investment 

policies, and discontinue cash dividends.

Deposits—$17.3 million

Permanent cease-and-desist order 

entered on October 6, 1976, following 

issuance of a temporary cease-anddesist order. Bank ordered to prohibit 

payment of checks against uncollected 

funds for deposit accounts of an insider and a foreign bank.

Deposits—$138.9 million

Cease-and-desist order entered on 

October 19, 1976. Bank ordered to 

provide acceptable management, reduce adversely classified assets and 

overdue loans, lim it payment of cash 

dividends, inject new capital, comply 

with laws, rules, and regulations, and 

adopt and comply with a loan policy.

Deposits—$28.1 million

Cease-and-desist order entered on 

October 19, 1976. Bank ordered to 

provide acceptable management, reduce adversely classified assets and 

overdue loans, discontinue cash dividends, inject new capital, comply with 

laws, rules, and regulations, adopt and 

comply with a loan policy, and discontinue overdrafts and preferential rates 

of interest to insiders.

Deposits—$30.8 million

Cease-and-desist order entered on 

November 16, 1976. Bank ordered to 

provide acceptable management, reduce adversely classified assets, inject 

new capital, discontinue cash dividends, comply with laws, rules, and 

regulations, adopt and comply with a 

loan policy, and implement internal 

controls and an audit program for electronic data processing operations.

Deposits—$88.3 million

Cease-and-desist order entered on 

December 16, 1976. Bank ordered to 

inject new capital in compliance with 

conditions included in an order issued 

in 1974 in connection with Corporation consent to establish a branch. 

Deposits—$13.4 million

Cease-and-desist order entered on 

December 16, 1976. Bank ordered to 

provide acceptable management, reduce adversely classified assets, inject 

new capital, lim it new extensions of 

credit to insiders and related interests 

and concentrations of credit, reduce 

loan volume, comply with laws, rules, 

and regulations, adopt and comply 

with loan and investment policies, and 

discontinue cash dividends.

57 Deposits—$20.2 million

Cease-and-desist order entered on 

December 16, 1976. Bank ordered to 

collect or eliminate adversely classified 

loans to certain insiders and their related interests, reduce adversely classified assets, provide acceptable management, inject new capital, comply 

with laws, rules, and regulations, and 

adopt and comply with a loan policy.

58 Deposits—$2.2 million

Cease-and-desist order entered on 

December 16, 1976. Bank ordered to 

provide acceptable management, reduce adversely classified assets, limit 

extensions of credit to any one borrower and related entities, discontinue 

participating in loans with certain related banks, eliminate loans to persons 

located outside the bank's normal 

trade area, reduce remuneration of certain officers and directors, comply 

with laws, rules, and regulations, adopt 

and comply with a loan policy, and 

discontinue cash dividends.

59 Deposits—$7.3 million

Cease-and-desist order entered on 

December 16, 1976. Bank ordered to 

provide acceptable management, reduce adversely classified assets, discontinue participating in loans with certain related banks, eliminate adversely 

classified loans to insiders, reduce concentrations of credit, eliminate loans 

to persons located outside the bank's 

normal trade area, comply with laws, 

rules, and regulations, adopt and comply with a loan policy, and discontinue 

cash dividends.

60 Deposits—$3.6 million

Cease-and-desist order entered on 

December 16, 1976. Bank ordered to 

provide acceptable management, reduce adversely classified assets, discontinue participating in loans with certain related banks, eliminate adversely

Digitized for FRASER 

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Federal Reserve Bank of St. Louis
CEASE-AND-DESIST ACTIONS 53

classified loans to insiders and loans to 

persons located outside the bank's normal trade area, reduce remuneration to 

certain officers and directors, comply 

with laws, rules, and regulations, adopt 

and comply with a loan policy, and 

discontinue cash dividends.

61 Deposits—$3.2 million

Cease-and-desist order entered on 

December 16, 1976. Bank ordered to 

provide acceptable management; reduce adversely classified assets, overdue loans, and concentrations of credit; eliminate adversely classified loans 

to insiders; discontinue participating in 

loans with certain related banks; comply with laws, rules, and regulations; 

adopt and comply with a loan policy; 

and discontinue cash dividends.

Formal Written Agreements 

S u m m ary o f cases

Bank No.

1 Deposits—$12.3 million

Written agreement entered into on 

October 27, 1971. Bank agreed for 

purposes of effecting correction of unsafe and unsound practices to provide 

acceptable management, eliminate and 

reduce adversely classified assets, correct internal control deficiencies, 

adopt and comply with an internal 

audit program, correct violations of 

and in the future comply with all applicable laws, rules, and regulations, 

and adopt and comply with a written 

loan policy.

Deposits—$14.0 million

Written agreement entered into on 

March 2, 1972. Bank agreed for purposes of effecting correction of unsafe 

and unsound practices to provide acceptable management, eliminate and 

reduce adversely classified assets, 

adopt and comply with a written loan 

policy, inject new capital, establish an 

unearned income account, adopt and 

comply with an internal audit program, correct internal control deficiencies, and correct violations of and in 

the future comply with all applicable 

laws, rules, and regulations.

Deposits—$2.0 million

Written agreement entered into on 

February 14, 1973. Bank and controlling shareholder agreed for purposes of 

effecting correction of unsafe and unBank No.

sound practices that the controlling 

shareholder, for a period of 3 years 

from date, would purchase within 60 

days after the completion of any FDIC 

examination of the bank, any loan 

which was classified loss or doubtful in 

subject bank that originated in any 

other of the controlling shareholder's 

chain of banks or any loan originating 

outside subject bank's regular trade 

area. Subject bank was also to divest 

itself of any loan originated in any of 

the controlling shareholder's other 

banks which were classified substandard. Divestiture was to be accomplished by sale to the originating bank 

or controlling stockholder.

Temporary Cease-and-Desist Actions 

Federal Deposit Insurance Act - Section 8(c)

S u m m ary o f cases

Bank No.

1 Deposits—$17.3 million

Temporary cease-and-desist order 

issued on July 22, 1976. Bank ordered 

to prohibit payment of checks against 

uncollected funds for deposit accounts 

of an insider and a foreign bank.

A permanent cease-and-desist order 

was issued on October 6, 1976. 

Deposits—$16.7 million

Temporary cease-and-desist order 

issued on July 22, 1976. Bank ordered 

to discontinue paying cash dividends 

pending resolution of charges against 

the bank concerning nonpayment of 

fair value of stock held by shareholders dissenting to conversion from national to State charter.

Temporary order terminated on 

December 3, 1976, following resolution of the matter.

Deposits—$15.7 million

Temporary cease-and-desist order 

issued on October 6, 1976. Bank ordered to prohibit insider transactions 

involving extensions of credit to or for 

the benefit of directors, officers, or 

the principal shareholder or involving 

purchase or sale of assets to or for the 

benefit of the principal shareholder, to 

prohibit additional credit to borrowers 

whose loans are classified doubtful or 

loss, and to discontinue payment of 

cash dividends.

The bank was closed on November 

19, 1976.

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Federal Reserve Bank of St. Louis
54 FEDERAL DEPOSIT INSURANCE CORPORATION

Bank No.

4 Deposits—$6.3 million

Temporary cease-and-desist order 

issued on October 19, 1976. Bank ordered to discontinue declaration or 

payment of cash dividends.

Deposits—$3.8 million

Temporary cease-and-desist order 

issued on December 23, 1976. Bank 

ordered to discontinue extending credit, directly or indirectly, over a specified amount to any insider or entering 

into any business transaction with an 

insider.

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Federal Reserve Bank of St. Louis
MERGER DECISIONS OF THE CORPORATION

PART THREE

v.

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Federal Reserve Bank of St. Louis
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Federal Reserve Bank of St. Louis
BANKS INVOLVED IN ABSORPTIONS APPROVED BY 57

THE FEDERAL DEPOSIT INSURANCE CORPORATION IN 1976

State Town or City Bank Page

Alabama Gadsden Etowah County Bank (in organization;

change title to Gadsden Mall Bank) 106

Gadsden Mall Bank 106

Tuscaloosa Peoples Bank of Tuscaloosa 106 

Tuscaloosa County Bank (in organization; change title to Peoples Bank

of Tuscaloosa) 106

California Beverly Hills Ahmanson Bank and Trust Company 86

California Overseas Bank (in organization) 86 

La Habra Hacienda Bank 76 

Los Angeles Japan California Bank 95 

Lloyds Bank California 71 

The Mitsubishi Bank of California 76 

San Francisco Bank of Montreal (California) 95 

San Leandro First State Bank of Northern

California 71

Colorado Woodmoor Bank of Woodmoor 61

El Paso County Bank (in organization) 61

Connecticut Bridgeport Metropolitan Bank & Trust Company 106

Union Trust Company of Bridgeport 106 

Union Trust Company of Bridgeport, Inc.

(in organization; change title to

Union Trust Company of Bridgeport) 106

Chester Chester Bank 104

Chester Savings Bank 104

Hartford Constitution Bank and Trust Company 106 

The Colonial Bank and Trust Company

of Hartford (in organization) 106

Georgia Atlanta DeKalb County Bank 61

Byromville Bank of Byromville 82 

Marietta Cobb Exchange Bank (change title

to First Bank & Trust Co.) 73

Roswell Roswell Bank 61

Smyrna First State Bank of Cobb County 73 

Unadilla Exchange Bank of Unadilia (change 

title to State Bank and Trust

Company) 82

Illinois Northfield BN Bank of Northfield (in organization; change title to Bank of

Northfield) 106

Bank of Northfield 106

Iowa Ames Union Company 93

Union Story Trust & Savings Bank 93

Digitized for FRASER 

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Federal Reserve Bank of St. Louis
58 FEDERAL DEPOSIT INSURANCE CORPORATION

State Town or City Bank Page

Burlington Burlington Bank and Trust Company 71

Hillsboro Hillsboro Savings Bank 71

New London New London State Bank 71

Maine Augusta Casco Northern National Bank 70

Bangor Bangor Savings Bank 77

Dover-Foxcroft Piscataquis Savings Bank 77 

Farmington Franklin County Savings Bank (change

title to Franklin Savings Bank) 86

Portland Casco Bank & Trust Company 70

Skowhegan Somerset Loan and Building Association 86

Massachusetts Boston Capitol Bank and Trust Company 85

The New Boston Bank and Trust

Company 85

The First National Bank of Boston 96

Holyoke The Park National Bank of Holyoke 74 

West Springfield Western Bank and Trust Company (change 

title to Park West Bank and Trust

Company) 74

Michigan Adrian CSB State Bank (in organization;

change title to Commercial Savings

Bank) 106

Commercial Savings Bank 106

The Commercial Savings Bank 106

Beaverton CFC Bank (in organization) 106

Gladwin County Bank 106

Caro P.S.B. State Bank (in organization) 106 

The Peoples State Bank of Caro,

Michigan 106

Dowagiac Community State Bank of Dowagiac 106

DSB Bank (in organization) 106

Howard City WSB Bank (in organization) 106

Western State Bank 106

Midland First MBT Bank (in organization) 106

First Midland Bank & Trust Company 106 

First National Bank & Trust Company 

of Midland (change title to First

Midland Bank & Trust Company) 106

Mississippi Crystal Springs Truckers Exchange Bank 89

Jackson The Mississippi Bank 89

New Hampshire Bristol The Bristol Savings Bank 79

The First National Bank of Bristol

(change title to The Bristol Bank) 79 

Jaffrey Monadnock National Bank (change title

to The Monadnock Bank) 103

Monadnock Savings Bank 103

Digitized for FRASER 

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Federal Reserve Bank of St. Louis
BANK ABSORPTIONS APPROVED BY THE CORPORATION 59

State Town or City Bank Page

New Jersey Atlantic City Guarantee Bank 96

Cape May 

Court House

The First National Bank of Cape May 

Court House

96

Chatham State Bank of Chatham 67

Chatham

Township

The Chatham Trust Company 67

Lacey Township Citizens State Bank of New Jersey 101

Point Pleasant Atlantic State Bank 101

New York Buffalo Erie County Savings Bank 98

Irondequoit Genesee Federal Savings and Loan 

Association

92

New York City American Bank & Trust Company 

Bank Leumi Trust Company of New York 

Dry Dock Savings Bank 

New York Federal Savings and Loan 

Association 

The Manhattan Savings Bank 

The New York Bank for Savings

85

85

91

91

99

92

Olean Olean Savings and Loan Association 98

Yonkers Yonkers Savings Bank 99

North Carolina Matthews The Bank of Matthews 68

Warrenton The Citizens Bank of Warrenton 93

Wilson Branch Banking and Trust Company 68, 93

Ohio Amesville The First National Bank of Amesville 62

Glouster The Glouster Community Bank 62

Lodi The Medina County Bank 64

Medina SDB Bank (in organization)

The Ohio State Bank of Medina (change 

title to The Medina County Bank) 

The Savings Deposit Bank Company

106

64

106

Oregon Canby Guaranty Bank 81

Woodburn Bank of Oregon 81

Pennsylvania Bala-Cynwyd Lincoln Bank 89

Greensburg

Harrisburg

C. W. Benner Company 

Dauphin Deposit Bank and Trust 

Company

Dauphin Deposit Trust Company (change 

title to Dauphin Deposit Bank and 

Trust Company)

Second Street Bank and Trust Company 

(in organization)

63

106

106

106

Lewiston The First National Bank of Lewiston 80

Philadelphia Centennial Bank 89

Pittsburgh Commercial Bank & Trust Company 63

Reading American Bank and Trust Co. of Pa. 65

Digitized for FRASER 

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Federal Reserve Bank of St. Louis
60 FEDERAL DEPOSIT INSURANCE CORPORATION

State Town or City Bank Page

Shoemakersville 

State College

The First National Bank of 

Shoemakersville 

Central Counties Bank

65

80

Texas Garland Garland Commerce Bank (in organizaGroveton

Houston

tion; change title to Southern Bank 

and Trust Company)

Southern Bank and Trust Company 

1st & Devine State Bank (in organization; change title to First Bank in 

Groveton)

First Bank in Groveton 

Galleria Bank

106

106

106

106

106

Vermont

Lufkin

Burlington

Galleria New Bank (in organization;

change title to Galleria Bank) 

First and Townsend State Bank (in 

organization; change title to First 

Bank & Trust)

First Bank & Trust

The Merchants Bank

106

106

106

88

Hardwick Hardwick Trust Company 88

Virginia Bristol Bank of Virginia-Southwest 66, 69

Galax Bank of Virginia-Galax 69

Norfolk First Virginia Bank of Tidewater 94

Poquoson First Virginia Bank of the Peninsula 94

Pulaski Bank of Virginia-Pulaski 69

Weber City Bank of Virginia-Scott 66

Wisconsin Green Bay West Bank and Trust 102

Thiensville Colonial State Bank 76

Wauwatosa Security Bank on Capitol 76

Wrightstown The Farmers and Traders Bank 102

Washington Everett Bank of Everett 61

Granite Falls Granite Falls State Bank 61

Lynnwood City Bank 84

Seattle Evergreen State Bank 84

Other Areas

Federal Republic Frankfurt Boston Leasing, GmbH 96

of Germany

BANKS INVOLVED IN ABSORPTION DENIED BY 

THE FEDERAL DEPOSIT INSURANCE CORPORATION IN 1976

Michigan Au Gres 

Stand ish

The Au Gres State Bank 

State Bank of Standish

107

107

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Federal Reserve Bank of St. Louis
61

BANK ABSORPTIONS APPROVED BY THE CORPORATION

Resources

(in

thousands

of dollars)

Bank ing

offices in

operation

Before A fter

El Paso C o u n ty Bank

(in organization) 

Woodmoor, Colorado

500 1

to purchase certain assets and assume the deposit liabilities o f

B ank o f W o o d m o o r

Woodmoor

5,112 1

Approved under emergency provisions. No report requested from the Attorney General.

Basis for Corporation approval, January 14,1976

El Paso County Bank, Woodmoor (P.O. Monument), Colorado, a newly chartered State nonmember bank having capital funds of $500,000, 

has applied, pursuant to section 18(c) of the Federal Deposit Insurance Act, for the Corporation's 

consent to purchase certain assets of and assume 

the liability to pay deposits made in Bank of 

Woodmoor, Woodmoor (P. O. Monument), Colorado, an insured State nonmember bank with total 

assets of $5,112,000 as of June 30, 1975.

As of January 12, 1976, Bank of Woodmoor 

had deposits of some $3,567,100 and operated 

one office. On January 12, 1976, the Federal Deposit Insurance Corporation was appointed as receiver of Bank of Woodmoor.

The Board of Directors finds that the failure of 

Bank of Woodmoor requires it to act immediately 

and thus waives publication of notice, dispenses 

with solicitation of competitive reports from other 

agencies, and authorizes the transaction to be consummated immediately.

Resources

(in

thousa nds

Banking

offices in

operation

of dollars) Before A fter

Bank o f E v erett 57,044 9 10

Everett, Washington

to acquire certain assets and assume the deposit liabilities o f

G ra n ite Falls S tate Bank 1,881 1

Granite Falls

Approved under emergency provisions. No report requested from the Attorney General.

Basis for Corporation approval, January 22, 1976

Bank of Everett, Everett, Washington, an insured State nonmember bank with total resources

of $57,044,000, has applied, pursuant to section 

18(c) and other provisions of the Federal Deposit 

Insurance Act, for the Corporation's prior approval to acquire certain assets of and assume the 

liability to pay deposits made in Granite Falls 

State Bank, Granite Falls, Washington, an insured 

State nonmember bank with total resources of 

$1,881,000. As an incident to the proposed transaction, the sole office of Granite Falls State Bank 

would become a branch of Bank of Everett.

The proposed transaction presents virtually no 

competitive problems. Granite Falls State Bank is 

an ineffective competitor. Bank of Everett, whose 

main office is 16 miles southwest of Granite Falls 

and whose nearest branch is 12 miles away, has 

13.6 percent of total commercial bank deposits 

held by all such banks within 15 miles of Granite 

Falls and would gain only another 0.5 percent by 

this transaction. This area is dominated by 

Seattle-First National Bank and Everett Trust & 

Savings Bank with 45.3 and 28.9 percent, respectively, of the area's commercial bank I PC deposits. 

Indeed, because of Granite Falls State Bank's small 

size, the competitive significance of this transaction would be virtually equivalent to the establishment of a de novo branch.

For reasons related to the condition of Granite 

Falls State Bank and the fact that the Corporation 

has been advised that the Supervisor of Banks of 

the State of Washington intends to take possession 

of the bank if this proposed transaction is not consummated, the Board of Directors finds that the 

Corporation must act immediately in order to prevent the probable failure of Granite Falls State 

Bank and thus waives publication of notice, dispenses with the solicitation of competitive reports 

from other agencies, and authorizes the transaction to be consummated immediately.

Resources

(in

Banking

offices in

operation

thousands

o f dollars) Before A fter

Rosw ell B ank

Roswell, Georgia

36,700 3 6

to merge w ith

D e K a lb C o u n ty Bank

DeKalb County

15,418 3

Approved under emergency provisions. No report requested from the Attorney General.

Basis for Corporation approval, March 2, 1976

Roswell Bank, Roswell, Georgia, an insured 

State nonmember bank with total resources of

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Federal Reserve Bank of St. Louis
62 FEDERAL DEPOSIT INSURANCE CORPORATION

$36,700,000 and I PC deposits of $29,244,000, has 

applied, pursuant to section 18(c) and other provisions of the Federal Deposit Insurance Act, for 

the Corporation's prior consent to merge with 

DeKalb County Bank, DeKalb County (P. O. 

Atlanta), Georgia, an insured State nonmember 

bank with total resources of $15,418,000 and IPC 

deposits of $13,380,000. As an incident to the 

proposed transaction, the three offices of DeKalb 

County Bank would become branches of the resulting bank, thereby increasing the number of its 

offices to six.

This merger would not eliminate significant 

existing or potential competition between the two 

banks, both having been operated under common 

control since DeKalb County Bank was established 

in 1970. Moreover, even if the banks were to disaffiliate and DeKalb County Bank were restored to 

a satisfactory condition, the prospects for significant competition to develop between Roswell 

Bank and DeKalb County Bank are remote.

For reasons related to the condition of DeKalb 

County Bank and the fact that the Corporation 

has been advised by the Department of Banking 

and Finance of the State of Georgia that" . . . it is 

apparent that DeKalb County Bank is in an insolvent condition . . . ", the Board of Directors finds 

that the Corporation must act immediately in 

order to prevent the probable failure of DeKalb 

County Bank and thus waives publication of notice, dispenses with the solicitation of competitive 

reports from the other agencies, and authorizes the 

transaction to be consummated immediately.

R e so u rce s

(in

th ou S3 nds

B a n k in g 

o ffic e s in 

o p e r a tio n

o f d o lla rs ) B e fo re A f t e r

The G lou ster

C o m m u n ity Bank

Glouster, Ohio

7,054 1 2

to acquire the assets and assume

the deposit liabilities o f

T he First N ational Bank

o f A m esville

Amesville

2,350 1

Summary report by Attorney General, 

October 23, 1975

We have reviewed this proposed transaction and 

conclude that it would not have a substantial competitive impact.

Basis for Corporation approval, March 2, 1976

The Glouster Community Bank, Glouster, Ohio 

("Community Bank"), a State nonmember insured 

bank with total resources of $7,054,000 and total 

IPC deposits of $5,697,000, has applied, pursuant

to section 18(c) and other provisions of the Federal 

Deposit Insurance Act, for the Corporation's prior 

consent to acquire the assets of and assume the liability to pay deposits made in The First National 

Bank of Amesville, Amesville, Ohio ("Amesville 

Bank"), with total resources of $2,350,000 and 

total IPC deposits of $1,860,000. The transaction 

would be effected under the charter and title of 

Community Bank, and incident to the transaction, 

the sole office of Amesville Bank would be established as a branch of the resulting bank.

Competition. Community Bank operates its sole 

office in Glouster, in the northern panhandle of 

Athens County, Ohio, which lies adjacent to the 

West Virginia border in the southeast part of the 

State. Amesville Bank has its sole office in Amesville, a hamlet of 295 residents, in northeastern 

Athens County. Athens County, a part of the 

Appalachian Region, is predominantly rural and 

agricultural with coal mining and recreational facilities of secondary economic importance. Commerce 

is centered around Athens, the county seat and 

home of Ohio University, located 16 road-miles 

south of Glouster and 13 road-miles southwest of 

Amesville. Population of the county was 55,747 in 

1970, an increase of 18.6 percent since 1960, with 

85 percent of the increase occurring in the county 

seat. Glouster's population meanwhile decreased

5.9 percent to 2,121. The 1974 median household 

buying level in Athens County was $9,207, about

29.5 percent below that of the State as a whole. The 

primary trade area of Community Bank extends 

north of Glouster some 10 road-miles to include 

Corning in Perry County, south 10 miles to include 

Chauncey, and west some 12 miles to Nelsonville. 

This market has a population of about 10,150, a 

decrease of approximately 6.4 percent since 1960. 

Community Bank has the third largest share, 17.3 

percent, of the IPC deposits aggregating $33 million 

held by the five commercial bank offices in the area.

Amesville Bank's primary trade area may be considered to include points within some 10 miles of 

Amesville; the bank draws its business from the 

sparsely populated area bounded by points southwest of the village along U.S. Highway ALT 50, on 

the east by Bartlett in Washington County, and on 

the northeast along State Highway 377 by Chesterhill in Morgan County. This market has a population 

estimated at 3,200 and three commercial banks, 

each with one office. Amesville Bank has the smallest share, 17.4 percent, of the $10.7-million IPC 

deposits held by these three offices.

Glouster is separated from Amesville by some 13 

miles of a tertiary road which serves no population 

center in the intervening area other than nearby 

suburbs of Glouster. Community Bank's primary 

market is oriented west from Glouster and north 

along State Highway 13, which runs from the 

Athens area toward Zanesville, some 40 road-miles 

north of Glouster. Amesville Bank's primary market 

lies along U.S. Route ALT 50, leading generally east

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Federal Reserve Bank of St. Louis
BANK ABSORPTIONS APPROVED BY THE CORPORATION 63

from the Athens area toward Bartlett, and along 

State Highway 377, leading northeast from Amesville toward Chesterhill. Although abutting, the 

primary markets of the two banks do not overlap to 

any significant degree. The proposal thus would not 

eliminate any significant existing competition between Community Bank and Amesville Bank.

Although both banks may legally establish de

novo branches in Athens County, there is no significant potential for increased competition between 

them in the future by virtue of such expansion. Both 

markets are sparsely populated and already have a 

substantial number of commercial bank offices. 

Income levels are relatively low and only very slow 

growth is predicted outside the county seat. Neither 

bank has branched since it opened, and any opportunities for de novo branching that may arise because of future growth are likely to be taken up by 

one or more of the three banks in Athens, rather 

than either bank here involved. Accordingly, the 

Board considers the prospects for increased competition between them through de novo branching to 

be extremely remote.

In the combined areas served by the two banks, 

the resulting bank would hold the second largest 

share, 17.3 percent, of IPC deposits held by eight 

area offices of the six commercial banks represented 

therein. In its maximum legal branching and merging area (Athens County), the resulting bank would 

have the fifth largest share, 7.7 percent, of IPC deposits held by seven commercial banks. On a statewide basis, the resulting bank would hold only 0.03 

percent of the aggregate IPC deposits held by all 

Ohio commercial banks.

On the basis of the foregoing information, the 

Board of Directors has concluded that the proposed 

transaction would not, in any section of the country, substantially lessen competition, tend to create 

a monopoly, or in any other manner be in restraint 

of trade.

Financial and Managerial Resources; Future

Prospects. Financial and managerial resources of 

each institution, and of the resulting bank, are considered satisfactory. Future prospects of the resulting bank are favorable.

Convenience and Needs o f the Com m unity to be

Served. The principal benefit of the proposed transaction is a modest increase in lending limits which 

would accrue to the residents and businesses in both 

Glouster and Amesville.

Based on the foregoing information, the Board of 

Directors has concluded that approval of the application is warranted.

Resources

(in

thousands

o f dollars)

Banking

offices in

operation

Before A fter

C o m m ercial Bank

& T ru s t C o m p an y 68,065 4 4

Pittsburgh, Pennsylvania

to m erge w ith

C. W. B enner C o m p an y 1,882 -

Greensburg

Summary report by Attorney General, 

November 4, 1975

We have reviewed this proposed transaction and 

conclude that it would not have a substantial competitive impact.

Basis for Corporation approval, March 8, 1976

Commercial Bank & Trust Company, Pittsburgh, Pennsylvania ("Commercial"), a State nonmember insured bank with total resources of 

$68,065,000 on June 30, 1975, has applied, pursuant to section 18(c) and other provisions of the 

Federal Deposit Insurance Act, for the retroactive 

consent of the Corporation to merge with C. W. 

Benner Com pany, Greensburg, Pennsylvania 

("Benner"), a noninsured institution which from 

its establishment in 1964 until September 30,

1974, was engaged primarily in the leasing of personal property.

Competition. In September 1971, Commercial 

acquired control of all the outstanding capital 

stock of Benner for debts previously contracted. 

Thereafter, Benner was operated by Commercial 

until September 30, 1974, at which time Commercial merged with Benner and established a leasing 

department within the bank. This merger transaction effected a reorganization which consolidated the operations of a wholly owned subsidiary 

into the parent organization. In and of itself, the 

transaction has had no significant effect on competition.

Financial and Managerial Resources; Future

Prospects. The financial and managerial resources 

and future prospects of Commercial are satisfactory.

Convenience and Needs o f the Com m unity to

be Served. The merger transaction, essentially an 

internal reorganization, has had no effect on the 

convenience and needs of the community.

On the basis of the foregoing information, the 

Director of the Division of Bank Supervision acting on behalf of the Board of Directors under 

delegated authority has concluded that approval of 

the application is warranted.

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Federal Reserve Bank of St. Louis
64 FEDERAL DEPOSIT INSURANCE CORPORATION

R e so u rce s

B a n k in g 

o ffic e s in

(in

th o u s a n d s 

o f d o lla rs )

o p e ra tio n

B e fo re A fte r

T he O hio State Bank

o f M edina 3,842 2 5

Medina, Ohio

(change title to The

Medina County Bank)

to merge w ith

T he M edina C o u n ty B ank 22,465 3

Lodi

Summary report by Attorney General,

July 31, 1975

Applicant's Medina headquarters is located 

about 10 miles northeast of Bank's Lodi headquarters and approximately 10 miles south of 

Bank's Valley City and Brunswick branches. Although Applicant is the only BancOhio Corporation 

subsidiary with offices in Medina County, BancOhio's subsidiaries in nearby Cleveland and Akron 

derive some deposits and loans from the Medina 

County area. Thus, it appears that the proposed 

merger would eliminate existing competition between the parties in the Medina County area. It does 

not, however, appear that concentration in commercial banking would be substantially increased in any 

relevant banking market.

Basis for Corporation approval, March 15, 1976

The Ohio State Bank of Medina, Medina, Ohio 

("State Bank"), a State nonmember insured bank 

with total resources of $3,842,000 and total I PC 

deposits of $2,218,000, has applied, pursuant to 

section 18(c) and other provisions of the Federal 

Deposit Insurance Act, for the Corporation's prior 

consent to merge with The Medina County Bank, 

Lodi, Ohio ("County Bank"), also a State nonmember insured bank, with total resources of 

$ 2 2 ,4 6 5 ,0 0 0 and to ta l IP C deposits of 

$18,592,000, under the charter of State Bank and 

with the title "The Medina County Bank." As an 

incident to the merger, the three offices of County 

Bank would become branches of the resulting bank, 

increasing the number of its offices to five.

Competition. State Bank has operated its main 

office and a nearby drive-up facility since April

1974 in the city of Medina, which is located in 

Medina County in northeastern Ohio, south of 

Cleveland and west of Akron. BancOhio Corporation, the State's second largest multibank holding 

company, which organized State Bank de novo,

holds 99.3 percent of its outstanding stock. Larger 

affiliates of BancOhio Corporation are located in 

both Cleveland and Akron, but State Bank's share of 

total commercial bank deposits in Cleveland is very 

small and in Akron is approximately one-half that of 

the market's leading bank. County Bank operates its 

main office in the village of Lodi, approximately 11

miles southwest of Medina, and branches at Brunswick and Valley City, 7 and 9 miles north and northwest, respectively, of State Bank's offices.

Medina County had a 1970 population of 

82,717, a 26.6 percent increase from 1960. The city 

of Medina, the county seat (1970 population 

10,913), showed a 32.5 percent increase in the same 

period while the village of Lodi (1970 population 

2,399) has remained more stable. The county's recent growth has occurred predominantly in its 

northern portions, while the southern sections have 

remained agriculturally oriented. An increasing 

number of the county residents commute to the 

industrialized areas around the nearby cities of 

Akron and Cleveland for employment.

Three possible local banking markets have been 

suggested by the Corporation's staff. One would 

encompass all of Medina County, the legal branching and merging area for both State Bank and County Bank and the political jurisdiction in which all of 

their banking offices are located and from which 

most of their banking business is drawn. The second 

would encompass northern Medina County, including both branches of County Bank, and all of Cuyahoga County in which the city of Cleveland is located. The third would encompass southern Medina 

County, including State Bank's two offices and 

County Bank's main office, plus all of Summit 

County in which the city of Akron is located. 

Whichever area is selected for analysis, however, 

there would appear to be only a modest elimination 

of existing competition, no significant loss of potential competition in the future, and no objectionable 

increase in banking concentration as a result of the 

proposed merger.

Wit hin Medina County as a whole, State Bank has 

not achieved any sizable market penetration, and 

County Bank, with 9.4 percent, lags far behind The 

Old Phoenix National Bank of Medina, which controls about 54 percent of the county's commercial 

bank I PC deposits. Three other banks, two of which 

are affiliated with statewide bank holding companies,, would be within $6 million of the resulting 

bank's total I PC deposit size. Even though the 

income levels of Medina County are 15 percent 

above the statewide average, the population per 

commercial bank facility is already below4,000, so 

that only modest de novo branching, if any, can be 

anticipated over the next few years.

In the two alternative, but much larger, local 

markets, the relatively small share of total commercial bank deposits held by County Bank offices 

would only nominally affect BancOhio Corporation's present holdings.

In any case, County Bank is not an aggressive 

competitor at the present time and does not appear 

capable of significant de novo expansion. Each of 

the possible markets, moreover, has a relatively large 

number of commercial bank competitors, and an 

increasing number are affiliated with multibank 

holding companies operating across county lines.

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Federal Reserve Bank of St. Louis
BANK ABSORPTIONS APPROVED BY THE CORPORATION 65

In the State as a whole, banking resources are 

relatively unconcentrated and this situation would 

continue if the proposed merger is approved. BancOhio Corporation, with 8.3 percent of the State's 

total commercial bank IPC deposits, would retain its 

second-place position and its share of such deposits 

would increase only 0.1 percent.

Under the circumstances, the Board of Directors 

is of the opinion that the proposed merger would 

not, in any section of the country, substantially 

lessen competition, tend to create a monopoly, or in 

any other manner be in restraint of trade.

Financial and Managerial Resources; Future

Prospects. The merger would end shareholder dissension in County Bank, supply that bank with 

management expertise available through affiliation 

with a large holding company, and strengthen the 

bank's capital position. Earnings of the newly organized State Bank should improve as a result of greater 

operating efficiencies, and the proposal would give 

State Bank an established base from which it can 

compete more effectively in Medina County. It is 

therefore concluded that the financial and managerial resources, as well as the future prospects of 

the resulting bank, weigh in favor of approval.

Convenience and Needs o f the C om m unity to be

Served.The principal benefit of the proposed merger 

to persons and businesses located in Medina County 

would be the extension to County Bank customers 

of the expanded commercial banking services now 

available at offices of banks affiliated with BancOhio Corporation.

Based on the foregoing information, the Board of 

Directors has concluded that approval of the application is warranted.

Resources

(in

thousands

of dollars)

Banking

offices in

operation

Before A fter

A m erican Bank and T ru s t

Co. o f Pa.

Reading, Pennsylvania

1,091,620 55 56

to merge w ith

T h e First N atio n al Bank

o f S h oem akersville

Shoemakersville

8,755 1

Summary report by Attorney General,

July 31, 1975

Shoemakersville is located about 14 miles north 

of Reading, in Berks County. Two of Applicant's 

offices are within 12-14 miles of Bank, with at least 

one competitive alternative in the intervening area. 

It appears that the proposed merger would eliminate 

some existing competition between the parties in 

the Reading-Berks County area.

Commercial banking in Berks County is highly

concentrated; the four largest banks with offices in 

Berks County control about 88 percent of county 

deposits. Applicant, with about44 percent of county deposits, ranks first among the 16 banks with 

offices in the county while Bank, with less than 1 

percent of total deposits, ranks tenth.

We conclude that this proposed merger will have 

some adverse competitive effects.

Basis for Corporation approval, March 15, 1976

American Bank and Trust Co. of Pa., Reading, 

Pennsylvania ("American"), a State nonmember 

in s u re d b a n k w ith to ta l resources of 

$1 ,09 1 ,6 2 0 ,00 0 and total IPC deposits of 

$853,913,000, has applied, pursuant to section 

18(c) and other provisions of the Federal Deposit 

Insurance Act, for the Corporation's prior consent 

to merge with The First National Bank of Shoemakersville, Shoemakersville, Pennsylvania ("First 

National"), with total resources of $8,755,000 and 

total IPC deposits of $7,158,000, under the charter 

and title of American. As an incident to the merger, 

the sole office of First National would become a 

branch of the resulting bank.

Competition. American operates 55 offices in 

the 7 counties where it may legally branch or merge 

under Pennsylvania law, that is, Berks, Chester, 

Lancaster, Lebanon, Lehigh, Montgomery, and 

Schuylkill Counties. In addition, American has one 

approved but unopened branch. American is an 

aggressive full service bank with a large trust department.

First National operates its sole office in Shoemakersville (1970 population 1,427), approximately 14 miles north of Reading (1970 population 

87,643, a decline of 10.7 percent from 1960) in the 

northern section of Berks County. The area surrounding Shoemakersville retains an agricultural 

flavor and some farming is done, though primarily as 

a part-time endeavor. The community itself is predominantly of the bedroom type with some commutation to Reading and Hamburg. However, the 

majority of the wage earners are employed by the 

several large industrial plants located just 5 minutes 

from town on Route 61. Industries in the community are related to the garment trade and employ 

mostly women. With the exception of the industries 

on Route 61, very little commercial business exists.

American's 7-county trade area had a combined 

population of 2,033,751 in 1970, up 14.7 percent 

since 1960. The trade area of American is well diversified and includes all types of industry, agriculture, 

and vacation and recreational facilities. With the 

exception of Schuylkill County, at $8,900, and 

Lebanon County, at $12,005, all counties in 

American's branching area had 1974 median household buying levels exceeding the State figure of 

$12,141.

Effects of the proposed merger would be most 

direct and immediate within the primary trade area 

of First National, an area comprising communities

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Federal Reserve Bank of St. Louis
66 FEDERAL DEPOSIT INSURANCE CORPORATION

within some 10 road-miles of Shoemakersville, in 

northern Berks County. In this market, First 

National has the seventh largest share (5.2 percent) 

of the IPC deposits held by all area offices of the 

eight commercial banks represented therein. American has the largest share of such deposits (21.7 percent), at its branch in Temple, which is located some

10 road-miles south of Shoemakersville in the northern suburbs of the city of Reading. Two other banks 

have local deposit shares closely approximating that 

of American: Hamburg Savings and Trust Company, 

with 20.8 percent, and The First National Bank of 

Leesport, with 19.0 percent. The 1970 population 

of First National's primary trade area is estimated at 

28,900,an increase of some 12.9 percent since 1960.

Although the proponents operate in the same 

local banking market, available information indicates that neither draws a significant amount of its 

business from areas served primarily by the other. 

First National draws its business from the local 

market surrounding Shoemakersville, while the 

Temple branch of American serves the northern 

suburbs of the city of Reading. It thus appears that 

existing competition between American and First 

National, which their merger would eliminate, has 

no compelling competitive significance in view of 

First National's small share of the relevant market 

and the number of convenient alternatives that 

would remain following the merger, including 

branches of the $754-million-IPC-deposit National 

Central Bank, Lancaster, and the$287-million-IPCdeposit Bank of Pennsylvania, headquartered in 

Reading.

First National has been a unit bank ever since its 

1920 establishment and presently has an aging 

management and no incentive to undertake office 

expansion. American, on the other hand, is an 

aggressive, growth-oriented bank and has the financial resources and expertise to facilitate de novo

expansion. First National's relevant market, north 

of Reading, has experienced considerable economic 

expansion during the past decade and appears to be 

an area that American may find attractive for its de

novo entry in the future. Elimination, by the merger, of this potential for increased competition between the proponents appears to have little competitive significance to weigh against approval of the 

application, however, in view of the existing commercial bank structure of the relevant market and 

the likelihood that other major competitors may be 

attracted to the area should its economic expansion 

continue.

There are 80 commercial banks operating 546 

offices within the 7-county trade area of American. 

These offices held approximately $6.2 billion in 

total IPC deposits as of June 30, 1975, and American ranked first with 13.3 percent. However, this 

percentage includes all of American's deposits but 

only a portion of the deposits of many banks operating in the area. For example, eight large Philadelphia banks with aggregate resources exceeding

$18 billion have their home offices in Montgomery 

County thereby allowing them to operate in four of 

the seven counties in which American has offices. In 

addition, 21 other commercial banks, each with 

total resources over $100 million, may branch de

novo into various portions of American's trade area. 

Therefore, it is obvious that there is significant 

actual and potential competition confronting 

American throughout the service area. The proposed merger, which would add only 0.1 percent to 

American's share of IPC deposits in the sevencounty market, would not significantly affect the 

structure of commercial banking or the concentration of banking resources in the trade area.

Based on the foregoing, the Board of Directors is 

of the opinion that the proposed merger would not, 

in any section of the country, substantially lessen 

competition, tend to create a monopoly, or in any 

other manner be in restraint of trade.

Financial and Managerial Resources; Future

Prospects. Both banks have satisfactory financial 

and managerial resources for the business they do as 

independent institutions, and the same would be 

true of the resulting bank.

Convenience and Needs o f the Com m unity to be

Served. Consummation of the proposed merger 

would bring to customers of First National the 

broad range of services of a large commercial bank, 

such as significantly larger lending limits, bank 

credit card services, computer services, trust services, and a more complete line of credit services.

On the basis of the foregoing information, the 

Board of Directors has concluded that approval of 

the application is warranted.

R e so u rce s

th o u s a n d s 

o f d o lla rs )

B a n k in g 

o ffic e s in 

o p e r a tio n

B e fo re A f t e r

Bank of V irg in ia-S o u th w es t

Bristol, Virginia

67,630 9 11

to merge w ith

Bank o f V irg in ia -S c o tt

Weber City

9,293 2

Summary report by Attorney General,

April 7, 1976 

The merging banks are both wholly owned subsidiaries; of the same bank holding company. As 

such, their proposed merger is essentially a corporate reorganization and would have no effect on 

competition.

Basis for Corporation approval, March 30, 1976

Bank of Virginia-Southwest, Bristol, Virginia 

(“ Southwest"), an insured State nonmember bank 

with total resources of $67,630,000 and IPC deDigitized for FRASER 

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Federal Reserve Bank of St. Louis
BANK ABSORPTIONS APPROVED BY THE CORPORATION 67

posits of $53,638,000, has applied, pursuant to section 18(c) and other provisions of the Federal 

Deposit Insurance Act, for the Corporation's prior 

consent to merge with Bank of Virginia-Scott, 

Weber City, Virginia ("Scott"), an insured State 

nonm em ber bank w ith to ta l resources of 

$9,293,000 and I PC deposits of $7,244,000. The 

banks would merge under the charter and title of 

Southwest. Following the merger, the 2 offices of 

Scott will be operated as branches of Southwest, 

increasing the number of its authorized offices to 

11.

Competition. Both Southwest and Scott are 

owned by Bank of Virginia Company, Richmond, 

Virginia ("Holding Company"), a multibank holding company. This proposed transaction has the sole 

purpose of enabling Holding Company to consolidate its operations in western Virginia. The two 

banks are located in separate but contiguous service 

areas and are operated under substantially identical 

managerial guidelines established by Holding Company. The proposed transaction, therefore, would 

not in itself change the structure of competition in 

the area.

Under the circumstances presented, the Board of 

Directors is of the opinion that the proposed merger 

would not, in any section of the country, substantially lessen competition, tend to create a monopoly, or in any other manner be in restraint of trade.

Financial and Managerial Resources; Future

Prospects. The proponent banks each have adequate 

financial and managerial resources for the business 

they do as independent institutions, and the same 

would be true of the resultant bank. Future prospects of the resultant bank are considered to be 

favorable.

Convenience and Needs o f the Com m unity to be

Served. This proposal represents an internal reorganization, and no effect on the convenience and needs 

of the community is expected.

On the basis of the foregoing information, the 

Board of Directors has concluded that approval of 

the application is warranted.

R e so u rce s

(in

th o u s a n d s 

o f d o lla rs )

B a n k in g 

o ffic e s in 

o p e r a tio n

B e fo re A fte r

The C h ath am T ru s t

C o m p an y

Chatham Township, 

New Jersey

62,989 4 2

to purchase certain assets

and assume the

deposit liabilities o f

S tate B ank o f C h ath am

Chatham

12,147 2

Summary report by Attorney Generai, 

April 23, 1976

Chatham has a population of 8,600 and Chatham 

Township has a population of 8,100. Apparently 

they are contiguous communities. According to the 

application, both banks' Chatham offices are essentially in middle income residential areas, and time 

deposits represent more than 70 percent of total 

deposits in both banks; the Livingston branch of 

Bank is in a shopping center and thus has more 

demand deposits.

U nited States Savings Bank of Newark, a 

$400-million institution, has a branch with deposits 

of $37.5 million in Chatham Township. The transaction would result in the entry of another savings 

bank in the area. The proposed transaction includes 

the sale of Bank's physical assets and its rights as 

lessee of its 2 offices to Howard Savings Bank of 

Newark, a $1.5-billion institution with about 20 

offices, including a branch in Millburn, about 6 

miles from Chatham, which has deposits of $25 

million.

Consummation of the transaction would leave 

Applicant as the only commercial bank in Chatham 

but head office protection will be eliminated.

You have asked that our report be furnished 

within 10 days, it having been determined that an 

emergency exists requiring expeditious action. 

Accordingly, in view of the precarious condition of 

Bank and the disposal of the commercial bank offices to a savings bank, we conclude that the probable 

anticompetitive effects are not so grave as to warrant our writing an adverse report.

Basis for Corporation approval, April 27, 1976

The Chatham Trust Company, Chatham Township, New Jersey ("Chatham Trust"), a State nonmember insured bank with total resources of 

$ 6 2 ,9 8 9 ,0 0 0 and to ta l IPC deposits of 

$51,623,000, has applied, pursuant to section 18(c) 

and other provisions of the Federal Deposit Insurance Act, for the Corporation's prior written consent to purchase certain assets of and assume the 

liability to pay deposits made in State Bank of Chatham, Chatham, New Jersey ("State Bank"), a State 

nonmember insured bank with total resources of 

$1 2 ,1 47 ,0 0 0 and to ta l IPC deposits of 

$10,138,000. The proposal does not include the 

acquisition of State Bank's fixed assets and no 

branches are to be established by Chatham Trust as a 

result of the proposed transaction.

The Corporation, upon the request of the Commissioner of Banking for the State of New Jersey, 

has heretofore advised the Attorney General, the 

Board of Governors of the Federal Reserve System, 

and the Comptroller of the Currency of the existence of an emergency requiring expeditious action 

pursuant to paragraph 6 of section 18(c) of the Federal Deposit Insurance Act. The publication required by the Bank Merger Act has been completed.

Competition. Chatham Trust operates its main 

office in Chatham Township and three branches in 

Chatham Borough, all in Morris County which is

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68 FEDERAL DEPOSIT INSURANCE CORPORATION

located in northeastern New Jersey approximately

13 road-miles west of Newark and 23 road-miles 

west of lower Manhattan. Chatham Trust was the 

75th largest commercial bank in New Jersey as of 

June 30, 1975, with 0.26 percent of the total commercial bank deposits. State Bank has its main office 

in Chatham Borough and one branch in Livingston, 

in Essex County, 3 miles north of the main office.

Existing competition between the proponents 

would be eliminated by the transaction; but, in its 

present precarious financial condition, State Bank 

cannot be considered a significant competitor. 

Following consummation of the proposal, Chatham 

Trust would be the only commercial bank represented in Chatham Borough; however, a number 

of commercial banking offices exist within a distance of 1 to 2 miles from the Chatham Borough 

branches of Chatham Trust. In addition, as a result 

of the proposal, State Bank's home office will be 

eliminated, thereby removing the community's 

current home office protection and opening it to de

novo branching.

The primary trade area of both proponents comprises those portions of southeastern Morris County, southwestern Essex County, and northern Union 

County that are situated within a 5-mile radius of 

Chatham Borough. Largely urbanized and containing an estimated 100,000 inhabitants, this area is 

served by 19 commercial banks presently maintaining a total of 48 offices therein. Of the I PC deposits 

held by area offices of such banks, as of June 30,

1975, Chatham Trust held 9.2 percent, the 5th largest share, and State Bank held 1.6 percent, the 13th 

largest share. The resultant bank would hold the 

fourth largest share, 10.8 percent, of area commercial bank IPC deposits. If consideration is given to 

the entire Newark SMSA, the resulting institution 

would control only 1.1 percent of the total commercial bank deposits. This would represent the 16th 

largest share of the 56 commercial banking organizations that would remain in that area. Therefore, it is 

apparent that the proposed transaction would have 

no significant effect on the structure of commercial 

banking in any relevant area.

Under these circumstances, the Board of Directors has concluded that the proposed transaction 

would not, in any section of the country, substantially lessen competition, tend to create a monopoly, or in any other manner be in restraint of trade.

Financial and Managerial Resources; Future

Prospects. Financial resources of State Bank are 

inadequate and its future viability is in grave doubt. 

Chatham Trust has a sound asset structure and satisfactory management. Prospects for the resulting 

bank are satisfactory.

Convenience and Needs o f the Com m unity to be

Served. Consummation of the proposal would preclude any interruption of banking services for the 

clientele of State Bank. These individuals should 

also benefit from the resulting larger, sound institution.

Based on the foregoing, the Board of Directors 

has concluded that approval of the application is 

warranted.

Resources

(in

thousands

of dollars)

Banking

offices in

operation

Before A fter

Branch Banking and

T ru st C o m p an y

Wilson, North Carolina

441,029 74 75

to merge w ith

T he Bank o f M atthew s

Matthews

6,885 1

Summary report by Attorney General, 

December 8, 1975

The main offices of the merging banks are 196 

miles apart. Applicant, however, has four branch 

offices at Charlotte, which is about 10 miles from 

Matthews. Applicant draws IPC deposits totaling 

$290,699 and loans totaling $234,547 from the 

service area of Bank, and the latter has I PC deposits 

of $5,827 and loans of $1,226 drawn from the service area of Applicant's Charlotte offices. Thus, it is 

likely that the proposed merger would eliminate 

some existing competition in the CharlotteMatthews area.

Both Charlotte and Matthews are in Mecklenburg 

County which has a total of 16 banks operating 124 

branch offices. As of June 30, 1974, Applicant controlled about 2 percent of total county deposits and 

Bank controlled some 2.1 percent of the deposits. 

The largest bank in the county, North Carolina 

National, held about 50 percent of these deposits as 

of that date. Thus, if the proposed merger is consummated, it would slightly increase concentration 

among commercial banking institutions in Mecklenburg C ou n ty, particularly in the CharlotteMatthews area of the county.

North Carolina law permits statewide branching. 

Applicant could, therefore, branch denovo into the 

Matthews area, but is probably not likely to do so 

since it already operates four branches in Charlotte 

which is close to Matthews and since Matthews is 

such a small town. Accordingly, the proposed acquisition would not have important anticompetitive 

consequences insofar as potential competition is 

concerned.

In sum, we conclude that the proposed acquisition would have some adverse effect upon competition.

Basis for Corporation approval, May 4, 1976

Branch Banking and Trust Company, Wilson, 

North Carolina ("Branch Bank"), an insured State 

nonm em ber bank w ith to ta l resources of

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BANK ABSORPTIONS APPROVED BY THE CORPORATION 69

$ 441,0 2 9 ,0 0 0 and to ta l IPC deposits of 

$325,920,000, has filed an application, pursuant to 

section 18(c) and other provisions of the Federal 

Deposit Insurance Act, seeking the Corporation's 

prior written consent to merge under its charter and 

title with The Bank of Matthews, Matthews, North 

Carolina ("Matthews Bank"), an insured State nonmember bank with total resources of $6,885,000 

and total IPC deposits of $5,982,000. As an incident 

to the merger, the sole office of the Matthews Bank 

would be established as a branch of the resulting 

bank and 230 shares of the Matthews Bank's $50 par 

value preferred stock would be retired.

Competition. Branch Bank is the sixth largest 

commercial bank and the seventh largest banking 

organization in the State of North Carolina, with 2.9 

percent of the total IPC deposits held by commercial banks in the State. It operates 74 offices 

throughout North Carolina, with the majority located in the eastern half of the State.

Matthews Bank has its sole office in the town of 

Matthews and is located approximately 10 miles 

southeast of Charlotte, the largest city and leading 

trade and distribution center in North Carolina. 

Matthews is a local retail center with a large number 

of its residents commuting to Charlotte for employment. Given this commutation pattern, the market 

principally affected by this transaction is delineated 

as that area encompassed within a 15-mile radius of 

Matthews, thereby including the city of Charlotte.

Branch Bank operates four offices in Charlotte. 

However, there is no significant direct competition 

between the proponents. A total of 15 commercial 

banks operate 147 offices within the trade area and 

there are numerous alternative banking offices located in the intervening area between the proponent 

banks. Branch Bank holds 0.5 percent of the market's commercial bank IPC deposits and Matthews 

Bank holds 0.4 percent. Upon consummation of the 

merger, the resultant bank would hold only 0.9 

percent of the IPC deposits held by all commercial 

banks, operating in the trade area, thereby maintaining Branch Bank's 11 th place ranking in the market. 

The major shares of the market, 53.0, 14.1, and 13.8 

percent, are held by the second, first, and third largest of North Carolina's banking organizations, 

respectively. Thus, although some existing competition would be eliminated, the proposed merger 

would have scant competitive significance in view of 

the small market shares held by the proponents, the 

concentration of deposits held by the State's three 

largest banks, and the many convenient alternatives 

for banking services located in the relevant area. The 

proposed merger would not result in the elimination 

of any significant potential competition between 

the banks involved. Branch Bank and Matthews 

Bank have such small shares within the market area, 

and there are so many other alternatives in the market capable of de novo expansion, that the elimination of any competition that could develop in the 

future between the two banks is not considered 

significant.

For the reasons stated, the Board of Directors is 

of the opinion that the proposed merger would not, 

in any section of the country, substantially lessen 

competition, tend to create a monopoly, or in any 

other manner be in restraint of trade.

Financial and Managerial Resources; Future

Prospects. The financial resources of Branch Bank 

and Matthews Bank are adequate. Managerial resources of Branch Bank are satisfactory. Future 

prospects for the resultant bank are favorable.

Convenience and Needs of the Community to be

Served. The merger would substitute an office of a 

major bank for a small unit bank. This would result 

in the provision of a full range of banking and trust 

services to Matthews Bank's present customers and 

the introduction of a more aggressive management. 

Operating with a greatly increased credit capability 

and offering the specialized loan and trust services 

of one of the State's major banks, this management 

should improve banking service in the local market.

Based on the foregoing, the Board of Directors 

has concluded that approval of the application is 

warranted.

Resources

(in

thousands

of dollars)

Banking

offices in

operation

Before A fter

B ank o f V irg in ia-S o u th w es t

Bristol, Virginia

to merge with

76,939 11 16

B ank o f V irg in ia-G ala x

Galax

and

30,890 2

B ank o f V irgin ia-P u laski

Pulaski

22,114 3

Summary report by Attorney General, 

January 15, 1976

The merging banks are wholly owned subsidiaries of the same bank holding company. As such, 

their proposed merger is essentially a corporate 

reorganization and would have no effect on competition.

Basis for Corporation approval, May 4, 1976

Bank of Virginia-Southwest, Bristol, Virginia 

("Southwest"), an insured State nonmember bank 

with total resources of $76,939,000 and IPC deposits of $64,473,000, has filed applications, pursuant to section 18(c) and other provisions of the 

Federal Deposit Insurance Act, seeking the Corporation's prior written consent to merge with 

Bank of Virginia-Galax, Galax, Virginia ("BOVAGalax"), an insured State nonmember bank with 

total resources of $30,890,000 and IPC deposits of 

$26,152,000, and with Bank of Virginia-Pulaski, 

Pulaski, Virginia ("BOVA-Pulaski"), an insured

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70 FEDERAL DEPOSIT INSURANCE CORPORATION

State nonmember bank, having total resources of 

$22,114,000 and IPC deposits of $17,484,000.* 

The proposed transactions would be consummated 

under the charter and title of Southwest, and the 2 

offices of BOVA-Galax and the 3 offices of 

BOVA-Pulaski would be established as branches of 

Southwest, thereby increasing the total number of 

its offices to 16.

Competition. Each of the subject banks is wholly 

owned by Bank of Virginia Company, Richmond, 

Virginia ("Holding Company"), a multibank holding company. The sole purpose of the proposed 

transactions is to enable Holding Company to consolidate its operations in western Virginia. The three 

banks are located in separate service areas and are 

operated under substantially identical managerial 

guidelines established by Holding Company. The 

two proposed transactions, therefore, would not in 

themselves change the structure of commercial 

banking competition in the relevant areas.

Under these circumstances, the Board of Directors is of the opinion that the proposed mergers 

would not, in any section of the country, substantially lessen competition, tend to create a monopoly, or in any other manner be in restraint of trade.

Financial and Managerial Resources; Future

Prospects. Each of the proponents has adequate 

financial and managerial resources for the business it 

does, as would the resultant bank. Future prospects 

of the resultant bank are considered to be favorable.

Convenience and Needs o f the Com m unity to be

Served. These proposals represent an internal reorganization and no effect on the convenience and 

needs of the community is expected to result therefrom.

On the basis of the foregoing, the Board of Directors has concluded that approval of the applications 

is warranted.

R e s o u rc e s

(in

th o u s a n d s 

o f d o lla rs )

B a n k in g 

o ffic e s in 

o p e r a tio n

B e fo re A f t e r

Casco B ank & T ru s t

C o m p any 267,454 37 39

Portland, Maine

to merge w ith

Casco N o rth e rn N ational

B ank 5,530 2

Augusta

^Financial data are as of December 31, 1975. Data concerning Bank of Virginia-Southwest were adjusted in 

anticipation of that bank's imminent merger with Bank 

of Virginia-Scott, Weber City, Virginia, which had received FDIC approval on March 30, 1976.

Summary report by Attorney General,

April 23, 1976

The merging banks are both wholly owned subsidiaries of the same bank holding company. As 

such, their proposed merger is essentially a corporate reorganization and would have no effect on 

competition.

Basis for Corporation approval, May 18, 1976

Casco Bank & Trust Company, Portland, Maine 

("Casco"), an insured State nonmember bank with 

total resources of $267,454,000 and total IPC deposits of $196,246,000, has filed an application, 

pursuant to section 18(c) and other provisions of 

the Federal Deposit Insurance Act, seeking the 

Corporation's prior written consent to merge with 

Casco Northern National Bank, Augusta, Maine 

("Northern"), with total resources of $5,530,000 

and total IPC deposits of $2,620,000. The banks 

would merge under the charter and title of Casco. 

Following the merger, the 2 offices of Northern 

would be operated as branches of Casco, thereby 

increasing the number of its offices to 39.

Competition. Both Casco and Northern are subsidiaries of Casco-Northern Corporation, Portland, 

Maine ("Holding Company"), a multibank holding 

company. The sole purpose of the proposed transaction is to enable Holding Company to consolidate 

its operations in central and southern Maine. The 

two banks are located in separate service areas and 

are operated under substantially identical managerial policies established by Holding Company. The 

proposed transaction, therefore, would not in itself 

alter the structure of commercial banking competition in the relevant areas.

Under these circumstances, the Board of Directors is of the opinion that the proposed merger 

would not, in any section of the country, substantially lessen competition, tend to create a monopoly, or in any other manner be in restraint of trade.

Financial and Managerial Resources; Future

Prospects. Each proponent has adequate financial 

and managerial resources for the business it conducts as an independent institution, as would the 

resultant bank. Future prospects of the resultant 

bank are considered to be favorable.

Convenience and Needs o f the Com m unity to be

Served. The proposal represents an internal reorganization, and no effect on the convenience and needs 

of the community is expected to result therefrom.

On the basis of the foregoing, the Board of Directors has concluded that approval of the application 

is warranted.

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BANK ABSORPTIONS APPROVED BY THE CORPORATION 71

R e s o u rc e s

B a n k in g 

o ffic e s in

(in

th o u s a n d s 

o f d o lla rs )

o p e r a tio n

B e fo re A f t e r

Lloyds B ank C a lifo rn ia 1,308,087 95 99

Los Angeles, California

to purchase the assets and assume the deposit liabilities o f

First S tate B ank o f

N o rth e rn C a lifo rn ia 63,058 4

San Leandro

Approved under emergency provisions. No report requested from the Attorney General.

Basis for Corporation approval, May 22, 1976

Lloyds Bank California, Los Angeles, California, an insured State nonmember bank with 

total resources of $1,308,087,000, has applied, 

pursuant to section 18(c) of the Federal Deposit 

Insurance Act, for the Corporation's consent to 

purchase the assets of and assume liability to pay 

deposits made in First State Bank of Northern 

California, San Leandro, California, also an insured 

State nonmember bank, with total resources of 

$63,058,000. As an incident to the proposed 

transaction, the four offices of First State Bank of 

Northern California would become branches of 

Lloyds Bank California.

As of May 20, 1976, First State Bank of Northern California had deposits of some $54.3 million 

and operated four offices. On May 21, 1976, the 

Federal Deposit Insurance Corporation was 

appointed receiver of First State Bank of Northern 

California.

The Board of Directors finds that the failure of 

First State Bank of Northern California requires it 

to act immediately and thus waives publication of 

notice, dispenses with the solicitation of competitive reports from other agencies, and authorizes 

the transaction to be consummated immediately.

R e s o u rc e s

(in

th o u s a n d s 

o f d o lla rs )

B a n k in g 

o ffic e s in 

o p e r a tio n

B e fo re A f t e r

B u rlington B ank and

T ru st C o m p an y 48,014 3 6

Burlington, Iowa

to acquire the assets and assume

the deposit liabilities o f

N ew L o n d o n S tate Bank 7,060 1

New London

and

H illsbo ro Savings Bank 4,923 2

Hillsboro

Summary report by Attorney General,

March 25, 1976

Applicant's office is 20 miles distant from New 

London Bank's office. Other banks operate in the 

intervening area between these offices, and less 

than 2 percent of Applicant's deposit and loan 

accounts originate in New London Bank's service 

area. Thus, it would appear that a minimal amount 

of direct competition would be eliminated by the 

proposed merger.

The service areas of both banks lie in a fourcounty area known as Region XVI, the Southeast 

Iowa Region. If the proposed acquisition is approved, Applicant will then be the largest bank in 

Region XVI with 18 percent of total regional 

deposits. The second ranked bank, the First National Bank of Burlington, will have 16 percent of 

such deposits. Applicant currently has pending an 

application to acquire Hillsboro Savings Bank of 

Hillsboro, Iowa, which is also located in Region 

XVI. In our March 18, 1976 letter to you concerning the application regarding the Hillsboro acquisition, we pointed out that the proposed acquisition 

would give Applicant 16 percent of total deposits 

in Region XVI (not including the instant application) and we concluded that that proposed acquisition would result in the elimination of some direct 

and potential competition, and that its overall 

effect would be somewhat adverse.

Under Iowa law, banks can establish full service 

office facilities outside the municipal corporation 

or urban complex in which their principal office is 

located, provided these facilities are located in the 

same or in a contiguous county. Applicant and 

New London Bank are located in contiguous counties and thus Applicant could branch into the area 

served by New London Bank. Applicant is not 

likely to do so, however, since New London Bank 

is located in a town of only 1,877 inhabitants.

In sum, the proposed acquisition would eliminate a minimal degree of direct competition between the participants and would result in Applicant becoming the largest bank in its regional area. 

It would also eliminate the potential for increased 

competition which would result if Applicant established a banking facility in New London. Our overall view is that the proposed acquisition will have 

some adverse effect upon competition.

Summary report by Attorney General,

March 8, 1976

The main office of Hillsboro Bank is 37 miles 

distant from Applicant's office and its branch office is 32 miles distant therefrom. A survey of 

accounts discloses that Hillsboro Bank has a small 

number of deposits and loans in Applicant's service area. Thus, there is some direct competition 

which would be eliminated by the proposed merger.

The service areas of both banks lie in a fourcounty area known as Region XVI, the Southeast

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72 FEDERAL DEPOSIT INSURANCE CORPORATION

Iowa Region. If the proposed acquisition is approved, Applicant will then be the largest bank in 

Region XVI with 16 percent of total regional deposits. The second ranked bank, the First National 

Bank of Burlington, will have 15 percent of such 

deposits.

Under Iowa law, banks can establish full service 

office facilities outside the municipal corporation or 

urban complex in which their principal office is located provided these facilities are located in the 

same or in a contiguous county. Applicant and 

Hillsboro Bank are located in contiguous counties 

and thus Applicant could branch into the area 

served by Hillsboro Bank. Applicant is not likely 

to do so, however, since Hillsboro Bank is located 

in a town of only 218 inhabitants.

In sum, the proposed acquisition would eliminate a slight amount of direct competition between 

the participants and would result in Applicant becoming the largest bank in its regional area. It would 

also eliminate the potential for increased competition which would result if Applicant established a 

banking facility in Hillsboro. Overall, the proposed 

acquisition would thus have some adverse effect.

Basis for Corporation approval, June 3, 1976

Burlington Bank and Trust Company, Burlington, Iowa ("Burlington Bank"), an insured State 

nonm em ber bank w ith total resources of 

$48,01 4 ,0 0 0 and to ta l IPC deposits of 

$38,126,000, has applied, pursuant to section 

18(c) and other provisions of the Federal Deposit 

Insurance Act, for the Corporation's prior written 

consent to acquire New London State Bank, New 

London, Iowa ("New London Bank"), an insured 

State nonmember bank with total resources of 

$7,060,000 and total IPC deposits of $5,519,000, 

and Hillsboro Savings Bank, Hillsboro, Iowa 

("Hillsboro Bank"), an insured State nonmember 

bank having total resources of $4,923,000 and 

total IPC deposits of $4,158,000. The transactions 

would be effected under the charter and with the 

title of Burlington Bank and Trust Company. 

Following the mergers, the sole office of New 

London Bank and the two offices of Hillsboro Bank 

would be established as branches of the resultant 

bank, thereby increasing the number of its authorized offices to six.

Competition. Burlington Bank, operating three 

offices in Burlington, Des Moines County, is a subsidiary of Hawkeye Bancorporation ("Hawkeye"). 

Controlling 15 banks with aggregate IPC deposits of 

$361 million as of June 30, 1975, 3.7 percent of the 

State's total IPC deposits, Hawkeye is Iowa's third 

largest commercial banking organization.

New London Bank has its sole office in New 

London, a town in eastern Henry County. Hillsboro 

Bank has its main office in Hillsboro and its sole 

branch in Salem, both in southwestern Henry 

County.*

Des Moines and Henry are adjoining counties 

located in southeastern Iowa. The population of Des

Moines County, 46,982 in 1970, increased 5.3 percent during the 1960s, while that of Henry County, 

18,114, did not change significantly during the 

decade. The town of New London had a 1970 population of 1,900, representing a 12.2 percent increase 

since 1960. Hillsboro and Salem had populations of 

252 and 458 respectively. Burlington, with a 1970 

population of 32,366, is located on the Mississippi 

River some 160 road-miles southeast of Des Moines 

and 80 road-miles south of Davenport. Burlington 

contains significant industry and is the trading 

center for much of the surrounding agricultural 

area. The 1974 median household buying levels of 

Des Moines County ($11,568) and Henry County 

($11,117) closely approximate that of the State 

($1 1,577).

The market principally affected by these transactions is delineated as that area within a 20-mile 

radius of Mount Pleasant, the county seat of Henry 

County and a focal point of economic activity for 

residents of the county. This would include Henry 

County and portions of adjacent Washington, 

Louisa, Des Moines, Lee, Van Buren, and Jefferson 

Counties. Both New London Bank and Hillsboro 

Bank are located in this market. Burlington Bank's 

primary trade area is principally Des Moines County, and although there is some slight overlap with 

the Henry County bank market, Burlington Bank 

operates in a separate market from New London 

Bank and Hillsboro Bank.

A total of 12 banks operate 15 offices within the 

relevant market area. New London Bank holds 5.4 

percent of the market's IPC deposits and Hillsboro 

Bank holds 4.1 percent, representing the eighth and 

ninth largest banks in the market. Upon consummation of the proposals, the resultant bank would hold 

9.5 percent of such deposits, representing the fifth 

largest market share.

Existing competition between Hillsboro Bank 

and New London Bank is minimal, with the nearest 

offices of these banks being located approximately

20 road-miles apart. No subsidiary of Hawkeye is 

located in the relevant market. Burlington Bank is 

the nearest Hawkeye subsidiary to either New 

London Bank or Hillsboro Bank. Its offices are located some 20 road-miles from New London and 30 

road-miles from Hillsboro Bank's Salem branch.

An Iowa commercial bank may legally branch de

novo in its main office county and into all contiguous or cornering counties subject to main office 

and branch office protection. Neither New London 

Bank nor Hillsboro Bank has the managerial and 

financial resources to facilitate such expansion.

*Mr. E. A. Hayes has controlled Hillsboro Bank since 

1951, Mr. Donald J. Bell acquiring a substantial interest 

therein during 1973. Messrs. Hayes and Bell have controlled New London Bank since 1955. They also had 

been control owners of Burlington Bank for several years 

prior to its acquisition by Hawkeye in 1969, becoming 

at that time members of Hawkeye's board of directors. 

This relationship among the three proponent banks lends 

no persuasive weight to approval of the applications.

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BANK ABSORPTIONS APPROVED BY THE CORPORATION 73

Burlington Bank or Hawkeye ordinarily would be 

considered a likely de novo entrant into the relevant 

market. However, due to the restrictive branching 

laws and the apparent adequately banked condition 

of the market, such entry does not appear to be 

highly probable.

In its maximum potential market under State 

law—Des Moines, Lee, Henry, and Louisa Counties—the resultant bank would hold 12.1 percent of 

a relatively unconcentrated market; 9 other banks 

held IPC deposit shares ranging, on June 30, 1975, 

from 4.1 percent (held by a subsidiary of the 

State's largest banking organization) to 11.1 percent (held by a subsidiary of Iowa's second largest 

banking organization) with the remaining 33.5 

percent of such deposits shared by an additional

14 banking organizations.

Hawkeye's third largest share of Iowa's commercial bank IPC deposits on June 30, 1975, would be 

increased from 3.7 percent to 3.8 percent by Burlington Bank's acquisition of both New London 

Bank and Hillsboro Bank.

Based on the foregoing, the Board of Directors 

has concluded that the proposed transactions would 

not, in any section of the country, substantially 

lessen competition, tend to create a monopoly, or in 

any other manner be in restraint of trade.

Financial and Managerial Resources; Future

Prospects. All three proponents have satisfactory 

financial and managerial resources. With its capital 

structure supplemented to offset a reduction of 

capital funds resulting from consummation of the 

proposals, the resultant bank appears to have favorable future prospects.

Convenience and Needs o f the C om m unity to be

Served. Residents in the relevant market should 

benefit from the expanded services offered by one 

of the major subsidiaries of Hawkeye. Computerized recordkeeping and credit card facilities would 

become available to the former customers of Hillsboro Bank and New London Bank. Trust services 

would be offered to Hillsboro Bank's customers for 

the first time.

On the basis of the information indicated, the 

Board of Directors is of the opinion that approval of 

the applications is warranted.

R e s o u rc e s

(in

B a n k in g 

o ffic e s in 

o p e r a tio n

th o u s a n d s 

o f d o lla rs ) B e fo re A f t e r

C o bb Exchange B ank

Marietta, Georgia 

(change title to First 

Bank & Trust Co.)

38,562 4 10

to consolidate w ith

First S tate B ank o f C o bb

Cou n ty

Smyrna

41,466 6

Summary report by Attorney General, 

November 25, 1975

The proposed merger would combine the third 

and fourth largest commercial banks in Cobb County into what would become the second largest bank 

in the county with approximately 25 percent of 

total county deposits. First National Bank of Cobb 

County, with about 30 percent of the deposits, 

would remain the largest bank. The third and fourth 

ranking banks in the county would then have 14 

percent and 10 percent of total county deposits, 

respectively.

Georgia banking law permits branching only in a 

county in which a bank is located. Thus, the large 

commercial banks in Atlanta are precluded from 

establishing branches in Cobb County. Several 

Atlanta banks have, however, established banks in 

the portion of Fulton County immediately adjacent 

to Cobb County. In addition, the Atlanta banks 

have made some competitive inroads upon the Cobb 

County banks by virtue of the fact that upwards of 

one-third of the Cobb County residents work in the 

greater Atlanta metropolitan area and, presumably, 

at least some of the commuters bank in the area 

where they work.

It appears that Cobb County will continue to 

experience considerable economic growth and may 

well need additional banking services. Inasmuch as 

State banking law permits only county branching, 

Applicant and Bank would be significant potential 

competitors in opening new branches to meet 

expanding banking needs of the county. Thus, the 

proposed acquisition would eliminate such potential competition.

In sum, we conclude that the proposed acquisition would eliminate both actual and potential 

competition between Applicant and Bank to a 

significant extent, would importantly increase the 

amount of concentration in the Cobb County banking market, and accordingly, would produce substantially adverse competitive consequences.

Basis for Corporation approval, June 16, 1976

Cobb Exchange Bank, Marietta, Georgia ("E xchange Bank"), an insured State nonmember bank 

with total resources of $38,562,000 and total IPC 

deposits of $27,691,000, has applied, pursuant to

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Federal Reserve Bank of St. Louis
74 FEDERAL DEPOSIT INSURANCE CORPORATION

section 18(c) and other provisions of the Federal 

Deposit Insurance Act, for the Corporation's prior 

consent to consolidate with First State Bank of 

Cobb County, Smyrna, Georgia ("State Bank"), an 

insured State nonmember bank with total resources of $41,466,000 and total IPC deposits of 

$30,398,000. The transaction would be effected 

under a new State charter and with the title "First 

Bank & Trust Co.” As an incident to the consolidation, the 6 offices of State Bank would become 

branches of the resulting bank, increasing the number of its approved offices to 11.

Competition. Exchange Bank operates its main 

office and three branches in central and northwestern Cobb County and has the necessary approvals to establish an additional office in the 

county. State Bank has its main office and five 

branches in southeastern Cobb County in areas adjacent to the city of Atlanta and Fulton County.

Located in northwestern Georgia, Cobb County 

had a 1970 population of 196,793, representing a

72.4 percent increase from 1960. The county's 

economy is closely tied to that of nearby Atlanta 

and Fulton County. Although the northern portion 

of the county remains largely rural, an influx of 

industrial and commercial activity has occurred as a 

result of the proliferation of highways providing 

easy access to Atlanta. In addition, such access has 

enabled a commutation pattern to develop and 

approximately 38.5 percent of the county's work 

force commutes to Atlanta and its vicinity.

There is currently little direct competition between the proponents, although there is some overlap between their service areas. However, because of 

the growth pattern in Cobb County, a potential for 

increased competition between the proponents does 

exist. Georgia banking law permits only county 

branching. Within Cobb County, State Bank and 

Exchange Bank are the third and fourth largest 

banks, controlling 11.9 and 11.7 percent of the total 

commercial bank IPC deposits, respectively. Upon 

consummation of the consolidation, the resulting 

bank would be the second largest of the eight remaining banks, holding 23.6 percent of the total 

commercial bank IPC deposits. This would result in 

two banks controlling 52.5 percent of the county's 

total commercial bank IPC deposits, and three 

banks controlling 66.8 percent of such deposits. 

Such a high level of concentration would ordinarily 

require an adverse determination regarding the 

proposal; however, the influence of the larger A tlanta banks must be considered in viewing the competitive environment in which the proposal is made.

Intense competition exists in Cobb County 

emanating from the Atlanta-based commercial 

banks, several of which are among the State's largest. These banks have branches located along the 

Cobb County-Fulton County border and are within State Bank's service area. Because of this and the 

commutation pattern in Cobb County, the relevant 

geographic market for purposes of determining the

competitive effects incident to the proposal includes both Cobb County and Fulton County. In 

this market, 5 of 23 commercial banking organizations controlled 87.5 percent of the IPC deposits 

held by such banks on June 30, 1975. Exchange 

Bank and State Bank each held only 0.9 percent of 

such deposits and the resulting bank would hold a 

mere 1.8 percent market share. Considering the relative sizes of the Atlanta-based competitors, commuting patterns and ease of access, and the presence 

of common communication media, the proposed 

consolidation is seen as having little competitive 

effect on the commercial banking structure of the 

market. Likewise, although a potential exists for 

increased competition between the proponents 

through future de novo branching, elimination of 

such future competition is not regarded as serious 

because of the dominance of the Atlanta-based 

banking organizations.

Under the circumstances, the Board of Directors 

is of the opinion that the proposal would not, in any 

section of the country, substantially lessen competition, tend to create a monopoly, or in any other 

manner be in restraint of trade.

Financial and Managerial Resources; Future

Prospects. Each proponent generally has satisfactory financial and managerial resources, as would 

the resulting bank. Future prospects of the combined institution appear favorable.

Convenience and Needs o f the Com m unity to be

Served. Benefits accruing to the community will be 

a significantly higher lending lim it and the availability of additional banking services to be offered 

by the combined institution.

Based on the foregoing, the Board of Directors 

has concluded that approval of the application is 

warranted.

R e so u rce s

(in

th o u s a n d s 

o f d o lla rs )

B a n k ing 

o ffic e s in 

o p e r a tio n

B e fo re A f t e r

W estern B ank and T ru st

C o m p an y 30,420 4 6

West Springfield,

Massachusetts

(change title to

Park West Bank

and Trust Company)

to merge w ith

The Park N atio n al Bank o f

H o ly o k e 11,986 2

Holyoke

Summary report by Attorney General,

April 29, 1976

Almost all of the banking activity of Applicant 

and Bank is confined to Hampden County. The

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Federal Reserve Bank of St. Louis
BANK ABSORPTIONS APPROVED BY THE CORPORATION 75

primary service area for Applicant is composed of 

the contiguous communities of West Springfield, 

Springfield, and Agawam, while the primary service 

area for Bank is Holyoke, South Hadley, and Chicopee. The primary service areas of the two banks are 

contiguous. Applicant's Riverdale Street branch is 

within 6 miles of both offices of Bank. Data supplied by Applicant suggests that there is some degree 

of competitive overlap. Approximately 4.3 percent 

of Applicant's deposits and 6.29 percent of its loans 

are derived from the primary service area of Bank. 

Similarly, Bank receives 3.06 percent of its deposits 

and 4.58 percent of its loans from the primary service area of Applicant. Thus, it appears that the proposed acquisition will eliminate some direct competition between the banks.

There are 19 commercial and savings institutions 

serving Hampden County. Applicant is the fifth largest commercial bank in the county, controlling 3.77 

percent of the total deposits, and 4 of the 82 commercial banking offices. Bank, as the smallest 

commercial institution in the county, controls 1.4 

percent of the deposits and 2 of the 82 commercial 

banking offices in the county. Consummation of the 

proposed merger will give the resulting institution 

total deposits and loans of 5.0 percent and 5.2 percent, respectively, and will effectively increase 

Applicant's market share by 1.4 percent, making it 

the fourth largest institution in the county. Accordingly, the proposed acquisition would tend to 

increase concentration in banking in Hampden 

County slightly.

Massachusetts banking law permits both Applicant and Bank to freely enter the primary service 

area of each other, either by branching or the establishment of a de novo bank. Thus, the proposed 

acquisition will remove the likelihood of potential 

competition between Applicant and Bank.

In sum, it appears that overall the proposed 

acquisition will have slightly adverse competitive 

consequences.

Basis for Corporation approval, June 16, 1976

Western Bank and Trust Company, West Springfield, Massachusetts ("Western"), an insured State 

nonm em ber bank w ith total resources of 

$ 3 0 ,420,000 and to ta l IPC deposits of 

$22,565,000, has applied, pursuant to section 

18(c) and other provisions of the Federal Deposit 

Insurance Act, for the Corporation's prior consent 

to merge with The Park National Bank of Holyoke, Holyoke, Massachusetts ("Park"), with total 

resources of $11,986,000 and total IPC deposits of 

$8,041,000, under the charter of Western and with 

the title "Park West Bank and Trust Company." 

As an incident to the merger, the two offices of 

Park would be established as branches of the resultant bank, thereby increasing to six the total number 

of its offices.

Competition. Western operates four offices in 

the Hampden County area of southwestern Massachusetts, with its main office and two branches located in West Springfield and one branch located in 

the Feeding Hills section of Agawam, approximately 5 road-miles southwest of its main office. 

Western's primary trade area consists of West 

Springfield and surrounding communities, including 

Westfield (7 miles to the west) Chicopee (4 miles to 

the northeast) Springfield (2 miles to the east) and 

Agawam (6 miles to the south). Western had the 

fifth largest share, 4.3 percent, of the IPC deposits 

held on June 30, 1975, by offices of the six commercial banks operating in the area.

Park has its two offices in Holyoke, in Hampden 

County, approximately 8 road-miles north of West 

Springfield. Park's primary trade area includes 

Holyoke, Chicopee (5 miles to the southeast), Easthampton (5 miles to the northwest), and South 

Hadley (4 miles to the northeast). Eight commercial 

banks operate within this area. On June 30, 1975, 

Park had the sixth largest share, 7.5 percent, of the 

area commercial bank IPC deposits; 72.4 percent of 

such deposits were held by the three largest commercial bank organizations in Massachusetts.

The proponents are located in an area of mixed 

economy. The cities of Springfield, Chicopee, and 

Holyoke are engaged in diversified manufacturing, 

commerce, education, and public administration. 

The town of West Springfield and the city of Westfield are mainly residential communities, as are the 

neighboring towns. The area is experiencing an 

economic decline. The unemployment rate in the 

Springfield-Chicopee-Holyoke SMSA was 11.1 

percent at year-end 1975; in Holyoke it was 13.9 

percent. The 1974 median effective household buying level of Hampden County ($11,846) was 5.5 

percent below that of the State.

The closest branches of the proponents are located approximately 5 road-miles apart. There is 

some overlapping of trade areas, largely in the 

Chicopee area, and the proposed merger would 

eliminate some existing competition. However, in 

view of the modest size of both banks, this result of 

the transaction would have no meaningful significance. Although Massachusetts law permits both 

proponents to expand de novo throughout Hampden County, there appears to be minimal potential 

for competition to increase between them through 

their de novo branching in the future. Western 

would not likely find de novo entry into the city of 

Holyoke feasible in view of the declining population 

trend and high unemployment rate in this area. 

Park, in business since 1892, is not an aggressively 

operated bank and has experienced a downward 

deposit trend since mid-1974. With limited managerial and financial resources, it is not likely to 

consider de novo expansion in the foreseeable 

future.

Following consummation of the merger, the 

resultant bank will hold the fifth largest share, or 5.1 

percent, of the IPC deposits held on June 30, 1975, 

by area offices of the nine commercial banks operDigitized for FRASER 

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Federal Reserve Bank of St. Louis
76 FEDERAL DEPOSIT INSURANCE CORPORATION

ating within the proponents' combined trade area. If 

consideration is given to the entire SpringfieldChicopee-Holyoke SMSA, the resulting institution 

would control only 4.3 percent of the commercial 

bank IPC deposits. This would represent the sixth 

largest share of the 11 commercial banks that would 

remain in the SMSA.

Under these circumstances, the Board of Directors has concluded that the proposed transaction 

would not, in any section of the country, substantially lessen competition, tend to create a monopoly, or in any other manner be in restraint of trade.

Financial and Managerial Resources; Future

Prospects. Both Western and Park have satisfactory 

managerial and financial resources for the business 

they do at the present time. Such resources of the 

resultant bank appear satisfactory and its future 

prospects are favorable.

Convenience and Needs of the Community to be

Served. The merger would have minimal effect on 

the convenience and needs of the relevant market. 

Although an increase in lending lim it would be 

provided for the resultant bank and trust services 

would be available for the first time at the offices 

of Park, there are a number of substantially larger 

competitors in the Springfield-Chicopee-Holyoke 

market whose services lim it the significance of 

these improvements in the proponents' competitive stature.

F o r the foregoing reasons, the Board o f D irectors has concluded th a t approval o f the app lication

is w arra n te d .

Resources

(in

thousands

of dollars)

Bank ing

offices in

operation

Before A fter

C o lon ial S tate B ank

Thiensville, Wisconsin

34,884 1 2

to acquire certain assets and assume the deposit liabilities o f

S e cu rity B ank on C a p ito l

Wauwatosa

6,231 1

Approved under emergency provisions. No report requested from the Attorney General.

Basis for Corporation approval, June 21, 1976

Colonial State Bank, Thiensville, Wisconsin, an 

insured State nonmember bank with total resources of $34,884,000, has applied, pursuant to 

section 18(c) and other provisions of the Federal 

Deposit Insurance Act, for the Corporation's prior 

approval to acquire certain assets of and assume 

the liability to pay deposits made in Security Bank 

on Capitol, Wauwatosa, Wisconsin, an insured 

State nonmember bank with total resources of 

$6,231,000. As an incident to the proposed transaction, the sole office of Security Bank on Capitol 

would become a branch of the Colonial State 

Bank.

For reasons related to the condition of Security 

Bank on Capitol and the fact the Commissioner of 

Banking of the State of Wisconsin has seen fit to 

invoke the “ emergency branching" section of the 

Wisconsin Banking Laws to permit the proposed 

transaction, the Board of Directors finds that the 

Corporation must act immediately in order to prevent the probable failure of Security Bank on 

Capitol and thus waives publication of notice, dispenses with the solicitation of competitive reports 

from other agencies, and authorizes the transaction to be consummated immediately, upon 

proper approval of the transaction by the shareholders of Colonial State Bank and Security Bank 

on Capitol.

Resources

(in

thousands

of dollars)

Banking

offices in

operation

Before A fter

T h e M itsubishi B ank of

C a lifo rn ia

Los Angeles, California

139,148 4 8

to merge w ith

Hacienda Bank

La Habra

56,871 4

Summary report by Attorney General, 

February 9, 1976

This merger involves two fairly small banks relative to the size of competing banks in the State. 

There are no deposit or loan accounts with both 

banks of the same individuals, partnerships, or corporations. In addition, there are no deposits or loans 

of Applicant or Bank which originate in the other's 

service area. In view of these factors and the presence of intervening banking alternatives, the proposed merger will not eliminate any direct competition. In addition, the proposed acquisition will not 

materially increase concentration in banking either 

on a statewide or a local basis. California law permits 

Applicant and Bank to branch de novo into each 

other's service area. Thus, the proposed acquisition 

removes this theoretical possibility. However, there 

are numerous much larger commercial banks in the 

State much better positioned to branch into the 

areas served by the merger parties should those areas 

prove to be economically attractive.

In short, the proposed acquisition will not adversely affect existing competition and will not 

materially increase concentration, but it will produce a slight lessening of potential competition.

Basis for Corporation approval, June 25, 1976

The Mitsubishi Bank of California, Los Angeles,

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Federal Reserve Bank of St. Louis
BANK ABSORPTIONS APPROVED BY THE CORPORATION 77

California ("Mitsubishi"), a State nonmember insured bank with total resources of $139,148,000 

and total IPC deposits of $95,096,000 on December 31, 1975, has applied, pursuant to section 

18(c) and other provisions of the Federal Deposit 

Insurance Act, for the Corporation's prior consent 

to merge with Hacienda Bank, La Habra, California, a State nonmember insured bank with total 

resources of $56,871,000 and total IPC deposits of 

$45,650,000 at year-end 1975, under the charter 

of and with the title "The Mitsubishi Bank of California." Incident to the merger, the four existing 

offices and one approved but unopened office of 

Hacienda Bank would become branches of the 

resultant bank, thereby increasing the total number of its authorized offices to nine.

Competition. Mitsubishi operates its main office 

and two branches in the metropolitan Los Angeles 

area, with the main office located in downtown Los 

Angeles, one branch located 1 mile east of the main 

office, and a second branch located in Gardena, 13 

miles south. A fourth office is operated in San Francisco. Mitsubishi, a wholly owned subsidiary of The 

Mitsubishi Bank, Ltd., Tokyo, Japan, a registered 

one-bank holding company, is 38th largest of California's commercial banks, with 0.13 percent of the 

total deposits held by all such banks within the 

State.

Hacienda Bank operates its main office in La 

Habra, approximately 18 road-miles east of Los 

Angeles. I n addition, it operates three branches, one 

each in La Mirada (5 road-miles south of the main 

office), Garden Grove (13 road-miles south), and 

West Covina (12 road-miles north). Hacienda Bank 

also has approval to establish one additional branch 

in Placentia, about 1 1 road-miles southeast of the 

main office.

Hacienda Bank operates in three separate trade 

areas: the La Habra-La Mirada market, the Garden 

Grove market, and the West Covina market. The 

effects of the proposed merger would be most direct 

and immediate within these markets. In each of 

these markets, Hacienda Bank is competing with 

four of the five largest commercial banks in the 

State. Only in the La Habra-La Mirada market does 

Hacienda Bank have more than a modest share of 

area commercial bank IPC deposits. In this market, 

Hacienda has 25.6 percent, or the second largest 

share, of the IPC deposits controlled by area offices 

of the seven commercial banks operating in the market.

Mitsubishi does not have an office in any of 

Hacienda Bank's primary markets. Its closest office, 

in Gardena, is located approximately 17 road-miles 

west of Hacienda Bank's La Mirada office, with 

many commercial bank offices intervening. Therefore, there is little direct competition between the 

proponents. If consideration is given to the Los 

Angeles-Long Beach SMSA, in which Mitsubishi 

operates three offices and Hacienda Bank operates 

two, the resulting institution would control only

0.36 percent, or the 17th largest share, of the total 

IPC deposits in the area. Thus, it is apparent that the 

proposed transaction would have no significant 

effect on the structure of commercial banking in 

any relevant area.

Mitsubishi has specialized in commercial and 

international banking, establishing its offices in 

areas where such business may best be developed. 

Hacienda Bank, in contrast, has concentrated on 

retail banking and its primary trade areas are residential communities. Therefore, although California law permits statewide branching, neither 

bank would be likely in the near future to enter de

novo the primary trade area of the other. Were such 

expansion to occur, with the existing domination by 

the major statewide banks, it is doubtful that any 

significant competition between the banks would 

result.

The Board of Directors, therefore, has concluded 

that the proposed merger would not, in any section 

of the country, substantially lessen competition, 

tend to create a monopoly, or in any other manner 

be in restraint of trade.

Financial and Managerial Resources; Future

Prospects. Each proponent has satisfactory financial 

and managerial resources and favorable future prospects, as would the resultant bank.

Convenience and Needs o f the Com m unity to be

Served. No significant enhancement of public convenience is likely to result from the proposed 

merger. The resulting institution would offer no 

services that are not currently available from alternative sources in the relevant areas.

Based on the foregoing, the Board of Directors 

has concluded that approval of the application is 

warranted.

R e so u rce s

(in

th o u s a n d s 

o f d o lla rs )

B a n k in g 

o ffic e s in 

o p e r a tio n

B e fo re A f t e r

Bangor Savings Bank

Bangor, Maine

154,768 4 7

to merge w ith

Piscataquis Savings Bank

Dover-Foxcroft

21,583 3

Summary report by Attorney General,

April 29, 1976

All of Applicant's offices are more than 25 miles 

from any of Bank's offices. Nevertheless, because 

Bangor is the employment and shopping center of 

the region, there is some competitive overlap between Applicant and Bank. Bank has virtually no 

loans outstanding in Applicant's area, derives no 

demand deposits from it, and holds only about $1.5 

million in savings deposits for people there. Applicant has less than $1 million in loans, holds about

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Federal Reserve Bank of St. Louis
78 FEDERAL DEPOSIT INSURANCE CORPORATION

$9.5 million in demand deposits, and has about $1.5 

million in savings deposits that derive from Bank's 

service area. Thus, the proposed merger will eliminate direct competition to some degree, albeit competition which runs almost entirely in the direction 

of Applicant.

Although Applicant's home office is the largest 

office in Bangor (deposits $110 million), it is not 

the largest financial institution doing business in the 

city, or even the largest financial institution headquartered there. Merrill Trust Company (total deposits of $163 million), which has 24 branches 

spread around the neighboring counties, has its 

home office in Bangor (total deposits of $68 million). Merrill Trust belongs to the fourth largest 

holding company in the State (total statewide deposits of $240 million). The first, second, third, and 

fifth largest holding companies in Maine also have 

offices in Bangor as does the seventh largest holding 

company, a one-bank affair (deposits $45 million, 

home office deposits $37 million).

Bank is a much smaller organization (deposits 

$20 million), headquartered in Dover-Foxcroft 

(home office deposits $15 million). It has three 

offices, one of which is only 6 months old. Although Bank is the largest bank in Dover-Foxcroft, 

it faces substantial competition. Merrill Trust has 

an office in the town (deposits $6 million); there 

are six more bank offices within a radius of 15 

miles that belong to vigorous organizations. Bank's 

other well-established branch also enjoys a similar 

degree of competition, while its 6-month old 

branch faces an entrenched competitor owned by 

a large holding company. Accordingly, although 

the proposed merger will increase concentration to 

some extent, the existence of numerous banking 

alternatives in the area serves as a mitigating factor.

Basis for Corporation approval, July 6, 1976

Bangor Savings Bank, Bangor, Maine ("Bangor 

Savings"), an insured mutual savings bank with total 

resources of $154,768,000 and IPC deposits of 

$142,250,000, has applied, pursuant to section 

18(c) and other provisions of the Federal Deposit 

Insurance Act, for the Corporation's prior consent 

to merge with Piscataquis Savings Bank, DoverFoxcroft, Maine ("PSB"), an insured mutual savings bank with total resources of $21,583,000 and 

IPC deposits of $19,135,000. The banks would 

merge under the charter and title of Bangor Savings. As an incident to the merger, the three offices of PSB would become branches of the resulting bank, increasing the number of its approved 

offices to eight.

Competition. Bangor Savings and PSB are savings banks operating in the State of Maine. The 

proponents are thrift institutions and, as such, are 

considered interchangeable alternatives to savings 

and loan associations for th rift deposits and residential mortgage loans. Ordinarily, thrift institution banking, as exemplified by savings banks and

savings and loan associations, would be considered 

the decisive line of commerce for determining the 

competitive implications of the proposed merger. 

However, Maine th rift institutions are now permitted to accept personal demand deposits, to 

allow the withdrawal by negotiable instruments 

from accounts on which interest is paid, to grant 

or participate in certain types of commercial loans, 

and to issue credit through the use of credit cards. 

As a result of these recent changes, the traditional 

competitive barriers separating thrift institutions 

and commercial banks have diminished; therefore, 

the competitive analysis of this case will view the 

market areas both in terms of thrift institutions 

separately and combined with commercial banks.*

Bangor Savings operates four offices: two in 

Bangor in southern Penobscot County and one 

each in Belfast, Waldo County, and Ellsworth, 

Hancock County. Additionally, it has an approved 

but unopened branch in Orono, Penobscot County. Bangor Savings is the largest of the six thrift 

institutions operating in its primary trade area, 

Waldo and Hancock Counties and southern Penobscot County, controlling 49.3 percent of the area 

thrift institution IPC deposits as of June 30, 1975. 

When commercial banks are considered, this market share is reduced to 25.5 percent.

PSB operates its main office in Dover-Foxcroft 

and one branch in Greenville, both in Piscataquis 

County, and one branch in Millinocket in northcentral Penobscot County. Its primary trade area 

comprises southern Piscataquis County, several 

adjoining towns in Penobscot County south of 

Dover-Foxcroft, and the Millinocket area of 

north-central Penobscot County. Within this market area, PSB controlled 93.6 percent of the IPC 

deposits held by the two thrift institutions operating in its market area as of June 30, 1975. However, it controlled only 28.3 percent of the combined commercial bank-thrift institution IPC 

deposits.

The proponents operate in adjoining, yet essentially separate and distinct markets. Their nearest 

offices are separated by approximately 36 roadmiles through a predominantly rural area. Therefore, little existing competition would be eliminated by the proposal.

Although both institutions may, under Maine 

law, merge or expand de novo throughout the 

State, neither would be likely to find economically 

feasible de novo entry into the primary trade area

*The Supreme Court stated in United States v. Connecticut National Bank, 418 U.S. 656 (1974), that in Connecticut for mergers between commercial banks the line of 

commerce is limited to commercial banks rather than 

both savings banks and commercial banks. However, due 

to the increased parity between th rift institutions and 

commercial banks in the State of Maine, the Board of 

Directors has determined that commercial realities require a viewing of a combined commercial bank-thrift 

institution market, as well as the traditional separate 

market, when determining the competitive impact of 

any proposed merger in Maine.

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Federal Reserve Bank of St. Louis
BANK ABSORPTIONS APPROVED BY THE CORPORATION 79

of the other. PSB's financial resources are limited 

and it is unlikely that it would undertake expansion in view of the strong competition it would 

encounter. Bangor Savings has adequate financial 

resources; however, because of the unfavorable 

income levels of Piscataquis County and the relatively small and declining population, PSB's market has limited potential for further expansion of 

banking offices.

Consummation of the proposal will result in the 

combination of the leading institutions in their 

respective markets, with the resultant bank controlling 52.3 percent of the th rift institution IPC 

deposits and 25.8 percent of the commercial 

bank-thrift institution IPC deposits, based on June 

30, 1975 deposit figures, in its combined market 

area. However, recent changes in State law permit 

statewide branching. Maine Savings Bank, the 

State's largest bank, which has operated in southern Maine, has applied for permission to establish a 

branch in Waterville, bringing it into closer competition with Bangor Savings. Such future encroachment may serve to erode the resultant bank's 

dominant position in its market.

Under these circumstances, the Board of Directors is of the opinion that the proposed merger 

would not, in any section of the country, substantially lessen competition, tend to create a monopoly, or in any other manner be in restraint of 

trade.

Financial and Managerial Resources; Future

Prospects. Financial and managerial resources of 

each institution are generally satisfactory, and the 

proposed merger would eliminate the problem of 

orderly succession of management presently confronting PSB. Future prospects of the resultant 

bank are considered favorable.

Convenience and Needs o f the Com m unity to

be Served. Although both banks provide the basic 

services normally associated with mutual savings 

banks, PSB customers would benefit from an increased lending lim it and a broader range of loan 

services at a slightly lower cost.

Based on the foregoing, the Board of Directors 

has concluded that approval of the application is 

warranted.

Resources

(in

thousands

o f dollars)

Banking

offices in

operation

Before A fter

T h e First N atio n al Bank

o f Bristol

Bristol, New Hampshire 

(change title to 

The Bristol Bank)

2,744 1 1

to acquire the assets and assume

the deposit liabilities o f

T he Bristol Savings B ank

Bristol

10,959 1

Summary report by Attorney General,

July 31, 1975

Bristol Bank and Bristol Savings have a common office, common chief executive officer, 

common teller window, and common advertising. 

Bristol Bank accepts demand deposits and makes 

non-mortgage loans while Bristol Savings accepts 

time and savings deposits and makes mortgage 

loans. Thus, the parties are not now in significant 

competition with each other. Bristol Savings owns 

approximately 11 percent of Bristol Bank's stock.

Although not presently in competition, State 

law will require the parties to separate their interlocking directors and management in July 1975, 

resulting, presumably, in two independent institutions capable of offering competing banking services. Thus, if the parties may be expected to exist 

as viable independent institutions, the proposed 

transaction will eliminate the prospect for future 

competition throughout their six-town common 

service area.

Basis for Corporation approval, July 6, 1976

The First National Bank of Bristol, Bristol, New 

Hampshire ("Commercial Bank” ), with total resources of $2,744,000 and total IPC deposits of 

$1,370,000, has applied, pursuant to section 18(c) 

and other provisions of the Federal Deposit Insurance Act, for the Corporation's prior consent to 

acquire the assets of and assume the liability to 

pay deposits made in The Bristol Savings Bank, 

Bristol, New Hampshire ("Savings Bank"), an insured mutual savings bank having total resources 

of $10,959,000 and total IPC deposits of 

$10,049,000. Incident to the proposed transaction, the 108 par $100 shares of common stock 

of Commercial Bank presently owned by Savings 

Bank would be retired. Commercial Bank, prior to 

consummation of the proposed transaction, would 

convert to a State nonmember insured bank under 

the title "The Bristol Bank." The resulting bank 

would operate from the sole location in which the 

two banks presently share quarters.*

Competition. Commercial Bank and Savings 

Bank share a single office in Bristol and have done so 

since 1898. Bristol had a 1970 population of 1,670 

and is located in the southeastern corner of Grafton 

County.

The two banks derive the bulk of their business 

from Bristol and the surrounding towns of Alexandria, Bridgewater, Hebron, and New Hampton. This 

area is rural and sparsely populated and is largely a 

resort area with virtually no industry. The aggregate 

1970 population of the service area was 3,714, representing an increase of only 566 from 1960. There 

are no other banks operating in this area, and the

*FDIC approval of mergers that would involve conversion 

from a mutual to a stock form had been prohibited, with 

certain exceptions, by section 18(c)(10) of the Federal 

Deposit Insurance Act, 12 U.S.C. section 1828(c)(10). 

However, this prohibition expired on June 30, 1976.

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80 FEDERAL DEPOSIT INSURANCE CORPORATION

closest alternatives are in Franklin, approximately 

13 miles south of Bristol. The service area of the 

proponents is highly localized, and the mountainous 

terrain and several lakes in the area have an inhibiting effect on travel.

There is no competition between Commercial 

Bank and Savings Bank. Each offers services appropriate to its method of operation and they complement one another. It is possible that the two banks 

could become independent of each other in the 

future, but it is highly unlikely. Commercial Bank 

has neither the resources nor the management to 

establish separate facilities in competition with 

Savings Bank. Moreover, it does not appear that the 

banking business is there to be had. The economy of 

the service area is relatively stagnant and its population is limited. In over 75 years of joint operation 

the two banks combined have accumulated a total 

of only $12.2 million in deposits. Commercial 

Bank's deposits have been stable or declining in recent years while Savings Bank's deposits have increased only modestly. Accordingly, the proposed 

transaction would not eliminate any significant 

existing or potential competition between the two 

banks.

In view of the foregoing, the Board of Directors is 

of the opinion that the proposed transaction would 

not, in any section of the country, substantially 

lessen competition, tend to create a monopoly, or in 

any other manner be in restraint of trade.

Financial and Managerial Resources; Future

Prospects. Commercial Bank and Savings Bank have 

satisfactory financial and managerial resources 

under their present operational arrangement, and 

the future prospects of the resulting bank are adequate.

Convenience and Needs o f the Com m unity to be

Served. The proposed transaction would have virtually no effect on the banking services presently 

available in the service area. The resulting bank 

would continue to offer all services now provided by 

Commercial Bank and Savings Bank.

Based on the foregoing, the Board of Directors 

has concluded that approval of the application is 

warranted, contingent upon Commercial Bank's 

conversion to a State nonmember insured bank.

Resources

(in

thousands

of dollars)

Banking

offices in

operation

Before A fter

C entral C o unties B ank

State College, 

Pennsylvania

213,056 19 23

to merge w ith

The First N atio n al Bank

o f L ew istow n

Lewistown

37,255 4

Summary report by Attorney General,

April 29, 1976

The head offices of the merging banks are 32 

miles apart and their closest branch offices are 20 

miles apart. Other banks operate in the intervening 

area between the two closest offices of the participants. Less than 1 percent of each bank's loans and 

deposits originate in the service area of the other 

bank. Additionally, the respective service areas of 

each bank abut mountains of the Appalachian 

Range which are an effective physical barrier to 

competition between them. Thus, it would appear 

that the proposed merger would eliminate only a 

minor degree of existing competition.

Under Pennsylvania law, which permits a bank to 

branch into counties contiguous to the county in 

which it maintains its principal office, either bank 

could branch into the service area of the other since 

they are based in adjoining counties. Neither bank is 

likely to branch into the other's service area, however, since both areas are more than adequately 

served by existing banking offices and since Bank 

appears to lack the resources that such expansion 

would require.

I n sum, the proposed transaction would not eliminate any significant degree of direct competition. It 

would, however, eliminate the theoretical potential 

for increased competition which would result if 

either bank established a de novo branch in the service area of the other. The overall effect of the proposed acquisition would be slightly adverse.

Basis for Corporation approval, July 22, 1976

Central Counties Bank, State College, Pennsylvania ("Central Counties"), an insured State nonmember bank with total resources of $213,056,000 

and total IPC deposits of $170,173,000, has applied, pursuant to section 18(c) and other provisions 

of the Federal Deposit Insurance Act, for the Corporation's prior consent to merge with The First 

National Bank of Lewistown, Lewistown, Pennsylvania ("FNB Lewistown"), with total resources 

of $37 ,2 5 5 ,0 0 0 and total IPC deposits of 

$31,589,000, under the charter and title of Central 

Counties. As an incident to the merger, the 4 offices 

of FNB Lewistown would become branches of the 

resultant bank, increasing the number of its authorized offices to 24.

Competition. Central Counties operates 19 offices: its main office and 5 branches in Centre County, 4 branches in Clinton County, and 9 branches in 

Blair County. In addition, it has approval to establish a 10th branch in Blair County.

FNB Lewistown operates its four offices in M ifflin County, with its main office in Lewistown. Its 

branches are located, one each, in Burnham, Milroy, 

and McVeytown, which are respectively 3 and 8 

road-miles north and 11 road-miles southwest of 

Lewistown. M ifflin County is situated immediately 

southeast of Centre County. The light manufacturDigitized for FRASER 

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BANK ABSORPTIONS APPROVED BY THE CORPORATION 81

ing industry in M ifflin County has declined in recent 

years and forestry and agriculture lend only modest 

economic support. As of March 1976, the county 

had a 12.3 percent unemployment rate, a rate substantially higher than the national average.

There is no significant existing competition between Central Counties and FNB Lewistown. Their 

markets, although adjacent, are separated by a portion of the Appalachian Range and by State forest 

lands, and their closest offices, the two State College 

offices of Central Counties and the Milroy branch of 

FNB Lewistown, are approximately 20 road-miles 

apart. For residents of either market, there are alternative sources of banking services more convenient 

than the proponent located in the other market. 

Few depositors or borrowers are common to both 

banks and neither bank draws a significant amount 

of business from the primary trade area of the other.

The effects of the proposed merger would be 

most pronounced in FNB Lewistown's market, 

which consists of M ifflin County. FNB Lewistown is

1 of 6 commercial banks operating a total of 13 

offices in this market and holds the second largest 

share, 27.6 percent, of the IPC deposits held on June

30, 1975 by area offices of these banks. The Russell 

National Bank, also headquartered in Lewistown, 

holds the largest share of such deposits, 40.4 percent.

Pennsylvania law permits a commercial bank to 

branch de novo or merge within its home office 

county and all contiguous counties. Central Counties thus may enter de novo M ifflin County while 

FNB Lewistown may enter Centre County. However, Mifflin County experienced only a moderate 

population growth during the 1960s, its median 

household buying level is substantially below the 

State median, and six commercial banks are already 

well established in the market. Centre County also 

has a median household buying level substantially 

below that of the State, and although it is an area of 

expanding population, the county presently has a 

commercial banking office in the county for each 

3,102 of its residents. Therefore, it appears unlikely 

that any substantial potential for increased competition between the proponents through their de

novo branching in the future would be eliminated 

by the proposed merger. Moreover, even if future 

economic developments warrant the establishment 

of additional branches, there are several existing 

banks, besides Central Counties, capable of de novo

entry into either county.

Within its maximum legal branching area, Central 

Counties is the second largest of the 41 commercial 

banks represented, with 14.4 percent of the area 

IPC deposits held by such banks on June 30, 1975. 

The proposed merger would increase to 17.0 percent Central Counties' IPC deposit share of this 

market. Mid-State Bank and Trust Company, Altoona, would continue to hold the largest share, 

18.2 percent. The five largest shares of such deposits 

would then aggregate 49.6 percent.

Based on the foregoing, the Board of Directors is 

of the opinion that the proposed merger would not, 

in any section of the country, substantially lessen 

competition, tend to create a monopoly, or in any 

other manner be in restraint of trade.

Financial and Managerial Resources; Future

Prospects. Both banks have satisfactory financial 

and managerial resources for the business they do, 

and the same would be true of the resultant bank.

Convenience and Needs o f the Com m unity to be

Served. The merger would bring to Mifflin County 

the specialized services of one of the region's major 

banks. Passbook savings deposits, now earning 3 percent annually at FNB Lewistown, would be paid 5 

percent, and rates paid on several types of certificates of deposit would be increased.

Based on the foregoing, the Board of Directors 

has concluded that approval of the application is 

warranted.

R e s o u rc e s

(in

B a n k in g 

o ffic e s in 

o p e r a tio n

th o u sands 

o f d o lla rs ) B e fo re A f t e r

B ank o f O regon

Woodburn, Oregon

39,056 8 9

to merge with

G u aran ty Bank

Canby

7,620 1

Summary report by Attorney General,

June 22, 1976

Applicant currently operates in Woodburn, 

Aurora, Salem, Hubbard, Silverton, Stayton, and 

Dundee, all in Marion County. Bank operates solely 

in Canby which is in Clackamas County, the county 

immediately to the north of Marion County. However, Applicant currently has pending an application 

to establish a branch in West Linn, which is located 

in Clackamas County approximately 7 miles from 

Canby. Furthermore, Applicant's Aurora office is 

only about4 miles from Canby. The main offices of 

Applicant and Bank are approximately 11 miles 

apart. It thus appears that the proposed acquisition 

would eliminate some existing competition between 

Applicant and Bank.

Applicant and Bank both operate within the 

Portland metropolitan commercial banking market—Canby is 20 miles from Portland and Woodburn is 36 miles away. Applicant currently ranks 7th 

and Bank ranks 16th among the commercial banks 

operating in the Portland metropolitan area. Upon 

consummation of the merger the Applicant would 

hold less than 2 percent of total deposits in the area. 

It thus appears that the proposed acquisition will 

not enhance concentration to any important degree 

in the area.

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82 FEDERAL DEPOSIT INSURANCE CORPORATION

Oregon law prohibits the branching into any city 

with a population of 50,000 or less that contains the 

head office of another bank. Thus, Applicant cannot establish a de novo branch in Canby and can 

enter the town only via acquisition.

In sum, the proposed acquisition would eliminate some existing competition, would increase 

concentration marginally, and would eliminate no 

meaningful potential competition. The proposed 

acquisition, simply put, would have only a slightly 

adverse anticompetitive effect.

Basis for Corporation approval, August 17,1976

Bank of Oregon, Woodburn, Oregon, with total 

resources of $39,056,000 and total IPC deposits of 

$31,203,000, has applied, pursuant to section 

18(c) and other provisions of the Federal Deposit 

Insurance Act, for the Corporation's prior consent 

to merge with Guaranty Bank, Canby, Oregon, 

with total resources of $7,620,000 and total IPC 

deposits of $6,006,000. The banks would merge 

under the charter and title of Bank of Oregon. As 

an incident to the merger, the sole office of Guaranty Bank would be established as a branch of the 

resultant bank, thereby increasing the number of 

its offices to nine.

Competition. Bank of Oregon operates its eight 

offices in the Willamette Valley of northwestern 

Oregon. Its main office, in Woodburn, is located 

some 30 road-miles south of Portland and 17 miles 

northeast of Salem. Other than a single branch 

established in Dundee, in northeastern Yamhill 

County, all offices of Bank of Oregon are located 

in western Marion County. Guaranty Bank has its 

sole office in Canby, in Clackamus County, 11 

road-miles northeast of Woodburn.

The Willamette Valley is a rich agricultural region. In addition to agriculture, the area around 

Woodburn has some light industry and timber 

operations. Canby is a trading center in the valley. 

During the 1960s Canby experienced a 76 percent 

increase in its population, resulting in a 1970 

population of 3,813. While the 1974 Marion County median household buying level of $10,116 was 

7 percent below the State level of $10,855, Clackamas County's median level of $13,038 was 20 

percent above that of the State.

One other institution, Canby Union Bank, is 

headquartered in Canby. Two branches of Bank of 

Oregon, representing the closest alternatives for 

Canby area residents other than Canby Union 

Bank, are located 3 and 7 miles southwest of Canby. Therefore, there is an overlapping of the service areas of the proponents. Guaranty Bank holds 

7.3 percent, the fifth largest share, of the IPC 

deposits held in the offices of the seven commercial banks operating in its trade area. Bank of 

Oregon holds 3.9 percent of such deposits. Consummation of the proposal would eliminate some 

existing competition. However, Guaranty Bank's 

market is dominated by the State's two major

banks, which hold a combined market share of

59.6 percent, and in view of the minor shares of 

aggregate area commercial bank IPC deposits held 

by each proponent, this elimination of competition would not weigh significantly against approval 

of the application.

Guaranty Bank has experienced managerial and 

financial problems and its potential for office 

expansion is negligible. On the other hand, although Bank of Oregon is precluded by Oregon's 

home office laws from de novo entry into Canby, 

it would likely find other areas of Guaranty Bank's 

market attractive for such entry. Thus, the merger 

would eliminate the potential for increased competition between the proponents. However, this anticompetitive effect is mitigated as a result of 

Guaranty Bank's weakened condition and the 

existing domination of the market by the State's 

major banks. Any available alternative merger partner for Guaranty Bank would be one of the larger 

banks which would represent a far more anticompetitive proposal.

In view of the foregoing, the Board of Directors 

is of the opinion that the proposed merger would 

not substantially lessen competition in any section 

of the country, nor would it tend to create a 

monopoly or in any other manner be in restraint 

of trade.

Financial and Managerial Resources; Future

Prospects. Bank of Oregon has satisfactory financial and managerial resources; those of Guaranty 

Bank are less than satisfactory. The latter's future 

prospects, as an integral part of the resultant bank, 

would be satisfactory.

Convenience and Needs o f the Com m unity to

be Served. The proposed merger would improve 

significantly the viability of Guaranty Bank as a 

part of the resultant bank and strengthen its competitive stance in the relevant market.

Based on the foregoing, the Board of Directors 

has concluded that approval of the application is 

warranted.

R e s o u rc e s

(in

th o u s a n d s 

o f d o lla rs )

B a n k in g 

o ffic e s in 

o p e r a tio n

B e fo re A f t e r

Exchange B ank o f U n ad illa

Unadilla, Georgia 

(change title to State Bank 

and Trust Company)

7,859 1 2

to merge with

B ank o f B y ro m v ille

Byromville

3,972 1

Summary report by Attorney General,

May 11, 1976

Dooly County (1970 population 10,404) is

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BANK ABSORPTIONS APPROVED BY THE CORPORATION 83

served by four banks, each of which has only one 

office. Applicant currently holds 30 percent of 

total county commercial bank deposits and ranks 

second in the county. Bank ranks fourth with 15 

percent. Hence, the proposed acquisition would 

produce a bank holding 45 percent of total county 

deposits and the bank which currently ranks first 

with 33 percent of county deposits will drop to 

second place. Also, Applicant and Bank are within

11 miles of each other, which produces some degree of competitive overlap.

It must be noted, however, that Applicant and 

Bank are controlled by the same five persons.

In sum, the proposed acquisition would eliminate direct competition and would greatly increase 

concentration and would normally be viewed as 

having an adverse effect upon competition. The 

existing common ownership and control of the 

Applicant and Bank suggests that the damage has 

already occurred and that the merger is more a 

change in form than in substance.

Basis for Corporation approval, September 7, 1976

Exchange Bank of Unadilla, Unadilla, Georgia 

("Exchange Bank"), an insured State nonmember 

bank having total resources of $7,859,000 and 

total IPC deposits of $6,100,000, has applied, pursuant to section 18(c) and other provisions of the 

Federal Deposit Insurance Act, for the Corporation's prior consent to merge with Bank of Byromville, Byromville, Georgia ("Byromville Bank"), an 

insured State nonmember bank with total resources of $3,972,000 and total IPC deposits of 

$3,611,000. The merger would be effected under 

the charter of Exchange Bank and with the title 

"State Bank and Trust Company." Following the 

merger, the sole office of Byromville Bank would 

be established as a branch of the resultant bank, 

which would then operate a total of two offices.

Competition. Exchange Bank operates its sole 

office in Unadilla, a town in central Georgia located approximately 40 miles south of Macon and 

70 miles east of Columbus. Byromville Bank has 

its office in Byromville, located some 12 roadmiles west of Unadilla.*

*A close relationship has existed between the proponents 

since September 1973 when the majority of Byromville 

Bank's stock was acquired by five individuals who also 

control more than 60 percent of the stock of Exchange 

Bank. The Corporation has consistently taken the position that where control of a bank is acquired by stock 

acquisition not subject to regulatory scrutiny, the effect 

of a merger may be the circumvention of the competitive standards of the Bank Merger Act. See Basis for 

Corporation Denial of the proposed acquisition of The 

Citizens and Southern Bank of Tucker by The Citizens 

and Southern Emory Bank, 1971 FD IC Annual Report,

pp. 152, 154 and Basis for Corporation approval of the 

proposed acquisition of The Citizens and Southern 

Emory Bank, 1975 FD IC Annual Report, pp. 105-110. 

Therefore, the current affiliation of the two banks is 

seen as being of no persuasive value in determining what 

competitive impact, if any, the proposed merger may 

have.

Both banks are located in the northern half of 

Dooly County. This county and the immediately 

adjacent area are largely rural and characterized by 

an agricultural economy. These areas have experienced a declining population over the last two 

decades.

Byromville Bank's primary trade area extends 

over a radius of approximately 12 miles from 

Byromville and includes the Macon County cities 

of Montezuma and Oglethorpe to the northwest as 

well as the Dooly County communities of Unadilla 

to the east and Vienna to the southeast. Including 

a bank established in July 1976, seven commercial 

banks have one office each in this area and serve a 

1970 estimated population of 17,300, representing 

a 3.9 percent population decrease during the 

1960s. Controlling the fifth and sixth largest 

shares of the market's commercial bank IPC deposits, Exchange Bank and Byromville Bank hold 

respectively 15.5 percent and 9.2 percent of such 

deposits. Although existing competition between 

the proponents would be eliminated by their merger, this result would have only slight competitive 

significance in view of the market's relatively 

modest size and the continued presence therein of 

four established competitors whose market shares 

range from 16.4 percent to 22.9 percent. Including 

the newly established bank in Vienna, there would 

be a bank to serve each 2,468 inhabitants in the 

market.

Within the primary trade area of the resultant 

bank (comprising in addition to Byromville Bank's 

market an area extending 15 road-miles north of 

Unadilla to Perry in Houston County and a similar 

distance east to Hawkinsville in Pulaski County),

11 commercial banks would be represented by a 

total of 16 offices. The resultant bank, holding

11.6 percent of the IPC deposits of these offices, 

would be third largest in the market. Five other 

banks would hold shares ranging from 9.9 percent 

to 14.3 percent of such deposits. Including the 

newly established bank, each commercial bank 

office in this market would serve an average of 

2,200 people.

Even if the two banks were not under the same 

majority control, it is doubtful that a significant 

potential for increased competition between the 

proponents through their de novo branching 

would exist. Although Georgia law permits their 

branching within Dooly County, such de novo

expansion by either would be unlikely in view of 

the county's 9.3 percent decline of population 

during the 1960s and its present over-banked 

structure.

Based on the foregoing, the Board of Directors 

has concluded that the proposed merger would 

not, in any section of the country, substantially 

lessen competition, tend to create a monopoly, or 

in any other manner be in restraint of trade.

Financial and Managerial Resources; Future

Prospects. Each proponent has satisfactory finanDigitized for FRASER 

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Federal Reserve Bank of St. Louis
84 FEDERAL DEPOSIT INSURANCE CORPORATION

cial and managerial resources, as would the resultant bank. Its future prospects appear to be favorable.

Convenience and Needs o f the Com m unity to

be Served. The larger lending lim it and increased 

pool of lendable funds of the resultant bank 

should be advantageous to a number of borrowers 

in the Unadilla area. Credit card financing would 

be introduced in the Byromville area.

In view of the foregoing, the Board of Directors 

has concluded that approval of the application is 

warranted.

R e s o u rc e s

B a n k in g 

o ffic e s in

(in 

th o u s a n d s 

o f d o lla rs )

o p e r a tio n

B e fo re A f t e r

C ity B ank 7,393 1 4

Lynnwood, Washington

to acquire the assets and assume

the deposit liabilities of

Evergreen S tate Bank 7,870 3

Seattle

Summary report by Attorney General,

July 19, 1976

The banks are relatively close to each other although Applicant is located in Snohomish County 

and Bank is located in bordering King County. 

One of Bank's branches is right on the border of 

the two counties. Both banks serve the Seattle 

SMSA, and thus they compete with each other. 

However, given the small size of deposits and market shares of the banks, the existing competition 

between them should be viewed as insubstantial. 

Applicant presently controls 5.7 percent of commercial bank deposits in its service area and Bank 

controls 7 percent. The resulting bank would have

12.7 percent of the total bank deposits in the surrounding area. However, if the entire Seattle 

SMSA were included in the relevant market, the 

respective market shares would be de minimus.

Furthermore, Washington State's laws pertaining to branching and holding companies preclude 

Applicant from entering King County on a de

novo basis and Bank from entering Snohomish 

County. Hence, the proposed acquisition will not 

eliminate potential competition.

We therefore conclude that the proposed acquisition will have only a slight adverse effect upon 

competition.

Basis for Corporation approval, September 7, 1976

City Bank, Lynnwood, Washington, with total 

resources of $7,393,000 and total IPC deposits of 

$5,323,000, has applied, pursuant to section 18(c) 

and other provisions of the Federal Deposit Insurance Act, for the Corporation's prior consent to

acquire the assets of and assume the liability to 

pay deposits made in Evergreen State Bank, 

Seattle, Washington, with total resources of 

$7,870,000 and total IPC deposits of $6,576,000. 

The transaction would be effected under the charter and with the title of City Bank. Incident to the 

proposal, the three offices of Evergreen State Bank 

would be established as branches of City Bank, 

increasing the number of its offices to four.

Competition. City Bank operates its sole office 

in the city of Lynnwood, a residential community 

in southwestern Snohomish County approximately

17 road-miles north of downtown Seattle and 12 

miles south of Everett, in northwestern Washington.

Evergreen State Bank has its main office 

approximately 12 road-miles north of downtown 

Seattle. It maintains one branch each in Innis 

Arden and in Inglewood, located respectively 3 

miles southwest and 6 miles southeast of the main 

office. All three offices are located in residential, 

unincorporated areas of northwestern King County.

The proponents operate within the SeattleEverett SMSA; however, the area in which the 

competitive effects of the merger would be most 

immediate is Evergreen State Bank's primary trade 

area. This area consists of extreme northwestern 

King County and adjacent southwestern Snohomish County and includes the cities of Kenmore, Lynnwood, and Edmonds. The defined 

market area has experienced substantial growth 

during recent years. The market's estimated 1970 

population of 89,800 represents approximately a 

72 percent increase from 1960.

A total of 10 commercial banks operating 23 

local offices are represented in Evergreen State 

Bank's primary market. The market is dominated 

by the State's largest commercial banks. The 

State's two largest commercial banks control 56.4 

percent of the market's commercial bank IPC 

deposits; 77.9 percent of such deposits are concentrated in four banks. City Bank has 2.7 percent 

and Evergreen State Bank has 3.8 percent of such 

deposits, representing the second and fourth smallest shares respectively. The proposed transaction 

would eliminate existing competition; however, in 

view of the modest size of each proponent, the 

proposal would have no significant effect on 

competition. The resultant bank's 6.5 percent 

share of the market's commercial bank IPC deposits, although fifth largest, would be substantially lower than those of the four market leaders.

A Washington commercial bank may legally 

branch de novo within the city that contains its 

main office, in unincorporated areas of its main 

office county, and in unbanked, incorporated 

communities throughout the State. As a result of 

this law, the number of branch sites open to either 

of the proponents is very limited and the potential 

for a significant increase in competition between

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Federal Reserve Bank of St. Louis
BANK ABSORPTIONS APPROVED BY THE CORPORATION 85

the proponents is minimal. Further, any potential 

increase in competition that may be eliminated by 

the proposal is not considered serious when compared with the market's present deposit concentration.

Based on the foregoing, the Board of Directors 

is of the opinion that the proposed transaction 

would not substantially lessen competition in any 

section of the country, nor would it tend to create 

a monopoly, or in any other manner be in restraint 

of trade.

Financial and Managerial Resources; Future

Prospects. Each proponent has satisfactory financial and managerial resources. Those of the resultant bank would be satisfactory. Its future prospects would be favorable.

Convenience and Needs o f the C om m unity to

be Served. The proposed transaction would have 

little effect on the convenience and needs of the 

local market. The resultant bank would not offer 

any services not presently available in the market; 

however, its increased legal lending lim it should 

enable it to compete more effectively in the relevant market.

The Board of Directors, considering the foregoing information, has concluded that approval of 

the application is warranted.

Resources

Banking

offices in

(in

thousands

operation

of dollars) Before A fter

C a p ito l B ank and

Tru st C o m p an y 68,910 3 4

Boston, Massachusetts

to purchase the assets and assume the deposit liabilities o f

The N e w Boston B ank and

T ru s t C o m p any 9,238 1

Boston

Approved under emergency provisions. No report requested from the Attorney General.

Basis for Corporation approval, September 14, 1976

Capitol Bank and Trust Company, Boston, 

Massachusetts, an insured State nonmember bank 

with total resources of $68,910,000, has applied, 

pursuant to section 18(c) and other provisions of 

the Federal Deposit Insurance Act, for the Corporation's consent to purchase the assets of and 

assume liability to pay deposits made in The New 

Boston Bank and Trust Company, Boston, Massachusetts, an insured State nonmember bank with 

total resources of $9,238,000. As an incident to 

the transaction, the only office of The New Boston Bank and Trust Company would become a 

branch of Capitol Bank and Trust Company.

As of September 14, 1976, The New Boston 

Bank and Trust Company had deposits and other 

liabilities of $5.3 million and operated one office. 

On September 14, 1976, the Federal Deposit 

Insurance Corporation was appointed as liquidating agent of The New Boston Bank and Trust 

Company.

The Board of Directors finds that the failure of 

The New Boston Bank and Trust Company requires it to act immediately and thus waives publication of notice, dispenses with the solicitation 

of competitive reports from other agencies, and 

authorizes the transaction to be consummated 

immediately.

Resources

(in

thousands

o f dollars)

Banking

offices in

operation

Before A fter

B ank Leu m i T ru st C o m p an y

o f N e w Y o rk

New York, New York

491,222 5 10

to purchase the assets and assume the deposit liabilities o f

A m erican B ank & T ru st

C o m p an y

New York

267,680 5

Approved under emergency provisions. No report requested from the Attorney General.

Basis for Corporation approval, September 15, 1976

Bank Leumi Trust Company of New York, New 

York (Manhattan), New York, an insured State 

nonm em ber bank w ith total resources of 

$491,222,000, has applied, pursuant to section 

18(c) and other provisions of the Federal Deposit 

Insurance Act, for the Corporation's consent to 

purchase the assets of and assume the liability to 

pay deposits made in American Bank & Trust 

Company, New York (Manhattan), New York, a 

State bank and member of the Federal Reserve 

System, with total resources of $267,680,000. As 

an incident to the transaction, the main office and 

four branches of American Bank & Trust Company would become branches of Bank Leumi 

Trust Company of New York.

As of September 15, 1976, American Bank & 

Trust Company had deposits and other liabilities 

of approximately $190 million and operated five 

offices. On September 15, 1976, the Federal Deposit Insurance Corporation was appointed as 

receiver of American Bank & Trust Company.

The Board of Directors finds that the failure of 

American Bank & Trust Company requires it to 

act immediately and thus waives publication of 

notice, dispenses with the solicitation of competitive reports from other agencies, and authorizes 

the transaction to be consummated immediately.

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Federal Reserve Bank of St. Louis
86 FEDERAL DEPOSIT INSURANCE CORPORATION

R e s o u rc e s

(in

th o u s a n d s

B a n k in g 

o ffic e s in 

o p e r a tio n

o f d o lla rs ) B e fo re A f t e r

C a lifo rn ia Overseas B ank

(in organization)

Beverly Hills, California

3

to purchase a portion of the

assets and assume a portion

of the deposit liabilities of

Ahm anson B ank and T rust

C o m p any

Beverly Hills

25,862 3

Summary report by Attorney General,

August 5, 1976

California Overseas Bank ("California Bank") is 

a non-operating institution organized for the purpose of effectuating the sale of the commercial 

banking business (except for the trust business) of 

Ahmanson Bank to a separate new banking organization. After consummation of the proposed plan, 

the capital stock of California Bank will largely be 

owned by a group of investors (including foreign 

investors) not connected with either Ahmanson 

Bank or its corporate parent.

It does not appear that the proposed transaction will have any adverse competitive effect.

Basis for Corporation approval, October 6, 1976

Pursuant to sections 5 and 18(c) and other provisions of the Federal Deposit Insurance Act, 

applications have been filed on behalf of California 

Overseas Bank, Beverly Hills, California, a proposed new bank in organization, for Federal deposit insurance and for consent to its purchase of a 

portion of the assets and assumption of a portion 

of the liabilities of Ahmanson Bank and Trust 

Company, Beverly Hills, California ("Ahmanson 

Bank"), a State nonmember insured bank with 

total resources of $25,862,000 and total IPC deposits of $20,021,000 as of December 31, 1975. 

The main office and two existing branches of 

Ahmanson Bank would be established as the main 

office and branches of California Overseas Bank.

Competition. Organization of California Overseas Bank and the proposed purchase and assumption transaction are being utilized by H. F. 

Ahmanson & Company, Los Angeles, California, a 

holding company controlling 100 percent of the 

voting shares of Ahmanson Bank, to divest the 

commercial banking business presently conducted 

by Ahmanson Bank. California Overseas Bank 

would not operate as a commercial bank prior to 

the proposed transaction. Subsequent to consummation of that transaction, California Overseas 

Bank would be operated as a commercial bank 

under a new management at the existing locations 

of Ahmanson Bank. The proposal would not affect 

the competitive structure of commercial banking 

in the trade area of Ahmanson Bank or result in a

change of the commercial banking services which 

Ahmanson Bank has heretofore made available to 

the public.

In view of the foregoing, the Board of Directors 

is of the opinion that the proposed transaction 

would not substantially lessen competition in any 

section of the country, nor would it tend to create 

a monopoly, or in any other manner be in restraint 

of trade.

Financial and Managerial Resources; Future

Prospects. California Overseas Bank's new management would appear to be both capable and diverse. 

Several of these individuals have had extensive and 

lengthy experience in the banking field. In addition, it is expected that the present staff of 

Ahmanson Bank will be retained. Overall, California Overseas Bank's proposed management 

appears to be satisfactory.

Ahmanson Bank has satisfactory financial resources. The replacement of current ownership by 

a more aggressive and growth oriented ownership 

should have favorable results in terms of the 

Bank's future resources.

Based on the foregoing, the Board concludes 

that the proponents' financial and managerial resources are satisfactory and the resultant bank's 

future prospects would appear to be favorable.

Convenience and Needs o f the Com m unity to

be Served. In the past, Ahmanson Bank has not 

chosen to be a strong competitor. As a result, the 

bank has not grown like other banks in its service 

area. It is expected that the new management will 

entirely change past policies and objectives and 

will aggressively seek new business, and by becoming an active competitor in its service area, the 

resultant bank should make a meaningful contribution to the financial needs of the community.

On the basis of the foregoing information, the 

Board of Directors has concluded that approval of 

the applications is warranted.

Resources

(in

thousands

of dollars)

Bank ing

offices in

operation

Before A fter

F ran k lin C o u n ty

Savings B ank 53,892 5 6

Farmington, Maine

(change title to

Franklin Savings Bank)

to merge wi th

Som erset Loan and

B u ilding Association 497 1

Skowhegan

Summary report by Attorney General, 

August 20, 1976

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Federal Reserve Bank of St. Louis
BANK ABSORPTIONS APPROVED BY THE CORPORATION 87

Based on information contained in the application, there appears to be no direct competition 

between the parties. Neither party has offices in 

the other's markets and neither draws any savings 

deposits or loans from the market area of the 

other.

There are 13 financial institutions (2 savings 

banks, 5 commercial banks, 1 savings and loan 

association, and 5 credit unions) operating in Association's market area with total deposits of $102 

million and loans of $75 million. Consummation 

of the proposed merger will result in the elimination of the only savings and loan association in 

the market. Although the respective market shares 

of each institution will remain the same after the 

merger, concentration in the number of savings 

banks will increase somewhat and the share of 

deposits held by all such savings institutions will 

increase by 0.4 percent.

Maine permits statewide branching except in 

limited circumstances which do not exist in the 

present application. By de novo entry into the 

Skowhegan market instead of merger, Applicant 

would increase competition, rather than eliminate 

the only mutual loan and building corporation in 

the market. De novo entry is the preferable, less 

restrictive alternative for Applicant to enter the 

Skowhegan market, absent any "failing company" 

argument.

In sum, it appears that the proposed merger will 

have some adverse competitive consequences.

Basis for Corporation approval, October 6,1976

Franklin County Savings Bank, Farmington, 

Maine (“ Franklin Savings"), an insured mutual savings bank with total resources of $53,892,000 and 

total deposits of $49,740,000, has applied, pursuant to section 18(c) and other provisions of the 

Federal Deposit Insurance Act, for the Corporation's prior consent to merge with Somerset Loan 

and Building Association, Skowhegan, Maine 

("Somerset Loan"), a noninsured mutual loan and 

building corporation with total resources of 

$497,000 and total deposits of $376,000. The 

institutions would merge under the charter of 

Franklin Savings with the title "Franklin Savings 

Bank." As an incident to the merger, the sole office of Somerset Loan would become a branch of 

the resulting bank, increasing the number of its 

approved offices to seven.

Competition. Franklin Savings operates five offices: its main office and two branches in Franklin 

County and two branches in Oxford County. Also, 

it has approval to open a sixth office in Franklin 

County. Franklin Savings is the 12th largest thrift 

institution in the State. Somerset Loan operates its 

sole office in Skowhegan, Somerset County.

The effects of the merger would be most pronounced in Somerset Loan's market, which consists of Skowhegan and the adjacent town of 

Norridgewock. The combined 1970 population of

Skowhegan and Norridgewock was 9,565, representing a 2.9 percent increase from 1960. The 

1970 population of Somerset County was 40,597, 

up 2.1 percent from 1960. Economic activity in 

the area includes the manufacture of leather, 

paper, lumber products, and textiles. The 1974 

median buying level for Somerset County was 

$9,713, 9.2 percent below the comparable statewide figure. The local economy is expected to 

receive a significant boost in the near future from 

the construction of a large plant of a major paper 

products company.

There is no existing competition between 

Franklin Savings and Somerset Loan. Their closest 

offices are about 28 miles apart, and neither has 

any significant business originating in areas served 

by the other. Indeed, Somerset Loan is not a 

viable competitor in its own market, having 

accumulated total deposits of less than $400,000 

in its over 90 years of operation. This amounts to 

only 0.7 percent of the aggregate IPC deposits of 

$55 million in the local market. The other 99.3 

percent is held by the Skowhegan Savings Bank 

(70.5 percent) and four branches of two commercial banks (28.8 percent).*

The potential for competition to develop between the two institutions in the future is remote. 

The miniscule size and lack of managerial resources preclude any expansion by Somerset Loan. 

Moreover, Somerset Loan is required by State law 

to become federally insured by March 1977, and 

the likely alternative to this merger is liquidation 

of the institution. This transaction represents a de

m inim is acquisition and it is the practical equivalent of the establishment of a de novo branch in 

Skowhegan by Franklin Savings.

Under these circumstances, the Board of Directors is of the opinion that the proposed merger 

would not, in any section of the country, substantially lessen competition, tend to create a monopoly, or in any other manner be in restraint of 

trade.

Financial and Managerial Resources: Future

Prospects. Financial and managerial resources of 

Franklin Savings are generally satisfactory. Financial resources of Somerset Loan are satisfactory; 

however, managerial resources are limited by an 

elderly staff with no successor management. Consummation of the proposed merger would eliminate the succession problem. Future prospects of 

the resulting bank are considered favorable.

Convenience and Needs o f the C om m unity to

be Served. The proposed merger would provide the

^Because of the increased parity between th rift institutions and commercial banks in the State of Maine, the 

Board of Directors has taken the position that commercial realities require a viewing of a combined commercial 

bank-thrift institution market when determining the 

competitive impact of any proposed merger in Maine. 

See Basis for Corporation Approval of the proposed 

merger of Bangor Savings Bank, Bangor, Maine and the 

Piscataquis Savings Bank, Dover-Foxcroft, Maine, page 78.

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Federal Reserve Bank of St. Louis
88 FEDERAL DEPOSIT INSURANCE CORPORATION

Skowhegan area with an alternative source for all 

mutual savings bank services, including maximum 

allowable interest rates on regular savings and a 

full range of time deposits, as well as conventional, 

insured conventional, and VA-guaranteed mortgage loans. Such alternatives are presently limited 

to regular savings and conventional mortgages by 

Somerset Loan. This broader range of alternative 

services would be offered at a time when demand 

for such services in the area should be increasing 

due to the completion of the new paper plant in 

the Skowhegan area. In addition, Somerset Loan's 

depositors would gain the protection and security 

of Federal deposit insurance.

Based on the foregoing, the Board of Directors 

has concluded that approval of the application is 

warranted.

R e so u rce s

(in

th o u s a n d s 

o f d o lla rs )

B a n k in g 

o ffic e s in 

o p e r a tio n

B e fo re A f t e r

T h e M erchants Bank

Burlington, Vermont

83,354 10 11

to merge with

H a rd w ic k T ru st C o m p an y

Hardwick

7,216 1

Summary report by Attorney General, 

August 19, 1976

Although neither party has banking facilities in 

the other's service area, both institutions derive 

some business from the other's market. Applicant 

derived 0.36 percent of its deposits and 0.67 percent of its loans from Bank's service area. Similarly, Bank receives 5.7 percent of its deposits and 

0.5 percent of its loans from Applicant's service 

area. Hence, the proposed acquisition would eliminate a small amount of existing competition.

There are seven commercial banking institutions serving Caledonia County. Applicant has no 

facility in the county, but nevertheless it has an 

0.8 percent market share. Bank, the smallest commercial banking institution in the county, controls

9 percent of the deposits and 1 of the 10 commercial banking offices in the county. Consummation 

of the proposed merger will give the resulting institution total deposits and loans of 9.8 percent and 

$4.3 million, respectively, and will effectively increase Applicant's market share by 9 percent, although it will not change its county rank. Accordingly, the proposed acquisition would tend to 

increase concentration in banking in Caledonia 

County slightly.

Vermont banking law permits both Applicant 

and Bank to freely enter the primary service area 

of the other, either by branching or the establishment of a de novo bank. Indeed, since 1963 Applicant has on five occasions entered new markets

through the establishment of de novo branches. 

Nothing in the application suggests that de novo

entry is infeasible in the instant situation. The proposed acquisition, therefore, would eliminate 

potential competition to an important degree.

In sum, it appears that overall the proposed 

acquisition will have adverse competitive consequences, particularly as regards potential competition.

Basis for Corporation approval, October 6, 1976

The Merchants Bank, Burlington, Vermont 

(“ Merchants"), a State nonmember insured bank 

with total resources of $83,354,000 and total IPC 

deposits of $68,178,000, has applied, pursuant to 

section 18(c) and other provisions of the Federal 

Deposit Insurance Act, for the Corporation's prior 

consent to merge with Hardwick Trust Company, 

Hardwick, Vermont ("Hardwick Trust"), with 

total resources of $7,216,000 and total IPC deposits of $5,780,000. The banks would merge 

under the charter and title of Merchants. The 1 office of Hardwick Trust, as an incident to the merger, 

would become a branch of the resulting bank, increasing to 11 the total number of its offices.

Competition. Merchants operates its 10 offices 

in western Vermont: 6 offices in Chittenden County, 2 in Washington County, and 1 each in Addison and Grand Isle Counties. Merchants is the 

State's fifth largest commercial bank, holding 5.4 

percent of the statewide commercial bank deposits.

Hardwick Trust, operating its sole office in 

Hardwick, Caledonia County, is ranked 27th 

among the 29 commercial banks in the State. 

Hardwick is situated in the northeast quadrant of 

the State and is approximately 45 miles east of 

Burlington.

The most appropriate geographic area in which 

to assess the competitive effects of the proposed 

transaction would be Hardwick Trust's market, 

which consists of the town of Hardwick and five 

adjacent communities in Caledonia County. This 

market area had a population of 4,651 in 1970, 

representing a 1.8 percent increase since 1960. Its 

economy is based primarily upon agriculture, with 

tourism and light manufacturing of some importance. Caledonia County's 1974 median household 

income of $9,004 was 11.4 percent below the 

statewide median of $10,160. The only other 

banking office in the trade area is a branch of 

Sterling Trust Company, Johnson, Vermont, 

which opened for business on November 24, 1975, 

and had total deposits of only $501,000 on June 

25, 1976. Merchants does not operate in this market. The proponents' closest offices, Merchants' 

office in Barre and Hardwick Trust's office in 

Hardwick, are located 25 road-miles apart. Therefore, no significant existing competition between 

the two banks would be eliminated by their proposed merger.

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Federal Reserve Bank of St. Louis
BANK ABSORPTIONS APPROVED BY THE CORPORATION 89

Although Vermont law permits statewide de

novo branching, there is little potential for the 

development of competition in the future between 

Merchants and Hardwick Trust. Hardwick Trust, in 

operation since 1892, has confined its expansion 

activity to one merger in 1931 and it lacks the 

managerial and financial resources to branch de

novo. For its part, Merchants would not find the 

Hardwick trade area attractive for de novo entry at 

the present time because income levels are well 

below the statewide average and each banking office presently serves an average of 2,325 people, 

compared with an average of 2,598 people per 

banking office throughout the State. Accordingly, 

any elimination of potential competition between 

Merchants and Hardwick Trust which might result 

from their proposed merger is not significant.

Under the circumstances presented, the Board 

of Directors is of the opinion that the proposed 

merger would not, in any section of the country, 

substantially lessen competition, tend to create a 

monopoly, or in any other manner be in restraint 

of trade.

Financial and Managerial Resources; Future

Prospects. Both Merchants and Hardwick Trust 

have satisfactory financial and managerial resources for their present operations, as would the 

resultant bank. Future prospects for the resultant 

bank are favorable.

Convenience and Needs o f the Com m unity to

be Served. Customers of Hardwick Trust would be 

offered broader banking services by a more aggressive management, such as an expanded deposit 

program, free checking for senior citizens, more 

sophisticated trust services, substantially increased 

lending limits, and a credit card plan.

Based on the foregoing, the Board of Directors 

has concluded that approval of the application is 

warranted.

R e so u rce s

(in

th o u s a n d s 

o f d o lla rs )

B a n k in g 

o ffic e s in 

o p e r a tio n

B e fo re A fte r

L incoln Bank

Bala-Cynwyd,

Pennsylvania

110,596 7 11

to purchase the assets and assume the deposit liabilities of

C entennial Bank

Philadelphia

15,281 4

Approved under emergency provisions. No report requested from the Attorney General.

Basis for Corporation approval, October 21, 1976

Lincoln Bank, Bala-Cynwyd, Pennsylvania, an 

insured State nonmember bank with total resources of $110,596,000, has applied, pursuant to

section 18(c) and other provisions of the Federal 

Deposit Insurance Act, for the Corporation's consent to purchase the assets of and assume the liability to pay deposits made in Centennial Bank, 

Philadelphia, Pennsylvania, an insured State nonmember bank with total resources of $15,281,000. 

As an incident to the transaction, the main office 

and three branches of Centennial Bank would become branches of Lincoln Bank.

As of October 20, 1976, Centennial Bank had 

deposits and other liabilities of some $12.4 million 

and operated four offices. On that date, Pennsylvania Secretary of Banking William E. Whitesell 

took possession of Centennial Bank.

The Board of Directors finds that the failure of 

Centennial Bank requires it to act immediately and 

thus waives publication of notice, dispenses with 

the solicitation of competitive reports from other 

agencies, and authorizes the transaction to be consummated immediately.

R e s o u rc e s

(in

th o u s a n d s 

o f d o lla rs )

B a n k in g 

o ffic e s in 

o p e r a tio n

B e fo re A fte r

The Mississippi B ank

Jackson, Mississippi

152,410 10 13

to merge with

Truckers Exchange B ank

Crystal Springs

18,784 3

Summary report by Attorney General, 

September 27, 1976

In terms of county deposits, Applicant is the 

third largest of the 10 banking organizations operating in Hinds County. As of June 30, 1975, 

Applicant's Hinds County offices held deposits of 

$72 million, 6.5 percent of the total deposits held 

by commercial banking offices located in that 

county. Deposit Guaranty National Bank, the largest banking organization in the State, held, as of 

June 30, 1975, deposits of $510 million at its 

Hinds County offices, 46 percent of total county 

deposits. First National Bank of Jackson, the 

second largest banking organization in the State, 

held, as of June 30, 1975, deposits of $448 million 

at its Hinds County offices, 40.4 percent of county deposits.

Bank is the second largest of the four banks 

operating in Copiah County, which adjoins Hinds 

County to the south. Its deposits of $15.5 million, 

as of June 30, 1975, constituted 28 percent of 

deposits held by Copiah County banks. Bank of 

Hazlehurst is the largest bank in Hinds County; it 

held deposits of $19.8 million, as of June 30,

1975, 36 percent of total Copiah County deposits. 

Merchant and Planters Bank and Bank of Wesson

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Federal Reserve Bank of St. Louis
90 FEDERAL DEPOSIT INSURANCE CORPORATION

held, as of June 30, 1975, 22 percent and 14 percent, respectively, of total Copiah County deposits. According to the application, the State has 

approved a charter for a new bank which will be 

located in Crystal Springs, Copiah County.

The closest offices of Applicant and Bank 

(Applicant's branch in Terry, Hinds County, and 

Bank's main office in Crystal Springs, Copiah 

County) are 9 miles apart, and there is some overlap between Applicant's and Bank's service areas. 

The application does not indicate the amount of 

deposits or number of accounts held by Applicant's Terry branch which are drawn from Bank's 

service area. However, even assuming that all the 

deposits held by Applicant's Terry branch—total 

deposits of approximately $2 million (including 

IPC demand deposits of a p p ro xim a tely 

$500,000)—are drawn from Bank's service area, 

the proposed acquisition would not eliminate a 

significant degree of direct competition. The deposits held by Applicant's Terry branch constitute 

only 1.4 percent of Applicant's total deposits, and 

equal only 3.6 percent of the total deposits held 

by Copiah County banks and 11.7 percent of 

Bank's total deposits.

Under Mississippi law, either bank could be permitted to open de novo branches in the area served 

by the other. Applicant, however, is substantially 

smaller than the two largest banks in the State 

which operate in its service area and which may 

also enter Bank's service area. Therefore, the proposed acquisition would be unlikely to have a significantly adverse effect on potential competition.

In sum, the proposed acquisition will have, 

overall, slightly adverse anticompetitive effects.

Basis for Corporation approval, November 3, 1976

The Mississippi Bank, Jackson, Mississippi 

(“ Jackson Bank"), an insured State nonmember 

bank with total assets of $152,410,000 and total 

IPC deposits of $50,271,000, has applied, pursuant to section 18(c) and other provisions of the 

Federal Deposit Insurance Act, for the Corporation's prior consent to merge under its charter and 

title w ith Truckers Exchange Bank, Crystal 

Springs, Mississippi ("Truckers"), an insured State 

nonm em ber bank w ith total resources of 

$ 1 8 ,784,000 and to ta l IPC deposits of 

$15,223,000. Incident to the merger, the 3 offices 

of Truckers would be established as branches of 

the resulting bank, increasing to 13 the total number of its offices.

Competition. Jackson Bank maintains its 10 

offices within the Jackson SMSA, in the southwest 

quadrant of Mississippi. This SMSA comprises 

Hinds and Rankin Counties and had a 1970 population of 258,906, representing a 17.0 percent increase since 1960.

Truckers operates its main office and two 

branches in the city of Crystal Springs, in Copiah 

County, 25 road-miles southwest of Jackson.

Copiah County adjoins the southern border of 

Hinds county and many of its workers commute 

to Jackson or its suburbs for employment. Crystal 

Springs and Copiah County had 1970 populations 

of 4,180 and 24,749, respectively. The county's 

population represented an 8.5 percent decrease 

from 1960 and its median household buying level 

of $6,957 was substantially below the statewide 

median of $8,706.

Effects of the proposed merger would be most 

immediate and direct in Truckers' local market, 

which comprises Copiah County and the southern 

portion of adjoining Hinds County. This includes 

the towns of Terry and Utica, which are respectively located 9 miles northeast and 20 miles 

northwest of Crystal Springs. There are 12 offices 

of 6 commercial banks operating within this market, serving a 1970 population estimated at 

27,250. In addition, a new unit bank has been 

chartered and approved for Federal deposit insurance and will be located in Crystal Springs. Jackson Bank operates one office in this market area. 

As of June 30, 1975, Truckers held 24.3 percent 

of the local market's commercial bank IPC deposits, representing the second largest share of 

such deposits. With merely $1,972,000 in IPC deposits, Jackson Bank's Terry branch held 3.6 percent of the IPC deposits, representing the local 

market's smallest share. The resultant bank's 27.9 

percent share of the market's commercial bank 

IPC deposits would remain second to the 31.6 percent share held by the market's largest competitor, 

Bank of Hazlehurst. The proposed transaction 

would eliminate existing competition; however, in 

view of Jackson Bank's modest size in the local 

market, the proposal is not viewed as having a significant effect on competition.

Under Mississippi law, each of the proponents 

may enter de novo the primary trade area of the 

other, but there appears to be little likelihood of 

this occurring. Truckers, in business for 44 years, 

has never expanded beyond Crystal Springs and 

would be unlikely to enter the Jackson SMSA, an 

area of intense competition, within the near future. With the pending entry of a new unit bank 

into Crystal Springs and as a result of the market's 

limited population, the Crystal Springs local market would be unattractive for de novo expansion. 

Further, even if the area were to become attractive 

for expansion in the future, several of the State's 

largest banks would be capable of de novo entry 

into the market.

In its maximum potential market, which under 

State law is that region in Mississippi lying within a 

radius of 100 miles of its main office, Jackson 

Bank controls 1.5 percent of the IPC deposits held 

on June 30, 1975, by all area offices of the 100 

commercial banks now represented in this market. 

The proposed merger would increase this share to 

2.0 percent.

From the foregoing data it appears that the proposed merger would not have a significant effect

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Federal Reserve Bank of St. Louis
BANK ABSORPTIONS APPROVED BY THE CORPORATION 91

on competition in any relevant area; and thus, the 

Board of Directors is of the opinion that the propsoed merger would not, in any section of the 

country, substantially lessen competition, tend to 

create a monopoly, or in any other manner be in 

restraint of trade.

Financial and Managerial Resources; Future

Prospects. Both Jackson Bank and Truckers have 

adequate financial and managerial resources, as 

would the resulting bank.

Convenience and Needs o f the Com m unity to

be Served. With a substantially increased credit 

capability, an aggressive management would offer 

at Truckers' locations a broader spectrum of lending services and introduce trust services in the area.

In light of the foregoing, the Board of Directors 

has concluded that approval of the application is 

warranted.

R e s o u rc e s

(in

th o u s a n d s 

o f d o lla rs )

B a n k ing 

o ffic e s in 

o p e r a tio n

B e fo re A f t e r

D ry D o ck Savings Bank

New York, New York

1,626,421 12 15

to merge with

N ew Y o rk Federal Savings

and Loan Association

New York

81,729 3

Summary report by Attorney General,

June 22, 1976

We have reviewed this proposed transaction and 

conclude that it would not have a substantial 

competitive impact.

Basis for Corporation approval, November 3, 1976

Dry Dock Savings Bank, New York (Manhattan), New York ("Dry Dock"), an insured mutual savings bank with total resources of 

$ 1 ,6 2 6 ,4 2 1 ,0 0 0 and to ta l deposits of 

$1,518,290,000, has applied, pursuant to section 

18(c) and other provisions of the Federal Deposit 

Insurance Act, for the Corporation's prior consent 

to merge with New York Federal Savings and Loan 

Association, New York (Manhattan), New York 

("Federal"), with total resources of $81,729,000 

and total deposits of $73,621,000, upon the latter's conversion to a State charter. The merger 

would be effected under the charter and title of 

Dry Dock, and incident to the transaction, the 3 

offices of Federal would become branches of the 

resultant bank, increasing to 17 the number of its 

approved offices.

Competition. Dry Dock presently operates a 

total of 12 offices: its main office and 8 branches 

in Manhattan, 2 branches in Queens, and 1 in

Nassau County. In addition, it has approval to 

establish a branch in Suffolk County and is proposing the relocation to Nassau County of a 

branch it acquired, but has never operated, by its 

April 1975 purchase of Fifth Avenue Savings and 

Loan Association. Dry Dock's primary trade area 

comprises the boroughs of Manhattan, Bronx, 

Brooklyn, and Queens, in New York City, and 

adjacent Nassau County. It is not represented in 

Westchester County.

Federal has its main office in Manhattan and 

two branches in Westchester County and it draws 

the bulk of its deposits from these two areas.

Dry Dock and Federal have their main offices 

at locations 1.3 miles apart on Lexington Avenue 

in Manhattan. Within the Manhattan-Westchester 

market, Dry Dock and Federal, respectively, hold 

4.72 percent and 0.31 percent of the deposits held 

by area offices of 40 mutual savings banks and 33 

federally insured savings and loan associations. 

Although some direct competition would be eliminated as a result of the proposed merger, in light 

of the modest size of each of the proponents and 

the numerous competing th rift institutions in the 

market, the competitive effects would be insignificant.

New York law permits thrift institutions to 

establish only one de novo branch per year. In 

view of the modest size of each institution in its 

market and the intense competition presently 

existing therein, there appears to be little potential 

for significant competition to develop between 

Dry Dock and Federal in the near future.

Dry Dock is the 10th largest of New York's 

thrift institutions, holding approximately 2.5 percent of their aggregate deposits. The resultant 

bank, with approximately 2.6 percent of such 

deposits, would remain the 10th largest in the 

State.

The Board of Directors is of the opinion that 

the proposed merger would not, in any section of 

the country, substantially lessen competition, tend 

to create a monopoly, or in any other manner be 

in restraint of trade.

Financial and Managerial Resources; Future

Prospects. While some weaknesses are noted in the 

condition of Dry Dock's assets and the level of its 

surplus accounts, its financial resources are considered adequate for the purposes of this proposal 

and its management is satisfactory. Federal's financial and managerial resources are less than acceptable. Financial and managerial resources of the 

resultant bank, however, would be acceptable and 

its future prospects appear to be favorable.

Convenience and Needs o f the C om m unity to

be Served. The proposed transaction would have 

little effect on the convenience and needs of the 

Manhattan market. The resulting institution would 

offer no services that are not presently available 

from numerous alternative sources in the relevant 

market.

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Federal Reserve Bank of St. Louis
92 FEDERAL DEPOSIT INSURANCE CORPORATION

The Board of Directors, considering the foregoing information, has concluded that approval of 

the application is warranted.

R e so u rce s

(in

th o u s a n d s 

o f d o lla rs )

B a n k in g 

o ffic e s in 

o p e r a tio n

B e fo re A f t e r

The N e w Y o rk Bank

fo r Savings

New York, New York

3,191,245 19 21

to merge with

Genesee Federal Savings

and Loan Association

Irondequoit

26,390 2

Summary report by Attorney General,

June 9, 1976

Applicant's branch office at Jefferson Valley 

and the Genesee Savings' branch office at Henrietta 

(the closest offices of the parties) are 305 miles 

apart. Thus, it appears the proposed acquisition 

would eliminate no significant existing competition.

Since January 1, 1976, statewide branching has 

been permitted under New York State law with 

certain exceptions, one of which requires that the 

city or village into which branching is contemplated have a population in excess of 50,000. 

Given the size of Rochester, Applicant could 

branch into the area served by Genesee Savings. 

Accordingly, the proposed acquisition would 

eliminate potential competition to some extent. It 

should be noted, however, that Genesee Savings 

ranks eighth among the nine thrift institutions 

which serve the Rochester area. Furthermore, 

there are 10 commercial banks which serve the 

market, several of which are upstate appendages of 

New York City banks that rank among the largest 

financial institutions in the country. Viewing all

19 financial institutions that currently serve the 

Rochester area collectively, the total deposits held 

by Genesee Savings represent 0.03 percent of the 

total deposits of all 19 institutions and its 2 offices 

represent less than 1 percent of total offices in the 

region. Thus, the amount of potential competition 

lost as a result of the proposed acquisition is not 

substantial. Indeed, the acquisition will create a 

financial institution much more capable of competing against the large institutions already serving 

the market than Genesee Savings standing alone.

In sum, the proposed acquisition would have 

only a slightly adverse effect upon competition.

Basis for Corporation approval, November 3, 1976

The New York Bank for Savings, New York 

(Manhattan), New York ("Applicant"), an insured 

mutual savings bank with total resources of

$ 3,1 9 1 ,2 4 5 ,0 0 0 and to ta l deposits of 

$2,757,194,000, has applied, pursuant to section 

18(c) and other provisions of the Federal Deposit 

Insurance Act, for the Corporation's prior consent 

to merge with Genesee Federal Savings and Loan 

Association, Irondequoit (P. O. Rochester), New 

York ("Genesee"), a federally insured savings and 

loan association w ith to ta l resources of 

$26,390,000 and total deposits of $24,795,000. 

The 2 institutions would merge under the charter 

and title of Applicant, and incident to the merger, 

the 2 offices of Genesee would become branches 

of the resultant bank, increasing to 21 the number 

of its offices.

Competition. Applicant operates its main office 

and 16 branches in Manhattan and its remaining 2 

branches in Westchester County. Applicant is the 

third largest of New York's mutual savings banks, 

holding 4.5 percent of their aggregate deposits.

Genesee has its main office in Irondequoit and 

its only branch in Henrietta, located respectively 

approximately 6 miles north and 7 miles south of 

Rochester. The city of Rochester, centrally located in Monroe County, is the largest center of 

population and industry between Syracuse and 

Buffalo in northwestern New York State. The

1975 median household buying level of Monroe 

County ($16,576) exceeded that of the State by

21.4 percent. The area enjoys the lowest unemployment rate in the State and its continued economic stability is indicated.

The Monroe County thrift institution market is 

shared by three mutual savings banks, whose area 

offices hold aggregate deposits of $1,562 billion, 

and six savings and loan associations, whose county offices hold deposits of $1,003 billion. Genesee 

has the eighth largest share, 1.0 percent, of the 

deposits held by county offices of these nine institutions.

No office of Applicant is located within 300 

road-miles of either office of Genesee and the proponents' primary trade areas are separate and distinct. No significant existing competition between 

them would be eliminated by their merger. The 

possibility of significant competition developing 

between Applicant and Genesee through their de

novo branching is limited. Modest-sized Genesee 

would not find feasible its entry into the distant, 

intensely competitive metropolitan New York 

market. New York law limits to one the number of 

de novo branches any th rift institution may establish per year. As a result, there is little potential 

for the development of a significant amount of 

competition in the near future even if Applicant 

were to branch de novo into the Rochester trade 

area.

Based on the foregoing, the Board of Directors 

is of the opinion that the proposed merger would 

not, in any section of the country, substantially 

lessen competition, tend to create a monopoly, or 

in any manner be in restraint of trade.

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Federal Reserve Bank of St. Louis
BANK ABSORPTIONS APPROVED BY THE CORPORATION 93

Financial and Managerial Resources; Future

Prospects. While some weaknesses are noted in the 

condition of Applicant's assets and the level of its 

surplus accounts, its financial and managerial resources are considered adequate for purposes of 

this proposal. Genesee's financial and managerial 

resources are acceptable. Financial and managerial 

resources of the resultant bank would be acceptable and its future prospects appear to be favorable.

Convenience and Needs o f the Com m unity to

be Served. The proposed transaction would have 

little effect on the convenience and needs of the 

local market. The resulting institution would offer 

no services that are not currently available from 

alternative sources in the relevant area.

Based on the foregoing, the Board of Directors 

has concluded that approval of the application is 

warranted.

Resources

(in

thousands

of dollars)

Banking

offices in

operation

Before A fter

U n io n S to ry T ru st

& Savings Bank

Ames, Iowa

31,835 3 3

to merge w ith

U n ion C o m p any

Ames

-

Summary report by Attorney General, 

October 18, 1976

The merging banks are both wholly owned subsidiaries of the same bank holding company. As 

such, their proposed merger is essentially a corporate reorganization and would have no effect on 

competition.

Basis for Corporation approval, November 16, 1976

Union Story Trust & Savings Bank, Ames, Iowa 

("Union Story"), an insured State nonmember 

bank with total resources of $31,835,000, as of 

December 31, 1975, has applied, pursuant to section 18(c) and other provisions of the Federal 

Deposit Insurance Act, for the Corporation's prior 

consent to merge with Union Company, Ames, 

Iowa, a nonbanking entity which holds title to 

Union Story's banking premises and which is 

wholly owned by Union Story. The merger would 

be effected under the charter and title of Union 

Story.

Competition. The proposed merger would be a 

minor internal reorganization designed to return 

direct ownership of Union Story's banking premises to the bank from its wholly owned subsidiary. 

As such, it would not affect competition.

Financial and Managerial Resources; Future

Prospects. The financial and managerial resources 

and future prospects of Union Story are satisfactory.

Convenience and Needs o f the Com m unity to

be Served. The proposed transaction would be an 

internal reorganization and would not affect the 

convenience and needs of the community.

Based on the foregoing information, the Board 

of Directors has concluded that approval of the 

application is warranted.

Resources

(in

thousands

o f dollars)

Banking

offices in

operation

Before A fter

Branch B anking and T ru st

C o m p any

Wilson, North Carolina

426,782 76 78

to merge w ith

T he Citizens B ank of

W arrenton

Warrenton

17,549 2

Summary report by Attorney General, 

September 10, 1976

Bank operates solely in Warrenton (population 

1,000), Warren County (population 15,800). 

Applicant operates its closest branch office in 

Littleton which is located in adjoining Halifax 

County about 16 miles away. Applicant also operates six other branch offices in Halifax County 

whose distances from Warrenton range between 30 

and 65 miles. Thus, it seems clear that the proposed acquisition will not eliminate existing competition.

There are three banks operating in Warren 

County. As of December 31, 1975, Bank had deposits of $14.5 million, 60 percent of county deposits; Peoples Bank and Trust Co., the State's 

10th largest bank, had deposits of $5.4 million at 

its branch in Norlina (4 miles northwest of Warrenton), representing 25.7 percent of county deposits; 

and First Citizens Bank and Trust Co., the State's 

5th largest bank, had deposits of $1.1 million at its 

Warrenton branch, equal to 5.2 percent of county 

deposits. Hence, the proposed acquisition will not 

increase concentration in Warren County. Applicant is the second largest bank in Halifax County, 

with about 30 percent of total deposits. Should it 

be deemed appropriate to define the relevant market to embrace both Warren and Halifax Counties, 

there would be an increase in concentration. The 

second largest bank would be acquiring the fifth 

largest bank in the two-county market, and the 

resulting bank would rank first with 36 percent of 

total two-county deposits.

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Federal Reserve Bank of St. Louis
94 FEDERAL DEPOSIT INSURANCE CORPORATION

Under North Carolina law either bank could be 

permitted to open de novo branches in the areas 

served by the other. Accordingly, the merger 

would eliminate the potential for increased competition between the merging banks in the WarrenHalifax County area. However, the area is open to 

entry by the State's four largest banks, with deposits ranging from $1 billion to $3.1 billion, none 

of which presently operates an office there. In 

view of the decline in the area's population, and 

the ability of the State's largest banks to enter the 

area, consummation of the proposed merger would 

be unlikely to have a significantly adverse effect 

on potential competition.

In sum, the proposed acquisition will have some 

adverse competitive effects.

Basis for Corporation approval, November 16, 1976

Branch Banking and Trust Company, Wilson, 

North Carolina ("Branch"), an insured State 

nonm em ber bank w ith total resources of 

$ 4 2 6,7 8 2 ,0 0 0 and to ta l IPC deposits of 

$327,085,000, has filed, pursuant to section 18(c) 

and other provisions of the Federal Deposit Insurance Act, an application seeking the Corporation's 

prior consent to merge under its charter and title 

with The Citizens Bank of Warrenton, Warrenton, 

North Carolina ("Citizens"), an insured State nonmember bank with total resources of $17,549,000 

and total IPC deposits of $14,825,000. As an 

incident of the merger, the 2 offices of Citizens 

would be established as branches of the resultant 

bank, increasing to 79 the number of its approved 

offices.

Competition. Branch is the sixth largest commercial bank in North Carolina and its parent, 

Branch Corporation, a one-bank holding company, 

is the State's seventh largest banking organization. 

Operating largely in the east-central and midwestern sections of the State, Branch has a total of 

77 offices, including 1 approved but unopened 

branch.

Citizens operates its two offices in the town of 

Warrenton, the county seat and trading center of 

Warren County. Located in central-northern North 

Carolina and characterized as a rural and predominantly agricultural area, Warren County had a 

1970 population of 15,810, representing a 19.6 

percent decrease from 1960.

Effects of the proposed merger would be most 

immediate and direct in Citizens' local market, 

which consists of Warren County. Three commercial banks have offices in this market, holding, on 

June 30, 1975, IPC deposits aggregating $20.3 

million. With 68.8 percent of such deposits, Citizens is the dominant bank in this market.

Branch's nearest office is located in the Halifax 

County portion of the town of Littleton, which 

lies partly in Warren County, 16 road-miles east of 

Warrenton. The intervening area is sparsely populated and neither proponent appears to draw a

significant amount of business from the market of 

the other.

Although North Carolina law permits statewide 

de novo branching, there is very little potential for 

the development of competition in the future between the proponents. Citizens is being operated 

under the conservative policies of an aged management and it is not likely to undertake office expansion. With a decreasing population and a 1974 

median household buying level 34.6 percent below 

that of the State, Warren County would be unlikely to attract Branch's de novo entry. Should 

Warren County become attractive for such entry, 

the State's largest banks would also be potential 

entrants.

The proposed merger would not eliminate significant existing or potential competition between 

Branch and Citizens, nor would it reduce the 

number of banking alternatives within the relevant 

market. Based on the foregoing, the Board of 

Directors is of the opinion that the proposed merger would not, in any section of the country, substantially lessen competition, tend to create a 

monopoly, or in any other manner be in restraint 

of trade.

Financial and Managerial Resources; Future

Prospects. The financial resources of both proponents are adequate. The managerial resources of 

Branch Bank are satisfactory. Future prospects of 

the resultant bank are favorable.

Convenience and Needs o f the Com m unity to

be Served. The merger would introduce at Citizens' two offices the full range of banking and 

trust services of one of the State's major banks. An 

aggressive management, operating with a greatly 

increased credit capability, should improve the 

scope and quality of banking service in the Warren 

County market.

On the basis of the foregoing information, the 

Board of Directors has concluded that approval of 

the application is warranted.

R e s o u rc e s

(in

th o u s a n d s 

o f d o lla rs )

B a n k in g 

o ffic e s in 

o p e r a tio n

B e fo re A fte r

First V irg in ia B ank o f

T id e w a te r

Norfolk, Virginia

124,053 26 31

to merge w ith

F irst V irg in ia B ank o f the

Peninsula

Poquoson

18,333 5

Summary report by Attorney General, 

August 19, 1976

The merging banks are both wholly owned subsidiaries of the same bank holding company. As

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Federal Reserve Bank of St. Louis
BANK ABSORPTIONS APPROVED BY THE CORPORATION 95

such, their proposed merger is essentially a corporate reorganization and would have no effect on 

competition.

Basis for Corporation approval, November 16, 1976

First Virginia Bank of Tidewater, Norfolk, V irginia ("Tidewater Bank” ), an insured State nonm e m b e r bank w ith to ta l resources of 

$12 4,0 5 3 ,0 0 0 and to ta l IPC deposits of 

$102,393,000, has applied, pursuant to section 

18(c) and other provisions of the Federal Deposit 

Insurance Act, for the Corporation's prior consent 

to merge with First Virginia Bank of the Peninsula, 

Poquoson, Virginia ("Peninsula Bank"), an insured 

State member bank with total resources of 

$18,33 3 ,0 0 0 and to ta l IPC deposits of 

$12,845,000. The banks would merge under the 

charter and title of Tidewater Bank, and incident 

to the merger, the five offices of Peninsula Bank 

would be established as branches of the resultant 

bank.

Competition. This proposal is designed solely to 

provide a means by which First Virginia Bankshares Corporation, Falls Church, Virginia ("First 

Virginia” ), a registered bank holding company, 

may consolidate its operations in the Tidewater 

and Peninsula areas of Virginia. Both proponents 

have been controlled by First Virginia for the past 

5 years and the proposal would not change the 

effective structure or concentration of resources of 

commercial banking in their relevant markets nor 

would there be any significant change in the banking services they presently provide.

The Board of Directors is of the opinion that 

the proposed merger would not, in any section of 

the country, substantially lessen competition, tend 

to create a monopoly, or in any other manner be 

in restraint of trade.

Financial and Managerial Resources; Future

Prospects. The proponents' financial and managerial resources are considered adequate for purposes of this proposal. The financial and managerial resources of the resultant bank would be 

satisfactory and its future prospects appear to be 

favorable.

Convenience and Needs o f the Com m unity to

be Served. This proposal represents an internal reorganization and no effect on the convenience and 

needs of the community is expected.

On the basis of the foregoing information, the 

Board of Directors has concluded that approval of 

the application is war ranted.

R e s o u rc e s

(in

th o u s a n d s 

o f d o lla rs )

B a n k in g 

o ffic e s in 

o p e r a tio n

B e fo re A f t e r

Japan C a lifo rn ia B ank

Los Angeles, California

36,466 1 2

to purchase a portion of the

assets and assume liability

to pay a portion o f the

deposits of

B ank o f M o n tre al

(C alifo rn ia)

San Francisco

_ * 1

Summary report by Attorney General,

May 24, 1976

Japan California's closest office to the San Diego 

branch is 120 miles away. The proposed branch in 

San Jose is even farther away. The applicant bank 

presently has no accounts or customers in San 

Diego County nor do the two banks share any 

loans. Thus, there is no existing competition between the banks that would be eliminated.

Potential competition is also not a problem in 

spite of California's lack of legal limitations on 

branching. The acquiring bank is very small in relation to California's high degree of concentration, 

and the bank it is acquiring has only .05 percent of 

the market in San Diego County which is clearly 

de minimus.

Basis for Corporation approval, November 30, 1976

Japan California Bank, Los Angeles, California 

("Japan California"), a State nonmember insured 

bank with total resources of $36,466,000 and 

total IPC deposits of $13,306,000 on December

31, 1975, has applied, pursuant to section 18(c) 

and other provisions of the Federal Deposit Insurance Act, for the Corporation's prior consent to 

purchase a portion of the assets of and assume liability to pay a portion of the deposits in Bank of 

Montreal (California), San Francisco, California, a 

State nonmember insured bank. Japan California 

also has applied for consent to establish Bank of 

Montreal's Westgate Plaza branch ("Montreal 

branch"), with total deposits of $1,637,000 as of 

December 31, 1975, as a branch, increasing the 

number of its offices to two.

Competition. Japan California operates its one 

office in downtown Los Angeles and it is the 87th 

largest of California's commercial banks, holding 

0.03 percent of their aggregate deposits.

The Montreal branch operates in a trade area 

consisting of the city of San Diego. Within this 

area it is competing with 121 offices of 24 banks 

and it holds merely 0.1 percent of total deposits. 

Nine of the State's 10 largest banks are represented in this area and hold a total of 84.0 percent of the area's commercial bank deposits.

*Total resources statistics are not available on a branch 

basis.

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Federal Reserve Bank of St. Louis
96 FEDERAL DEPOSIT INSURANCE CORPORATION

Japan California's only office is located approximately 120 road-miles north of the Montreal 

branch and has no deposits in the San Diego area. 

California law permits statewide de novo branching; however, were such expansion to occur, no 

significant competition between the proponents 

would result in view of the fact that both are 

modest-sized operations in markets dominated by 

the State's major banks. For these reasons, it 

appears that the approval of this application would 

not eliminate significant existing or potential 

competition between the two proponents, nor 

would it affect the structure of commercial banking in any relevant area.

The Board of Directors, therefore, has concluded that the proposed transaction would not, in 

any section of the country, substantially lessen 

competition, tend to create a monopoly, or in any 

other manner be in restraint of trade.

Financial and Managerial Resources; Future

Prospects. Each proponent has satisfactory financial and managerial resources and favorable future 

prospects, as would the resultant bank.

Convenience and Needs o f the Com m unity to

be Served. No significant enhancement of public 

convenience is likely to result from the proposal. 

Nine of the State's 10 largest banks are represented in Montreal branch's trade area. Expansion of services to include Japan California's 

international banking services at the Montreal 

branch location would provide an additional alternative for such services in the relevant area.

Based on the foregoing, the Board of Directors 

has concluded that approval of the application is 

warranted.

R e so u rce s

(in

th o u s a n d s

B a n k in g 

o ffic e s in 

o p e r a tio n

o f d o lla rs ) B e fo re A f t e r

The First N ational Bank

o f Boston

Boston, Massachusetts

7,540,247 42 42

to acquire the assets and

assume the deposit

liabilities of

Boston Leasing, G m b H

Frankfurt, Germany

18,386 -

Summary report by Attorney General, 

November 5, 1976

The banks are both wholly owned subsidiaries 

of the same bank holding company. As such, the 

proposed transaction is essentially a corporate 

reorganization and would have no effect on competition.

Basis for Corporation approval, November 30, 1976

The First National Bank of Boston, Boston, 

Massachusetts ("FNBB"), a national banking association having total resources of $7,540,247,000, 

has applied, pursuant to section 18(c) of the Federal Deposit Insurance Act, for the Corporation's 

prior consent to acquire the assets and assume the 

liabilities of Boston Leasing, GmbH, Frankfurt, 

Federal Republic of Germany ("BLG"), a noninsured indirect wholly owned subsidiary of 

FNBB.

The proposed transaction is in effect a corporate reorganization whose purpose is to change 

the legal form under which FNBB conducts its 

leasing business in the Frankfurt market. As a 

result of the merger, substantially all the assets and 

liabilities of BLG would be transferred to the accounts of FNBB's Frankfurt branch. The transaction consummated, FNBB would carry on essentially the same leasing business at its Frankfurt 

branch, in addition to the other services now offered by that branch, as has heretofore been conducted by BLG.

Competition. The proposed transaction would 

have no effect on either existing or potential competition between FNBB and BLG or on the structure of commercial banking in any relevant area.

Financial and Managerial Resources; Future

Prospects. These factors are acceptable for both 

FNBB and BLG, and the potential tax benefits 

which would result from the new corporate structure should have a salutary effect.

Convenience and Needs o f the Com m unity to

be Served. The proposal would have no perceptible 

effect on the convenience and needs of any of 

FNBB's domestic markets or of the Frankfurt 

market.

Based on the foregoing, the Board of Directors 

has concluded that approval of the application is 

warranted.

R e s o u rc e s

(in

th o u s a nds

B a n k in g 

o ffic e s in 

o p e r a tio n

o f d o lla rs ) B e fo re A f t e r

G uarantee Bank

Atlantic City, New Jersey

141,783 10 15

to acquire the assets and assume

the deposit liabilities of

T he First N ational B ank of

Cape M ay C o u rt House

Cape May Court House

56,926 5

Summary report by Attorney General, 

August 20, 1976

Applicant currently operates nine offices in the 

Atlantic County market and a single office in adjacent Cumberland County. First National operates 

five offices in Lower and Middle Townships, Cape

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BANK ABSORPTIONS APPROVED BY THE CORPORATION 97

May County. The main offices of the banks are 

separated by 29 miles and the closest branches are 

20 miles apart. It appears that the proposed merger would not eliminate any significant amount of 

existing competition.

New Jersey law permits de novo branching by 

commercial banks in any municipality in the State, 

but provides home office protection in municipalities of less than 20,000. (As of January 1, 1977, 

the population requirement becomes 10,000.) 

Applicant is the second largest institution in Atlantic County with 23.6 percent of total IPC deposits. 

First National, the dominant bank in its primary 

service area of Lower and Middle Townships, ranks 

third among all institutions in Cape May County. 

Applicant, which has recently opened a branch in 

Cumberland County, over 30 miles distant from its 

main office, is a likely de novo entrant into Cape 

May County absent the proposed acquisition. 

Furthermore, the proposed acquisition will foreclose the possibility of entry by Applicant by 

means of a merger with one of the small banks in 

the area.

The proposed acquisition would not eliminate 

any significant amount of existing competition. 

However, it would combine a likely entrant into 

the Cape May County area with the dominant 

institution serving the Middle and Lower Township market. Accordingly, the proposed merger 

would have an adverse effect on potential competition.

Basis for Corporation approval, November 30, 1976

Guarantee Bank, Atlantic City, New Jersey, an 

insured State nonmember bank with total resources of $141,783,000 and total IPC deposits of 

$112,292,000, has applied, pursuant to section 

18(c) and other provisions of the Federal Deposit 

Insurance Act, for the Corporation's prior consent 

to acquire the assets of and assume the liability to 

pay deposits made in The First National Bank of 

Cape May Court House, Cape May Court House, 

New Jersey ("FNB"), with total resources of 

$56,92 6 ,0 0 0 and to ta l IPC deposits of 

$42,680,000. The transaction would be effected 

under the charter and title of Guarantee Bank, and 

as an incident thereto, the 5 offices of FNB would 

become branches of Guarantee Bank which would 

then have a total of 15 offices.

Competition. Guarantee Bank operates nine 

offices in Atlantic County and one office in 

Cumberland County. Sixteen commercial banks 

with a total of 100 area offices serve these 2 counties. Guarantee Bank controls 14.0 percent, representing the second largest share, of the total 

commercial bank deposits held in these two counties.

FNB operates all five of its offices in Cape May 

County. Cape May County is bounded on the 

south and east by the Atlantic Ocean, on the west 

by the Delaware Bay, on the north by Atlantic

County, and on the northwest by Cumberland 

County. The county had a 1970 population of 

59,554, representing a 22.7 percent increase from 

1960, and a 1975 median household buying level 

of $10,551, which was 33.9 percent below the 

statewide median.

Effects of this proposed merger would be most 

immediate and direct in FNB's local market, which 

consists of the lower townships and the southern 

portion of the middle townships of Cape May 

County, including the boroughs of Woodbine and 

Sea Isle City. The population of the market is 

approximately 45,000. The area is characterized as 

being a predominantly rural, residential area with a 

heavy concentration of seasonal dwellings and 

resort-oriented facilities. This market is currently 

served by 19 offices of 7 commercial banks. Guarantee Bank is not represented in this market. FNB 

holds 25.4 percent, or the second largest share, of 

the market's commercial bank IPC deposits. Therefore, the proposed acquisition would neither eliminate existing competition nor enhance concentration in the area, as Guarantee Bank would succeed 

to the market share held by FNB.

New Jersey law permits statewide branching, 

subject to certain restrictions relating to home 

office protection. Although FNB does not have 

the managerial or financial resources to branch de

novo into the highly competitive Atlantic City 

area in the foreseeable future, Guarantee Bank is a 

possible de novo entrant into the Cape May County area and would be able to establish branches 

both in FNB's service area and other areas of the 

county. Therefore, there is some potential for 

development of competition between the proponents. However, consummation of the proposed 

transaction would remove home office protection 

in Middle Township, presently afforded FNB. 

Moreover, the elimination by this transaction of 

the potential for increased competition between 

the two banks is mitigated by the availability of 

many of the State's larger banks as potential entrants.

Commercial banking in New Jersey is relatively 

unconcentrated. The two largest commercial banking organizations, each a multibank holding 

company with total IPC deposits in excess of $1.4 

billion, have an aggregate of only 15.0 percent of 

the commercial bank IPC deposits in the State. 

Guarantee Bank has 0.6 percent of such deposits 

and the proposed acquisition would give the resultant bank only 0.8 percent. Neither of the participating banks is affiliated with a holding company, 

but many of the competitors of Guarantee Bank 

are so affiliated. The proposed acquisition would 

have no appreciable effect on the structure or 

deposit concentration of commercial banking in 

New Jersey.

Under those circumstances, the Board of Directors is of the opinion that the proposed transaction would not, in any section of the country,

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Federal Reserve Bank of St. Louis
98 FEDERAL DEPOSIT INSURANCE CORPORATION

substantially lessen competition, tend to create a 

monopoly, or in any other manner be in restraint 

of trade.

Financial and Managerial Resources; Future

Prospects. Financial and managerial resources at 

FNB are satisfactory and are adequate at Guarantee Bank. Financial and managerial resources at 

the resultant bank would be acceptable and its 

future prospects appear to be favorable.

Convenience and Needs o f the Com m unity to

be Served. The proposed transaction would have 

little effect on the convenience and needs of the 

local market. The resultant institution would offer 

no services that are not currently available from 

alternative sources in the relevant market.

Based on the foregoing, the Board of Directors 

has concluded that approval of the application is 

warranted.

R e s o u rc e s

(in

th o u s a n d s 

o f d o lla rs )

B a n k ing 

o ffic e s in 

o p e r a tio n

B e fo re A f t e r

Erie C o u n ty Savings

Bank

Buffalo, New York

1,315,172 10 11

to merge w ith

O lean Savings and Loan

Association

Olean

8,232 1

Summary report by Attorney General, 

August 19, 1976

Applicant operates 11 offices in and around 

Buffalo and had deposits on December 31, 1975, 

of $1,209 million. Savings has its only office in 

Olean, 70 miles southeast of Buffalo, and has also 

been authorized to open a branch in Arcade, 45 

miles southeast of Buffalo. As of December 31,

1975, it had deposits of $7.2 million.

There are no other savings and loans and no 

savings banks in Olean but there are eight commercial banking offices, including four of Manufacturers Hanover. Applicant's offices are almost 

entirely within Erie County, surrounding Buffalo; 

it has one branch in an adjoining county, opened 

last year. Savings' business comes from the areas 

surrounding Olean. In Applicant's area are 30 savings bank offices, 30 savings and loan offices, and 

174 commercial bank offices, including many of 

the State's largest. Depositors in common for both 

organizations as of December 31, 1975, had total 

deposits at Applicant of $73,000 (0.006 percent 

of deposits) and at Savings of $46,000 (0.637 percent of deposits). Applicant has three loans totaling $607,000 in Savings' area; Savings has no loans 

in Applicant's area. There are no borrowers who 

have loans at both institutions.

It appears that the proposed acquisition is not 

likely to have an adverse effect upon competition.

Basis for Corporation approval, November 30, 1976

Erie County Savings Bank, Buffalo, New York 

(“ Erie Savings"), an insured mutual savings bank 

with total resources of $1,315,172,000 and total 

deposits of $1,227,494,000, has applied, pursuant 

to section 18(c) and other provisions of the Federal Deposit Insurance Act, for the Corporation's 

prior consent to merge with Olean Savings and 

Loan Association, Olean, New York ("S&L"), a 

federally insured mutual savings and loan association with total resources of $8,232,000 and total 

deposits of $7,260,000. The institutions would 

merge under the charter and title of Erie Savings, 

and as an incident to the merger, the 2 approved 

offices of S&L would become branches of the 

resultant bank, increasing the number of its full 

service offices to 13.

Competition. Erie Savings is headquartered in 

Buffalo and operates 10 full service branches, with 

all but 1 located in Erie County. That branch is 

located in Jamestown, Chautauqua County. Erie 

Savings is the second largest th rift institution in 

Erie County with 32.5 percent of the total deposits held by area offices of three mutual savings 

banks (deposits as of June 30, 1975) and seven 

savings and loan association offices (deposits as of 

March 31, 1976). It is also the 13th largest thrift 

institution in the State of New York with 1.6 percent of the State's total deposits. No change in 

these market positions would be effected as a result of this proposed merger.

S&L operates its sole office in Olean (population 19,169), Cattaraugus County, which is located 70 miles southeast of Buffalo and 55 miles 

east of Jamestown, the location of Erie Savings' 

nearest office.

The area principally affected by this merger is 

the city of Olean and its immediate environs, including the towns of Allegany and Portville. This 

market has an estimated population of 33,000. 

Olean is the center of commercial and retail activity in southeastern Cattaraugus County. Cattaraugus County had a 1975 median buying level of 

$10,896, which was approximately 20.2 percent 

below the State median level of $13,649. At present there are 10 offices of 4 commercial banks 

located in the relevant market area. These banks 

controlled 92.2 percent of the market's aggregate 

IPC time and savings deposits as of June 30, 1975. 

S&L is the only th rift institution represented in 

the market, and it held merely 7.8 percent of the 

market's IPC time and savings deposits. In view of 

the distance between the proponents' closest offices, there is no significant existing competition 

between them. Moreover, the proposed merger 

would not change the local market structure, but 

would merely allow Erie Savings to succeed to the 

deposits now held by S&L.

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BANK ABSORPTIONS APPROVED BY THE CORPORATION 99

There is little potential for the development of 

significant competition between the proponents in 

the future through their de novo branching. S&L 

has operated as a unit institution for over 80 years 

and it has neither the financial nor the managerial 

resources to expand in this manner.* Mutual savings banks in New York are permitted only one de

novo branch per year. Due to this limitation, Erie 

Savings is likely to prefer more economically viable areas than Olean in which to branch.

Under the circumstances presented, the Board 

of Directors is of the opinion that the proposed 

merger would not, in any section of the country, 

substantially lessen competition, tend to create a 

monopoly, or in any other manner be in restraint 

of trade.

Financial and Managerial Resources; Future

Prospects. Erie Savings has, and the resultant bank 

w ould have, adequate financial and managerial resources and favorable future prospects. 

S&L has experienced a declining trend in net earnings due to an imbalanced deposit structure and 

accompanying high cost of time money, a situation which would be remedied by this merger proposal.

Convenience and Needs o f the Com m unity to

be Served. Customers of S&L and other area residents would benefit from the full range of savings 

bank services offered by the resultant bank, including savings bank life insurance, free checking, 

and more favorable interest rates.

Based on the foregoing, the Board of Directors 

has concluded that approval of the application is 

warranted.

R e so u rce s

(in

th o u s a n d s 

o f d o lla rs )

B a n k in g 

o ffic e s in 

o p e r a tio n

B e fo re A f t e r

T h e M a n h a tta n Savings

B ank

New York, New York

1,303,046 10 14

to merge w ith

Y o nkers Savings B ank

Yonkers

392,189 4

Summary report by Attorney General, 

October 28, 1976

Applicant, the ninth largest mutual savings 

bank in New York County, has its main office and 

six branches in New York City and three other 

branches in Westchester County. On June 30,

1976, Applicant had total deposits of $1,200.3 

million (including IPC time and savings deposits of

*S&L has received approval to establish a branch in 

Arcade, Wyoming County; however, the branch's establishment is conditioned upon the consummation of this 

merger transaction.

$1,187.8 million), and held real estate loans totaling $884.9 million.

Bank operates four offices in the city of 

Yonkers in Westchester County and is the largest 

mutual savings bank headquartered in the county. 

On June 30, 1976, Bank had total deposits of 

$356.5 million (including IPC time and savings 

deposits of $356.1 million), and held real estate 

loans totaling $125.1 million. A review of Bank's 

balance sheets for selected prior years shows that 

the investment portfolio has usually been larger 

than the real estate mortgage loan portfolio.

Westchester County, located in the northern 

sector of the New York metropolitan area, is a 

suburban area with a 1970 population of 894,409. 

Approximately one-third of employed county residents commute to work outside the county, 

primarily to New York City. There is also substantial commutation to the county; in 1970, approximately 71,000 nonresidents were employed in 

Westchester County.

Applicant operates two offices in Mount Kisco, 

in the northern portion of the county, and one in 

Eastchester, in the southeast portion of the county. All four of Bank's offices are located in the 

city of Yonkers, in the southwest portion of the 

county. The closest offices of both banks are 3.26 

miles apart, and all Bank's offices are within 

approximately 6 miles of Applicant's Eastchester 

office. According to the application, the service 

areas of Applicant's Eastchester office and. Bank's 

offices overlap to a substantial extent.

Twenty-one savings banks operating in Westchester County (an area which may overstate the 

market) held total county savings deposits of $2.6 

billion as of June 30, 1975. As of the same date,

18 savings and loan associations operating in the 

county held total county savings of $919.2 million. (As of June 30, 1975, the 15 commercial 

banks operating in Westchester County held $1.5 

billion of county IPC time and savings deposits.) 

On June 30, 1975, Applicant, seventh largest of 

the 39 th rift institutions in total county savings 

deposits, held $141.7 million of county savings 

deposits, 4 percent of total county th rift institution savings deposits. As of June 30, 1975, Bank, 

the largest Westchester County-headquartered 

thrift institution, held $328 million in total county deposits which constituted 9.4 percent of total 

county th rift institution savings deposits. The four 

largest th rift institutions in Westchester County 

held 34.7 percent of total county savings deposits 

held by all th rift institutions operating in the 

county. If the proposed merger were consummated, the resulting bank would be the largest 

thrift institution in the county, accounting for

13.4 percent of total county savings deposits held 

by the thrift institutions operating there. The share 

of county savings deposits held by the top four 

thrift institutions would increase from 34.7 percent to 38.7 percent.

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100 FEDERAL DEPOSIT INSURANCE CORPORATION

The proposed merger would eliminate substantial existing competition between the merging 

parties, and would increase concentration among 

Westchester County thrift institutions. However, 

Bank's preference for investing a larger share of its 

deposits in securities rather than in real estate 

mortgages means that it has not competed as 

actively as it should. Furthermore, the increase in 

concentration may be substantially offset by the 

commuting habits of Westchester County residents 

referred to above, and by the presence of large and 

numerous th rift institutions located in New York 

City, some of which also have branches in the 

county.

We conclude that, overall, the proposed merger 

would have an adverse effect on competition.

Basis for Corporation approval, November 30, 1976

The Manhattan Savings Bank, New York 

(Manhattan), New York ("Manhattan Savings"), 

an insured mutual savings bank with total resources of $1,303,046,000 and total deposits of 

$1,200,337,000 as of June 30, 1976, has applied, 

pursuant to section 18(c) and other provisions of 

the Federal Deposit Insurance Act, for the Corporation's prior consent to merge with Yonkers 

Savings Bank, Yonkers, New York ("Yonkers Savings"), an insured mutual savings bank having, on 

June 30, 1976, total resources of $392,189,000 

and total deposits of $356,454,000. The 2 banks 

would merge under the charter and title of Manhattan Savings, and incident to the merger, the 4 

offices of Yonkers Savings would be established as 

branches of the resultant bank, increasing to 16 

the number of its approved offices.

Competition. Yonkers Savings operates all four 

of its offices within the city of Yonkers in Westchester County.

Manhattan Savings presently operates a total of 

10 offices: its main office and 5 branches in Manhattan, 1 branch in Queens, and 3 branches in 

Westchester County. Two additional branches, to 

be established in Manhattan, have been approved. 

Two of Manhattan Savings' three Westchester 

County branches are located in Mount Kisco, 

approximately 21 road-miles north of the city of 

Yonkers. The third branch is located in Eastchester, 3.9 miles southeast of Yonkers Savings' 

Northeast branch.

Manhattan Savings draws the bulk of its deposits from the boroughs of Manhattan and 

Queens and Westchester County. Yonkers Savings 

draws more than 95.0 percent of its deposits from 

Yonkers and other nearby communities in Westchester County.

Westchester County is situated immediately 

north of New York City. The county had a 1970 

population of 894,104, representing a 10.5 percent increase from 1960, and a 1975 median 

household buying level of $18,564, which was 

approximately 36.0 percent higher than the statewide median. Yonkers Savings held 9.3 percent,

representing the largest share, of the deposits held 

by offices of the 23 mutual savings banks and 18 

federally insured savings and loan associations 

operating in the county. Manhattan Savings has 

the eighth largest share, 4.0 percent, of these deposits. Therefore, existing competition between 

the proponents would be eliminated as a result of 

this merger. However, due to the location of Westchester County, many of its residents commute to 

New York City for employment. Manhattan Savings held 2.2 percent, the 14th largest share, of the 

deposits held by offices of the 54 mutual savings 

banks and 61 federally insured savings and loan 

associations operating within this larger area consisting of New York City and Westchester County. 

Yonkers Savings held merely 0.7 percent of the 

deposits. In view of these modest market shares, 

the resulting elimination of existing competition 

would not be significant.

New York law limts de novo expansion by a 

mutual savings bank to one branch each year. This 

limitation effectively restricts the development of 

significant competition between Manhattan Savings and Yonkers Savings.

Manhattan Savings is the 18th largest of the 

New York thrift institutions, holding approximately 1.4 percent of their aggregate deposits. The 

resultant bank, with some 1.9 percent of such deposits, would become the 11th largest thrift institution in the State.

The Board of Directors is of the opinion that 

the proposed merger would not, in any section of 

the country, substantially lessen competition, tend 

to create a monopoly, or in any other manner be 

in restraint of trade.

Financial and Managerial Resources; Future

Prospects. Both proponents have satisfactory 

financial and managerial resources, as would the 

resultant bank. Future prospects of the resultant 

bank appear favorable.

Convenience and Needs o f the C om m unity to

be Served. The proposed transaction would have 

little effect on the convenience and needs of the 

community. The resulting institution would offer 

no services that are not currently available from 

alternative sources in the relevant area.

Based on the foregoing, the Board of Directors 

has concluded that approval of the application is 

warranted.

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BANK ABSORPTIONS APPROVED BY THE CORPORATION 101

R e so u rce s

B a n k ing 

o ffic e s in

(in

th o u ss n ds

o p e r a tio n

o f d o lla rs ) B e fo re A f t e r

Citizens S tate B ank o f

N ew Jersey 20,205 3 4

Lacey Township,

New Jersey

to acquire the assets and assume

the deposit liabilities of

A tla n tic S tate B ank 9,584 1

Point Pleasant

Summary report by Attorney General, 

October 18, 1976

Applicant's main office is located 21.4 miles 

south of Bank, and its two other offices are located approximately 27 miles and 36 miles south 

of Bank. According to the application, Bank holds 

no deposits or loans originating in Applicant's service area, Applicant holds only a negligible amount 

of deposits and loans originating in Bank's service 

area, and there are only a small number of customers who have deposit or loan accounts at both 

banks. Therefore, it appears that the proposed 

acquisition will not eliminate any significant existing competition.

Both banks are among the smaller institutions 

operating in Ocean County. As of June 30, 1975, 

Applicant held approximately 2 percent of the 

total deposits in the county and Bank held less 

than 1 percent. Bank is the smallest of the four 

banks operating in its immediate service area; as of 

June 30, 1976, it accounted for 4.3 percent of the 

total deposits in that area.

Under New Jersey law, Applicant could be permitted to branch de novo into Bank's service area. 

However, in view of the relative sizes of Applicant 

and Bank, and Bank's present condition, the proposed acquisition will not have any significant 

effect on potential competition.

In sum, the proposed acquisition will not eliminate either actual or potential competition to any 

significant degree.

Basis for Corporation approval, December 16, 1976

Citizens State Bank of New Jersey, Lacey 

Township (P. 0. Forked River), New Jersey (“ Citizens” ), a State nonmember insured bank with 

total resources of $20,205,000 and total IPC deposits of $17,127,000, has applied, pursuant to 

section 18(c) and other provisions of the Federal 

Deposit Insurance Act, for the Corporation's prior 

consent to acquire the assets of and assume the 

liability to pay deposits made in Atlantic State 

Bank, Point Pleasant, New Jersey ("A tlantic"), a 

State nonmember insured bank with total resources of $9,584,000 and total IPC deposits of 

$5,635,000. The resultant bank would be operated 

under the charter and title of Citizens, and as an

incident to the acquisition, the sole office of 

Atlantic would become a branch of Citizens, 

which would then have a total of four offices.

Competition. Both of the proponents operate 

in Ocean County, which is located in central New 

Jersey along the Atlantic Ocean. Ocean County 

experienced a construction and population boom 

during the 1960s and early 1970s. Between 1960 

and 1970, the county's population nearly doubled, 

increasing from 108,241 to 208,470. The 1975 

median household buying level for the county was 

$12,471, compared to a statewide level of 

$15,971.

Citizens' service area is defined as the southeastern, coastal portion of Ocean County, extending as far north as Toms River and as far south as 

Little Egg Harbor. Eight commercial banks operate 

a total of 29 offices in this area. Citizens' holds 6.4 

percent, the fourth largest share, of the commercial bank IPC deposits held in the market. Atlantic 

does not operate in the market. Three banks, holding 86.4 percent of the IPC deposits, dominate the 

market, with the largest, The First National Bank 

of Toms River, Toms River, New Jersey, controlling 52.9 percent.

Atlantic's service area consists of the northeastern tip of Ocean County and the southernmost 

portion of adjacent Monmouth County. Atlantic 

holds the smallest share, 1.3 percent, of the commercial bank IPC deposits held by the nine 

commercial banks operating in this area. Citizens 

has no offices in this market.

Citizens' and Atlantic's closest offices are 

approximately 21 road-miles apart and there are 

many alternative commercial banking offices located in the intervening area. The business generated by Citizens and Atlantic from areas served 

primarily by the other is nominal and their service 

areas are separate and distinct. The proposed 

acquisition, therefore, would not eliminate any 

significant existing competition between the proponents.

New Jersey law permits statewide de novo

branching, subject to certain restrictions relating 

to home office protection. As of January 1, 1977, 

Citizens would be able to branch de novo into 

Point Pleasant, as well as into other communities 

located in Atlantic's service area*This area is already adequately banked, however, and it is 

doubtful that Citizens would branch into it in the 

near future. Moreover, acquisition of Atlantic's 

mere 1.3 percent market share is insignificant and 

it is the practical equivalent of the establishment 

of a de novo branch by Citizens. For Atlantic's

^Currently, New Jersey commercial banks may not establish de novo branches in communities that contain both 

fewer than 20,000 residents and the main office of 

another bank, thereby precluding Citizens' de novo

entry into Point Pleasant. However, beginning January 1, 

1977, this restriction will be limited to communities 

having fewer than 10,000 residents, and as a result. Citizens would be able to branch into Point Pleasant.

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Federal Reserve Bank of St. Louis
102 FEDERAL DEPOSIT INSURANCE CORPORATION

part, it lacks the financial and managerial resources 

to engage in any meaningful de novo branching. 

Therefore, the proposed acquisition of Atlantic by 

Citizens would not eliminate any significant potential for competition to develop in the future.

Based on the foregoing, the Board of Directors 

is of the opinion that the proposed merger would 

not, in any section of the country, substantially 

lessen competition, tend to create a monopoly, or 

in any manner be in restraint of trade.

Financial and Managerial Resources; Future

Prospects. Both Citizens' and Atlantic's financial 

and managerial resources are adequate for purposes of this proposal. Financial and managerial 

resources of the resultant bank would be acceptable and its future prospects appear to be favorable.

Convenience and Needs o f the Com m unity to

be Served. The proposed transaction would have 

little effect on the convenience and needs of any 

market. The resultant institution would offer no 

services that are not currently available from alternative sources in the relevant areas.

The Board of Directors, considering the foregoing information, has concluded that approval of 

the application is warranted.

R e s o u rc e s

B a n k in g 

o ffic e s in

(in

th o u s a n d s 

o f d o lla rs )

o p e r a tio n

B e fo re A fte r

W est B ank and T rust 103,222 3 4

Green Bay, Wisconsin

to acquire the assets and assume

the deposit liabilities of

The Farm ers and Traders

B ank 6,034 1

Wrightstown

Summary report by Attorney General, 

December 30, 1976

We have reviewed this proposed transaction and 

conclude that it would not have a substantial 

competitive impact.

Basis for Corporation approval, December 16, 1976

West Bank and Trust, Green Bay, Wisconsin 

("West Bank"), a State nonmember insured bank 

with total resources of $103,222,000 and total 

IPC deposits of $74,986,000, has applied, pursuant to section 18(c) and other provisions of the 

Federal Deposit Insurance Act, for the Corporation's prior consent to acquire the assets of and 

assume liability to pay deposits made in The 

Farmers and Traders Bank, Wrightstown, Wisconsin ("Farmers"), a State nonmember insured bank, 

with total resources of $6,034,000 and total IPC 

deposits of $4,900,000, and for consent to establish the sole office of Farmers as a branch.

Competition. West Bank operates its main office in downtown Green Bay and two branches in 

the western suburbs of that city. West Bank is 

owned by United Bankshares, Inc., Green Bay, 

Wisconsin ("Bankshares"), a holding company 

whose only other banking subsidiary is East Bank, 

Green Bay, Wisconsin.

Farmers operates its sole office in Wrightstown, 

which is located approximately 17 miles southwest 

of Green Bay.

The city of Green Bay is located in northcentral Brown County, which is in northeastern 

Wisconsin about 100 miles north of Milwaukee. 

The village of Wrightstown is in southwestern 

Brown County. Green Bay is an industrial community whose principal products are paper, paper 

products, and machinery. The surrounding area in 

the county, however, is agricultural, with dairy 

farming predominating. The 1975 median household buying level for Brown County was $13,675, 

some 3.3 percent above the State figure of 

$13,232.

The proposed transaction would have its most 

immediate competitive impact in Farmers' local 

market, which consists of that area within 10 

road-miles of Wrightstown. There are four banking 

offices in this market, each operated by a different 

bank. Farmers has the third largest share, 13.2 percent, of the market's IPC deposits. Neither West 

Bank nor its affiliate, East Bank, operates in this 

market.

The proponents' closest offices are located 17 

road-miles apart. West Bank's affiliate, East Bank, 

has its office approximately 15 miles from 

Wrightstown. In both instances, the intervening 

area contains a number of offices of competing 

banks, including affiliates of some of the State's 

largest holding companies. Thus, the proposed 

transaction would neither eliminate existing competition nor enhance concentration in any relevant 

area.

The potential for competition to develop between West Bank and Farmers through de novo

branching appears to be remote. Wisconsin's restrictive branching law precludes West Bank from 

branching into Wrightstown, and Farmers has 

neither the financial nor the managerial resources 

to expand in this manner.

Bankshares is one of the smaller holding companies in Wisconsin, holding only 0.6 percent of 

total statewide deposits. Consummation of the 

proposed transaction would have no perceptible 

effect on this percentage.

Under these circumstances, the Board of Directors is of the opinion that the proposed transaction would not, in any section of the country, 

substantially lessen competition, tend to create a 

monopoly, or in any other manner be in restraint 

of trade.

Financial and Managerial Resources; Future

Prospects. The financial and managerial resources

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Federal Reserve Bank of St. Louis
BANK ABSORPTIONS APPROVED BY THE CORPORATION 103

of West Bank are satisfactory and its future prospects are favorable. Farmers has experienced asset 

and capital problems which the proposed transaction would resolve. Financial and managerial 

resources at the resultant bank would be satisfactory and its future prospects would be favorable.

Convenience and Needs o f the C om m unity to

be Served. As a result of the proposed transaction, 

new banking services, such as trust services, data 

processing services, and leasing services, as well as a 

much larger lending limit, would be available to 

Farmers' customers.

Based on the foregoing information, the Board 

of Directors has concluded that approval of the 

application is warranted.

APPROVALS OF BANK ABSORPTIONS PREVIOUSLY DENIED BY THE CORPORATION

R e s o u rc e s

(in

th o u s a n d s 

o f d o lla rs )

B a n k in g 

o ffic e s in 

o p e r a tio n

B e fo re A f t e r

M o n ad n o ck N ational Bank

Jaffrey, New Hampshire 

(change title to The 

Monadnock Bank)

4,724 1 1

to acquire the assets and assume

the deposit liabilities of

M o n ad n o ck Savings B ank

Jaffrey

20,978 1

Statement upon reconsideration,

July 6, 1976

Monadnock National Bank, Jaffrey, New Hampshire, with total resources of $4,724,000 and total 

IPC deposits of $3,195,000, applied, pursuant to 

section 18(c) and other provisions of the Federal 

Deposit Insurance Act, for the Corporation's prior 

consent to acquire the assets of and assume the liability to pay deposits made in Monadnock Savings 

Bank, Jaffrey, New Hampshire, an insured mutual 

savings bank having total resources of $20,978,000 

and total IPC deposits of $18,862,000. It was intended that, incident to the proposed transaction, 

the 4,000 par $5 shares of common stock of Monadnock National Bank owned by Monadnock Savings 

Bank would be retired. It was further intended that 

Monadnock National Bank, prior to consummation 

of the proposed transaction, would convert to a 

State nonmember insured bank under the title "The 

Monadnock Bank" and that the resulting bank 

would operate from the sole location where the two 

banks share quarters. On June 30, 1975, the applicatio n was denied.* Subsequently, Monadnock 

National Bank requested the Corporation to reconsider its denial and submitted additional material in 

support of its request. During processing of this 

request, the Corporation's reason for denial of the 

original application became moot.** Accordingly, 

after an analysis of the relevant factors contained in 

the Bank Merger Act, the Corporation has concluded that the application should be approved.

Competition. Monadnock National Bank and

Monadnock Savings Bank share a single lobby and 

various overhead and operating expenses. In addition, the two banks had some interlocking of directors, trustees, and officers prior to July 1, 1975, 

when State legislation which prohibited such interlocks became effective. Realignment of management personnel has taken place to comply with the 

law, but this reorganization proposal was initiated as 

the ultimate solution.

The town of Jaffrey had a 1970 population of 

3,353 and is located in the southeastern portion of 

Cheshire County, which is the extreme southwestern corner of New Hampshire and borders on 

Vermont and Massachusetts. The two banks appear 

to draw their business from an area within 10 to 12 

miles of Jaffrey, including Peterborough, New 

Hampshire, and Winchendon, Massachusetts. The 

population of this area is estimated at 23,000 and is 

largely rural but has some industry. The service area 

experienced good growth during the 1960s, but the 

rate of growth is reported to be slowing.

Five commercial banks, 5 mutual savings banks, 

and 1 cooperative bank serve this local banking market with a total of 13 offices. Monadnock National 

Bank holds 19.6 percent of the market's IPC demand deposits (or $2.9 million out of a total of 

$14.6 million), and Monadnock Savings Bank holds

14.9 percent of the IPC time and savings deposits (or 

$18.4 million out of a total of $123.7 million). In 

terms of total deposits of $140.4 million in the market, both banks combined would control 15.5 percent, ranking a distant second to the 43.2 percent 

held by Peterborough Savings Bank and about on a 

par with the 15.1 percent held by Winchendon Savings Bank. The proposed transaction would give 

permanence to the combined 15.5 percent share of 

total deposits in the local market, but this would not 

significantly affect the competitive delivery of

*See Basis for Corporation Denial, 1975 F D IC Annual

Report, pp. 121-123.

**Section 18(c)(10) of the Federal Deposit Insurance 

Act, 12 U.S.C. section 1828(c)(10), which, with certain 

exceptions, prohibited FDIC approval of any merger 

that would involve conversion from a mutual to a stock 

form expired on June 30, 1976.

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Federal Reserve Bank of St. Louis
104 FEDERAL DEPOSIT INSURANCE CORPORATION

financial services to its residents.

Monadnock National Bank and Monad nock Savings Bank have chosen not to compete for the same 

banking business. Consequently, there is currently 

no overlapping of their services, and for many years 

they have operated as complementary entities. 

Although the management interlocks have been 

eliminated, this arrangement is continuing in anticipation of consummation of the proposed transaction. However, there is the possibility that competition could arise between the two banks in the 

future if either or both would become part of a 

different banking organization or if each were to go 

its own way. Although the economy of the service 

area is reasonably viable, this does not appear to be a 

very realistic prospect. It is questionable whether 

the market has the near-term potential to support 

what would in effect be a new competitor vying for 

segments of the existing banking business. Furthermore, even if the proposed transaction is approved, 

the 23,000 persons in the trade area would still have

5 commercial banks, 4 mutual savings banks, and 1 

cooperative bank from which to choose. This would 

appear to provide fully adequate alternatives for the 

variety of commercial and th rift institution services. 

Therefore, the proposed transaction would eliminate no existing competition between Monadnock 

National Bank and Monadnock Savings Bank, but 

would eliminate an insignificant amount of potential competition between them.

In view of the foregoing, the Board of Directors is 

of the opinion that the proposed transaction would 

not, in any section of the country, substantially 

lessen competition, tend to create a monopoly, or in 

any other manner be in restraint of trade.

Financial and Managerial Resources; Future

Prospects. Monadnock National Bank and Monadnock Savings Bank have adequate financial resources, and the proposed transaction would restore 

the full managerial resources to the resulting bank 

that each shared prior to the elimination of management interlocks.

Initially there may be a reduction in the resulting 

bank's savings and time accounts since by regulation 

it would not be able to pay the maximum rates of 

interest allowed mutual savings banks on similar 

accounts. However, the deposit attrition may be 

slight in view of the interest that present depositors 

of Monadnock Savings Bank would have, as shareholders, in the success of the resulting bank. The 

future prospects of the resulting bank are considered satisfactory.

Convenience and Needs o f the Com m unity to be

Served. The proposed transaction would have little 

effect on the convenience and needs of the Monadnock market. The resulting bank would not offer 

any services not presently available in the market, 

but its increased legal lending lim it would enable it 

to make larger commercial loans, thereby benefiting 

the local economy.

Based on the foregoing, the Board of Directors

has concluded that approval of the application is 

warranted, contingent upon Monadnock National 

Bank's conversion to the status of a State nonmember insured bank.

R e s o u rc e s

(in

th o u s a n d s

B a n k in g 

o ffic e s in 

o p e r a tio n

o f d o lla rs ) B e fo re A f t e r

Chester B ank

Chester, Connecticut

4,661 1 1

to acquire the assets and assume

the deposit liabilities of

Chester Savings Bank

Chester

18,625 1

Statement upon reconsideration,

July 16, 1976

Chester Bank, Chester, Connecticut, an insured 

State nonmember bank with total resources of 

$4,661,000 and total IPC deposits of $3,512,000, 

applied, pursuant to section 18(c) and other provisions of the Federal Deposit Insurance Act, for the 

Corporation's prior consent to acquire the assets of 

and assume the liability to pay deposits made in 

Chester Savings Bank, Chester, Connecticut, an 

insured mutual savings bank having total resources 

of $18 ,6 2 5 ,0 0 0 and total IPC deposits of 

$17,205,000. It was intended that the resulting 

bank would operate from the sole location in which 

the two banks presently share quarters. On June 30,

1975, the application was denied on the grounds 

that approval was precluded by section 18(c)(10) of 

the Federal Deposit Insurance Act, 12 U.S.C. section 1828(c)(10), which, with certain exceptions, 

prohibited FDIC approval of any application that 

would involve conversion from a mutual to a stock 

form of organization.* That prohibition expired 

on June 30, 1976. Upon request, the Corporation 

has reconsidered the application and, based on an 

analysis of the relevant factors contained in the 

Bank Merger Act, has concluded that the application should be approved.

Competition. Chester Savings Bank has operated 

one office ever since its establishment in 1871 in the 

town of Chester, Middlesex County, in southern 

Connecticut. Chester Bank was organized in 1914 

by individuals connected with Chester Savings 

Bank. Through the ensuing years, the two banks 

have been under essentially the same management, 

sharing a common lobby at their sole location. The 

operations of the two banks have been complementary, thereby providing a broad range of services 

for Chester and its vicinity. A t year-end 1975, 

Chester Savings Bank ranked as the 65th largest of 

the 67 Connecticut mutual savings banks with 0.19

*See Basis for Corporation Denial, 1975 FD IC Annual

Report, pp. 119-121.

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Federal Reserve Bank of St. Louis
BANK ABSORPTIONS APPROVED BY THE CORPORATION 105

percent of their aggregate deposits; Chester Bank 

was 68th largest of the State's 71 commercial banks, 

with 0.05 percent of their total deposits.

The most appropriate geographic area in which 

to assess the competitive effects of the proposed 

transaction would be the town of Chester and the 

surrounding towns within a radius of approximately

10 road-miles, this being a segment of southeastern 

Middlesex County and the town of Lyme in adjacent New London County. Chester is located 31 

road-miles south of Hartford, the capital and largest 

city in the State, and a similar distance east of New 

Haven. The local market is largely residential and 

rural. Its population approximated 26,300 in 1970, 

having increased about 30 percent during the 1960s, 

in contrast to the statewide increase of 19.6 percent. 

Middlesex County's 1974 median household buying 

level of $14,518 closely approximated that of the 

State.

The Chester banking market is served by six 

commercial banks and six mutual savings banks. 

Chester Bank has 12.8 percent of the$26.6-million 

IPC deposits held by the seven area offices of these 

commercial banks; Chester Savings Bank has 22.4 

percent of the $74.6-million deposits held by the six 

area offices of the savings banks. The resulting bank 

would control 19.9 percent of the total I PC deposits 

in the market, representing the second largest share 

within the market.

There is no significant competition between the 

proponents. These banks enjoy a unique exception 

to the Connecticut statute which prohibits interlocking directorates of financial institutions. In view 

of th e ir current common management, there 

appears to be no potential for competition to increase between them.

Chester is currently closed to de novo expansion 

by outside banks as a result of Connecticut's home 

office protection law. Consummation of this proposal would result in the abandonment by Chester 

Savings Bank of its charter, thereby permitting 

branching into Chester by other savings banks.

In view of the foregoing, the Board of Directors is 

of the opinion that the proposed transaction would 

not, in any section of the country, substantially 

lessen competition, tend to create a monopoly, or in 

any other manner be in restraint of trade.

Financial and Managerial Resources: Future

Prospects. Chester Bank and Chester Savings Bank 

have satisfactory financial and managerial resources 

under their present operational arrangement, as 

would the resulting bank.

Initially there may be a reduction in the resulting 

bank's savings and time accounts since by regulation 

it would not be able to pay the maximum rates of 

interest allowed mutual savings banks on similar 

accounts. However, the deposit attrition may be 

slight in view of the interest that present depositors 

of Chester Savings Bank would have, as stockholders, in the success of the resulting bank. The 

future prospects of the resulting bank are considered satisfactory.

Convenience and Needs o f the Com m unity to be

Served. The proposed transaction would have little 

effect on the convenience and needs of the Chester 

market. The resulting bank would offer no services 

that are not presently offered by the proponents, 

but its increased legal lending lim it would enable it 

to make larger commercial loans.

Based on the foregoing, the Board of Directors 

has concluded that approval of the application is 

warranted.

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106 FEDERAL DEPOSIT INSURANCE CORPORATION

Merger transactions were involved in the acquisitions of banks by holding companies in the following approvals in 1976. In each instance, the 

Attorney General's report stated that the proposed 

transaction would have no effect on competition. 

The Corporation's basis for approval in each case 

stated that the proposed transaction would not, 

per se, change the competitive structure of banking, nor affect the banking services that the (operating) bank has provided in the past, and that all 

other factors required to be considered pertinent 

to the application were favorably resolved.

Tuscaloosa County Bank, Tuscaloosa, Alabama, 

in organization; offices: 0; resources: 100($000); 

to merge with and change title to Peoples Bank o f

Tuscaloosa, Tuscaloosa; offices: 1; resources: 

7,462($000). Approved: January 23.

Etowah County Bank, Gadsden, Alabama, in 

organization; offices: 0; resources: 100($000); to 

merge with and change title to Gadsden Mall Bank,

Gadsden; offices: 2; resources: 6,022($000). Approved : January 28.

First National Bank & Trust Company o f M idland (upon conversion to a State-chartered institution with the title First M idland Bank & Trust

Company), Midland, Michigan; offices: 5; resources: 61,175($000); to consolidate with First

M BT Bank, Midland, in organization; offices: 0; 

resources: 120($000). Approved: March 29.

S econd Street Bank and Trust Company,

Harrisburg, Pennsylvania, in organization; offices: 

0; resources: 512($000); to merge with Dauphin

Deposit Trust Company (change title to Dauphin

Deposit Bank and Trust Company), Harrisburg; 

offices: 32; resources: 444,921 ($000). Approved: 

April 12.

The Savings Deposit Bank Company, Medina, 

Ohio; offices: 2; resources: 20,652($000); to 

merge with SDB Bank, Medina, in organization; 

offices: 0; resources: 647($000). Approved: April 

16.

Galleria New Bank, Houston, Texas, in organization; offices: 0; resources: 200($000);to merge 

with and change title to Galleria Bank, Houston; 

offices: 2; resources: 39,894($000). Approved: 

April 21.

1st & Devine State Bank, Groveton, Texas, in 

organization; offices: 0; resources: 50($000); to 

merge with and change title to First Bank in

G ro v e to n , G roveton; offices: 1; resources: 

12,189($000). Approved: August 30.

First and Townsend State Bank, Lufkin, Texas, 

in organization; offices: 0; resources: 75($000); to

merge with and change title to First Bank & Trust,

Lufkin; offices: 1; resources: 74,865($000). Approved : August 30.

The Commercial Savings Bank, Adrian, Michigan; offices: 4; resources: 66,200($000); to consolidate with CSB State Bank (change title to 

Commercial Savings Bank), Adrian, in organization; offices: 0; resources: 120($000). Approved: 

October 28.

C onstitution Bank and Trust Company, Hartfo rd , C o n n e cticu t; o ffic e s : 6 ; resources: 

35,356($000); to merge with The Colonial Bank

and Trust Company o f Hartford, Hartford, in 

organization; offices: 0; resources: 4,697($000). 

Approved: November 3.

M etropolitan Bank & Trust Company, Bridgep o rt, C o n n e cticu t; o ffic e s : 1; resources: 

13,023($000); to merge with Union Trust Company o f Bridgeport, Inc. (change title to Union

Trust Company o f Bridgeport), Bridgeport, in 

organization; offices: 0; resources: 3,000($000). 

Approved: November 29.

Garland Commerce Bank, Garland, Texas, in 

organization; offices: 0 ; resources: 200($000); to 

merge with and change title to Southern Bank and

Trust Company, Garland; offices 1; resources: 

21,138($000). A ppro ve d : Novem ber 17.

Gladwin County Bank, Beaverton, Michigan; 

offices: 2; resources: 15,720($000); to consolidate 

with CFC Bank, Beaverton, in organization; offices: 0; resources: 120($000). Approved: November 23.

BN Bank o f N o rth fie ld , Northfield, Illinois, in 

organization; offices: 0 ; resources: 88($000); to 

merge with and change title to Bank o f Northfield,

Northfield; offices: 1; resources: 20,795($000). 

Approved: November 29.

Western State Bank, Howard City, Michigan; 

offices: 3; resources: 14,092($000); to consolidate 

with WSB Bank, Howard City, in organization; offices: 0; resources: 120($000). Approved: November 29.

C om m unity State Bank o f Dowagiac, Dowagiac, M ichigan; o ffice s: 2; resources: 

17,098($000); to consolidate with DSB Bank,

Dowagiac, in organization; offices: 0; resources: 

120($000). Approved: November 30.

The Peoples State Bank o f Caro, Michigan,

C a ro , M ic h ig a n ; o ffice s: 2; resources: 

24,415($000); to consolidate with P.S.B. State

Bank, Caro, in organization; offices: 0; resources: 

120($000). Approved: December 23.

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107

BANK ABSORPTION DENIED BY THE CORPORATION

R e s o u rc e s

(in

th o u s a n d s 

o f d o lla rs )

B a n k in g 

o ffic e s in 

o p e r a tio n

B e fo re A f t e r

S tate B ank o f Standish

Standish, Michigan

36,424 3 4

to acquire the assets and assume

the deposit liabilities of

T h e A u Gres S tate Bank

Au Gres

8,158 1

Summary report by Attorney General, 

December 8, 1975

Applicant and Bank are the only banks in Arenac 

County and are located 15 miles apart. The service 

areas of the banks overlap and it appears that Applicant is a substantial factor in the service area of 

Bank. Consequently, the proposed merger would 

eliminate a substantial amount of competition and 

would give Applicant a monopoly position.

In conclusion, the proposed merger would 

appear to have significant adverse competitive effects, albeit in a very small market.

Basis for Corporation denial,

March 15, 1976

State Bank of Standish, Standish, Michigan 

("Standish Bank” ), a State nonmember insured 

bank with total resources of $36,424,000 and 

total IPC deposits of $28,262,000, has applied, 

pursuant to section 18(c) and other provisions of 

the Federal Deposit Insurance Act for the Corporation's prior consent to acquire the assets of 

and assume the liability to pay deposits made in 

The Au Gres State Bank, Au Gres, Michigan ("Au 

Gres Bank"), also a State nonmember insured 

bank, having total resources of $8,158,000 and 

total IPC deposits of $6,246,000, the transaction 

to be effected under the charter and with the title 

of Standish Bank. The sole office of Au Gres Bank 

would be established as a branch of the resulting 

bank. Consent has also been requested to issue 

subordinated capital notes as an addition to resulting bank's capital structure and to retire these 

notes at maturity, seven years after date of issue. 

These notes constitute part of the consideration 

being offered to shareholders of Au Gres Bank.

Competition. Standish Bank has its main office 

and a drive-in facility in Standish (population

1,184), the county seat of Arenac County, which 

borders Saginaw Bay north of Bay City in eastcentral Michigan. Standish Bank also has a branch 

at Skidmore Lake in Mills Township, Ogemaw 

County, 20 road-miles north of its main office. At 

year-end 1974, Standish Bank was 129th largest of 

the commercial banks in the State of Michigan, 

with 0.1 percent of their total deposits. Au Gres 

Bank, a unit bank located in the city of Au Gres

(population 564), 16 road-miles northeast of 

Standish, is the only other bank in Arenac County.

Arenac County had a 1970 population of

11,149, which represented an increase of 13.1 percent over its population in 1960. The county, 

which has been primarily agricultural, continues to 

grow at about the same rate, as light manufacturing, touring, and recreational activities become 

more important. Arenac County's most recent 

median household buying level, however, was 

about 33 percent below the statewide median.

The area in which the competitive effects of the 

proposed transaction would be most immediate 

and direct may be approximated by the area within a 20-25 mile radius of Au Gres. This would 

include all of Arenac County, the southern portion 

of Iosco County, the southeastern portion of 

Ogemaw County, and the northern half of Bay 

County. The total population of this local market 

which is bounded on the east by Saginaw Bay 

approximated 28,000 people in 1970. Except for 

Bay County, income levels are well below the 

State median, but economic prospects throughout 

the market are reasonably good. Both Standish 

Bank and Au Gres Bank, for example, have seen 

their deposits grow substantially since 1970—more 

than doubling for the former and increasing by 

over 80 percent for the latter.

Both Standish Bank and Au Gres Bank compete 

within the relevant market, and each draws a not 

insignificant portion of its total loans and deposits 

from the primary service area of the other. Altogether, six commercial banks compete in the relevant market. Two of these are affiliates of 

Peoples Banking Corporation, which presently 

controls about 15.9 percent of the market's total 

IPC deposits, while Standish Bank has the largest 

market share of all six (34.8 percent). Peoples 

State Bank of East Tawas controls about 27.0 percent of such deposits; Farmers and Merchants 

State Bank of Hale, about 14.7 percent; and Au 

Gres Bank, 7.6 percent. Standish Bank and Au 

Gres Bank are the closest of these six banks.

Although the market involved is relatively 

sparse in population, the proposed transaction 

would, if consummated, (i) eliminate a modest 

amount of existing competition between Standish 

Bank and Au Gres Bank, (ii) add substantially to 

the market share presently held by Standish Bank, 

the leading local bank, (iii) increase substantially 

the advantage in local market share which Standish 

Bank presently enjoys over all of its local competitors, nam ely Peoples Banking Corporation, 

Peoples State Bank of East Tawas, and Farmers 

and Merchants State Bank of Hale, and (iv) reduce 

from five to four the number of other banking 

sources from which residents and businessmen in 

the Au Gres area have to choose for banking services, the nearest of which would then be 19 roadmiles away.

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108 FEDERAL DEPOSIT INSURANCE CORPORATION

Even if no significant potential exists for increased competition between Standish Bank and 

Au Gres Bank in the future through de novo

branching by either or both, and even if some 

consolidation appears desirable for Au Gres Bank, 

the Board of Directors understands that Standish 

Bank is not the only legally available partner for 

such an acquisition and believes it extremely desirable as a competitive matter not to increase Standish Bank's present advantage over its nearest 

competitors within the market. The Board also 

notes that the trust department of Peoples National Bank & Trust Company of Bay City, an 

affiliate of Peoples Banking Corporation, annually 

votes a substantial, although possibly not controlling, block of stock in Standish Bank, thereby 

raising a question in its mind of the vigor of competition between the two banking organizations.

Based on the foregoing and on the standards 

established by the Supreme Court in cases involving horizontal mergers of banks already competing 

in the same local market, the Board of Directors is 

of the opinion that the proposed transaction 

would "substantially lessen competition” in the 

relevant local banking market.

Financial and Managerial Resources; Future

Prospects. Both banks have satisfactory financial 

resources, with the earnings performance of Au 

Gres Bank being particularly strong. The latter 

bank claims a management succession problem, 

with one senior officer due to retire shortly and 

the other, presently in his late 50s, in somewhat 

precarious health. The Board notes in this regard 

that the application contemplates that both o fficers will continue on the board of directors of the 

resulting institution and that the younger of the 

two will continue in charge of the proposed Au 

Gres branch for 4 or 5 years if his health permits. 

The succession problem does not appear either 

imminent or insurmountable, and lends only slight 

weight in favor of the application. Standish Bank 

has managerial resources in depth, and the future 

prospects of both banks, as well as the resulting 

bank, must be regarded as favorable in this developing area.

Convenience and Needs o f the Com m unity to

be Served. Banking premises at the Au Gres location would be renovated and refurbished. A t this 

office, policies of a more aggressive, sophisticated 

management would be reflected and improved 

loan services, particularly in the field of agricultural credit, would be available. Standish Bank's 

$180,000 statutory loan lim it and Au Gres Bank's 

$60,000 lim it would, for the resulting bank, be 

increased to $270,000 (subject in each case to the 

discretionary 100 percent increase legally permitted a board of directors). Time deposit open 

accounts would become available at the Au Gres 

location, as would time certificates of deposit in a 

minimum amount reduced from $5,000 to $1,000, 

a costless checking plan, and interest on Christmas

Club deposits. However, since Standish Bank already competes within the relevant market, these 

additional services are presently available to residents and businessmen in and around Au Gres, 

albeit with some inconvenience. Greater convenience for a limited portion of the public within the 

market area does not, in the opinion of the Board, 

outweigh the adverse competitive effects previously recited.

The Board of Directors believes accordingly that 

the application should be, and it hereby is, denied.

Statement upon reconsideration, June 25, 1976

State Bank of Standish, Standish, Michigan 

("Standish Bank” ), a State nonmember insured 

bank with total resources of $36,424,000 and total 

IPC deposits of $28,262,000, was denied, on March 

15, 1976, the Corporation's prior approval to acquire the assets of and assume the liability to pay 

deposits made in The Au Gres State Bank, Au Gres, 

Michigan ("Au Gres Bank” ), a State nonmember 

insured bank having total resources of $8,158,000 

and total IPC deposits of $6,246,000 (see page 107 

for Basis for Corporation Denial). Standish Bank 

and Au Gres Bank thereafter petitioned the Corporation to reconsider its original denial. The 

Corporation's Board of Directors, having reconsidered its earlier decision, affirms its original 

denial with the following additional statement.

The Board of Directors concluded in its original 

decision that the proposed transaction would, if 

consummated, (i) eliminate a modest amount of 

existing competition between Standish Bank and 

Au Gres Bank, (ii) add substantially to the market 

shares presently held by Standish Bank, the leading 

local bank, (iii) increase substantially the advantage 

in the local market share that Standish Bank presently enjoys over all of its local competitors, and (iv) 

reduce from five to four the number of other banking sources from which residents and businessmen in 

the Au Gres area have to choose for banking services. Based on those conclusions and on the standards established by the Supreme Court in cases 

involving horizontal mergers of banks already competing in the same local market, the Board of Directors was of the opinion that the proposed transaction would "substantially lessen competition" 

within the relevant local banking market, which was 

described as the area within a 20-25 mile radius of 

Au Gres. This included all of Arenac County, the 

southern portion of Iosco County, the southeastern 

portion of Ogemaw County, and the northern half 

of Bay County.

The applicants' requested reconsideration is 

based, principally, on the ground that the market 

defined in the Basis for Corporation Denial was too 

narrow and should be expanded to include additional parts of all adjoining counties, particularly 

the southern half of Bay County with its principal 

trade and population center, Bay City. Additionally, the argument was again made that Au Gres

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BANK ABSORPTION DENEID BY THE CORPORATION 109

Bank faced serious management succession problems and that residents of the Au Gres area were not 

receiving full banking services. Further, it was stated 

that there were no less anticompetitive alternatives 

available.

In support of the argument that the market 

should be expanded, particularly southward to include Bay City, surveys were presented which purportedly indicated substantial commutation between the Bay City area and Standish for banking 

and other services. The statistics in these surveys 

were contained in the original application and were 

carefully considered at the time the application was 

denied. It was recognized that some residents of the 

Standish area do commute to large shopping complexes in the Bay City area for shopping needs, but 

no conclusion could be drawn from the statistics 

submitted that any meaningful number of persons 

traveled there for banking services or that residents 

of the Bay City area found Standish Bank a convenient banking alternative. On the contrary, the surveys showed that 72 percent of Standish Bank's 

main office customers were located within 10 miles 

of that office and 99 percent were located within 25 

miles. The survey further indicated that 91 percent 

of Au Gres Bank's customers were contained within a 10-mile radius of Au Gres and that the one 

branch operated by Standish Bank obtained 96 

percent of its deposits from customers located 

within a 10-mile radius of that office.

While the Bay City trade area does have some 

economic impact on competition in the service areas 

of the applicants, for purposes of section 7 of the 

Clayton Act (15 U.S.C. 18), the relevant geographic 

market is where "the effect of the merger will be 

direct and immediate" (United States v. Philadelphia N ational Bank. 374 U.S. 321, 359 (1963)). 

In view of the direct effect the proposed merger 

would have within the originally defined market 

area, the Board of Directors sees nothing in the 

record supporting the argument for an expanded 

market.*

It is noted, however, that even were the relevant 

market redefined to include that area within a 

25-mile radius of Standish, which would correspond to Standish Bank's legal branching area, the 

basis for the original denial would still be true.

Standish Bank and Au Gres Bank hold a combined 

30.1 percent share of that market, second only to 

the 39.6 percent combined share held by the two 

subsidiary banks of Peoples Banking Corporation 

represented therein. While the resultant bank would 

not hold the leading share of deposits in this market, 

the combined share of the two largest banking 

organizations in that market would be increased to

69.7 percent, existing competition would be eliminated, and banking sources would be reduced from 

six to five. The Board of Directors is of the opinion 

that consummation of the proposal, even if such a 

redefined market were considered relevant, would 

present anticompetitive problems too severe to 

warrant approval of the application.

The Corporation has again reviewed the convenience and needs factor and the banking factors, 

and it adheres to its original conclusion on these 

points and finds nothing in the record to warrant a 

conclusion that the proposed transaction would 

result in the realization of significant public benefit 

under these factors. Again, the management succession problem does not appear to be imminent or 

insurmountable and lends only a slight weight in 

favor of the application. Alternative purchasers include 3 other banks headquartered within 25 miles 

of Au Gres and thus capable of consummating the 

transaction under present Michigan law, and with 

the exception of Peoples Banking Corporation, any 

of the other 41 bank holding companies operating in 

Michigan could be considered potential purchasers. 

Since Standish Bank already competes in the relevant market, any additional services are presently 

available to residents and businessmen in and 

around Au Gres, albeit with some inconvenience. 

Therefore, there is no basis in the record for concluding that the public cannot obtain such benefits 

from other sources at the present time or that the 

same benefits could not be achieved through other, 

less anticompetitive means.

Based on all of the foregoing and on the record 

before it, the Corporation's Board of Directors again 

concludes that approval of the proposed purchase of 

assets and assumption of liabilities of Au Gres Bank 

by Standish Bank is not warranted and should 

accordingly be denied.

* Although the population of this relevant geographic market is quite small, the Au Gres banking market would 

constitute an economically significant "section of the 

country." See United States v. Phillipsburg National

Bank & Trust Co., 339 U.S. 350 (1970); United States v. 

County National Bank of Bennington, 330 F. Supp. 1 55 

(D. Vt. 1971), 339 F. Supp. 85 (D. Vt. 1972).

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r \

REGULATIONS AND LEGISLATION

PART FOUR

V y

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113

RULES AND REGULATIONS

Interest rate regulations (Part 329).

The Corporation amended its deposit 

interest rate regulations to broaden the 

exemption from interest rate ceilings for 

capital notes issued by insured nonmember banks. Under the amendments of 

June 16, 1976, such notes may have an 

average (rather than absolute) maturity as 

short as 7 years, although no note in a 

serial issue can have an original maturity 

of less than 5 years. The amendments also 

established a procedure for permitting 

such banks to issue capital notes of less 

than $500 to satisfy the preemptive rights 

of shareholders.

The Corporation further amended its 

interest rate regulations on November 12, 

1976, to permit the penalty-free withdrawal before maturity of funds deposited in insured nonmember banks by 

self-employed persons under so-called 

Keogh or H.R. 10 retirement plans. Such 

withdrawals can be made after the depositor reaches age 5914, or earlier if he or 

she is disabled. Moreover, the $1,000 

minimum amount requirement for longer 

term time deposits no longer applies to 

such funds. These amendments are similar 

to those adopted in December 1975 for 

Individual Retirement Accounts and are 

designed to prevent conflicts with Federal 

tax law upon distribution of retirement 

funds.

Finally, the Corporation temporarily 

suspended premature withdrawal penalties on time deposits for victims of the 

Teton Dam disaster in Idaho. The suspension, which was initiated on June 6, 

1976, and expired on December 31, 

1976, gave victims of that disaster ready 

access to their time deposit funds for 

reconstruction and similar purposes. Each 

insured nonmember bank had the discretion to decide whether or not to allow 

such penalty-free withdrawals.

Two new proposals about regulations 

on deposits were advanced by the Corporation during 1976. On March 15,

1976, the Corporation proposed an 

amendment to its regulations that would 

permit transfers from savings accounts to 

checking accounts to cover overdrafts. 

This proposal would require that the 

transfers be in minimum increments of 

$100, with at least 30 days' interest on 

the amount transferred to be forfeited. 

On November 15, 1976, the Corporation 

proposed a rule which would generally require notice to depositors of the maturity 

of their time deposits. The notice would 

have to be printed on or affixed to the 

deposit instrument. The purpose of this 

proposal is to reduce the possibility that 

depositors will forget when their deposits 

mature, resulting in the loss of interest or, 

if the deposit has been automatically renewed, payment of a penalty for early 

withdrawal.

Insider transactions. On February 25, 

1976, the Corporation adopted a regulation aimed at curbing abuses which may 

occur in transactions between an insured 

State nonmember commercial bank and 

"insiders" of the bank. On April 27, 

1976, this regulation was extended to 

cover insured State nonmember mutual 

savings banks as well. The regulation became effective on May 1, 1976.

Under this regulation, the board of 

directors of each insured State nonmember bank is required to review and approve every insider transaction involving 

assets or services having a fair market 

value greater than a specified amount, 

that amount varying with the size of the 

bank. In addition, certain recordkeeping 

requirements are imposed in order to 

foster effective internal controls over 

such transactions by the bank itself and 

to facilitate examiner review.

In adopting this regulation, the Corporation did not intend to suggest that all 

transactions with insiders or their interests are detrimental to the bank or that 

such transactions should be automatically 

rejected. The regulation neither prohibits 

nor significantly restricts a bank's ability 

to enter into such transactions. On the

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114 FEDERAL DEPOSIT INSURANCE CORPORATION

other hand, the regulation makes clear 

that formal compliance with its review 

and approval requirements does not relieve a bank of its duty to conduct its 

operations in a safe and sound manner, 

nor does it prevent the Corporation from 

taking appropriate supervisory action 

with respect to any insider transaction.

By year-end 1976, the regulation had 

been in effect 8 months. Reaction to it 

was generally viewed as favorable, with 

many banks finding that implementation 

of its requirements did not result in undue burden or expense. Compliance with 

the regulation generally appeared satisfactory, but it was still too early to assess 

adequately whether the regulation is 

achieving its intended purpose of curbing 

abusive insider transactions.

Deposit insurance coverage. Under the 

Corporation's insurance regulations, the 

deposit accounts of a corporation are insured up to $40,000 in any one insured 

bank. On November 3, 1976, the Corporation proposed amendments to its insurance regulations designed to apply this 

same rule to deposit accounts of any registered investment company, even if that 

company is organized in some noncorporate form. Specifically, for deposit 

insurance purposes, the Corporation 

would treat as a corporation any trust or

other business arrangement registered, or 

required to be registered, with the Securities and Exchange Commission as an investment company under the Investment 

Company Act of 1940. The proposal 

would not cover trusts that are not subject to registration under that act, such as 

employees' pension and profit-sharing 

trusts, charitable trusts, and common 

trust funds maintained by bank trust departments.

The proposed amendments are intended to clarify the extent of insurance 

coverage on deposits of certain business 

trusts and other entities which may be 

viewed as de facto corporations because 

of their public ownership and business 

objectives. Some confusion has existed as 

to whether such deposits are insured 

according to each individual investor's 

beneficial interest in the trust, or alternatively, according to the aggregate deposits 

held by the trust in each insured bank. 

The Corporation asked for comment on 

these proposed amendments by January 

14, 1977.

FEDERAL LEGISLATION

The three most significant pieces of 

banking legislation enacted in 1976 involve consumer credit and so-called

FEDERAL DEPOSIT INSURANCE COVERAGE

PER DEPOSITOR 1934-1976

Amount (each insured bank) Effective date

$ 2,500.........................................................................................................................................................January 1,1934

5,000.........................................................................................................................................................July 1,1934

10.00 0 September 21,1950

15.00 0 October 16, 1966

20.00 0 December 23, 1969

40.00 0 November 27,1974

100,000- Time and savings deposits of government units (except State and local government

deposits held in out-of-State b a n k s ).................................................................................... November 27, 1974

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FEDERAL LEGISLATION - 1976 115

Negotiable Orders of Withdrawal (NOW) 

accounts, which in effect are interestbearing checking accounts. A provision of 

Public Law 94-22, signed on February 27, 

1976, added Connecticut, Rhode Island, 

Maine, and Vermont to the list of States 

in which NOW accounts could be offered. 

Previously, they had been permitted only 

in Massachusetts and New Hampshire. 

This same legislation also amended the 

Truth in Lending Act to provide that cash 

discounts would not be regarded as interest for disclosure purposes and placed a 

3-year ban on the imposition of surcharges on credit card purchases.

Approved on March 23, the Equal 

Credit Opportunity Act Amendments expanded the categories of prohibited discrimination in consumer credit transactions to include age, race, color, 

religion, national origin, and receipt of 

public assistance benefits, in addition to 

the existing prohibitions against discrimination because of sex or marital status. 

This law also gave rejected applicants the 

right to obtain specific reasons for the 

refusal of credit and raised the ceiling on 

class action liability to $500,000 (from 

$100,000) or 1 percent of the creditor's 

net worth, whichever is less.

The Consumer Leasing Act of 1976, 

which was also approved on March 23, 

made the Truth in Lending Act applicable 

to leases of consumer durables, such as 

automobiles and household goods, and required that the costs of the lease arrangement be clearly stated. It also created a 

presumption of unreasonableness if the 

final ("balloon") payment under the lease 

exceeded three times the average monthly 

payment. These new requirements of the 

Equal Credit Opportunity Act Amendments and the Consumer Leasing Act 

become effective on March 23, 1977, except for the increase in class action liability limits which became effective upon 

enactment.

A bill approved on August 3, 1976 

(Public Law 94-375), contained provisions amending the National Flood Insurance Act to grant certain exemptions 

from the general statutory ban against 

mortgage lending by federally supervised 

financial institutions in identified flood 

hazard areas of communities not participating in the national flood insurance 

program. This legislation made permanent 

the existing temporary exemption permitting mortgage loans to be made for the 

purchase of existing, previously occupied 

residential dwellings. It also broadened 

this exemption to include loans to finance the purchase of existing small business properties and to permit owners of 

residential dwellings to renew or increase 

the financing on their homes. The new 

law further expanded this exemption to 

permit loans to finance improvements of 

existing residential structures, up to an 

aggregate of $5,000 per dwelling, and to 

finance farm improvements of a nonresidential, agricultural nature.

Legislation enacted late in the 94th 

Congress, the "Government in the Sunshine A ct" (Public Law 94-409), requires 

all Federal agencies headed by two or 

more Presidential appointees to hold their 

meetings and to conduct agency business 

i n t h e o p e n a f t e r g i v i n g a t l e a s t 1 - w e e k ' s 

notice of the time and place of their 

meetings. The agencies are required to 

keep transcripts, recordings, or detailed 

minutes of all closed agency meetings. 

The law contains a list of 10 exemptions 

from the open meeting requirements. The 

exemptions relating specifically to bank 

regulation matters include those covering 

trade secrets and confidential financial 

information, information contained in exam ina tio n reports, and information 

which, if prematurely disclosed, would 

significantly endanger the stability of any 

financial institution. Agencies are required to issue implementing regulations 

by March 13, 1977.

Two provisions in the mammoth Tax 

Reform Act of 1976 (Public Law 94-455) 

which became law on*October 4, 1976, 

are of particular interest to banks. An important step in the direction of financial

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116 FEDERAL DEPOSIT INSURANCE CORPORATION

privacy for bank customers was taken in 

section 1205 of the act, which requires 

the Internal Revenue Service to provide, 

in most circumstances, at least 14 days' 

prior notice to any bank customer whose 

bank records it wishes to examine. Within 

this 14-day period, the customer may 

direct the bank in writing not to comply 

with the IRS administrative summons. 

The Service would then be required to 

obtain a court order to examine the records. Also, sections 1061-64 of the act 

provide that United States corporations

(including banks) actively participating in 

international boycotts not sanctioned by 

the United States can, in some circumstances, lose their foreign tax credits, 

foreign tax deferrals, and export subsidies.

Public Law 94-414 amended the Internal Revenue Code to permit banks in a 

holding company system to use a common trust fund maintained by one or 

more banks in the same affiliated group, 

without loss of the fund's tax-exempt status.

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STATEMENTS BY CORPORATION DIRECTORS

PART FIVE

K y

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STATEMENTS BY CORPORATION DIRECTORS 119

Statement by Frank Wille, on the Committee Print of the "'Financial Reform

Act of 1976"*

Mr. Chairman and Members of the Subcommittee:

I appreciate this opportunity to testify 

on the proposed "Financial Reform Act 

of 1976," a bill designed to reflect testimony and comments received in connection with your subcommittee's FINE 

Study "Discussion Principles." The bill 

also incorporates a number of provisions 

from the Senate-passed "Financial Institutions A ct" (S.1267), from legislative 

proposals by the Federal bank regulatory 

agencies designed to strengthen their available regulatory procedures to prevent and 

correct problem bank situations (S. 2304,

H.R. 9743, and Title I of H.R. 10183), 

and from the FDIC's proposed "housekeeping" bill (S. 2233, H.R. 9742, and 

Title IV of H. R. 10183).

The bill before the subcommittee is 

long and complex. Many of its provisions 

are interrelated, and some, for technical 

consistency and clarification, may require 

amendments to Federal law beyond those 

presently contemplated. Because of the 

short time which has been available to 

analyze all the ramifications of the bill 

and its recently proposed amendments, I 

respectfully request that the FDIC be 

allowed to file for the record such additional comments and suggestions of both 

a technical and a substantive nature as 

may be appropriate in the light of our 

continued study of this important legislation.

On the substantive side, I have previously testified for the Corporation in 

general support of the objectives and provisions of the Senate-passed Financial 

Institutions Act, particularly those provisions which would enlarge the asset and

* Presented to the Subcommittee on Financial 

Institutions, Supervision, Regulation and Insurance, Committee on Banking, Currency and 

Housing, House of Representatives, March 16, 

1976.

liability powers of th rift institutions, provide a Federal charter option for mutual 

savings banks, and schedule a gradual 

phasing out of the deposit rate ceilings 

presently found in Regulation Q and its 

FDIC counterpart. Naturally, the Corporation would favor those same provisions in the House bill, as well as those 

supervisory and housekeeping provisions 

which have been previously introduced at 

the FDIC's request and are now included 

in the same bill.

This morning I intend to confine my 

remarks**to five aspects included in or 

relevant to the proposed House bill:

• the proposed restructuring of the 

Federal bank regulatory agencies,

• the requirement that the FDIC and 

the proposed Federal Banking Commission operate on appropriated 

funds,

• the imposition of Federal Reserve 

reserve requirements on all State 

banks having third party payment 

accounts exceeding $15 million,

• the need for a fresh look at the 

country's housing goals and incentives, and

• the desirability of further legislation to mandate additional financial 

and operating disclosure on insured 

banks with fewer than 500 shareholders.

I. Agency Restructuring

My December 9 testimony before this 

subcommittee contained a specific, intermediate proposal for Federal bank agency 

restructuring which I think is superior to 

the provisions presently in the bill before 

you, because it would have consolidated

* * ln fairness to my successor as Chairman of 

the FDIC and to the Comptroller of the Currency who serves ex o ffic io on the FDIC 

Board of Directors and w ill be presenting the 

views of his office tom orrow, these remarks 

should be considered personal observations 

of the present incumbent and not necessarily 

the present or future views of the FDIC.

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120 FEDERAL DEPOSIT INSURANCE CORPORATION

Federal oversight of State-chartered 

banks in one office, preserved significant 

play between national and State banking 

systems, and provided for an evolutionary 

structure (the proposed Federal Banking 

Board) which would include among its 

five members the Comptroller of the Currency, the Federal Supervisor of State 

Banks, and a Governor of the Federal 

Reserve System.

Title I of the proposed Financial Reform Act, by consolidating the present 

supervisory powers of the Comptroller of 

the Currency over national banks and the 

Federal Reserve System over bank holding companies and State member banks, 

adopts some aspects of my earlier proposal at the expense of others. It provides 

for the removal of the Federal Reserve 

System from day-to-day supervision of 

bank holding companies and State member banks, a transfer of power I continue 

to support wholeheartedly. Such a transfer does not require that the Federal 

Reserve conduct its monetary policy in a 

vacuum, and no r e s p o n s i b l e p e r s o n h a s 

suggested that the Federal Reserve System be denied information about banking 

developments which it needs to conduct 

the all-important monetary affairs of the 

country. No convincing argument has yet 

been advanced, however, to justify the 

daily diversion of the staff and members 

of the Board of Governors away from 

monetary policy issues to such matters as 

regul ati o n -w riti ng under Truth-inLending, Fair Credit Billing, and Equal 

Credit Opportunity or the thousands of 

decisions required annually under the 

Bank Holding Company Act Amendments of 1970. The Financial Reform 

Act would also consolidate in one place 

the regulation and supervision of most of 

the nation's larger banks (no nonmember 

commercial bank today exceeds $2 billion in size), but it does so at potentially 

great risk to the major State banking 

systems of the country if the proposed 

commission fails to permit some diversity 

between the way in which national and

State banks operate. The bill before you 

also divides jurisdiction over State banks 

between the FDIC and the proposed commission, depending on whether or not the 

bank is a member of a holding company 

system. Apparently, the FDIC would also 

have jurisdiction over State banks that are 

"members" of the Federal Reserve System 

so long as they are not in a holding company. I urge the subcommittee to review 

these matters carefully, clarifying them as 

necessary, and again consider the alternative I proposed in December.

II. Placing the Federal Bank Agencies on

Appropriated Funds

It is no accident, in my judgment, 

that the three Federal bank agencies have 

remained over the years relatively untouched by political scandal or intimidation. I fear, however, that this track record could be substantially altered if the 

proposed Federal Banking Commission 

and the FDIC were to be placed on an 

appropriated funds basis, subject in the 

first stage of the process to the tender 

mercies of the White House and the Office of Management and Budget and in 

the second stage to the varied interests of 

individual Congressmen. The practical 

effect of the appropriations process would 

be to give the political operatives of the 

White House and the Congress substantial 

control over the personnel, the day-today operations, and the legislative positions*** taken by the commission and 

the FDIC, and I need not remind you 

how sensitive many of these agency decisions can be.

The Congress and the public must, 

however, hold every agency of government, and its responsible officials, ac­

* * * ln this respect, insofar as OMB is concerned, the imposition of the appropriations procedure on the FDIC could have the 

practical effect of nullifying recent legislation which expressly exempted the FDIC 

from obtaining OMB clearance before subm itting its positions on legislative matters 

to the Congress.

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STATEMENTS BY CORPORATION DIRECTORS 121

countable for their performance of duty. 

In part, this is accomplished today 

through the requirement of an annual 

report to the Congress, through oversight 

hearings of the responsible committees 

and subcommittees of the two Houses 

and through the limited GAO audit which 

is presently conducted each year of the 

FDIC's "financial transactions/' In addition, the Freedom of Information Act is 

opening more and more of the activities 

and decisions of the Federal bank agencies to public scrutiny. This process of 

enforcing accountability on the bank 

regulatory agencies could be further 

strengthened by (i) requiring periodic 

reports to the Congress on specific subjects of interest to the responsible committees or subcommittees, and (ii) enlarging the GAO audit requirements to include a limited sampling of the agency's 

examination reports and supervisory processes in specific cases, under strict requirements of confidentiality, in an effort 

to obtain an independent, outside appraisal of the effectiveness of the agency's 

supervision. We are currently engaged in 

an effort to compromise the FDIC's longstanding dispute with the GAO over its 

asserted need to have "unrestricted" 

access to FDIC examination reports in 

order to accomplish its required audit, 

and I am hopeful that the pattern that 

emerges from these current efforts can be 

used on a regular basis. In any event, 

legislative oversight and GAO post-audit 

hold more promise in my view than the 

appropriations process of preserving the 

nonpolitical nature of the bank agencies 

and the public confidence which has 

accompanied their performance in the 

past.

III. Uniform Reserve Requirements for

Banks with $15 million or more in

Third Party Payment Accounts

Under present law the Federal Reserve 

is required by Federal law to impose reserve requirements on national banks and 

on State-chartered banks which choose to

become members of the Federal Reserve 

System. Some State-chartered member 

banks apparently find the advantages of 

membership overcome the cost thereof, 

although a substantial number of banks 

have dropped their membership over the 

past 10 years. The principal cost of 

membership is the maintenance of required reserves in the form of noninterest-earning deposits at a Federal Reserve 

Bank. State reserve requirements for 

nonmember banks generally are less onerous than Federal Reserve requirements 

since nonmember banks may use balances 

held with a correspondent bank and, in 

some States, may also use earning assets 

in calculating their required reserves. The 

most frequently cited advantages of membership are cost-free check clearing and 

collection services, rediscounting and 

borrowing privileges at a Federal Reserve 

Bank, cost-free wire transfer, and safekeeping privileges. Some banks also consider the "prestige" of membership an 

intangible benefit.

By contrast, nonmember banks receive 

a variety of services and assistance from 

correspondent banks in return for maintaining correspondent balances. As fees 

for such services replace the maintenance 

of balances (and there clearly is a trend 

toward this development), it will be more 

apparent to nonmember banks what the 

various services, including check clearing 

and collection, are costing them. Should 

the Federal Reserve make its clearing wire 

and transfer service available on a fee 

basis to all users, nonmember banks 

would be able to compare costs in this 

area with those fees charged by correspondent banks. The net result might well 

be that State-chartered banks, member as 

well as nonmember, would have better 

information than they do today in deciding how to have their checks cleared 

and whether the benefits of discount window borrowing and safekeeping services 

are worth the residual cost of maintaining 

reserves with the Federal Reserve.

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122 FEDERAL DEPOSIT INSURANCE CORPORATION

ments for banks of similar size argue that 

uniform requirements are necessary for 

the Federal Reserve to maintain adequate 

control over the money supply. It is implied that the absence of uniform reserves 

allows a significant part of the banking 

system to escape Federal Reserve control 

and this makes monetary management 

more difficult.

I am not aware of any substantive research and analysis that gives credence to 

these arguments. FDIC staff analyses, as 

well as those of outside economists, do 

not support the view that the existence of 

a large number of nonmember banks has 

hampered monetary management. Sophisticated observers note that except for the 

large money-market correspondent banks, 

Federal Reserve membership may not be 

particularly important for the conduct of 

monetary policy. They argue that the 

reserve positions of smaller banks depend 

upon the reserve positions of large correspondent banks and thus effective monetary control of correspondent bank reserves gives the Federal Reserve effective 

control over all banks, regardless of the 

amount or form of these reserves.

Another argument advanced on behalf 

of uniform reserve requirements pertains 

to equity. Insofar as State reserve requirements can be met by correspondent balances which compensate for services provided or by placing funds in earning 

assets, it is sometimes alleged that such 

institutions tend to be at a competitive 

advantage compared with member banks; 

and, in fact, nonmember banks in States 

with lower reserve requirements have 

tended to be more profitable than member banks of comparable size. However, 

extending reserve requirements to all 

depository institutions is not the only 

way to address this issue. Another alternative would be for the Federal Reserve 

to pay interest on member bank reserves, 

to allow all or a portion of its required 

reserves to be held in the form of Treasury securities, or to reduce prevailing 

reserve requirement levels. (There may be

considerable logic in tying the latter to 

the elimination of restrictions on the payment of interest on demand deposits.) 

With respect to other Federal Reserve 

services, principally access to the discount 

window and check clearing services, these 

might be made available to nonmember 

banks on a nonsubsidized basis.

To reiterate the position outlined in 

my previous testimony, I believe that the 

nation's banks should be permitted to 

retain a meaningful choice between the 

regulatory options now available to insured banks. For State-chartered banks, 

an important part of that choice is optional membership in the Federal Reserve 

System with its attendant costs and benefits. A t present, being unconvinced of the 

merits of the two principal arguments 

advanced by proponents of uniform 

Federal Reserve reserve requirements, I 

would not favor the imposition of such 

uniform requirements on State-chartered 

banks. If considerations of either monetary policy or equity persuade the subcommittee to adopt such a requirement, I 

believe that a much higher cutoff figure 

than the $15 million proposed should be 

used to determine those banks to which 

such uniform reserves should apply.

IV. A Fresh Look at the Country's Housing Goals and Incentives

Diversification on the asset and liability side appears to be necessary if the 

specialized th rift institution is to have the 

earnings and the competitive tools necessary to attract and retain deposits in 

periods of high market interest rates. To 

those in the Congress and elsewhere, however, who seek to keep lendable funds 

flowing to the housing sector, broadened 

investment powers for thrifts raises the 

specter of a reduced commitment to 

housing. While it may be true that the 

percentage o f assets devoted to mortgage 

lending and the housing sector is likely to 

go down with broadened powers, most 

experts feel that the dollars devoted to 

housing will not be adversely affected. 

Heightened competition for deposits also

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STATEMENTS BY CORPORATION DIRECTORS 123

raises the likelihood of higher rates on 

home mortgages and related housing credit, and this raises understandable concern 

over the future attractiveness of such 

expenditures to the purchasing public. 

Should we then be moving away from 

specialized mortgage lending institutions?

I think the answer must be “ yes,”

coupled with a more enlightened housing 

policy. Tax incentives to keep financial 

institutions in the housing sector, or incentives like the differential under Regulation Q, are directed to lending institutions, not the ultimate user. If the incentives are adequate, so the argument goes, 

more money will flow to housing and 

home mortgage rates will be kept low. 

But will this happen and is it what we 

need today? Will such incentives increase 

the flow of funds to housing units that 

are affordable by lower- and middleincome families—who are, after all, the 

vast majority of our population? Or will 

it again be the developers and the relatively affluent who benefit from the 

many real estate incentives presently 

embedded in our laws?

The basic problems in housing today 

run much deeper than the availability of 

funds or high interest rates. They are a 

combination of high and rising energy 

costs, high building costs, and a preoccupation with the detached, single-family 

home. Surely the time has come for a 

fresh look at the housing goals we have 

set for ourselves as a nation. A reexamination of these goals, and agreement on 

what they should be, may lead us to quite 

different incentives in the housing sector 

than are contemplated by either the 

Senate or House bills now before you. I 

fear that reliance on the traditional incentives aimed at lending institutions and 

developers will only lead to more disappointments in the actual improvement, 

both quantitatively and qualitatively, of 

our housing stock.

V. Greater Disclosure in Banks with

fewer than 500 Shareholders

Recent events have accelerated what 

has been a persistent trend toward greater 

disclosure of information related to the 

operations and financial soundness of the 

nation's insured banks, a trend which I 

believe benefits the institutions themselves, their depositors and customers, 

their shareholders, and their regulators.

The Federal bank agencies and the 

SEC have played a major role in this process. The FDIC has for several years, for 

example, released to anyone who asks the 

complete Reports of Condition and Income which insured banks file regularly 

but which had previously been held confidential. Contrary to the fears of some, 

there is no evidence that this has resulted 

in any adverse effects on the nation's 

banking system. Currently, the Federal 

bank agencies and the SEC are engaged in 

a concerted effort to expand the usefulness of the information collected in such 

reports.

In addition, bank holding companies 

with 500 or more shareholders are generally required to disclose data, file periodic 

reports, use proxy statements, and distribute annual reports in accordance with 

SEC standards. Nonholding company 

banks with 500 or more shareholders are 

required to meet similar disclosure requirements set by the Federal bank agencies, in substantial conformance with SEC 

standards. A t the present time 321 nonmember insured banks meet the statutory 

tests and are subject to these extensive 

disclosure requirements.

I would recommend two additional 

steps which would significantly enlarge 

the public dissemination of banking data, 

both of which would require legislation 

to be effective. First, the 500-shareholder 

test should be reduced to 300 shareholders and subsequently to 100 shareholders. The initial reduction would add 

approximately 500 nonmember banks to 

those already subject to these extensive 

reporting requirements, while the reduction to 100 shareholders would add

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124 FEDERAL DEPOSIT INSURANCE CORPORATION

another 1,700 nonmember banks. A comparable percentage increase in coverage 

would most likely occur for bank holding 

companies registered with the SEC, for 

national banks registered with the Comptroller of the Currency, and for State 

member banks registered with the Federal 

Reserve. Second, all insured banks should 

be required to send out to their shareholders the data contained in the yearend condition and income reports submitted as of December 31 to the three 

Federal bank agencies. While such data 

may be obtained from the agencies upon 

request, placing the burden of dissemination on the banks themselves would lead 

to more widespread disclosure on an 

equal basis to all bank owners.

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Statement by Robert E. Barnett, on S.

2304, 94th Congress, a bill "to strengthen

the supervisory authority of the Federal

banking agencies over financial institutions and their affiliates"*

I appreciate this opportunity to testify 

in support of S. 2304, 94th Congress, a 

bill "to strengthen the supervisory authority of the Federal banking agencies 

over financial institutions and their affiliates." As you know, the bill was proposed jointly by the FDIC, the Comptroller of the Currency, and the Federal 

Reserve. Its enactment would provide 

much needed assistance for preventing 

certain types of abuses that in the past 

have led some banks to fail and would 

better enable the regulatory agencies in 

the future to attempt to correct such 

problem bank situations before they 

reach the terminal stage. The need for 

this type of legislation was underscored 

by former FDIC Chairman Frank Wille in 

his July 21, 1975 statement before the 

House Committee on Financial Institutions Supervision, Regulation and Insurance . . . [a copy was attached as appendix A ] .

In his September 5, 1975 letter to 

Senator Proxmire forwarding this proposed legislation to the Congress, Federal 

Reserve Chairman Arthur Burns discussed 

in some detail the background circumstances giving rise to this proposal. I will 

briefly summarize these circumstances to 

refresh the committee's memory in this 

regard.

Civil Penalties

In a number of areas of bank regulation there is no totally effective deterrent 

to violation of various limitations and 

restrictions imposed by Federal statute. 

Although such violations can severely 

affect a bank's safety and soundness, the 

only sanction a bank faces in some cases 

is the possible issuance of a cease-and-

*Presented to the Committee on Banking, 

Housing and Urban Affairs, United States 

Senate, March 26, 1976.

desist order requiring it to reverse a particular transaction or to refrain from 

committing similar future violations. One 

example is section 23A of the Federal 

Reserve Act which (in conjunction with 

section 18(j) of the Federal Deposit 

Insurance Act) imposes stringent limitations on loans and other dealings between 

insured banks and their affiliates. However, since there are no specific penalties 

for violation thereof, a bank holding company or other person experiencing financial pressure may cause a subsidiary bank 

to violate such restrictions knowing that, 

if such violations are discovered, the only 

sanction would be the possible issuance 

of a cease-and-desist order designed to 

rectify the violation and prevent further 

such transgressions.

While the cease-and-desist order is 

quite useful for some purposes, it is not 

as significant a deterrent to violations of 

restrictions on inter-affiliate or insider 

lending as a daily money penalty would 

be. Accordingly, sections 1 and 7 of the 

bill would authorize the Federal Reserve 

and the FDIC to impose up to $1,000 per 

day civil penalties for violations of section 23A of the Federal Reserve Act rel a t i n g t o i n t e r - a f f i l i a t e d e a l i n g s o r s e c t i o n 

22 of the Federal Reserve Act covering 

bank loans to their own executive officers. Similarly, section 2 of the bill 

would authorize the imposition of up to 

$100 per day civil penalties for violations 

of Regulation Q type restrictions relating 

to the payment of interest on deposits 

(section 19 of the Federal Reserve Act).

In addition, section 6(e) of the bill 

would authorize the imposition of a civil 

penalty against any bank or any officer, 

director, employee, agent, or other person participating in the bank's affairs for 

violation of a cease-and-desist order or a 

consent agreement which has become 

final under section 8(b) or 8(c) of the 

Federal Deposit Insurance Act. Section 

6(e) would provide for a civil penalty of 

up to $10,000 for each day the offending 

bank or individual w illfully refuses to

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obey the order. The authority to impose 

such a fine for violating a final cease-anddesist order would serve to emphasize the 

gravity of such an order.

Under section 8(k) of the FDI Act, a 

cease-and-desist order does not become 

final unless entered into by consent or 

until the time has run for filing a petition 

for review with the appropriate U.S. 

Court of Appeals and no petition has 

been filed or perfected, or the petition so 

filed is not subject to further review by 

the Supreme Court. In either event, the 

party must have exhausted the administrative and judicial remedies afforded to 

him under the act. If the party then continues to disobey an order, the appropriate agency can apply to the proper 

U.S. District Court to secure its enforcement. However, the threat of a court 

enforcement and possible contempt proceedings should not be the only deterrent 

at this point. The party has been given 

every opportunity to have his day in 

court. He should not be allowed to further impede the effect of the o r d e r 

simply to secure another delay and 

should be subject to a substantial monetary penalty for each day that he does so, 

as provided in the bill.

In imposing civil money penalties 

under the bill's provisions, the appropriate bank regulatory agency would be 

required to take into account the financial resources and the good faith of the 

bank or person charged with the violation, as well as the history of previous 

violations. Hopefully, the utility of such 

penalties would be primarily in their 

deterrent effect, and the actual imposition of fines could be used sparingly.

Insider Loans

Our experience has indicated the need 

for more vigorous supervision by bank 

boards of directors and bank supervisory 

agencies of transactions between an insured nonmember bank and insiders of 

the bank. Abusive self-dealing has been a 

significant contributing factor in more 

than half of all bank failures since 1960,

including the failure of 30 nonmember 

insured banks. Losses to the deposit insurance fund as a result of these failures 

are likely to exceed $175 million. A review of existing and past problem bank 

cases also reveals abusive self-dealing as a 

significant source of difficulty. Even 

where the immediate result is not the 

bank's failure or its designation as a bank 

requiring close supervision, an insider 

transaction that is not effected on an 

"arm's length" basis may lead to a diminution of the bank's earnings and an erosion of its capital—thereby increasing the 

risk of loss to depositors and minority 

shareholders and ultimately to the deposit insurance fund. Also, insider transactions whose terms and conditions cannot be justified constitute a diversion to 

insiders of resources that properly belong 

to all shareholders on a pro rata basis, as 

well as a misallocation of a community's 

deposited funds.

For these reasons the FDIC on February 25, 1976, adopted a new regulation 

dealing with insider transactions. The 

regulation seeks to minimize abusive selfdealing through the establishment of procedures which insure that bank boards of 

dire cto rs supervise such transactions 

effectively and which better enable FDIC 

examiners to identify and analyze such 

transactions. The board of directors of 

each insured nonmember bank will be required, effective May 1, 1976, to review 

and approve each insider transaction involving assets or services having a fair 

market value greater than $20,000 for a 

bank having assets under $100 million, 

$50,000 for a bank between $100 million 

and $500 million in assets, or $100,000 

for a bank with assets over $500 million. 

In addition, certain recordkeeping requirements, including a record of dissenting votes cast by members of bank 

boards of directors, will be imposed in 

order to foster effective internal controls 

over such transactions by the bank itself 

and to facilitate examiner review. A more 

complete explanation of the FDIC's new

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STATEMENTS BY CORPORATION DIRECTORS 127

insider regulation will be found in our 

February 25, 1976 press release issued in 

this connection . . . [a copy was attached 

as appendix B ].

In addition to these new regulatory 

requirements, it is our opinion that more 

explicit statutory lending limitations on 

the amount of a bank's loans to its insiders would be helpful in preventing 

banks from incurring undue risks by lending excessive amounts to insiders and their 

related business enterprises. Such limits 

are necessitated by the fact that a bank 

may be less subject to the restraints imposed by prudence and sound judgment 

when making loans to its insiders and 

their related interests than it would be in 

making loans to unrelated individuals or 

business enterprises.

Accordingly, we believe further substantive restrictions should be placed on 

transactions between banks and insiders. 

Specifically, it would be desirable to 

amend section 22 of the Federal Reserve 

Act to impose additional restrictions on 

loans by a bank to its own officers and 

directors and to major stockholders and 

corporations affiliated with such individuals. Accordingly, sections 3 and 7 of the 

bill would provide that the existing limits 

under applicable Federal or State law on 

loans to one borrower would apply with 

respect to loans by any member or nonmember insured bank to any one of its 

officers and directors and to any other 

individual holding more than 5 percent of 

its voting securities, including loans to 

companies controlled by such an officer, 

director, or 5-percent shareholder. These 

provisions would require that loans or 

extensions of credit to any one of its officers, directors, or 5-percent shareholders 

and to all companies controlled by such a 

person be aggregated and that the aggregate of such a credit not exceed applicable Federal or State one-borrower limits.

Administrative Enforcement

While the provisions of the bill discussed above are designed in large part to 

prevent problem bank situations from

developing, the bill also contains several 

provisions intended to assist in dealing 

with problem bank situations once they 

arise. Presently, under section 8(e) of the 

Federal Deposit Insurance Act the appropriate Federal bank regulatory agency is 

authorized to remove a bank director or 

officer who has engaged in a violation of 

a law, rule, or regulation, participated in 

an unsafe or unsound practice, violated a 

final cease-and-desist order, or breached 

his fiduciary duty—but only if such a violation involves personal dishonesty and 

where substantial financial loss to the 

bank or other damage to its depositors 

can be demonstrated. Because of the 

d iffic u lty of proving circumstances 

amounting to personal dishonesty, the 

present law effectively bars removal of 

individuals even if they have repeatedly 

demonstrated gross negligence in the 

operation or management of the bank or 

willful disregard for its safety and soundness.

While we realize that the congressional 

objective underlying the "personal dishonesty" requirement was to protect 

bank officers and directors from arbitrary 

or capricious administrative action, we 

b e l i e v e t h a t in l i g h t of r e c e n t e x p e r i e n c e 

it is necessary to balance the interests of 

the individual bank officer or director 

against those of the bank's depositors and 

shareholders, and ultimately against the 

public interest in maintaining the integrity of the Federal deposit insurance 

fund. To strike this balance, we strongly 

recommend enacting the provisions of 

section 6(d) of the bill, which add to the 

standard of personal dishonesty an alternative standard which would recognize 

the need to remove those officers and 

directors whose gross negligence in the 

operation or management of a bank or 

whose willful disregard of its safety and 

soundness threatens the financial safety 

of the institution. We believe that the 

present hearing and judicial review requirements are sufficient to shield bank 

officers and directors from arbitrary or

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capricious administrative action.

Recent experience also indicates that a 

bank may be harmed not only by the misconduct of its own officers and directors 

but also by the misconduct of others who 

are in a position to influence its affairs. 

However, it is often difficult or impossible to reach such persons through removal proceedings or through cease-anddesist action brought against the bank 

itself. Accordingly, we also recommend 

that the amendments contained in section 

6(a) and 6(c) of the bill, which would 

amend paragraphs (b) and (c) of section 8 

of the Federal Deposit Insurance Act, to 

provide that the appropriate regulatory 

agency may bring cease-and-desist proceedings against directors, officers, employees, agents, and other persons participating in the conduct of the affairs of a 

bank, as well as against the bank itself as 

permitted under present law. We believe 

that the ability to reach such officers, 

directors, and other persons participating

in a bank's affairs through cease-anddesist orders would result in a greater 

ability to correct situations which might 

otherwise result in serious detriment to 

the bank.

There are other provisions in the bill 

which relate to bank holding companies 

or to other matters within the special 

cognizance of the Comptroller of the Currency or the Federal Reserve. While we 

support the bill in toto, we defer to these 

other agencies for detailed discussions of 

such provisions. Also in response to the 

request contained in your March 15, 

1976 letter, there is attached a resume of 

administrative enforcement proceedings 

conducted by the FDIC during the past 5 

years . . . [a copy was attached as appendix C ]. Finally, we would recommend 

that the committee also act favorably 

with respect to a related bill (S. 2233) 

which contains various noncontroversial, 

"housekeeping" amendments to the 

Federal Deposit Insurance Act.

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STATEMENTS BY CORPORATION DIRECTORS 129

Letter by Robert E. Barnett, on making

the FDIC subject to the appropriations

process*

Dear Mr. Chairman:

I have learned that the Banking Committee voted yesterday to make the FDIC 

subject to the appropriations process. 

That action is profoundly troubling to 

the Corporation and its Board of Directors, and while I believe you know the 

general position of the Corporation on 

that proposition, I feel I should present it 

more thoroughly so that you and the 

other committee members will understand our view of the full implications of 

that action.

We are unaware of any major dissatisfaction of the committee with the Corporation. In many areas, such as disclosure, insider transactions, variable rate 

deposit instruments, examiner training 

and development, problem bank predictio n , responsiveness to Congressional 

suggestions and inquiries, etc., we have 

been the leader among the bank regulatory agencies. We have not resisted your 

efforts to have the GAO audit our performance; on the contrary, we have welcomed it.

With respect to our performance in 

assisting banks that are failing or in danger of failing, or our general performance 

as guardians of the deposit insurance fund 

and administrators of the deposit insurance program, most objective observers 

will give us very high marks. We understand, for example, that a recent Gallup 

poll showed that 93 percent of Americans 

with bank accounts feel their money is 

safe there. Frankly, even though this poll 

was apparently funded by the American 

Bankers Association for that association's own purposes, we feel the results 

are a tribute to the FDIC and are a direct 

result of the Corporation's efforts over 

the years. No other efforts in the financial

*To Honorable William Proxmire, Chairman, 

Committee on Banking, Housing and Urban 

Affairs, United States Senate, April 30, 1976.

or monetary arena have received or could 

receive such a vote of confidence and 

approval.

If including the FDIC under the appropriations process was not designed to 

correct serious abuses or poor performance in our office, then it must be designed to provide better oversight of our 

activities. We feel we have always been 

open and candid with the Banking Committee, but nevertheless we can appreciate your interest in more information.

Because of our interest in providing 

you that information, we willingly have 

agreed to a GAO performance audit of 

the FDIC. This audit, which tracks most 

of the suggestions generated by your staff 

and sent to the FDIC by you on January 

27, 1976, should provide you the information which will permit you a more 

thorough oversight of our activities. [A 

copy of the agreement was attached.]

As you know, the financial statements 

of the Corporation have been audited by 

the General Accounting Office on an 

annual basis for over 30 years. With the 

exception caused by the disagreement 

between the GAO and the Corporation 

over the desirability of predicting bank 

failures a n d possible losses to the d e p o s i t 

insurance fund, and the concomitant reluctance of the Corporation to permit a 

review of our examination reports for 

that purpose, the GAO has always found 

the Corporation helpful in assisting it in 

its annual audit. There have been no 

instances to my knowledge of the GAO 

raising any questions of irregularity or 

irresponsibility in the financial dealings or 

budget expenditures of the FDIC.

Although our budget is not reviewed 

by the OMB or Congressional commit' 

tees, our budget decisions are made only 

after careful analysis within the FDIC. 

Our budget process begins with the Division chiefs7 preparation of budget recommendations to our Budget Office. That is 

followed by a review by that office and 

our Personnel Office of those recommendations, hearings conducted by a

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130 FEDERAL DEPOSIT INSURANCE CORPORATION

Budget Review Committee internal to the 

Corporation, detailed recommendations 

by that review committee to the Board of 

Directors, and finally review and approval 

by the Board of Directors itself. We have 

a Controller's Office within the Corporation to which are delegated certain lim ited responsibilities and authorities with 

respect to administering the budget 

adopted by our Board of Directors, and 

the FDIC auditor and his audit staff audit 

both the Corporation's expenditures and 

each and every liquidation in which the 

Corporation is participating. During the 

middle of each fiscal year, a limited budget review and update is held.

Several benefits flow from this procedure. We have no need to pad our budget 

estimates to allow for cutting by the 

OMB or the Congressional appropriations or Budget Committees. We have no 

need to spend unused funds near the end 

of the fiscal year in order to avoid budget 

cuts the following year. Our decisions on 

applications for branches, deposit insurance, merger approvals, etc., and our 

judgments on hiring, firing, promotions, 

contracts, etc., can be made on the basis 

of our professional objective judgment 

rather than on their possible impact on 

our ability to gain approval for future 

budgets. We are able to budget and plan 

on a long-range basis for programs with 

long-range benefits. For example, we have 

developed over a period of many years a 

training program for bank examiners of 

which we are very proud. Such a program 

does not necessarily provide a payoff in 

the very beginning, but the present need 

for more and better trained examiners 

underscores the correctness of the judgment which initiated this program before 

the need was obvious. We are able immediately to increase our expenditures over 

budget estimates if an emergency involving a large bank failure occurs. We do not 

have to wait for a special supplementary 

appropriation nor do we have to build an 

unpredictable and probably misleading 

contingency fund into our budget estimates. Finally, if we decide, for example, 

that we should hire 100 more liquidators 

to administer closed bank receiverships 

that we see might be developing (as we 

did about 2 years ago), we can do that 

without publicity. As Senator Vandenberg said on the floor of the Senate in 

leading a bipartisan effort to prevent 

requiring the FDIC to submit a budget 

annually to the Bureau of the Budget (the 

same principle as here):

. . . If the FDIC is doubtful about the year 

to come and has to build up a large budget 

in anticipation of its doubts, I know of no 

surer way to precipitate a crisis in the 

United States than to have the budget of the 

FDIC necessarily increased in anticipation 

of bank failures made public to the world 

on New Year's each year. (93 Cong. Rec. 

10121 (1947)).

Because of the crucial and unique role 

of the banking system in providing the 

credit base for our entire economic system, certain related propositions seem 

clear to the FDIC. First, it is essential 

that Congress and the public are assured 

that the financial affairs of the FDIC are 

managed in a prudent and efficient manner. Second, it is essential that bank 

depositors remain confident that the 

FDIC has the financial and managerial 

ability to meet its responsibilities to deal 

effectively and promptly with failing 

banks. Third, it is essential that the general public remain confident that the Federal deposit insurance fund, built up over 

40 years, will continue to be dedicated to 

protecting the safety and soundness of 

the banking industry. Finally, it is essential that the public be confident that the 

decisions of the FDIC on broad policy 

issues or on individual bank cases that 

come before it are decided on a professional, impartial, and nonpolitical basis.

I believe that under our existing administrative, financial, and budgetary 

arrangements and procedures, particularly 

as amended by the addition of a GAO 

performance audit, these propositions can 

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Federal Reserve Bank of St. Louis
STATEMENTS BY CORPORATION DIRECTORS 131

ports and financial statements published 

by the FDIC constantly assure the public 

that the financial affairs of the FDIC are 

in order. Second, our performance has 

proved that the Corporation can deal 

effectively with closed banks. Third, the 

confidence of the public in the FDIC was 

shown by the total absence of lines outside the doors of Franklin National Bank, 

U.S. National Bank, or Hamilton National 

Bank when those banks closed. Before 

the FDIC was created, "runs" on banks 

were commonplace; now they are practically nonexistent. We believe the Gallup 

poll I referred to earlier accurately represents the confidence the public has in 

the FDIC. Finally, the public knows that 

decisions at the FDIC are not wrongly 

influenced by the political process since it 

is an independent agency, not supported 

by tax funds and not subject to the 

appropriations process. Change is unnecessary, unwarranted, and may, in fact, 

weaken the confidence the public now 

has in the FDIC. Again, referring to comments of Senator Vandenberg in the 

debate referred to before:

. . . No one has yet had the temerity to propose that the Federal Reserve System 

should be robbed of its independence and 

subordinated to a political bureau of the 

Government. Yet, here is an in stitu tio n

w hich is even more sensitive w ith respect to

the necessities fo r its independence ....

I am not so much afraid of what the p o litical controls would do, because I assume that 

they would have an adequate respect for 

this institution. But I am saying that the 

fundamental importance and value of the 

Federal Deposit Insurance Corporation is 

psychological; it is the faith that for 15 

years America has demonstrated it has in 

this institution. A t the moment when the 

FDIC is about completing $1,000,000,000 

of earnings of its own, so that it can elim inate all Government capital at this time 

when there is a billion dollars of money 

available in the Treasury of the FDIC, if the 

American people read that, at long last, in 

Washington something is going on which 

indicates that the political powers are restless and w ill remain restless until they can 

get their hands upon this great institution, 

the effect w ill be most deplorable. [Emphasis 

added.]

Federal deposit insurance has worked.

That the American public has confidence 

in its banking system and knows that its 

deposits are safe in the nation's banks is 

due in large measure to the existence of 

Federal deposit insurance. The integrity 

of the fund out of which those deposits 

will be paid in the event of a bank closing 

is unquestioned; each succeeding Board 

of Directors of the Corporation since its 

beginning has proved to be an excellent 

guardian of the fund. Any change in the 

financial operations of the Corporation or 

the methods by which the Corporation 

receives its money to conduct its business 

may well erode the public's confidence in 

the fund. We might note in this regard the 

recent concern being voiced about the 

soundness and solvency of the Social 

Security fund. Whether justified or not, 

similar concern about the integrity of the 

deposit insurance fund could prove to be 

unsettling. Without some overwhelming 

need, carefully and completely delineated, it seems reckless to expose the 

public's confidence in the banking system 

to the danger of such erosion of confidence. In a statement by former Chairman Leo T. Crowley (1934-1945) before 

the Senate Appropriations Committee 

which was at that time considering placing the FDIC under the appropriations 

process, this was stated eloquently:

In the brief span of 14 years, the Federal 

Deposit Insurance Corporation has banished 

the fear of bank failures from the minds of 

the public. It has blazed the trail from 

hoarded currency hidden in mattresses and 

tobacco cans to the present tim e when no 

one doubts that his bank deposit w ill be 

repaid, if not by his bank, then by the 

Deposit Insurance Corporation. No longer 

do broken people gather before the closed, 

cold doors of a failed bank and ponder their 

plight while reading the fatal notice announcing the appointment o f a receiver. 

Instead, when a bank closes, the depositors 

calmly await the arrival of the claim agents 

of the Federal Deposit Insurance Corporation who, in a brief period of days, pay off 

their claims in cash. From the outset, the 

Corporation has operated successfully and, 

as a banker, a form er Government official, 

and a businessman, I have always believed

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132 FEDERAL DEPOSIT INSURANCE CORPORATION

that an organization which is operating 

successfully should not be disturbed or 

upset by forcing it to change its method of 

transacting business. To unnecessarily deprive the Federal Deposit Insurance Corporation of its independence and fle xib ility 

which its corporate structure was designed 

to furnish, as is proposed in the pending 

measure, would, in my opinion, be a very 

grave mistake.

Former Chairman Wille made much 

the same statement testifying before the 

Subcommittee on Financial Institutions 

Supervision, Regulation and Insurance on 

his final day as Chairman of the FDIC:

It is no accident, in my judgment, that the 

three Federal bank agencies have remained 

over the years relatively untouched by political scandal or intim idation. I fear, however, that this track record could be substantially altered if the proposed Federal Banking Commission and the FDIC were to be 

placed on an appropriated funds basis, subject in the first stage of the process to the 

tender mercies o f the White House and the 

Office of Management and Budget and in 

the second stage to the varied interests of 

individual Congressmen. The practical effect 

of the appropriations process would be to 

give the political operatives of the White 

House and the Congress substantial control 

over the personnel, the day-to-day operations, and the legislative positions** taken by 

the commission and the FDIC, and I need 

not remind you how sensitive many of these 

agency decisions can be.

* * *

My own suggestion fo r change is, as I say, 

legislative oversight and post-audit by the 

GAO under specified conditions of confidentiality. I think we must have accountability, but I truly believe that w ith the 

thousands of very sensitive and important 

decisions made by the bank agencies on 

which many financial interests ride, that it 

would be a mistake to go through the p o litical process of appropriations reviewed by 

the White House and then by the Congres­

**ln this respect, insofar as the OMB is concerned, the imposition of the appropriations 

procedure on the FDIC could have the practical effect of nullifying recent legislation 

which expressly exempted the FDIC from 

obtaining OMB clearance before submitting 

its positions on legislative matters to the 

Congress.

sional committees. I believe that this w ill 

lead to control over personnel and legislative positions and possibly even regulatory 

decisions themselves.

* * *

It was no secret that during the years of 

this past Adm inistration and the affairs of 

Watergate significant efforts were made on 

the part of the White House to place particular personnel in some of the agencies of 

government, who were loyal above all things 

to the incumbent President.

I think it is clear that the Office o f Management and Budget has used its power to recommend budget levels in an e ffort to control the policy direction of agencies. And, in 

many cases, I think this is appropriate. 

When you have a regulatory agency, I have 

severe question that that is appropriate.

I also believe that the temptation may 

exist to try to influence the actual decisions 

that the agency must make on individual 

applications.

To summarize, therefore, our opposition to including the FDIC under the 

appropriations process is based on (1) a 

deep concern for the integrity of the 

deposit insurance program and the independent dedicated fund which supports 

that program, (2) a fear that public confidence in deposit insurance might erode if 

the finances of the Corporation become 

politically controlled, (3) a strong desire 

to continue the present ability of the 

FDIC to make its decisions, many of 

which are extremely sensitive, on an 

objective, nonpolitical basis, and (4) a 

need to maintain flexibility in our finances to cover expenditures which may 

be predictable or unpredictable. The 

Corporation feels that the recent agreement reached with the General Accounting Office permitting operational audits 

by the GAO provides thorough oversight 

ability to Congress without the ancillary 

dangers associated with subjecting the 

FDIC to the appropriations process.

I am taking the liberty of sending 

copies of our views as expressed in this 

letter to the other members of the committee. I hope they are helpful to you 

and the other members.

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STATEMENTS BY CORPORATION DIRECTORS 133

Address by Robert E. Barnett, Remarks

on the Economy, Banking, and Bank

Regulation*

We have been going through a period 

in which problem banks and failures have 

received more public attention than we 

have been used to. Even those of us who 

are in favor of increased disclosure by 

banks have been unhappy with those 

news stories which have been exaggerated, out-of-date, or simply inaccurate. I 

may just be overly sensitive on this, however, since there is substance to the impression one gets from them and from the 

accurate stories also published during this 

period. Our problem bank list is longer 

than it has ever been and it does include 

some sizable banks. Bank loan losses were 

up dramatically last year and were more 

than double the figure for just 2 years 

ago.

I cannot explain everything that has 

happened to banks in the last 2 years. I 

have not seen any complete explanations 

for the very significant increase in bank 

problems that accompanied the recent 

recession. Unlike some observers, I do not 

find that the performance of the bank 

regulators, including the FDIC, is the 

cause of the problems, although had all of 

us done our jobs better, perhaps we could 

have blunted the impact on some individual banks—more about our role later. 

What I want to do today is to set out 

three factors which I think account, at 

least in large part, for the severity of our 

recent problems and to discuss briefly the 

implications of these events for bank 

supervision. While I might make a prediction or two, this is not a speech about 

what is going to happen as much as about 

what has already occurred.

The major strands in the explanation 

for the increase in bank losses and in the 

number of problem banks include, first of 

all, the 1974-75 recession; second, a gen­

*Presented before the 92nd Annual Convention 

of the Texas Bankers Association, El Paso, 

Texas, May 3, 1976.

eral trend toward greater risk-taking on 

the part of the banking system that goes 

back a fairly long time; and third, some 

unusual peculiarities of the recent economic and international situation.

The 1974-1975 Recession

It is important that we not underestimate the relationship between the 

economy and bank performance. Some 

analysts and reporters seem to assume 

that banking should be immune to the 

general trends and problems of the economy. But that seems an unreasonable 

standard for banks. The 1974-75 recession was much more severe than anything 

our economy has experienced since World 

War II, whether measured by decline in 

GNP or industrial production or increase 

in unemployment. Since banks play such 

a major role in our economy, we must 

expect the health of banks to mirror that 

of the economy as a whole. In periods of 

economic decline, the profits of business 

firms fall and the number of firms encountering financial difficulties and failure always increases. This will be reflected in nonaccruing loans and loan 

charge-offs at commercial banks. If this 

were not the case—if banks were only 

making loans to firms whose financial 

condition was so solid that even a severe 

recession would not affect their ability to 

pay—then the banks would not be doing 

their job. I think most of us can agree 

that banking involves taking moderate 

risks on individual credits, though we 

expect that a well-managed, diversified 

loan and investment portfolio will keep 

overall losses at reasonable levels. Maintaining that portfolio, however, is hard to 

do when there is very substantial weakness in the general business environment.

We have reviewed the figures on loan 

losses of commercial banks over the last 

25 years and we find a definite cyclical 

pattern. The pattern is not perfect, partly 

because we only have loss data on an 

annual basis and partly because banks do 

exercise some discretion with respect to 

the timing of charge-offs. Essentially, we

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134 FEDERAL DEPOSIT INSURANCE CORPORATION

have found that the percentage of loans 

charged off does increase during periods 

of business recession. This has been true 

in all of our post-war recessions—1949, 

1954, 1958, 1960, 1967, 1971, and 

1975. The year of recovery following 

those recessions always produced a reduction in the loan loss ratio. Of course, we 

don't know yet whether that will turn 

out to be the case for 1976, but if the 

pattern of these past 25 years continues 

then I would expect the loan loss ratio to 

decline this year.

While the pattern is rather clear, the 

magnitude of these year-to-year changes 

in bank loan losses was actually modest 

until we get to around 1970. I think that 

reflects the fact that the economic declines themselves were relatively modest. 

In fact, most of our recessions of the last 

25 years really were slowdowns in the 

rate of growth of GNP rather than an 

actual year-to-year decline in the economy. Thus, it is not surprising to me that 

during the period of our most severe 

post-war recession, we should have a significant increase in bank loan losses and a 

significant increase in the number of 

banks on our problem list.

Risk-Taking in Banking during 1960-1976

Once I have said all this about the impact of the economic situation on banks, 

I am still left with the belief that the data 

on loan losses suggests more than a cyclical phenomenon. The extent of bank 

problems in the last 2 years was certainly 

influenced by this recession, but it also 

reflects some more basic and longlasting 

characteristics. I believe this squares with 

our general assessment of what has been 

happening in banking. Let me suggest a 

few numbers that illustrate this general 

trend.

The I oan-to-deposit ratio of large 

banks was about 56 percent in 1960 and 

68 percent in 1975. The ratio of equity 

capital to assets of large banks was over 8 

percent in 1960 and under 6 percent in 

1975. The ratio of cash and U.S. Government securities to assets was over 40 percent in 1950 and about 25 percent in

1975. These are significant differences in 

meaningful ratios.

Since the early 1960s, many banks, 

and particularly the large banks, abandoned their traditional conservatism and 

began to strive for more rapid growth in 

assets, deposits, and income. "Liability 

management" became the essential phrase 

in the modern banker's lexicon. The larger banks also began pressing at the boundaries of allowable activities for banks. 

They expanded into fields which some 

felt involved more than the traditional 

degree of risk for commercial banks. 

These activities included direct lease financing, credit cards, underwriting of 

revenue bonds, foreign operations, and 

others. This list of activities and the bank 

financial ratios I cited reflect a general 

trend toward increased aggressiveness and 

increased willingness to bear risks on the 

part of the banking system in general and 

large banks in particular. The holding 

company movement of the 1970s certainly accelerated these developments, 

though most of the activities of bank 

holding companies could also be, and 

were in fact, engaged in by banks directly. I am assured by our FDIC examiners that this increased aggressiveness 

showed up in lowered credit standards as 

well.

During the 1960s, banks generally 

were not noticeably harmed by the diversification of activities, the movement 

toward greater risk in their own financial 

structure, and lowered credit standards. 

After all, the early and mid-1960s represented a fairly extended period of relative ly stable growth and moderately 

stable prices. The first half of the 1970s 

proved to be a much tougher economic 

environment in which to operate. Even 

apart from the recession of 1974-75, we 

should not minimize the impact on banks 

of operating in periods of very tight credit, very high money costs, and extremely

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erratic movements in commodities and 

other prices. These factors affected not 

only the banks directly, but also the stability and predictability of business operations, and that, in turn, had its impact 

on the repayment of bank loans.

I have mentioned some financial ratios 

and changes in activities that specifically 

apply to large banks. Many would argue 

that small banks have changed much less 

dramatically than larger institutions, and 

the loan loss data support this view. During the 1950s and 1960s, smaller banks 

generally had higher loss ratios than the 

larger institutions. That pattern clearly 

has been reversed in the 1970s. The loan 

loss ratios have been noticeably higher for 

larger banks over the last few years. This 

has been due in part to some failures of 

major corporations with substantial bank 

lines from large banks, in part to the large 

banks' greater exposure to construction 

lending and mortgage banking, and in 

part to their greater willingness over this 

period to finance new and sometimes 

untested operations or ideas. Moreover, 

since the large banks tend to have higher 

loan-to-asset ratios, their earnings tend to 

be more sensitive to loan losses.

The two factors I have mentioned in 

explaining the increase in bank problems, 

the general state of the economy and the 

increased willingness of banks to bear 

risk, are clearly interrelated. The increased aggressiveness of the banks would 

probably not have shown up to the same 

extent in increased problems if it had not 

been for the decline in the economy. 

Likewise the third factor I wish to explore is related to the general state of the 

economy as well.

Unusual Characteristics of this Period

In recent years, in addition to the 

general decline in economic activity, we 

have had some special problems. Some 

are directly related to the economy; some 

are unusual, one-shot events. These include such factors as the tremendous increase in energy costs, rapid rise in food

prices, record high interest rates, and very 

severe problems in the real estate market.

Let us look first at the real estate 

problem, since many of our bank failures 

and major problems for the past 2 years 

have had severe real estate loan problems. 

While real estate markets have turned or 

appear to be bottoming out in many areas 

of the country, real estate loan problems 

in some areas may be with us for some 

time. It is difficult to tell what amount of 

nonaccruing real estate or REIT loans 

have been written off thus far, and what 

the ultimate write-offs will be on the volume of these loans presently on bank 

books. Some analysts expect that REIT 

loans still on the books of the banks will 

result in losses of up to 25 percent. While 

this figure seems high to me, even the 

more optimistic imply ultimate losses still 

to be taken by the banks over a period of 

a number of years will be in the order of 

a billion dollars. In some instances, loan 

swaps and refinancing have forestalled or 

eliminated immediate charge-offs, but 

these have been at the price of taking on 

long-term, low-yielding assets, which may 

penalize long-term earnings. It is possible, 

therefore, that bank loans to REITs will 

be a drag on the earnings of some large 

banks for several years. If successful, 

however, these work-out programs may 

reduce the number of REIT failures and 

lower future losses on REIT loans.

Why all the real estate loan problems? 

One answer given is that land booms are 

accompanied and fed by forces associated 

with price appreciation and "can't-miss" 

projection that feed on themselves. Beyond this, I think banks as lenders and as 

managers of REITs through holding companies deserve a considerable share of the 

blame. High rates on construction loans 

and REIT fee arrangements that encourage volume purchases and sales undoubtedly contributed importantly to a loss of 

perspective on loan quality. Too many 

projects required overly favorable sales or 

occupancy to break even, and though I

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recognize that the following is easy to say 

as a matter of hindsight, the lender's traditional restraint on the developer's perpetual optimism was not present. In 

many cases, bank real estate lending officers were too young and inexperienced 

to remember past periods of real estate 

lending problems.

There have been some well-conceived 

projects that ended up with foreclosures 

and bankrupt builders. These have been 

due to the general weakness of the economy, greatly increased building costs, and 

much higher energy costs, all of which 

contributed importantly to the failure of 

many real estate ventures that appeared 

sound when they were conceived. Very 

high interest rates added to the burden of 

carrying nonearning assets and accelerated bankruptcies. Now the economy is 

on the rise and money for permanent 

financing seems plentiful. Many of these 

projects will be bailed out by the rising 

tide of the economy and, in the longer 

run, perhaps by inflation.

Some of the real estate developments, 

however, were poorly conceived to begin 

with. In some instances, costs were just 

too high for the market and sizable losses 

will have to be accepted. Some of the 

developments, particularly second-home 

or vacation area condominiums, were 

based on expectations of ever-increasing 

prices and eventual resale at a profit. 

Once it became clear that owning a condominium was not a sure-fire route to 

ever higher and higher values, it became 

very difficult to sell any at all. Many of 

those projects seemed to be based on the 

"greater fool" theory of investment; that 

is, even if you foolishly pay too much for 

a piece of property, sometime in the future you will be able to sell it at an even 

higher price to an even greater fool.

Many banks have had problems with 

loans to REITs and real estate developers. 

A smaller number of banks have been 

affected by other particular problems, 

such as losses on foreign operations and 

loans on oil tankers. It appears that some

of these problems have been greatly exaggerated. For example, there has been a 

widely cited figure of American bank 

vulnerability on oil tanker loans of something like $17 billion. It appears now that 

responsible analysts are saying that the 

correct figure for American banks is actually nearer $3 billion. Or to take 

another example, many of the loans to 

less developed countries that have been 

cited as a potential problem for large 

banks appear to be loans to foreign subsidiaries of AAA U.S. corporations. 

Nevertheless, these special problems, 

combined with the decline in the economy and the increased vulnerability of 

some banks, have led to increased loan 

losses and a larger number of problem 

banks.

Significance of these Problems

Loan losses need to be viewed within 

the context of a bank's overall ability to 

absorb such losses through earnings and 

through reserve and capital accounts. I 

have mentioned the decline in bank capital ratios and the increase in loan-todeposit ratios, particularly for the large 

banks. Some of the decline in capital 

ratios has been the result of rapid growth 

of foreign operations, increased reliance 

on purchased money, holding company 

acquisitions, and inflation, all of which 

contributed to rapid deposit growth for 

all banks. During the past year or so, 

however, many banks have made considerable progress in reducing their vulnerability. Bank capital increased faster 

than deposits last year and as a result, 

capital ratios rose. The deposit mix of 

banks, and particularly large banks, has 

improved considerably from the standpoint of cost and stability. Banks have 

not bid aggressively for CDs, allowing a 

sizable runoff. Thus, while bank deposits 

have increased by over 7 percent since the 

end of 1974, that increase occurred despite a sizable reduction in large CDs. 

Bank loans are virtually unchanged from 

year-end 1974, whereas holdings of U.S.

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Government securities have increased by 

about $40 billion. Thus, the banking 

system is clearly in a more liquid and less 

vulnerable position than it was a year or 

so ago.

There is also reason for optimism 

when we look at bank earnings. In the 

aggregate, bank earnings have held up 

fairly well during this very difficult period. Bank earnings rose by about 2 percent last year, making it one of the few 

industries to show an increase in earnings 

during the recession. But that average increase masks some wide variations. Along 

with some sizable gains, there were a lot 

of moderate gains and some very sizable 

declines. Despite weak commercial loan 

demand and declining loan rates, banks 

generally maintained their spread between gross earnings and money costs. 

Money center banks actually improved 

their spreads. Banks experiencing the 

worst year-to-year comparisons generally 

did so because of loan losses.

Loan losses have come to be a major 

factor in determining bank net income. 

This is quite different than the situation 

only a few years ago when bank loan 

losses had a negligible effect on bank 

earnings. The increased importance of 

loan losses is shown in a recent report of 

Keefe, Bruyette & Woods, Inc., a leading 

bank stock analyst, which reported an 

average ratio of net loan losses to outstanding loans of .65 percent for 82 large 

banks in 1975. There was considerable 

variation among banks and among regions. The percentage for 10 New York 

banks was .72 percent and for 10 southern banks the figure was 1.1 percent. It 

was lower in the rest of the country and 

only .41 percent for five large banks in 

Texas.

It is difficult to predict bank earnings 

for this year. First quarter reports seem 

to indicate that most banks have declines 

as compared with last year. That reflects 

lower loan volume and lower interest 

rates as compared with the first quarter 

of last year, and an increased tendency of

banks to spread out loan charge-offs 

throughout the year rather than concentrating them heavily in the last quarter. 

While it is hard to forecast the balance of 

the year, since much will depend on loan 

demand and interest rates, I would expect 

comparisons with last year to get better 

throughout the year. I would also expect 

to see some improvement stemming from 

a reduction in loan losses.

Relationship to FDIC Problem List and

Supervisory Implications

The trends I have described so far have 

been reflected in our list of problem 

banks. The FDIC's problem list, which 

includes national banks and State member banks as well as nonmember banks, 

now totals about 370 banks. That number was increasing steadily all during

1975 but now appears to be leveling off. 

While that is only about 2Vi percent of all 

insured commercial banks, it is nevertheless at its highest level in 25 years.

We have compared figures of our problem list with data on the economy as a 

whole, in much the same way we did with 

loan losses, and found again a meaningful 

relationship. However, whereas loan losses appear worst just when the state of 

the economy is worst, our problem list 

tends to lag by an average of about 12 

months. This should not be surprising 

since there tends to be a lag in the examination and analysis process and since our 

own examiners are not apt to be completely insensitive to recent economic and 

financial developments. Thus, it is not 

surprising that now, about a year from 

the low point in the recession, we are at a 

high point on our problem list. If the 

cu rre n t relationship follows previous 

experience, I would expect the number 

on our problem list to get smaller later on 

this year.

Not only has the banking system gotten considerable attention over the last 

year or so, so has the bank supervisory 

system. There are those who say or imply 

that inadequate bank regulation was the 

cause of so many banks being on problem

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lists. That misses the point, however, 

since it is good bank regulation and supervision that spot the banks that are in 

trouble and puts them on lists for closer 

supervision. The question probably 

should be, could better regulation and 

supervision have prevented banks from 

reaching a condition which required 

closer supervision by bank regulators? 

What are the implications of this economic cycle analysis of bank problems 

for bank supervision?

It is my view that bank supervision as 

we know it in the United States, as 

opposed to its characteristics in other 

countries such as Japan, is limited in its 

ability to dictate the soundness of the 

banking system. It appears that a considerable part of the bank problems in the 

last couple of years has been due one way 

or another to the general state of the 

economy. That is clearly a matter beyond 

the control of the process of bank supervision. Some of the problems have been 

due to specific unpredictable events like 

the rapid increase in oil prices and a resulting decline in the demand for oil and 

oil tankers. It would have been nice if we 

had been able to anticipate and prevent 

the debacle of the REITS, for example. 

In view of the vast number of financial 

experts who failed to foresee these problems, I don't think it is surprising that 

bank supervisors failed also.

There is one area, however, in which 

we do have an ability to lessen the impact 

of the business cycle. We must be very 

careful in this area, however. It is the one 

covering bank attitudes toward risk and 

the willingness of bankers to increase loan 

ratios and decrease capital. We are giving 

more attention to these matters at the 

present time, and we will continue to 

demand more capital from banks inadequately capitalized, as well as demand 

that loan, investment, and operating policies and practices be reasonable ones. We 

have so informed members of the two 

banking committees which have expressed concern over capital adequacy.

We are analyzing trends rather than static 

pictures much more intently than we did 

in the past. Computers are whirring constantly as we try to find ways to discover 

problems sooner. We are looking much 

harder at management and are willing to 

step in quicker with formal orders requiring action on management's part. We've 

asked Congress for more powers to deal 

not only with dishonest bankers but 

grossly negligent ones.

We recognize, however, that banking is 

a risk-taking business and we must rely on 

market forces, on management, and on 

owners, in addition to our supervisory 

judgment, to determine the appropriate 

degree of risk for individual banks. I do 

not believe that even the most outspoken 

critics of banking and bank regulators 

want the regulators to run the banks rather than the bankers. We can all agree that 

that is not our function. If we are too 

intent upon preventing all bank failures in 

our regulatory posture, we may have 

some success in shortening our problem 

lists, but the conservative banking philosophies we would have to adopt would 

retard the progress of the economy. So 

attempting to prevent all bank failures is 

not our function either. In some cases, 

government policy, which I endorse, has 

encouraged a shift toward a riskier banking posture. We have issued regulations on 

"leeway investments" which have broadened the types of investments that can be 

made. By disapproval of redlining and 

promoting the concept of equal credit 

opportunity, we have actively pushed 

banks into lending that they may feel 

(though I do not necessarily agree) is 

more risky. The FDIC has been in the 

vanguard of those who insist that the 

Bank Merger Act be interpreted to permit 

more competition between banks: this 

approach has as its corollary an unwillingness to protect competitors from the 

results of competition—i.e., one wins, one 

loses.

Frankly, I believe that the FDIC and 

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lent job of bank supervision during the 

past 2 or 3 years after the magnitude of 

the problems became apparent to us. 

Very large bank failures have been resolved by the Corporation working closely with the Comptroller of the Currency 

or the Federal Reserve System without 

the loss of a dime to any depositor and 

with only minimum disruption in the 

communities affected. Compare that with 

the result of the bank panics in the '20s 

or early '30s!

The Corporation and the other regulators should be praised, not berated, for 

this performance.

The jury is still out, however, on the 

question of prevention. Somehow, the 

regulators must do a better job of carrying out the full range of responsibilities 

given them by Congress, some of which 

have only limited direct effect on safety 

and soundness; must spot problem situations earlier; must be willing and able to 

move in more quickly with effective enforcement action; and must do all of this 

w hile recognizing that our economy 

needs the initiative, ingenuity, and aggressiveness of free enterprise and competitive banking.

In any case, I believe that the movement since 1960 has been essentially 

healthy, though it may have gone too far 

in some respects. Overall, the system is 

not in bad shape and I do not think we 

have to be apologetic. Some individual 

banks made mistakes and have suffered 

for those mistakes. I would have preferred it if we could have spotted those 

individual situations earlier, and perhaps 

corrected them. No one, particularly a 

bank regulator, likes to see a bank fail. 

But the role of banking supervision in 

general, and certainly of the FDIC, is 

much more oriented toward soundness in 

the banking system and maintenance of

confidence in that system rather than 

protecting individual banks. While I recognize the interrelationship of the two 

concepts, it should be kept in mind that 

they are different. As long as banking is 

part of the competitive enterprise system, 

there will be bank failures.

What the FDIC has done, however, is 

cushion the shock of a failure, and we've 

done an excellent job there. I am sure 

you have all seen the recent Gallup Poll 

which showed that 93 percent of Americans with bank accounts feel their money 

is safe there. This comes after intensive 

bad publicity about bank problems, and 

soon after the largest bank failures in our 

history. Frankly, we feel that this overwhelming display of confidence is a direct 

result of the FDIC's efforts over the 

years. Any suggestions that the operations, funding, or control of the Corporation be changed must deal with the 

possibility that this confidence may be 

eroded.

We certainly can improve our policies 

and our operations in many areas, and I 

intend to explore the possibilities during 

my term as Chairman of the FDIC. We 

cannot completely sever the links, however, between the performance of the 

economy and the performance of the 

banking system. If the economy continues to improve, next year will probably be a very good year for banks. I 

suspect that banks will be somewhat 

more cautious in their lending policies 

than was the case during the past few 

years. We will be more cautious as well 

and view unusual situations much more 

skeptically than 5 years ago. Whether or 

not that caution will prove warranted, or 

perhaps overdone, will depend in great 

part on the performance of the economy 

in the years ahead.

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Address by George A. LeMaistre, on bank

regulatory reform*

Large bank failures and economic 

strains have focused attention on the 

banking industry and our system of bank 

supervision and regulation to a degree not 

seen since the '30s. Beginning with the 

speech given by Arthur Burns of the 

Federal Reserve at the American Bankers 

Association Convention in 1974 in which 

he decried what he termed a "competition in laxity" and described the existing 

regulatory framework as a "jurisdictional 

tangle that boggles the mind," the issue 

of bank regulatory reform has never been 

far from the attention of either the banking committees in Congress or the banking agencies themselves. A myriad of proposals has been put forward, untold hours 

have been consumed in discussion, 

numerous speakers have pontificated, 

reams of paper have been produced, and, 

finally, what should have been a careful 

analytical exploration degenerated into a 

personal political vendetta. I do not need 

to tell you the outcome: after much 

sound and fury, the issue of bank regulatory reform is dead in the 94th Congress.

Nevertheless, I think it is desirable to 

reflect on the subject of regulatory reform in the banking context, since, like it 

or not, governmental and regulatory reform seems to be an idea whose time has 

come. When I talk with businessmen, 

bankers, and even consumer advocates 

around the country, I hear one persistent 

complaint: profound dissatisfaction with 

the pervasiveness of governmental intervention in our day-to-day affairs and with 

the reams and reams of paper that are 

required to effect even the simplest and 

least controversial of transactions. The 

extent of this concern has been one of 

the dominant themes of the current Presidential election campaign.

*Presented before the 86th Annual Convention of the Arkansas Bankers Association, Hot 

Springs, Arkansas, May 17, 1976.

The issue posed by this dissatisfaction 

is not a simple one. Most informed people 

share the recognition that our economy is 

too large and complex to function properly without some governmental supervision or regulation. For example, while 

some might disagree with the direction of 

monetary policy at a particular time, few 

would deny the need for a mechanism to 

control the quantity of money in the 

system. Similarly, although one may disagree with the specific policies of many 

environmentalists, the absence of some 

controls over the disposal of commercial 

waste and other pollutants would lead to 

disastrous consequences in a highly industrialized society such as ours. And finally, 

by way of illustration, there is, I believe, 

general agreement that some surveillance 

and supervision of the operation of individual banks is required to avoid an excessive number of failures that would create 

economic instability.

Accordingly, the problem is not that 

regulation and supervision of economic 

and commercial affairs is inappropriate, 

but rather that regulation often outlives 

the problem it was intended to address; 

that we do not always take sufficient care 

to choose the least costly means to 

achieve the desired end; and that, often, 

regulation results in unanticipated consequences which can be more severe than 

the problem which regulation sought to 

remedy.

It is not surprising, however, that these 

problems are so rarely dealt with effectively. All too often those who are regulated, while screaming loudest about the 

sanctity of an unfettered free enterprise 

system, grow comfortable in their regulated environment and resist mightily 

when any serious effort is made to deregulate. Similarly, regulatory bodies acquire a vested interest in their own existence and the "tu rf" which they regulate which prevents their objective assessment of the regulatory policies which 

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ical self-examination. And finally, it must 

be acknowledged that while it is possible 

to deal with these issues with some ease 

in the abstract, real-world solutions are 

not easy to produce. In part, this is a consequence of practical politics and the fact 

that any change in the framework of an 

industry's regulation may lead to significant short-run dislocations or adjustment 

costs. At least as important, however, is 

the simple fact that answers to many of 

these problems are extremely difficult to 

discover.

These factors provide a partial explanation of why the results of bank regulatory reform efforts were so disappointing 

in the 94th Congress. Notwithstanding 

the difficulties, however, I believe that it 

is important—and perhaps crucial—that 

bankers and bank regulators develop a 

systematic and reasoned approach to 

regulatory reform. In my judgment, the 

failure to develop such a positive approach will have several adverse consequences. A golden opportunity will be 

lost to deal in a meaningful way with the 

problems of excessive and inefficient 

regulation, and to highlight the unintended ill effects and hidden costs of 

regulation. Similarly, an opportunity will 

be lost to remedy certain demonstrable 

inadequacies in the present supervisory 

framework. And finally, I think that it is 

critical that we not opt out of the process 

of shaping the changes which are both 

inevitable and bound to affect us deeply.

In the time which remains, I would 

like to identify some of the elements of 

such an approach, and to suggest some of 

the changes which might flow from this 

analysis. I hasten to emphasize that these 

remarks are not intended to be a comprehensive or definitive plan but are rather a 

tentative effort to suggest an orderly way 

of thinking about regulatory reform—an 

effort which I hope to refine substantially 

in the months ahead.

First of all, remedies should be developed which respond directly to inadequacies and abuses which are demonstrated by careful analysis of the facts, 

rather than to empty phrases such as 

"competition in laxity." In my judgment, 

the failure of recent legislative efforts to 

focus upon specific, demonstrated shortcomings of the system insures that at 

least one serious flaw will be with us for 

at least two more years.

Recent events have illustrated that the 

existing framework for the regulation and 

supervision of bank holding company 

systems is not only unduly costly because 

of the overlapping and conflicting jurisdictions involved, but also in some instances simply has not functioned properly. In three of our largest bank failures 

in the past 18 months—the insolvencies of 

the $1/2-billion-asset Hamilton National 

Bank of Chattanooga and the $175- 

million American City Bank of Milwaukee, and the distressed merger of the 

Palmer National Bank of Sarasota—the 

cause of bank failure was not abusive 

self-dealing, which from 1960 through

1973 was far and away the predominant 

cause of failure, but rather massive unsafe 

and unsound lending practices occurring 

in the essentially unsupervised environment of a nonbanking holding company 

affiliate. The failure of the Hamilton 

National Bank of Chattanooga—a venerable, traditionally conservative, well-run 

institution—is the most graphic and tragic 

illustration of this phenomenon. But for 

$80 million in mortgages initiated by an 

Atlanta-based mortgage company affiliate 

over a period of months and dumped on 

the bank, the bank in Chattanooga would 

be in existence today.

These cases illustrate two points which 

should be recognized by both the banking 

agencies and the Congress. First of all, the 

notion that one segment of a holding 

company operation can be insulated from 

the remainder of the system is quite simply a myth. It is the worst form of selfdeception to think that the lead bank i*n a 

holding company is in a safe and sound 

condition because its last examination 

was satisfactory if other facets of the

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holding company system are not undergoing equally rigorous scrutiny. (I should 

emphasize parenthetically that I am not 

an advocate of more stringent portfolio 

supervision. Quite the contrary.) Rather, 

my point is that when holding companies 

were allowed to proceed in a manner that 

would be unacceptable in a commercial 

bank, some of them were encouraged, in 

effect, to hide enormous risk.

The second point flows from the first. 

That is, it simply makes no sense for as 

many as four bank regulatory agencies to 

have safety and soundness jurisdiction 

over various segments of an integrated 

business enterprise. Inevitably, this approach will be at times conflicting and 

uncoordinated.

Accordingly, as an individual involved 

with the agency concerned with the administration of the deposit insurance 

fund, I would rate the fragmented and 

ineffectual framework of regulating holding company systems and not some vague 

notion of "competition in laxity" as the 

most profound cause for concern in our 

present supervisory structure. As has 

been suggested by others, including 

Comptroller of the Currency Jim Smith, 

this problem could be remedied by charging the supervisor of the lead bank with 

the primary supervisory responsibility for 

the entire system, including the holding 

company itself.

Even if it were not possible to illustrate the adverse consequences of the 

present framework in concrete cases such 

as the Hamilton failure, such a framework 

should be rejected both because of the 

governmental waste that results from the 

unnecessary duplication of effort and 

because of the burden imposed upon the 

banker, who must deal with four bank 

regulators as well as the SEC, the Justice 

Department, the FTC, and miscellaneous 

other regulatory bodies.

This brings me to what seems to me to 

be a second element of any serious attempt to reform a regulatory framework: 

that is, a concerted effort should be made

to eliminate redundancy and overlap 

within the framework of regulation that 

applies to an industry. Although many of 

the regulatory reform proposals which 

surfaced recently purported to rationalize 

the bank regulatory structure, some of 

the most notable instances of duplication 

and inefficiency were largely ignored.

In my judgment, the existing system 

of review under the Bank Merger Act represents a classic example of a regulatory 

process which, although benign, is redundant, time-consuming, and unduly costly. 

As you know, our present system of review of the competitive aspects of a merger has three elements. Under the statute, 

the primary Federal regulator is charged 

with the responsibility for considering 

both anti-trust and banking factors in 

determining whether a given merger 

should be approved or denied. Second, 

each of the remaining two Federal banking agencies and the Justice Department 

are required to file with the primary regulator its own analysis of the competitive 

implications of the merger in question. 

Finally, after approval by the banking 

agency, Justice may, within 30 days, sue 

to overturn the merger on anti-trust 

grounds.

This system was designed by Congress 

ostensibly to obtain uniform application 

of the act. Moreover, on paper at least, 

the system seems a good example of how 

checks and balances can be built into 

governmental processes. Yet, in fact, the 

record as developed and reviewed by the 

Senate Banking Committee this session 

reveals that uniformity has not been the 

result. And I can personally testify to the 

fact that the advisory opinions contribute 

little, if anything, in the way of facts or 

analysis that is not brought to our attention by FDIC staff.

Thus, the net effect of this process is, 

in my judgment, that the energies of 

bright competent people are consumed in 

a meaningless task and that more paper is 

circulated in a city already choked with 

it. The redundancy, it seems to me, could

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be remedied without altering the present 

application of the law. At the very least, 

the requirement of the extra competitive 

factor reports should be eliminated. However, I would go a step further, and recommend simply that the primary bank 

supervisor and the Justice Department be 

given notice of the intention of two 

banks to merge. The bank agency would 

have the responsibility of reviewing the 

merger from a safety and soundness point 

of view and the Justice Department 

would review the competitive factors. If, 

in the judgment of the banking agency, 

the merger was defective in terms of 

banking factors, then the agency would 

have the authority to prevent it. The Justice Department could, as it does now, 

file suit under the anti-trust statutes to 

stop the merger within the time period.

Another area of redundancy has been 

underscored by the recent highly publicized efforts of the SEC with respect to 

disclosure of financial information by 

large holding companies about to go to 

the market with debt issues. Congress 

made a determination that banks should 

be exempt from the registration requirements of the Securities Exchange Act of 

1933. That decision was undoubtedly 

based on the belief that the special expertise of the bank supervisors would 

better protect investors, on the idea that 

the disclosure of the sort mandated by 

the securities laws was incompatible with 

the maintenance of confidence in the 

banking system and, perhaps, on the 

political clout of banks at the time.

Whatever the reasons underlying this 

scheme or its merits, the rapid evolution 

of the holding company and its dominance of banking have served to nullify 

it. So long as holding company systems 

finance through the holding company 

rather than the bank—and that has been 

one of the attractive features of the 

mechanism—bank exemption from SEC 

jurisdiction is meaningless. Accordingly, 

it seems to me that Congress should face 

up to this fundamental anomaly in the

law and vest jurisdiction for the protection of investors in bank securities in 

either the SEC or the banking agency or 

agencies. The failure to do so will, it 

seems to me, lead to further duplication 

of time and effort as well as further conflict and confusion.

I have focused upon the administration of the securities laws and the Bank 

Merger Act not so much because the 

redundancy involved in each leads to 

"bad" or ineffective regulation, but because they illustrate so clearly the extent 

to which we have all come to expect, and 

live easily with, needless and wasteful 

government when the same resources 

could be employed to achieve meaningful 

and needed results. A t best, as in the review of merger cases, the result of duplication and overlap in governmental function is waste and inefficiency within the 

government. A t worst, as in the area of 

holding company supervision, the result is 

increased costs and burden upon those 

regulated and their customers, confusion 

of responsibilities, and, most importantly, 

regulation which is far less effective than 

it might be.

Finally, and most importantly, any 

serious effort at regulatory reform must 

be based upon an analysis of the objectives and functions of the entire bank 

regulatory framework. Congress has assigned to the banking agencies and to 

other agencies of the government such as 

the Justice Department, the FTC, and the 

SEC a host of functions, including, 

among others, the promotion of economic stability through the administration of monetary policy, the protection 

of the safety and soundness of the banking system and individual banks through 

bank examinations and supervision, the 

protection of investors and the securities 

markets through fair and adequate disclosure under the securities laws, the promotion of competition, the protection of 

consumers, the enforcement of antidiscrimination laws, the regulation of 

interest rates paid on deposits, and the

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amelioration of the effects of bank failures when they do occur.

As even the recitation of this partial 

list suggests, bank regulation is multifaceted. All too often these several goals 

conflict, necessitating trade-offs among 

them in terms of both the allocation of 

resources and the resolution of disputes. 

In order to understand, much less intelligently reform, the structure and content 

of bank supervision and regulation, each 

of these functions and its relationship to 

other functions should be fully comprehended and evaluated. Indeed, I think 

that it is quite likely that much of the 

recent controversy surrounding bank 

supervision is the result of misunderstanding, confusion, and submerged disagreements as to the relative weights which are 

to be accorded the different functions 

involved in bank regulation. While this 

evaluation of each of these functions is a 

tedious and difficult process—and one for

which the political crucible of Congress is 

especially ill-suited—it is in my judgment 

essential if regulatory reform is to lead to 

anything but disruption of a system 

that—by and large—works.

In conclusion, I would simply like to 

reiterate what I suggested earlier. The current Presidential campaign confirms what 

we should have already known: that reform of our governmental and regulatory 

processes is an idea whose time has come. 

Knee-jerk opposition to change will not 

prevent its occurrence, but may serve to 

exclude the opponents from participation 

in shaping that change. I sincerely hope 

that we as bankers and bank regulators 

will have the foresight to deal with the 

issues involved in an orderly and analytical way. If we do, I am convinced that 

the net result will be a regulatory framework that is less burdensome and more 

effective and an industry which better 

serves its customers.

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Address by Robert E. Barnett, Enforcing

the Fair Housing Lending Law*

Since becoming Chairman of the FDIC 

several weeks ago, I have received many 

invitations to speak. I have turned down 

most of those invitations because I have 

felt that it is important to spend as much 

time as possible at my desk during this 

early period. However, I was happy to 

accept this invitation to speak at the 

NAMSB convention. The FDIC is the 

only Federal supervisory agency for the 

savings bank industry, and savings banks 

comprise about one-third of the deposits 

of all banks examined by the FDIC. 

Happily, from both our points of view, 

savings banks give us much less than their 

proportionate amount of supervisory 

problems.

Today I would like to say a few words 

about our view of the condition of the 

savings bank industry and also our analysis of the current year's outlook. I then 

will turn to my major topic today, fair 

housing lending.

Attention has been given in recent 

weeks to a decline in the surplus position 

of mutual savings banks. In our view, this 

decline, which we see as a relatively insignificant one, has been a result more of 

the problems associated with inflation 

than anything else. Inflation has three 

direct undesirable effects on mutual savings bank capital. First, inflation, accompanied by an increase in the money supply, results in an increase in the dollar 

amount of deposits. Second, inflation results in an increase in operating expenses. 

Third, inflation is accompanied by high 

interest rates, which increase the interest 

expense of savings banks more rapidly 

than the interest income from long-term 

assets. The net result is an inability of 

savings banks to retain earnings in a sufficient volume to margin the rapid deposit

*Presented before the 56th Annual Conference 

of the National Association of Mutual Savings 

Banks, Philadelphia, Pennsylvania, May 19, 

1976.

growth. We are concerned, of course, 

about the continued decline of mutual 

savings bank surplus ratios. We recognize, 

however, that the decline in recent years 

has not resulted from losses or substantial 

deterioration of asset quality, or from a 

deliberate movement of the industry toward a riskier capital position, but instead 

is simply a reflection of the economic 

forces that the industry has faced.

The last few years have been troublesome ones for the commercial banking 

industry. One of the most serious problems faced by commercial banks has been 

in real estate lending. This, of course, is 

the area to which mutual savings banks 

devote most of their resources. Yet the 

mutual savings banks have weathered this 

very trying period of real estate financing 

virtually unscathed. Commercial bank 

real estate loan losses are at record levels. 

Mutual savings bank real estate loan losses, while up slightly, are still low and no 

cause for concern.

Similarly, a great deal of attention has 

been paid in recent months to our problem list. The number of commercial 

banks on the problem list is at the highest 

level since the aftermath of the depression. I hope the worst is past with respect 

to the commercial bank problem list. But 

the mutual savings bank problem list has 

caused us almost no concern at all. There 

are very few mutual savings banks on the 

problem list, only two or three, and this 

represents no real change from the situation several years ago.

Of course, mutual savings banks have 

gone through a difficult few years. We 

expect, however, that 1976 is going to be 

a near record year for mutual savings 

bank earnings. Our analysis of first quarter reports finds the industry moving 

about on the track we expected. Deposits 

have been flowing into mutual savings 

banks at a record pace all year and show 

no signs of slackening off. Obviously 

these inflows are sensitive to market interest rates, and at the present time, the 

rates offered by mutual savings banks

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compare very favorably with rates available on the open market. We recognize 

that that might change. Many forecasts 

anticipate some increase in short-term 

interest rates over the last half of 1976. 

But while that may well be the case, we 

see little likelihood that interest rates will 

rise fast enough or high enough to result 

in disintermediation. The deposit inflows, 

so far this year, have allowed savings 

banks to greatly improve their liquidity 

position. This includes both the repayment of borrowings and an expansion in 

holdings of short-term securities. Mutual 

savings banks will turn more heavily to 

the mortgage market in the remainder of 

the year, and we expect mortgage holdings to increase by over $3.5 billion in

1976. Obviously, investment in shortterm securities tends to penalize earnings 

in the short run, but there is no question 

that it has left the industry in a very 

strong position to meet whatever the 

future may bring. Not only is there adequate liquidity to handle the threat of 

possible outflows, but an increase in interest rates this time around will find the 

savings banks with substantial resources 

which can be moved into attractive highyielding investment opportunities.

The improved earnings that the savings 

banks are experiencing this year are accounted for by the sizable growth in 

deposits. Profit margins, while expected 

to be somewhat higher than in the last 

couple of years, are still low and are poor 

in comparison with the more robust profit margins of the early 1970s. We project 

net income at .42 percent of assets for

1976 compared with about .35 percent in

1974 and 1975. In 1972 and 1973, the 

ratio was above .50 percent. Inflation, 

with its impact on noninterest costs, and 

the steady rise in the percentage of savings bank deposits accounted for by 

high-yielding term accounts may make it 

impossible to return to those days of 

higher profit margins. But a narrower 

margin on ever-increasing deposit volume 

may not be an unsatisfactory industry

position.

I'd like to move now to the question 

of fair housing lending.

At my confirmation hearing, Senator 

Proxmire and I discussed several matters. 

He led off with one issue, however, which 

he returned to at the conclusion of the 

hearing. That matter concerned FDIC 

enforcement of fair housing lending laws.

I think it fair to infer from the stress he 

put on that topic that it is his view, and 

that of the Senate Banking Committee, 

that the FDIC should give serious attention to this matter over the coming 

months. I was not unhappy with that 

emphasis because it has been my personal 

view also that the FDIC should devote 

substantial effort to assuring that mortgage lending by commercial and mutual 

savings banks is carried out in a nondiscriminatory manner. I would like to review the background of this matter with 

you briefly, and then discuss what we 

might do about it.

In 1968, Congress passed a Civil Rights 

Act that included a title on fair housing. 

A section of this act made it unlawful for 

any financial institution to discriminate 

in real estate lending on the basis of race, 

color, religion, or national origin. A further provision of the act requires "all 

executive departments and agencies to 

administer their programs and activities 

relating to housing and urban development in a manner affirmatively to further 

the purposes of this title." In 1974, this 

act was amended so as to prohibit discrimination on account of sex in mortgage financing. The Equal Credit Opportunity Act added marital status and age as 

illegal bases for discrimination.

The Civil Rights Act provides a clear 

proscription against these enumerated 

discriminatory practices, but does not 

specifically call for regulations to be issued by the financial regulatory agencies 

or spell out other duties or obligations of 

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STATEMENTS BY CORPORATION DIRECTORS 147

tion to formulate regulations related to 

the act, and issued a policy statement on 

fair housing directing banks supervised by 

the FDIC to give public notice that their 

real estate loans are available without 

regard to race, color, religion, or national 

origin. We also required that a fair housing notice appear in real estate financing 

advertisements. This policy statement 

became effective on May 1, 1972. Our 

routine examination process since then 

has included checks on bank compliance 

with the requirements for advertising and 

the required lobby poster on fair housing. 

We have found relatively few violations, 

and those have been promptly corrected.

In the fall of 1972, we proposed some 

regulations on fair housing that involved 

recordkeeping requirements, and in December we held 2 days of hearings on 

these proposed regulations. These regulations were never issued because we were 

not convinced that the recordkeeping 

requirements would provide meaningful 

data for monitoring fair housing lending 

practices. In the spring of 1974, we began 

a pilot survey along with the Comptroller 

of the Currency, the Federal Reserve, and 

the Federal Home Loan Bank Board to 

test various types of reporting forms to 

determine what a feasible and effective 

recordkeeping system would involve. I 

will comment in a few minutes on some 

of the problems we encountered in that 

pilot survey. In any case, after a review of 

all the data, we concluded that use of any 

of the three different types of reporting 

forms would not enable us to detect patterns of discrimination.

It is fair to say then, that even now we 

have not determined the best route to 

take to assure ourselves that discrimination in housing finance has been eliminated. All during this period, we have 

received petitions and proposals submitted by civil rights organizations urging us 

to do things. Many of them appeared to 

be costly and burdensome, and not necessarily effective. We have also received 

comments from bankers telling us that

nothing should be done since banks do 

not discriminate in mortgage financing. 

The problem is a very difficult one for 

reasons which I will get into shortly. 

Regardless of the difficulties of the problem, however, we have become increasingly subject to criticism from the Congress and others that we have not met the 

responsibilities that they would like us 

to assume.

Part of our problem in enforcing the 

law is that the concept of discrimination 

is a very difficult one and its exercise can 

take place in subtle ways. Discrimination 

connotes the exclusion of some individual 

or group of individuals from some activity on the basis of one or more identifiable attributes possessed by the individual 

concerned. Some forms of discrimination 

represent indefensible biases (for example, exclusions from certain jobs on 

the basis of sex or race) and work to the 

ultimate disadvantage of both the affected individuals and society as a whole, 

while other forms of discrimination may 

be appropriate and, in fact, benefit society (for example, the exclusion of confirmed kleptomaniacs from jobs as bank 

tellers). Our economic system is based on 

a type of discrimination. In our market 

economy, an increase in the price of any 

goods excludes certain members of society from consuming the goods or restricts 

their purchases below what they would 

have desired at the previous price. That is, 

if a commodity is in short supply, its 

price rises so that the supply is allocated 

to those to whom it is worth the most 

and, hence, discriminates against others. 

But while markets are inherently discriminatory, they should be discriminatory 

with respect to economic phenomena 

only. Two individuals with vastly different incomes would be expected to receive 

different amounts of credit with, perhaps, 

different credit terms. On the other hand, 

two individuals with similar economic 

characteristics but with different skin 

colors would be expected to receive 

essentially the same amount of credit on

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essentially the same terms. It is primarily 

noneconomic discrimination with which 

the Civil Rights Act is concerned.

It is very difficult to detect or to measure this noneconomic discrimination 

because, in order to do so, it is necessary 

to control for economic characteristics. If 

this is not done, a finding of apparent 

systematic discrimination in, say, credit 

allocation to one group of individuals 

may be due to valid economic considerations rather than noneconomic biases. If 

blacks, on average, have lower incomes 

than whites, we should not be surprised 

to find that blacks receive a share of 

mortgage loans made that is less than proportional to their number in the population. But for those blacks who have 

comparable incomes with whites, loan 

rejections should not be at a higher rate. 

We must also take account of the size of 

the loan requested in relation to the appraised value of the property. But are 

appraisals influenced by the racial composition of the neighborhood? These 

economic factors, enormously complicated by themselves, must be analyzed 

thoroughly before we can say anything 

about noneconomic discrimination.

A further complication in the enforcement of the Civil Rights Act is that its 

coverage is much broader than simply 

affirmative or negative decisions on loan 

applications. The act forbids discrimination with respect to downpayments, interest rates, maturity, and other terms or 

conditions of the mortgage loan. A borrower may feel that he is discriminated 

against when his loan application is rejected, and he may have some basis for 

that judgment. He may not know he is 

being discriminated against with respect 

to the terms of the loan that is granted, 

since, at least under present institutional 

arrangements, he does not necessarily 

know the prevailing policy of the institution with respect to maturities, downpayments, or even interest rates.

In our experiences with surveys and 

recordkeeping proposals, we have found

it difficult to specify information which 

would provide sufficient evidence of discrimination to prove that the law has 

been violated.

I recognize all these problems as well 

as some others I have not mentioned. I 

think they explain why the FDIC and 

other banking supervisory agencies have 

not been successful in promulgating regulations aimed at enforcement of the Civil 

Rights Act. It is possible that racial or 

religious discrimination may be quantitatively an insignificant problem in the savings bank industry. But our information 

does not enable me to confirm that view.

I am sure all of you feel that racial discrimination does not play any role in 

your bank's mortgage lending decisions. 

But can you know for sure that all your 

loan officers are conducting themselves in 

accord with bank policy? How do you 

know?

It may well be, as many bankers have 

argued, that the costs of more vigorous 

enforcement of the law will substantially 

outweigh the benefits. There is a law on 

the books prohibiting discrimination, and 

we have felt an obligation at the FDIC to 

determine the existence and extent of discrimination and devise appropriate enforcement procedures to insure compliance with the law. If it turns out to be 

very costly to enforce this law, it will be 

up to Congress to deal with the situation. 

We will certainly bring information on 

enforcement cost to their attention. In 

any case, I personally am in agreement 

with the Congressional view that the 

FDIC should continue to take action to 

make sure that illegal discrimination does 

not exist.

In the past, some bankers have had the 

view that since they feel that there is no 

real problem in this area, it was not 

worthwhile to devote much energy to 

thinking about realistic and effective solutions. If I do nothing else with my comments today, I would like to change that 

view. I would like to encourage each of 

you to think about this problem, and let

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me know what steps you feel can be 

taken that will represent acceptable burdens for the vast majority of savings 

banks that are not discriminating in mortgage lending, yet will be effective in ferreting out those few situations where 

discrimination may be taking place. Write 

me. Give me your suggestions. At least 

tell us how you convince yourselves and 

your trustees or directors that you're not 

violating the law.

It may be helpful to your thinking on 

this matter if I describe some of the steps 

that have been taken, or have been proposed, in the past. Our first step in implementing the law against discrimination 

was easy and noncontroversial. We told 

the banks that there was a law that made 

discrimination illegal. Some bankers may 

have been discriminating in real estate 

lending and felt that it was their prerogative to do so. Informing them that the 

law now prohibited such discrimination 

probably had some effect. After all, bankers are basically law-abiding. I believe it is 

quite possible, for example, that prior to

1974, some bankers did discriminate in 

real estate lending to women. We heard 

several stories of unjustifiable discrimination against women at our 1972 hearing. 

Sex discrimination was not illegal at that 

time, and I am sure that simply passing a 

law making such discrimination illegal 

and bringing this action to the attention 

of the bankers had a significant impact in 

reducing such discrimination.

The next step was somewhat harder. 

We required banks to include a statement 

in real estate advertising saying that they 

were a fair housing lender and to post a 

notice in their lobby alerting bank customers that discrimination in mortgage 

lending was illegal. The lobby poster informs the customer with a complaint that 

he can tell either the FDIC or HUD of the 

complaint. While this kind of requirement 

seems rather innocuous, some of our staff 

questioned whether this was an appropriate step. After all, most bankers are 

law-abiding, and many are offended by

being required to post a notice suggesting 

they may be violating the law.

None of these requirements have generated many complaints from potential 

borrowers. Since 1968, the FDIC has 

received very few complaints regarding 

discrimination in mortgage lending. This 

may mean that there is no such discrimination, but it may also reflect an unwillingness of loan applicants to get involved 

in the complaint procedure, a skepticism 

on their part about our sincerity in following up on complaints, an ignorance 

about the process of complaining, or any 

of a number of other reasons.

The civil rights groups have told us 

that reliance on the complaint procedure 

is necessarily ineffective, and that we 

could not expect a large volume of complaints. They argue that those discriminated against have no faith that action 

will be taken unless they have indisputable proof that they were victims of illegal discrimination and that examples of 

such proof are very rare; discrimination is 

generally much more subtle or sophisticated. They also argue that minority 

applicants go to lenders who make loans 

to minority applicants, and that word 

"gets around" as to who will and who 

won't give a real estate loan to a qualified 

minority or a woman. I recognize there is 

some validity to these arguments, but it is 

difficult to conclude that discrimination 

is widespread when we receive so few 

complaints.

There are steps that could be taken to 

generate more complaints. We might solicit complaints more actively by, for 

example, running a newspaper advertising 

campaign on the law, and urging borrowers to write us if they have any suspicions that they have been discriminated 

against, or even if they suspect that a 

given institution is not a fair housing 

lender. Obviously, such a program would 

be expensive, might simply generate unjustified complaints, and might appear to 

suggest that we believe that discrimination is widespread. I am certainly not

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endorsing such a program at this time, 

but it might be one way of convincing the 

public that we take the complaint process 

seriously.

The problem becomes even more d ifficult when we talk about recordkeeping 

requirements. The first piece of information that becomes necessary in any recordkeeping program designed to monitor 

compliance with fair lending requirements is information on the race, religion, 

sex, and national origin of the borrower. 

Many bankers dislike asking a loan applicant about his race or religion, and many 

borrowers would be offended by being 

asked such questions. Such information 

really is none of the lending officer's business (if he is doing his job correctly). 

Moreover, there may be concern on the 

part of the borrower that such information will be used to discriminate against 

him. In any case, it is hard to require the 

furnishing of such information, and many 

borrowers would decline to furnish it 

voluntarily. On our pilot surveys, for 

example, we found that about 18 percent 

of mortgage applicants refused to fill out 

the voluntary racial questionnaire.

Another problem with the recordkeeping requirements is that many applications are disposed of informally, even 

before they get to the stage of the written 

application. In some cases, telephone or 

other casual inquiries are rejected with 

the simple statement that the bank is not 

making mortgage loans at the present 

time. The banker who wants to discriminate may find it fairly easy to discourage 

the filing of an actual application. This 

might then lead into the need for some 

sort of log of informal inquiries or even 

phone calls. We recognize that this could 

be burdensome and difficult to enforce. 

In some cases, discrimination may occur 

even before a potential loan applicant 

approaches the bank. He may be discouraged by a real estate agent or broker, 

either with or without the bank's knowledge or approval.

Since the laws are aimed at racial,

ethnic, religious, and sex discrimination, 

and not discrimination on an economic 

basis, any sort of reporting or recordkeeping designed to prove a case of discrimination must include detailed information on 

the financial situation of the borrower 

and the property being financed. We have 

not yet determined what sort of reporting 

or recordkeeping is essential to monitor 

compliance with the law. The civil rights 

groups have told us that, in their view, we 

have to be alert to patterns of discrimination, and hence, some sort of recordkeeping is necessary. To the extent that redlining fits this category, the Home Mortgage Disclosure Act recently passed 

should help resolve this problem since it 

mandates that certain records shall be 

kept. O bviously, however, redlining 

doesn't cover all possible patterns of discrimination.

It has been suggested that our examiners are not skilled enough nor trained 

enough in the kind of investigative work 

necessary to detect discrimination, and 

that we might do better if we had FBI 

agents participating in examinations 

aimed at compliance with civil rights 

legislation. We have not been convinced 

of this, however, and would prefer to 

train our own staff to the extent necessary. We have been devoting a part of our 

examiner training program to the fair 

housing area, and we are developing an 

expanded training program that will include investigatory techniques.

I think this description of some of the 

possible techniques indicates the source 

of my concern and frustration. We recognize the shortcomings of various enforcement techniques, but we must enforce the law and meet our responsibilities.

I would like to return briefly to the 

specific problem of sex discrimination. As 

I noted, in the course of the hearings we 

held on fair mortgage lending, it was clear 

that the most convincing evidence of discrimination related to discrimination on 

the basis of sex. Numerous documented

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instances of such discrimination were 

presented. The problem of sex discrimination is a particularly knotty one. As I 

have mentioned, there appears to be 

strong evidence that discrimination on 

the basis of sex has taken place in banks 

and other financial institutions, and I am 

in sympathy with the Congressional decision to do something about it. I also recognize, however, that women do bear 

children and frequently leave the work 

force to rear those children, although it 

can also be argued (1) that women now 

have more control over the question of 

pregnancy or not, and (2) that those 

women who need an income do not leave 

the work force for a sustained period 

when they have a child. Alimony and 

child support payments are probably not 

as steady and reliable a source of income 

as salaries and wages. Thus, one might 

argue that discrimination against women 

in the past had more of an economic 

foundation than the racial and religious 

discrimination covered by the Civil Rights 

Act of 1968.

Even after recognizing this, however, it 

appears that for some time, many bankers 

did not follow very enlightened policies 

with respect to lending to women. The 

role of women in our economy has 

changed, with the majority now part of 

the labor force, but bankers did not adju st swiftly to this profound social 

change. I concede that the ground rules

on lending to women are not very clearcut, but we do intend to meet our obligations to enforce fair lending requirements 

in this case, as in the case of all other 

areas. Many bankers have already developed credit standards for dealing with 

lending to women in an equitable and 

n o n d iscrim in a to ry manner, and we 

encourage the remaining bankers to follow suit.

Bankers, just like other citizens, do 

not participate enough in a positive way 

when legislation and regulations are being 

drafted. They have a tendency to argue 

that certain laws or regulations are unnecessary, and then depart from the 

scene. Perhaps the supervisory agencies 

are somewhat at fault in not more actively soliciting comments and suggestions from the banking community and 

giving them the weight they deserve. At 

the same time, I hope you all realize that 

it is not the practice of the FDIC to put 

out regulations for comment when a decision has already been made. Here, where 

we are not at this time putting out additio n a l regulations for comment, but 

where we are wrestling with the problems 

of enforcement in a specific area, we 

clearly have an open mind as to the best 

way to proceed. I am earnestly soliciting 

your suggestions and hope you will be 

able to come up with ideas that will be 

helpful for all of us.

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Address by Robert E. Barnett, The Burden of Regulation*

We are all frustrated by the extent to 

which government interferes with our 

businesses and the extent to which we are 

required to complete government forms 

and maintain government records. I am 

just as frustrated about it as Chairman of 

a governmental agency as you are. What 

can be done about it?

The quantity of paper crossing my 

desk as Chairman of the FDIC is overwhelming. I have asked our Management 

Systems Office to review the paper flow 

across my desk and have discovered that I 

will receive to review and respond to, on 

an average, 28 letters, memoranda, reports, Congressional inquiries, Board of 

Directors cases, etc., each day throughout 

each year of my term. In addition, I will 

have 10 separate items per day for my 

signature and my secretaries will handle 

75 phone calls per day, many of which 

will pass through to me. By itself, that's a 

large paper load; when you consider the 

problem created by an absence from the 

office for a few days, it's an overwhelming load. Clearly, something has to 

be done about the flow of work across 

the desk of the Chairman of the FDIC 

and I am in the process of doing something at the present time.

I know that each of your desks has 

more than enough work on it but I hope 

that you have had a better plan for resolving the paper load problem than we have 

had. I know you also generate paper since 

some of the paper I receive consists of 

letters from banks complaining about the 

volume and complexity of reports they 

are required to file with the FDIC. Some 

of it consists of proposals originating with 

our staff or with the Federal Reserve 

suggesting additional surveys to be collected from banks. Some of it consists of 

correspondence from the Office of Man­

*Presented before the 75th Annual Convention 

of the Colorado Bankers Association, Colorado Springs, Colorado, June 4, 1976.

agement and Budget and the Commission 

on Federal Paperwork asking what I am 

doing to meet my obligations to reduce 

the flow of Federal paperwork. The President has directed each agency head to 

reduce the reporting burden for the public by 10 percent this year. And some of 

it consists of letters from me to the chief 

executive officer of the nonmember 

banks in the country carrying a message 

about a new regulation or policy statement or some continuing request for data 

from the banks.

When I began writing this speech, I 

had in mind discussing my desire to reduce the amount of time and money 

banks have to spend complying with 

governmental regulations and reducing 

the paper banks have to submit to Washington. As I attempted to write this, however, I found that I could offer very little 

besides desire when it comes to reducing 

governmental regulations. Congress and 

the agencies are under great pressure from 

a great variety of groups (including 

banks) to pass legislation or promulgate 

regulations to correct real or perceived 

abuses. When legislation is passed by 

Congress, regulations frequently must be 

promulgated by the agencies to implement the legislation. The FDIC, therefore, promulgates regulations and issues 

policy statements and will continue to, as 

will the Comptroller of the Currency, the 

Federal Reserve, the Federal Home Loan 

Bank Board, and everyone else. I wish I 

could be more optimistic, but I can't. 

Pressure groups are simply too well organized, concepts of appropriate business 

activity have changed, the government is 

accepted (rightly or wrongly) as the answer to difficult problems, and abuses in 

banking continue to surface.

I then decided to discuss some of the 

reports required by the FDIC; the utility 

of these reports to banks; what, if anything, the Corporation can do to reduce 

the number of reports submitted to it or 

to reduce the cost and difficulty of preparing them; and finally to make some

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comments about the inordinately high 

error rate, the tardiness of report submissions, and statutory penalties that the 

Corporation will begin invoking for continued grossly inadequate or tardy reporting. Since these comments are not all 

good either, I decided to wind up with a 

comment or two on ways the Corporation has attempted to speed its decision 

processes by delegating to our regional 

offices and by expediting handling within 

the Corporation. At least that should be 

good news.

Turning to reports, we should look 

first at the Reports of Condition and 

Reports of Income which comprise the 

major part of the FDIC's reporting and 

statistical operation. Each insured bank 

prepares Reports of Condition four times 

a year, and a Report of Income, starting 

this year, twice each year. This amounts 

to over 85,000 reports coming to Washington each year, or 6 per bank.

You are all familiar with these reports 

since each of your banks has been submitting them for years and years and 

since the reports resemble the financial 

statements which all of you must prepare 

annually for one purpose or another. 

Originally, the information on the individual Reports of Condition and Income 

was used primarily by the FDIC to monitor the collection of assessments of insured banks. For all bank regulatory 

agencies, State and Federal, they comprise the basic information we receive on 

individual banks between periodic examinations. If it were not for our ability to 

follow the progress of some banks on this 

basis, more frequent examination or 

other supervisory procedures would be 

necessary. This supervisory use has been 

increasing since these routine Reports of 

Condition and Income are the basic raw 

material for efforts at the FDIC and other 

agencies to design "early warning" or 

statistical surveillance systems. This increasing use as an ongoing supervisory 

tool demands accuracy and timeliness of 

the data.

In addition to our own use of these 

data, we have been able to prepare statistical reports for all banks—e.g., providing 

data on a variety of operating ratios, comparing each bank with other banks in the 

same State or smaller geographic area, 

etc. —that have been used by many 

others. These comparative reports have 

been received enthusiastically by the 

banks (particularly by the banks that 

come off well in the comparisons), and 

bankers seem to be making increasing use 

of these data for analysis of their own 

operations, the operations of correspondent banks, and the operations of 

banks they deal with in the Federal funds 

market. Again, these comparisons are 

valuable only if the data are timely and 

accurate.

Aggregate data compiled from these 

reports (and many other reports) have 

been an important part of the financial 

information relied on by the Federal 

Reserve in carrying out monetary policy. 

The aggregate statistics are also used by 

other government agencies for a variety 

of purposes. More recently, particularly 

since both reports became publicly available in 1972, the use has multiplied. Now 

bank asset and liability and income information is also used by:

• banks that wish to know how their 

competitors are doing;

• financial analysts and market researchers in banks and universities;

• consulting firms, bank associations, 

and reporting services who buy 

computer tapes of these data, perform their own analyses, and offer 

these analyses for sale;

• bank stockholders interested in 

their investments; and

• corporate treasurers who seek information on which to base their selection of banks as depositories or 

lenders.

Last year, for example, we filled 1,250 

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tion and Income involving a total of 

24,000 documents. About half of these 

requests came from banks, but individuals 

(particularly lawyers) also asked for these 

reports in sizable numbers. As of the end 

of May this year, we had filled 820 requests involving over 16,000 documents, 

significantly higher than the comparable 

period last year. Forty-three of these 

requests originated in Colorado and 

covered primarily Colorado banks. Clearly, there is interest in the Reports of 

Condition and Income.

I have been continually amazed at the 

volume of errors made by banks in completing these required reports. Some of 

these errors may be due to the complexity of the reporting requirements or to 

the inadequacy of our instructions, but 

neither complexity nor inadequacy on 

our part can explain the following amazing facts culled from State nonmember 

reports filed for the December 31, 1975 

Call:

• 1 12 reports indicating that the 

banks were operating without any 

currency or coins or without common stock,

• 1,184 banks reporting that they 

were operating without any employees, and

• 2,400 banks indicating either that 

they had income on their Report of 

Income from assets that their Report of Condition indicated that 

they did not have, or that they had 

no income from earning assets that 

their Report of Condition showed 

them as holding.

By far the most common errors in the 

reports are mathematical or mechanical. 

That is, totals that do not equal the sum 

of the subtotals, or an item in the Report 

of Condition not agreeing with the same 

item in the Report of Income. For example, banks report total capital as of 

year-end in both the Report of Income 

and the Report of Condition. Obviously, 

accurate reporting would find total capital the same in both reports but we have 

hundreds of banks that report different 

figures in the two reports. Almost half of 

all errors handled by our staff are of this 

sort.

In total, out of the 8,600 insured nonmember commercial banks that submitted Reports of Condition and Income 

to us at year-end 1975,** no less than 54 

percent of all the Reports of Condition 

and 84 percent of the Reports of Income 

failed to pass one or more of the initial 

tests in our verification procedures. The 

total number of edit messages (potential 

errors) came to 51,318 for year-end 1975 

Reports of Condition and Reports of 

Income. Both the banking industry and 

the FDIC should be embarrassed by that 

number—the banking industry because its 

members are submitting such sloppy 

reports, and the FDIC because it has tolerated such reporting.

Let me emphasize that the largest 

single category of errors was mathematical or logical errors, errors which only a 

modest amount of care and concern on 

the part of the reporting banks could 

eliminate.

Not only is the information we get on 

reports frequently in error, it is also frequently late. Currently, the Report of 

Condition is due within 10 days after the 

Call date, and the Report of Income is 

due 30 days after the end of the reporting 

period, a backwards order for reporting if 

I have ever seen one—more about this 

later. For year-end 1975, 481 banks 

were delinquent in submitting one or 

more of the reports at the end of January 

(the final report did not come in until 73 

days after year-end). Of course, the vast 

majority of banks do report reasonably 

promptly, but even a small number of

**N ational banks submit their reports to the 

Comptroller of the Currency, State member 

banks submit theirs to the Federal Reserve 

System. The FDIC ultim ately processes data 

from all the banks on its computers. Error 

rates for all banks appear to be about the same 

as the error rate for State nonmember banks.

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delinquent reports can cause serious delays in processing since errors are often 

found on the delinquent reports, and that 

means further delays for corrections.

It makes very little sense for us to 

publish any data before we have received 

all of the reports from all of the banks. 

As of the present time, data from our 

condition report and income report are 

published approximately 4 months after 

the date of the Call; if all banks were to 

report within 30 days correct information 

on both reports, we could publish that 

data within 50 days of the Call, cutting 

the time lag in half and saving thousands 

and thousands of dollars.

I recognize that the reporting requirements of the Report of Condition and the 

Report of Income are rather complex, 

and they have tended to become more 

complex over time. To some extent, that 

is a reflection of some change in the use 

of the reports from a statistical one to 

one of serving as the basic public financial 

report of the bank. This has led us to 

change the accounting required in the 

direction of "generally accepted accounting principles." Some of these changes 

have added complexity, and have led to 

complaints from banks. We received quite 

a volume of complaints a few years ago, 

for example, when we required that 

banks with over $25 million in assets prepare their reports on the basis of accrual 

accounting. Many banks in the affected 

size range complained that accrual accounting was just too complicated for 

them. I confess that I find it difficult to 

feel a great deal of sympathy with the 

management of a $25 million bank, that 

is in the business of making loans and 

analyzing the financial statements of 

borrowers, claiming that accrual accounting is too complicated.

It was adherence to generally accepted 

accounting principles that led us to require a breakdown of the loan loss reserve 

into a valuation portion, a deferred liability portion, and a contingency portion. 

There I concede that the accounting and

the accompanying tax calculations have 

become complicated. We have also added 

additional detail on types of loans and 

maturity distribution of securities that 

have increased the reporting burden on 

the banks. For the most part, however, I 

feel that the information required in the 

Report of Condition and the Report of 

Income is information that the banker 

should have in order to run his bank 

effectively. Some bankers complain, for 

example, about our requirement that the 

bank, even if it is operating on a cash 

basis, must estimate the taxes due on its 

current year's income. It seems reasonable to conclude, however, that in order 

for the bank to make correct investment 

decisions, it should know what its current 

tax position is and what the tax implications of its financial decisions are.

The situation I am describing has existed for a long time. In the past, for 

whatever reasons, the FDIC has overlooked this problem. But now, when 

much more intensive use is made of these 

financial data, both within the banking 

agencies and outside, we feel that it no 

longer can be overlooked.

Recognizing that we must continue to 

receive Reports of Condition and Reports 

of Income, we plan to schedule the reporting in a logical way and to give the 

banks sufficient time so that we can 

reasonably expect prompt and accurate 

reports. One of the difficulties for the 

banks is our current requirement that the 

Report of Condition be submitted within 

15 days after the end of the quarter—a 

rather tight schedule. We give banks 30 

days to complete the Report of Income, 

which appears to be more generous, but 

the conscientious banker recognizes that 

a Report of Condition as of year-end cannot be completed accurately until after

the bank has completed its Report of 

Income. That is, there are many year-end 

income adjustments that must be reflected in the year-end Report of Condition. 

These requirements are illogical, and I see 

no reason to continue them. Effective

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with the June 30 reports, I am proposing 

that we set a uniform date for submission 

of both reports, 30 days from the end of 

the reporting period. Both the Report of 

Condition and the Report of Income, 

therefore, for the June 30, 1976 period 

will be due by the end of July. I believe 

that is a reasonable period, and if banks 

are delinquent in meeting that requirement, we intend to pursue the penalties 

provided by the Federal Deposit Insurance Act which authorizes us to levy a 

fine of up to $100 per day for each day a 

report is delinquent. The Comptroller of 

the Currency recently announced his intention to follow this procedure, and 

indicated that a fine of $6,600 had been 

levied on a national bank that was flagrantly and repeatedly late in submitting 

its required reports.

Some action must also be taken to 

reduce the number of errors in the Reports of Condition and Income, and we 

intend to take the following steps to 

improve the accuracy of reports submitted :

(1) Improve the format and instructions of the reports. We are considering, for example, whether it 

would be productive to have different instructions for smaller 

banks (those $25 million or less in 

assets) or whether it would be 

productive and reasonable to have 

different reports for such banks.

(2) We have contacted the Bank 

Administration Institute and are 

trying to arrange for meetings involving our staff and their officers 

to solicit their suggestions for 

improving the instructions and 

forms.

(3) We plan to solicit comments from 

all banks through a questionnaire 

mailed with the June reports.

(4) We are installing a toll-free telephone number that a bank may 

call for assistance in completing or 

correcting reports.

(5) We would like to consider, although we recognize the extreme 

difficulty of this, adopting an 

agreement among all the bank 

agencies that there would be no 

change on the reports more frequently than every 5 years. Banks 

would have the benefit of working 

with the same forms for an extended period, and suggestions for 

changes by the agencies would 

have to stand the test of the passage of a reasonable period of 

time. Frankly, the possibility of 

getting such an agreement seems 

slim to me, although I personally 

would support it, at least until an 

exception came along that I'd like 

to make.

We believe all of these suggestions or 

actions would minimize the cost both to 

banks and the agencies by reducing the 

time spent on completing and correcting 

these reports. Obviously, it would also 

put the data into the public domain much 

faster. If those carrots don't work, however, we will consider either fining those 

banks up to $100 per day whose error 

rate is so high as to constitute no filing, or 

proceeding against such banks under section 8 of our statute.

The FDIC and the other agencies cannot be successful without the help of the 

industry. Banks must believe it is important to complete the reports accurately 

and promptly.

To summarize, we suggest that some 

major steps for improvements in the quality of the Reports of Condition and Income are needed at this time. The errors 

in the reports submitted appear to be 

primarily the result of carelessness, but 

the design of the forms, the instructions 

given, the assistance provided, and the 

attention given to promptness and accuracy by the agencies may have a bearing

on the matter.

I have reviewed other reports required

to be sent to the FDIC in addition to 

Reports of Condition and Income. While

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preparing these other reports and the surveys occasionally taken does involve some 

burden and some staff time, I think the 

burden is exaggerated by most banks. 

First of all, many of our surveys are conducted on a sample basis. This may not 

be much consolation to the bank included in a sample, but we have different 

samples for each survey, so that if your 

bank is included in one, it is probably not 

included in several others. Only a total of 

about 42 banks in Colorado, for example, 

are included in any of our sample surveys. 

Others, of course, may be included in the 

surveys by other agencies.

Second, in many of our surveys, the 

information is relatively simple for the 

bank to provide, though I recognize that 

just typing up the report form is some 

burden for some banks.

Third, much of the data we are asking 

for in these surveys is information the 

banker should have to manage his bank 

effectively and, therefore, probably does 

have or can find profitable use for once it 

is prepared. While we ask the banker to 

report the information, for example, we 

think there is great u tility to him in 

knowing the maturity distribution of his 

municipal portfolio, or the amount of his 

time deposits in different maturities, or 

the market value of his trust department's 

assets. Since he probably already has and 

uses such data, it's not onerous to report 

it to the FDIC.

It is a mistake to assume that all surveys and statistical reports are imposed 

by the agencies on a reluctant and resisting banking industry. There are some 

reports and surveys which we conduct 

which the banking industry has either 

initiated or strongly supported. Let me 

mention just a couple of these. Several 

years ago, the American Bankers Association commissioned a sizable research project, carried out by Arthur D. Little & 

Company, to investigate the ability of the 

banking system to handle the rising volume of paper checks in the future. Subsequent to that survey, the ABA asked

the FDIC to conduct follow-up surveys, 

which we did and have continued to do. 

While this information is of some interest 

to the FDIC, it is not considered vital by 

us and we could reduce the burdens 

which we are putting on responding 

banks by elimination of this survey. We 

do plan to reduce the frequency of this 

survey to every second or third year.

Another example is a survey we did a 

couple of months ago on the volume and 

rate structure of IRA and Keogh accounts. Many bankers have been very 

unhappy about the current interest rate 

ceiling structure which has been applied 

to IRA accounts as well as all other accounts. This rate structure, as you know, 

gives savings institutions a quarter-percent 

rate advantage. In an account that is 

going to be maintained for 20 or 30 

years, a quarter-point interest rate differential is very significant. Commercial 

bankers feel they are unable to compete 

with savings institutions for IRA accounts, and that their customers are put 

at an unfair disadvantage as compared 

with customers of savings institutions. To 

determine whether the bank share of such 

accounts is really being adversely affected 

by the interest rate differential, the banking agencies conducted a survey of both 

banks and savings institutions. We got 

strong support from the banking industry 

for conducting this survey and, I might 

add, a very rapid response. This seems to 

be illustrative of the fact that where 

bankers can see some payoff to their institution from a survey, there is support 

for it and a willingness to cooperate. We 

hope to encourage the same support and 

rapid response for all of our reports.

Some reports are collected for the use 

of other agencies. For example, we collect detailed and extensive monthly data 

from a sample of banks on the volume of 

mortgage loans extended. These data are 

collected as part of the government-wide 

program coordinated by the Department 

of Housing and Urban Development. 

Again, this is a survey which we could

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dispense with as far as the FDIC is concerned, but I am convinced that the survey would continue to be taken by HUD 

or the ABA.

The Federal Government has been 

aware of and sensitive to this general 

problem of governmental paper, although 

not very successful yet in solving it. The 

National Commission on Productivity in 

its analysis of the financial industry gave 

considerable attention to the question of 

whether reporting requirements of Federal agencies imposed a burden that adversely affected productivity in the financial sector of the economy. There is now 

a Commission on Federal Paperwork with 

responsibility for attempting to minimize 

the flow of paper both within the government and between the government and 

the private sector. I am hopeful that the 

commission will be able to make significant progress, though there is some initial 

burden of reporting to the Commission 

on Paperwork.

Apart from government-wide efforts 

and c o n c e r n , the FDIC and the other 

banking agencies have been giving attention to this matter for some time. Several 

years ago, a joint banking agency-industry 

task force began work on a project now 

called ISBAR (Information System for 

Bank Agency Reporting.) This is a system 

designed for use by large, automated 

banks with substantial agency reporting 

requirements. When it is fully implemented, it will allow banks to report bits 

of information on magnetic tape which 

will then be processed by the agency 

without the need to fill out printed report forms. While it will be a long time 

before any bank is actually using the 

system to meet a substantial fraction of 

its reporting requirements, we have already experimented with receiving some 

reports in tape form. This is an example 

of joint agency-industry forward planning 

on a long-range problem rather than 

simply reaction to an immediate crisis.

Within the FDIC, we have reduced the 

flow of paper into Washington and back 

again and have reduced the time during 

which you must await our decisions by 

delegating certain responsibilities to our 

Regional Directors. These delegations include decisions on branch applications, 

office relocations, offering of trust services, continuation of deposit insurance 

after withdrawal from Federal Reserve 

membership, and others. The Regional 

Director has the authority to approve, 

but not to deny, such applications in the 

majority of instances. We have allowed 

banks to determine whether they wish to 

have their unmanned cash dispensers or 

automated teller facilities considered as 

branches or not. If the bank decides that 

the facilities should not be viewed as a 

branch, then we have dispensed with our 

branch application procedure, and require 

only a brief information notification. As 

a result of these delegations and other 

efforts within the FDIC, there has been a 

substantial improvement in the speed 

with which we process applications. We 

estimate that a banker receives an answer 

from the FDIC to an application for 

merger approval, insurance, new branches, etc., a month sooner than he would 

have 3 years ago.

Let me return to the beginning. I had 

in mind pointing out to you today ways 

the FDIC could remove some of the burden of Federal regulations and reporting 

requirements. My analysis of the situation, however, is that regulations will 

continue to be promulgated, and you will 

be required to continue to submit reports. Hopefully, we can make the preparation of reports easier and less costly 

for you—perhaps we can make them more 

useful. Whatever the case, we are going to 

insist on timely and accurate submission 

of reports because we feel that only if 

they are timely and accurate can they be 

useful to us in our supervisory responsibilities.

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Address by Robert E. Barnett, Deposit

Insurance*

There are times when it seems most 

propitious to encourage public examination and discussion of issues that affect 

our banking system for the purpose of 

seeing whether and how things might be 

improved. This would appear to be one of 

those times. Many banks that had encountered difficulties in the past year or 

so seem to be gradually working out of 

them. Things are likely to be better for 

most banks during the balance of this 

year and next. Both bank regulators and 

Congress are less preoccupied with emergency situations and thus, hopefully, 

better able to view issues in perspective. 

In light of all of this, I would like to discuss the adequacy and fairness of deposit 

insurance as it exists today, and make a 

few preliminary remarks about 100 percent deposit insurance as one alternative 

to the current system.

Except for occasional increases in the 

limits of deposit insurance coverage, there 

has not been any fundamental change in 

our system of Federal deposit insurance 

since the beginning of the FDIC. While I 

am far from dissatisfied with our present 

deposit insurance system, there are several reasons for raising the issue of change 

of the system at this time—if the mere 

passage of some 40-odd years is not sufficient in itself.

First, the Hunt Commission made 

suggestions for change that relate to deposit insurance, but none of the commission's recommendations in that area 

found their way into the legislation the 

Congress has recently considered. Neither 

have other possible changes, among which 

was 100 percent deposit insurance, which 

the commission considered but rejected. 

These issues have thereby escaped the 

public attention and discussion which the 

legislative process always provides.

*Presented before the 82nd Annual Convention 

of the Kentucky Bankers Association, Louisville, Kentucky, September 13, 1976.

Further, deposit insurance is obviously 

linked to bank failures, and some recent 

failures are different enough from earlier 

ones to require reconsideration of our 

unspoken premises. For most of the life 

of the FDIC, bank failures have involved 

relatively small banks. From the beginning of the Corporation in 1934 through 

1970, only one insured bank which failed 

had over $50 million in deposits, and 

almost all of them were under $5 million 

in deposits. The number of depositors 

and dollar amount of deposits in any failure, therefore, were quite small. In just 

the last 6 years, however, we have seen 

failures of some very large banks, including two over $1 billion in deposits, two of 

$100 million to $500 million and five 

between $50 and $100 million. Even 

though banks generally have grown dramatically in size,** the number of depositors affected by recent failures has grown 

relatively as well as absolutely.

Finally, the appropriate role of the 

FDIC and other bank agencies in bank 

supervision has been raised in a number 

of ways recently, and I believe it is appropriate to review the varying functions of 

the Corporation, including its role as an 

insurer, in some depth.

Today I plan to discuss the adequacy 

and fairness of the current deposit insurance system, in part by describing how 

the FDIC deals with bank failures and the 

basis for our decisions. I will then briefly 

consider the rationale for the one alternative normally suggested—100 percent 

deposit insurance. In other scheduled 

speeches over the next several weeks, I 

intend to explore more thoroughly the 

arguments and implications not only of 

100 percent deposit insurance, but also of 

other alternatives to the present system.

**ln 1956, a $500-million-deposit bank would 

have been the 42nd largest bank in the U.S., 

and a billion-dollar bank would have been 

the 18th largest. As of June 30, 1976, a 

$500-m illion bank would be only the 186th 

largest, and a billion-dollar bank only the 

89th largest.

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It is not the present intention of the 

FDIC to propose such legislation, nor do 

I wish to leave the impression that the 

Corporation would favor such legislation 

if it were proposed at the present time. 

But we do plan to review all the issues 

surrounding the matter as well as others 

basic to the FDIC.

The basic purpose of deposit insurance 

is to protect the banking system against 

destructive runs on deposits as well as to 

protect the depositors themselves. With 

respect to the latter, most depositors have 

fared extremely well in the 519 insured 

banks which were closed since the establishment of the Federal Deposit Insurance 

Corporation. About 99.8 percent of all 

depositors, large or small, fully recovered 

their deposits almost immediately, with 

only one-tenth of 1 percent having to 

wait for the liquidation of bank assets. 

And less than 5,000 out of nearly 3 million depositors are expected to experience any deposit loss at all. Out of $4 

billion in deposits at failed banks through

1975, approximately $267 million was 

lost or is expected to be lost. Of this 

amount, unprotected depositors stood to 

lose about $13 million, the Corporation 

absorbing the remainder. These loss figures do not take account of foregone 

interest in situations where recoveries 

have required extended periods of time. 

If we take this into account, even using 

modest interest rate levels for this purpose, losses on an opportunity-cost basis 

would be approximately 50 percent greater than the figures I have cited. In view of 

the number of years involved and the 

volume of deposits, most would agree 

that losses of this magnitude are not substantial.

The high recovery rate for depositors 

is attributable at least in part to the fact 

that $9 out of every $10 in deposits were 

in bank failures which were handled by 

purchase and assumption transactions in 

which the FDIC provided assistance enabling another bank to assume the failed 

bank's liabilities. This arrangement provides, in effect, 100 percent insurance to 

uninsured depositors and general creditors as well as to FDIC-insured depositors. If one or more of the large bank 

failures (United States National Bank or 

Franklin National Bank, for example) had 

been paid off, the number of depositors 

not having de facto 100 percent insurance 

would have been substantially larger.

However, even in banks which were 

handled by a payoff of insured deposits, 

more than 99 percent of the depositors 

are assured of payment in full and more 

than 98 percent of all deposits (in dollars) 

are expected to be recovered. Insurance 

covered about 70 percent of these deposits, and another 16 percent were protected via pledged assets, preference, or 

loan offsets; as in a purchase and assumption, these deposits were made available 

to depositors almost immediately.

But the consequences of a payoff to 

individual depositors who held the remaining 14 percent of the excess deposits 

were not quite so favorable. Although 

one-third of these depositors have historically recovered their deposits in full, in a 

typical payout, the depositors who are 

not fully insured have lost about 12 percent of their individual deposits. In addition, these depositors, including those 

who are lucky enough to recover in full, 

must forego interest on the recoverable 

portion of their deposits while waiting for 

the bank's assets to be liquidated. In 

many instances, the foregone interest has 

been considerable and, as I have suggested, may equal one-half of the losses 

of principal incurred.

The depositors caught in this situation 

comprise a mixed group, and a group that 

to a great extent includes depositors that 

would have to be among the more sophisticated and knowledgeable about the 

condition of a bank. Savings and loan 

associations accounted for close to onethird of the total of these deposits. The 

next largest amount was held by individuals, followed by nonfinancial corporations, credit unions, public entities, and

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banks, in that order.

In a deposit payoff, balances in secured and preferred deposits, as well as 

insured deposits, are paid over to their 

owners, usually beginning 5 to 7 days 

following the closing of the bank, for 

which the Corporation receives the subrogated claims of these owners against the 

bank's assets. Owners of uninsured deposits having any indebtedness to the 

bank also may request to have their loans 

offset against their deposit balances. Both 

the Corporation and uninsured holders of 

excess deposits not protected by the foregoing features must await recovery on 

their claims from an often lengthy liquidation of the bank's assets and must bear 

a pro rata share of any loss that ensues.

In a purchase and assumption, the 

acquiring bank assumes all the deposit 

liabilities of the failed bank ensuring little 

or no disruption in banking services to 

the community and providing full protection to both insured and uninsured 

depositors alike. To the extent that the 

initial transition also involves little change 

in personnel and facilities, the transaction 

is also likely to minimize any secondary 

reactions affecting the public's confidence in the banking system. Where relatively large banks are involved or where 

the failure coincides with uncertainty in 

financial markets, this confidence factor 

is one that should not be minimized.

If the acquiring bank acquires or purchases a substantial amount of assets, this 

not only facilitates the disposition of the 

assets for the FDIC but also is consistent 

with maintaining the established banking 

relationship between loans and deposits 

which is necessarily severed in a payoff. 

In recognition of the value of acquiring a 

going business, the assuming banks will 

usually pay a premium for the assets and 

deposits of the failed bank, thus reducing 

the net loss resulting from the bank failure. In effect the FDIC is able to recover, 

for the benefit of creditors and shareholders, a "going business" value or goodwill from the failed bank. In contrast, the

necessary transfer of deposits to other 

banks by individual depositors following 

a payoff commands no such special price 

from the recipient banks.

Despite these advantages, it has not 

always been possible for the FDIC to 

arrange a purchase and assumption. Since 

January 1, 1971, for example, purchase 

and assumptions could not be arranged in 

15 of the 40 banks that closed. In unit 

banking States it may be impossible to 

find a nearby bank that is interested or in 

a position to acquire the failed bank. 

Since the office of the failed bank must 

be closed, the potential purchasing bank 

cannot be sure of retaining the bulk of 

the failed bank's business. Similarly, in 

unit banking States or States in which 

branching statutes are restrictive, otherwise suitable banks located elsewhere in 

the State cannot even be considered. 

Even in unit bank or restricted branching 

States where multibank holding companies are permitted, the cost or complexities of establishing another bank (as 

opposed to a branch) may be enough 

greater as to make the acquisition of the 

defunct bank unprofitable. Of the 13 

payoffs since January 1, 1971, all of 

them have been in States which at the 

time of failure had either unit banking or 

limited branching laws.

Even in full branching States, however, 

it may be that the market served by the 

defunct bank simply has insufficient value to attract the interest of any bank 

large enough to manage the assets and 

liabilities.

In order to make the purchase and 

assum ption transaction attractive to 

potential takeover banks, the FDIC indemnifies that bank against unknown 

liabilities that may surface after the takeover. That indemnity is one given by the 

Corporation in its role as a Corporation, 

not in its role as a receiver, and therefore 

is not limited by the estate of the failed 

bank, but rather is supported by the 

deposit insurance fund. In cases of fraud, 

the consequences may be so severe as to

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convince the Corporation that granting 

such an indemnity to the acquiring bank 

may involve too much risk to the insurance fund. More specifically, since the 

Corporation is permitted under section 

13(e) of the statute to assist in a purchase 

and assumption transaction only if doing 

so will "reduce the risk or avert a threatened loss" to the Corporation (interpreted over time by the Corporation to 

mean "only if it's cheaper") if the assets 

and contingent liabilities of the closed 

bank are too ill-defined for the Corporation to make a reasonable estimate of the 

comparative costs of an assumption versus a payoff, it may not do so. Despite 

our care, under such uncertain conditions 

the Corporation probably has erred on 

both sides, opting for a payout in some 

instances of fraud or embezzlement when 

subsequent developments suggested that a 

purchase and assumption transaction 

would have been less costly and, in a few 

instances, opting for a purchase and 

assumption which later proved to involve 

considerably more liabilities or worthless 

assets than expected.

In several recent bank failures, the 

FDIC has concluded that it was necessary 

to exclude from assumption contingent 

and suspected claims in order to determine that the purchase and assumption 

was cheaper. We believe we have the 

power to do that. But that determination 

is being challenged in court. If the claimants prevail, under our present statute it 

may be difficult to arrange a purchase 

and assumption where we are unable to 

define the liabilities of the bank on the 

date it closes.

Even in bank failures not beset by 

embezzlement or wrongdoing, however, 

there are still many uncertainties concerning the financial status of the closed bank 

and the possible outcome following closure. Since 1951, the Corporation has 

attempted to make informed cost estimates in accordance with statutory requirements to choose the most economical alternative. Under the method used,

we first estimate the insured and uninsured shares of the expected loss. The 

Corporation assumes the full loss in an 

assumption and only the insured share of 

the loss in a payout. Thus, the difference 

in these two figures—represented by 

the uninsured share of the loss—determines the additional cost to the Corporation of an assumption. From the resulting 

figure, we also usually subtract the 

administrative costs of distributing deposit balances to insured depositors— 

costs which are incurred in a payout but 

not in an assumption. The remaining difference must be made up in some manner 

in order for the Corporation to justify a 

purchase and assumption on a cost basis. 

Typically, this is done by a premium paid 

by the acquiring bank which assumes the 

liabilities and certain of the assets of the 

failed bank. The premium offered is 

usually determined through closed bids 

submitted by potential buyers—usually, 

but not always, existing banks or bank 

holding companies.

In practice, the assuming bank usually 

does not take over all of the assets of the 

failed bank. Many of those are of such 

poor quality that we do not want to 

weaken the takeover bank by requiring it 

to take them. These are taken over by the 

FDIC which then provides cash to make 

up the difference between assets purchased and liabilities assumed (less, of 

course, the premium paid).

For example, assume a bank fails with 

deposits and nonsubordinated liabilities 

of $100 million and of this total $75 million (75 percent) is insured deposits. 

Anticipated losses are projected at $20 

million. In a payoff, uninsured depositors 

and other creditors would absorb 25 percent of the loss, or $5 million. In a purchase and assumption, assuming the FDIC 

buys back all questionable assets, all 

losses would be absorbed by the FDIC. 

Thus, an acquiring bank would have to 

bid at least a $5 million premium (less the 

saving to the FDIC of avoiding the cost of 

paying insured depositors in a payoff) to

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justify the transaction on a cost basis.

Since October of 1974, following an 

announcement to that effect by thenChairman Wille, the FDIC has made a 

special effort in all failures to arrange a 

purchase and assumption transaction, 

including developing and using the concept of an "all cash" or "clean bank" 

transaction, one in which the Corporation 

delivers to the takeover bank cash equal 

to the liabilities assumed less the premium. Since that time, only 4 of the 24 

banks which have failed have been handled by a payoff rather than a purchase 

and assumption transaction. These four 

banks were each under $20 million in 

deposits when they failed. As I have suggested, it is the preferred method for reasons other than cost, and one might 

expect that this might lead us to fudge 

our cost estimates in favor of a purchase 

and assumption. However, that does not 

seem to have been the case. In fact, a 

recent review of our method of calculating comparative costs revealed that 

some additional considerations should 

properly be taken into account, which 

would significantly improve the relative 

cost status of assumptions so that in even 

more cases than now they would be less 

costly to the FDIC than payoffs, even if 

the premium bids were to fall short of the 

uninsured depositors' share of the loss as 

currently calculated.

Depending on how long a bank is 

known or suspected to be in trouble before being closed, there is a strong likelihood that a significant number of uninsured depositors, especially those holding 

sizable demand deposits, will have withdrawn the exposed portion of their deposits, leaving balances that to a considerable extent are protected from any loss 

by preferred status, pledged assets, or 

offsetable loans. The latter had not figured 

in our calculations until examination of 

the F ra n k lin National Bank failure 

showed how significant a factor offsets 

could be, particularly in a large-bank failure. We estimate that about three-fourths

of the uninsured demand deposits and 

one-third of all uninsured domestic deposits remaining at Franklin at the time it 

closed were protected by loan offsets. On 

this basis, the premium required to justify 

arranging a purchase and assumption 

rather than paying off insured depositors 

was nearly one-third smaller than the 

amount estimated by ignoring offsets.

Where there is sufficient time and the 

stakes are relatively high, we have tried to 

structure the transaction so that the acquiring bank takes a considerable portion 

of the assets of the failed bank. This both 

puts individual borrowers in a much better position than they would be if their 

loans were left in the receiver's hands and 

disrupts the community less. In addition, 

it minimizes the FDIC's cash outlay and 

foregone interest, and tends to reduce our 

losses on collections as well as liquidation 

expenses.

O ur liquidators are skilled professionals who do an excellent job of collecting on the assets of closed banks. Nevertheless, in many instances an acquiring 

bank has advantages in loan collection 

compared with the FDIC acting as receiver. Where loans are current and associated with a deposit relationship, they 

are worth more to the bank than to the 

FDIC. A bank may be very happy to 

carry or even extend a loan arrangement 

where sizable deposit balances are involved. Where workouts involving additional advances are necessary, the bank as 

an ongoing financial institution typically 

has more flexibility than the FDIC acting 

as a receiver. Frequently, though not 

always, the acquiring bank has staff, 

experience, and expertise in the local 

market and because of this may be able 

to move more knowledgeably in the early 

phases of the collection process. In practically all cases, buildings, leases, and 

other physical facilities are worth more 

on a going-concern basis to the acquiring 

bank than they would have been if they 

were liquidated in a payoff. If a collection matter ultimately ends up in court,

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the FDIC sometimes appears as an outsider with unlimited resources attempting 

to take all the assets of an unfortunate 

local merchant or businessman.

In many of the smaller purchase and 

assumption transactions, we have not 

required bidding banks to take loans of 

the failed bank. Even in these transactions, however, acquiring banks frequently buy some loans, thereby facilitating the liquidation process. Within the 

FDIC we have been looking at the purchase and assumption process to see how 

such transactions might be modified and 

improved. It may be feasible to structure 

transactions so that acquiring banks 

usually take a high percentage of assets. 

By minimizing FDIC cash outlays, foregone interest, and liquidation expenses, 

the overall cost to the FDIC might be 

further reduced.

In 1951 a Congressional committee 

was severely critical of what appeared to 

be an automatic FDIC decision to use the 

purchase and assumption alternative in all 

bank failures. In fact, there had been no 

payoffs between 1944 and 1951, and 

comparative cost tests had been virtually 

ignored. The result, of course, could be 

predicted: one bank with total assets of 

only $637 thousand required an outlay 

by the FDIC of $1.8 million and an ultimate loss of $1 million, to effect FDICassisted purchase and assumption with 

accompanying indemnities to the takeover bank. Following that criticism, the 

FDIC became and has remained very careful to arrange purchase and assumption 

transactions only when the costs justify 

that decision, and as I have mentioned, 

there have been a few instances in which 

payoffs have occurred.

Nevertheless, all of the considerations 

I have mentioned suggest that we are likely to continue to handle most bank failures through purchase and assumption 

transactions as we have during the past 

few years. While subordinated creditors 

and equity investors typically lose most 

or all of their investment in purchase and

assumption transactions, depositors and 

nonsubordinated creditors incur no losses.

As a result we have had de facto 100 

percent insurance for all depositors in 

most banks in recent years. What we have 

not had is equity, fairness, and logic in 

determining which are to be the few 

depositors who do not have 100 percent 

insurance. Those instances where depositors have experienced losses in payoffs 

have reflected special circumstances from 

the FDIC's standpoint—not from the 

depositors'.

For example, there were some cases 

where it was not possible to arrange for a 

purchase and assumption because of the 

location of the bank, because of the 

State's branching and holding company 

laws, because the FDIC could not get a 

good fix on liabilities because of pending 

lawsuits or suspected fraud, etc. Uncertainty and potential cost considerations 

may have afforded logical reasons for a 

payoff in such cases as far as the FDIC 

was concerned. However, uninsured depositors were not necessarily at fault. 

They were unlucky. I recognize that these 

were large depositors who presumably 

were sophisticated and knowledgeable 

enough to scrutinize the condition of the 

bank before making their deposits. The 

fact is, however, that would not have 

helped in all cases. The sophisticated 

depositor is more likely to be able to 

detect poor management, which will 

probably lead to a purchase and assumption transaction in which he will be 100 

percent insured if he leaves his deposit 

with the bank, than to detect fraud, 

which is more likely to lead to a payout 

and some loss on his deposits.

In a few other instances where the continued existence of the failing bank was 

essential to the community served, the 

FDIC has provided direct assistance under 

section 13(c) of its statute, thereby eliminating or postponing the need for closing 

the bank and losses to depositors. This 

section has been used rarely by the FDIC,

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at least partly because it requires a finding that preservation of the bank in question is . essential for providing adequate 

banking services to the community. While 

I do not quarrel with the appropriateness 

of this test, it has nothing to do with 

any equitable determination from the 

depositor's standpoint of which depositors get covered in full and which do not.

Another factor affecting depositor 

losses has been the timing of bank closings. Decisions on bank closings are made 

by agencies that charter the banks: the 

Comptroller of the Currency and the 

State bank supervisors. The Federal Reserve may play an important role in connection with advances to member banks 

and the FDIC provides input to the 

Comptroller and the States. Delays in 

closing a bank, avoidable or unavoidable, 

particularly after adverse publicity, enable some large depositors to withdraw 

funds to avert a possible loss. In some 

instances such delays have benefited specific depositors, perhaps just those depositors who we have argued over the years 

provide the discipline to top management. It may also be, however, that 

those depositors who leave during the 

delays just happen to be those whose 

deposit certificates mature during the 

period, a relatively illogical basis for preferring one uninsured depositor over 

another. Such withdrawals, whatever the 

basis, increase the share of loss borne by 

other uninsured depositors if the bank is 

paid off.

If we have almost 100 percent deposit 

insurance and the present system appears 

to work in an almost random way in its 

treatment of depositors—similar depositors are treated differently in different 

cases—why not go to 100 percent deposit 

insurance? Obviously, this proposition is 

more complicated than that. The possibility that presently uninsured depositors 

will lose money in the event of a bank 

failure, for example, does make a difference in the behavior of some depositors 

and, as a result, in the behavior of some

bank managers. This difference is important and its impact, I believe, has some 

good and bad consequences. I do not 

have the time today to trace those effects 

in detail—that is in fact another speech 

which I plan to make soon—but I would 

like to briefly review the arguments for 

and against 100 percent deposit insurance, without, at least for the time being, 

committing to the support of any of 

them.

First, the obvious arguments in support:

1. One-hundred percent deposit insurance obviously will provide additional 

protection to those depositors whose 

deposits are not now fully protected. 

Based on past experience, the cost of this 

additional insurance coverage to the 

FDIC would be small. We have calculated 

that the additional cost to the FDIC of 

payoffs made throughout the Corporation's history, if none of the loss had 

been borne by uninsured depositors and 

the same banks had failed, would be 

about $13 million. Of course, that is a 

small figure in part because large bank 

failures have been handled through purchase and assumptions. For example, if 

USNB had been handled as a payoff rather than a purchase and assumption, this 

figure would be $88 million. An important point, as we have noted, is that in 

effect, we already have almost 100 percent deposit insurance because of our policy of arranging purchase and assumption 

transactions wherever possible.

2. With 100 percent deposit insurance, depositors would have no need to 

withdraw funds from banks with problems, and runs on such banks would not 

be likely to cause a failure. Under our 

present system, when a bank gets into difficulty or is exposed to adverse publicity, 

some uninsured depositors tend to flee, 

exacerbating that difficulty. One-hundred 

percent deposit insurance would limit 

deposit outflows in adverse circumstances, thus providing more time to 

work out a solution for the problem bank

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166 FEDERAL DEPOSIT INSURANCE CORPORATION

or for management to turn the bank 

around. If these considerations prevail 

over other contradictory considerations, 

we would expect to have fewer bank failures under a system of 100 percent deposit insurance.

3. One-hundred percent deposit insurance would have a beneficial impact on 

competition among banks. At present, 

institutions deemed to be more solid or 

more conservative have an advantage in 

competing for deposits. Perhaps this is as 

it should be. However, depositors may 

not be able to differentiate accurately 

among banks according to risk, and for 

some depositors, size becomes a proxy 

for soundness. Or depositors may simply 

assume that we will not allow a large 

bank failure to result in a payoff* **. Onehundred percent deposit insurance would 

probably improve the competitive positions of small vs. large banks and of new 

vs. established institutions. Over time this 

would ordinarily be expected to reduce 

the level of concentration in banking and 

to lead to more competitive pricing of 

banking services.

4. Because, as I have mentioned, we 

would not need to fear provoking runs on 

troubled banks, fuller public disclosure of 

adverse information on a bank's financial 

condition could be made. This would lead 

to more informed business decisions by 

investors and customers of the bank.

* * * Statistical I y, there is some support for that

position, as evidenced by the following: 

During the period 1971 to September 1, 

1976, of the banks that closed, 29 were less 

than $25 m illion in deposits. Twelve of 

these were paid out, 15 were acquired by a 

third party in an FDIC-assisted purchase 

and assumption transaction, and 2 became 

deposit insurance national banks. Seven of 

the failed banks were between $25 m illion 

and $100 m illion, and of these only one 

was paid out. Four were over $100 m illion 

and none of those were paid out. Logically, 

legally, and historically, however, the fact 

remains that no one can be certain that the 

FDIC will always be able to avoid paying 

off even a large bank.

5. There has been much discussion in 

the past about the distortions caused by 

State pledging requirements for deposits 

of public funds. With 100 percent deposit 

insurance, such requirements could be 

eliminated without any risk of loss to the 

depositors.

The obvious arguments against 100 

percent deposit insurance:

1. The principal and traditional argument against 100 percent deposit insurance is that uninsured depositors place 

limits on the riskiness of bank operations. 

While there is some debate about how 

effective such influence is, few would 

deny that to a degree at least, it exists. 

With 100 percent insurance, banks anxious to increase their risk by bidding 

aggressively for deposits and loans might 

be able to do so without any market restraints. No banker wants to lose money 

or fail, but some would be willing to take 

on considerable risk if they consider 

potential rewards in the form of growth 

and earnings to be sufficient.

This weighing of risk and reward 

works in most sectors of our economy, 

but we normally expect most of the risk 

to be assumed by equity investors. Where 

leverage is sought, lenders restrain the 

extent of overall risk by imposing restrictions—higher interest rates—and limiting 

available funds as risk is increased. In the 

banking system, depositors provide most 

of the funds, and if 100 percent deposit 

insurance were to exist, much or most of 

the risk would be borne by the deposit 

insurance fund.

Let me emphasize that the argument is 

not that most or even many bankers 

would behave irresponsibly if we had 100 

percent deposit insurance. Rather, it is 

that 100 percent deposit insurance would 

eliminate market restraints that many believe presently exist which lim it the 

amount of deposits available to the overly 

risky, overly aggressive, overly optimistic, 

or self-serving operation.

2. To protect its position, the FDIC 

might need authority to restrict leverage

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STATEMENTS BY CORPORATION DIRECTORS 167

or the composition of bank asset portfolios if 100 percent deposit insurance 

were to exist. Traditionally, the FDIC has 

opposed the regulation of the operational 

mix and I think most bankers have opposed it, fearing that regulatory restrictions might be more costly than the benefits of 100 percent deposit insurance.

3. As long as there are no runs or 

liquidity pressures on banks in difficulty, 

supervisors might be reluctant to close 

banks that are insolvent or operating in 

an excessively risky fashion.

4. In view of the greater risks which 

banks might take and the longer time 

before they are closed, the ultimate losses 

to the insurance fund might be large. In 

fact, our past experience of very limited 

losses may not be a true indication of the 

potential risks under 100 percent deposit 

insurance.

There are, of course, other issues involved that I have not even mentioned.

These include the premium structure for 

deposit insurance. The suggestion has 

often been made that deposit insurance 

premiums be tied to the riskiness of the 

bank, a suggestion that is easier to justify 

in principle than to work out in practice. 

Others argue that there is an inequity in 

that banks pay premiums on all deposits 

even though part are not insured. What 

should we do about insurance coverage 

for deposits of American banks abroad? 

Or about the deposits of U.S. branches of 

foreign banks? If deposits are insured 100 

percent, what are the implications for 

capital needs in a bank? Would the new 

mix of risks affect monetary policy 

mechanisms? I cannot resolve all these 

issues today, but I believe that the banking system would benefit from public discussion of the issues I have raised today, 

and as I indicated at the outset, this is 

probably a good time to begin such discussion.

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168

FEDERAL DEPOSIT INSURANCE CORPORATION

Address by Robert E. Barnett, Six Alternatives to the Present Deposit Insurance

System*

In a recent speech I discussed the 

adequacy and fairness of the current 

deposit insurance system, and described 

in detail how the FDIC deals with bank 

failures and the bases for our decisions in 

handling failing banks. After pointing out 

the inequity in the present system for 

certain uninsured depositors, I went on to 

consider briefly the rationale for the one 

alternative normally suggested-100 percent deposit insurance. Today I intend to 

explore more thoroughly the arguments 

and implications not only of 100 percent 

deposit insurance, but also of other alternatives to the present system, some of 

which may be more desirable than 100 

percent insurance.

The basic purpose of deposit insurance 

is to protect the banking system against 

destructive runs on deposits as well as to 

protect the depositors themselves. With 

respect to the latter, most depositors have 

fared extremely well in the 531 insured 

banks which have been closed since the 

establishment of the Federal Deposit 

Insurance Corporation. About 99.8 percent of all depositors, large or small, fully

recovered their deposits almost immediately. Out of $4 billion in deposits at 

failed banks through 1975, approximately $267 million was lost or is expected to be lost. Of this amount, unprotected depositors have recovered or will 

recover all but about $13 million, the 

Corporation absorbing the remainder.

The high recovery rate for depositors 

is attributable mainly to the fact that 

over $9 out of every $10 in deposits were 

in bank failures which were handled by 

purchase and assumption transactions, 

transactions in which the FDIC provides 

assistance enabling another bank to 

assume all of the failed bank s liabilities,

* Presented before the Nebraska Correspondent 

Bank Conference, Lincoln, Nebraska, September 24,1976.

i n e f f e c t , p r o v i d i n g 1 0 0 p e r c e n t i n s u r a n c e 

b o t h t o u n i n s u r e d a n d i n s u r e d d e p o s i t o r s 

a l i k e . S u b o r d i n a t e d c r e d i t o r s a n d e q u i t y 

i n v e s t o r s g e n e r a l l y l o s e m o s t o r a ll o f 

t h e i r i n v e s t m e n t s in e i t h e r a p a y o f f o r a 

p u r c h a s e a n d a s s u m p t i o n .

The present law, however, restricts our 

ability to arrange a purchase and assumption in all cases. It requires that we arrange an assumption only when the cost 

of doing so is less to the FDIC than a 

payoff. In addition, of course, the FDIC 

has to be able to find a buyer and in some 

cases, particularly in unit banking States, 

that has proved impossible. In Nebraska, 

for example, of the eight failures since 

the FDIC was created all have been payoffs, with the attendant disruptions, rather than assumptions.

Nevertheless, since October of 1974, 

when the FDIC made this policy explicit, 

only 4 of 28 bank failures have been 

handled by payoff rather than purchase

and assumption.

By resorting to purchase and assumptions whenever possible, we have provided de facto 100 percent insurance for 

all depositors in most banks in recent 

years. What we have not provided is 

equity, fairness, and logic in determining 

which are to be the few depositors who 

do not have 100 percent insurance. Those 

instances where depositors have experienced losses in payoffs have reflected 

special circumstances from the FDICs 

sta n d p o in t-n o t necessarily from the 

depositors'. That is, there were some 

cases where it was not possible or appropriate to arrange for a purchase and 

assumption because of the location of the 

bank, or because of the State's branch 

and holding company laws, or because 

the FDIC could not get a good fix on 

liabilities because of pending lawsuits or 

su s p e c ted fraud. Uncertainty and potential cost considerations may have afforded logical reasons for a payoff in such 

cases as far as the FDIC was concerned. 

However, uninsured depositors were not 

necessarily at fault. They were unlucky. I

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STATEMENTS BY CORPORATION DIRECTORS 169

recognize that these were large depositors 

who presumably are sophisticated and 

knowledgeable enough to scrutinize the 

condition of the bank before making 

their deposit, but that probably did not 

help. The sophisticated depositor is more 

likely to be able to detect poor management which will probably lead to a purchase and assumption than fraud which is 

more likely to lead to a payoff.

If we have almost 100 percent deposit 

insurance and the present system appears 

to work in an almost random way in its 

treatment of depositors—similar depositors getting treated differently in different cases—why not protect those innocent uninsured depositors by going to 

100 percent deposit insurance? Let's 

explore the possibility.

First, the five most obvious arguments 

in support of such a change:

1. One-hundred percent deposit insurance would provide protection to those

depositors whose deposits are not now

fully protected. This can be done with 

only minimal additional cost to the 

FDIC, if past experience is any guide. The 

additional cost to the FDIC of payoffs 

made throughout the Corporation's history, if none of the loss had been borne 

by uninsured depositors and the same 

banks had failed, would be about $13 

million. Let me insert a caveat at this 

point, however. If one or more of the 

recent large bank failures had been payoffs, the amount of loss to uninsured 

depositors would be much larger and 

therefore, the cost of moving to full insurance much more costly to the FDIC. If 

just one bank failure, U.S. National Bank 

in San Diego, California, had been resolved with a payoff rather than a purchase and assumption, the cost to uninsured depositors would have increased 

from $13 million to $88 million.

2. With 100 percent deposit insurance,

depositors would have no need to withdraw funds from banks with problems,

and runs on such banks would not be

likely to cause a failure. Under our present system, when a bank gets into d ifficulty or is exposed to adverse publicity, 

some uninsured depositors tend to flee, 

exacerbating that difficulty. We must 

remember, when comparing banks with 

other corporations, that much of bank 

liabilities are payable on demand and free 

to leave in response to adverse publicity. 

One-hundred percent deposit insurance 

should lim it deposit outflows in adverse 

circumstances, thus providing more time 

to work out a solution for the problem 

bank or for management to turn the bank 

around. Of course, not all deposit outflows would be forestalled since depositors typically want to do business with 

banks that can provide loans and other 

services, and the troubled bank is apt to 

be less able to serve its customers.

We expect that these factors would 

lead to a reduction in the number of bank 

failures, but that is by no means assured. 

What is more certain is that there would 

be fewer payouts. The purchase and 

assumption procedure could be used in 

almost every failure if deposits are insured in full.

3. One-hundred percent deposit insurance would have a beneficial impact on

competition among banks. At present, 

institutions deemed to be more solid or 

more conservative have an advantage in 

competing for deposits. This is as it 

should be. However, depositors may not 

be able to differentiate accurately among 

banks according to risk, and for some 

depositors, size becomes a proxy for 

soundness. Or depositors may simply 

assume that we will not allow a large 

bank failure to result in a payoff. Statistically, there is some support for that 

position, as evidenced by the following: 

During the period 1971 to the present, of 

the banks that closed, 30 had less than 

$21 million in deposits. Twelve of these 

were paid out, 16 were acquired by a 

third party in an FDIC-assisted purchase 

and assumption transaction, and 2 became deposit insurance national banks. 

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tween $21 million and $100 million was 

paid out, and none of the five with more 

than $100 million in deposits was paid 

out.

The present system, then, gives a decided competitive edge to very large 

banks. One-hundred percent deposit insurance would probably improve the 

competitive positions of small vs. large 

banks and of new vs. established institutions. Over time this would ordinarily be 

expected to reduce the levels of concentration in banking and to lead to more 

competitive markets for banking services.

4. Because, as / have m entionedwe

would not need to fear provoking runs on

troubled banks, fuller public disclosure of

adverse information on a bank's financial

condition could be made. This would lead 

to more informed business decisions by 

investors and customers of the bank, and 

some of the controversy about proper 

bank disclosure could be eliminated. The 

FDIC has been concerned that in recent 

years the capital markets have become 

less open to banks, particularly to smaller 

banks. Fuller disclosure would make it 

easier for well-run banks to open these 

markets, and to open them at reasonable 

rates. Large customers could become 

more confident that their business was 

safe in smaller banks if they had more 

disclosure of the condition of the bank.

5. I f we had 100percent deposit insurance, pledging requirements for State and

local governments could presumably be

eliminated. State and local governments 

already have preferred treatment with 

respect to their deposits in banks. They 

now have insurance coverage of 

$100,000, and the remainder, in most 

States, is protected by pledging requirements. Those bankers and others who 

view pledging requirements as an impediment to the efficient utilization of bank 

assets, and a reduction in bank liquidity, 

would count its elimination as an advantage of 100 percent insurance coverage. 

Those treasurers of public bodies and 

others concerned with the market for

State and local government securities 

probably would view the elimination of 

pledging requirements as an undesirable 

aspect of 100 percent deposit insurance. 

There are other techniques for providing 

a continuing market for municipal securities, however, that probably would be 

effective even if pledging requirements 

were eliminated. Municipalities may be 

able to improve their markets, for example, by providing fuller disclosure or 

by moving to taxable, subsidized borrowings.

Let me turn to the obvious arguments 

against 100 percent deposit insurance:

1. Uninsured depositors place limits on

the riskiness o f bank operations. While 

there is some debate about how effective 

such influence is and no hard evidence is 

available, few would deny that, to a degree at least, this influence exists. With 

100 percent insurance, banks anxious to 

increase their risk by bidding aggressively 

for deposits and loans might be able to do 

so without any market restraints.

No banker wants to lose money or fail, 

but some would be willing to take on 

considerable risk if they considered 

potential rewards in the form of growth 

and earnings to be sufficient. This weighing of risk and reward works in most sectors of our economy where most of the 

risk is assumed by equity investors. Where 

leverage is sought, lenders restrain the 

extent of overall risk by imposing restrictions, e.g., higher interest rates, and lim iting available funds as risk is increased.

In the banking system, however, depositors provide most of the funds. With 

100 percent deposit insurance, there 

would be little reason for large depositors 

to impose such market constraints. 

Aggressive high-risk-oriented banks, therefore, would be able to bid successfully for 

sizable additional time deposits at moderately elevated interest rates, which under 

current conditions might have been available to them only at prohibitive rates or 

not at all. Under 100 percent insurance, 

then, all of this additional exposure to

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loss would be borne by the deposit insurance fund.

Let me emphasize that the argument is 

not that most or even many bankers 

would behave irresponsibly if we had 100 

percent deposit insurance. Rather, it is 

that 100 percent deposit insurance would 

significantly reduce the market restraints 

that many believe presently lim it the 

amount of deposits available to the overly 

risky, overly aggressive, overly optimistic, 

and self-serving operation. Of course, 

there would still be some competitive 

forces working in the direction of sound 

bank operations. Many depositors, particularly large business firms, are attracted 

to a bank by its ability to provide services 

efficiently and to grant credit when 

needed. A bank whose continued existence is in question is hindered in this 

competition for customers.

2. Since under 100 percent deposit

insurance the exposure o f the FDIC fund

may increase, the Corporation may need

authority to restrict leverage or the composition o f bank asset portfolios in order

to offset the greater risk exposure and

costs. Some possible restrictions would be 

limitations on capital ratios, limitations 

on asset combinations, or some form of 

both. Traditionally, the FDIC has not 

sought additional powers over bank leverage or asset composition. In fact, we have 

tended to favor broader lending and investment powers for banks. Likewise, 

most bankers have opposed the mix of 

increased insurance and increased regulation, fearing that regulatory restrictions 

might be more costly than the benefits of 

100 percent deposit insurance.

Over the last year or so, several large 

banks have gone to market to raise very 

sizable amounts of capital. Obviously, we 

are pleased to see that, because increased 

bank capital becomes part of the cushion 

for the deposit insurance fund. To some 

extent, these capital issues may have resulted from informal pressure from the 

supervisory agencies, but I would not 

want to exaggerate our influence in these

decisions. The major factor probably was 

the bank's concern that capital ratios play 

a role in the competitive battle for large 

deposits. In a world of 100 percent deposit insurance, however, bankers may be 

able to attract fully insured large deposits 

with very low capital ratios. Since bankers will not have the same incentive to 

maintain this cushion of capital protection for the deposit insurance fund, we 

may need authority to impose minimum 

capital requirements (or minimum liquidity requirements, or more control over 

types of investments).

3. As long as there are no runs or

liquidity pressures on banks in difficulty,

supervisors might be reluctant to close

banks that are insolvent or operating in

an excessively risky fashion. This raises a 

very important issue concerning bank failures and insurance. Do we want a situation in which a bank cannot fail? That is, 

do we want to keep inefficient, marginal 

banks open indefinitely? I do not think 

so, and 100 percent deposit insurance 

does not necessarily lead to that result. 

But there is a legitimate concern that 

supervisors may be reluctant to close a 

bank that could otherwise continue to 

operate indefinitely. Suppose a State 

supervisor concludes that a bank, on the 

basis of examiner classifications and market depreciation of securities, is insolvent. 

Under present conditions, such a bank is 

closed on an asset valuation basis, or 

tends to lose deposits, finds it difficult to 

borrow Federal funds, and is closed on a 

liquidity basis in a relatively short time. 

W ith 100 percent deposit insurance, 

depositors will not shy away from such a 

bank and liquidity pressures will be absent. In such a case, human nature might 

well lead the supervisor to delay taking 

action to close the bank. He may not 

intend to delay indefinitely, but it might 

appear desirable to delay until after the 

next election or until the supervisor's 

term is up. The temptation to leave such 

problems to one's successor is great, and

is not unreasonable. After all, perhaps the

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examiner's loan classifications were too 

harsh, or perhaps the market will turn 

around and eliminate the depreciation in 

the bond portfolio, or maybe something 

else will come up to improve the bank's 

condition. Whatever the reason, if supervisors react in this way, the risk of failure 

for inefficient, incompetent, or crooked 

owners and managers will be substantially 

decreased.

4. In view o f the greater risks which

banks might take and the longer time before they are dosed, the ultimate losses

to the insurance fund might be large. In 

fact, our past experience of very limited 

losses may not be a true indication of the 

potential risks under 100 percent deposit 

insurance. I mentioned earlier that if our 

past bank failures had involved 100 percent deposit insurance the additional cost 

to the FDIC would only have been about 

$13 million. But that was in a world in 

w hich insolvent banks were closed 

promptly and in which the prudence of 

uninsured depositors made it difficult for 

crooked or incompetent bankers to obtain deposits. If large depositors, with no 

fear of loss, could put large amounts of 

fully insured funds in the hands of swindlers, incompetents, or swingers, our 

losses could be much larger than past 

experience suggests.

Where do these pros and cons lead us 

with respect to a position on 100 percent 

deposit insurance? Allow me to duck that 

question for the present and suggest other 

alternatives than 100 percent deposit 

insurance for dealing with the inequities 

of the present system.

I see at least four or five alternatives:

1. It is clear that we can achieve all 

the benefits of 100 percent deposit insurance by adopting a policy of always arranging for purchase and assumption

transactions in the case o f bank failure.

We can do so nearly all the time now, but 

there are some situations in which existing statutes do not allow us to use the 

assumption technique. There are some 

cases where the amount of uninsured liabilities is so great, or the value of the 

bank's business is so low, that no potential assuming bank is willing to offer a 

premium sufficient to meet the statutory 

test that an assumption transaction can 

be assisted by the FDIC only if the cost 

to the FDIC will be less than in a payout. 

In cases of suspected fraud, we must be 

concerned that there are liabilities that do 

not appear on the bank's books, which 

we obviously do not want to underwrite. 

In other cases an assumption may appear 

undesirable because the potential acquiring bank already has too large a share of 

the market, and an increase in that share 

would have anticompetitive effects on 

bank structure.

In some of these cases, we can avoid a 

payout (and avoid the disruption to the 

local community from a bank closing) by 

using a provision of our law which allows 

us to provide assistance directly to a failing bank to keep it operating. This provision allows us to provide such assistance, however, only when the continued 

existence of the failing bank is "essential" 

to its community. Obviously, there are 

very few cases in which that finding can 

be made—in fact, we have successfully 

used that section only four times in the 

history of the FDIC.

To accomplish all the effects of 100 

percent deposit insurance by a purchase 

and assumption in each failed bank case, 

we need a change in the law such that the 

FDIC would be required to arrange an 

assumption in all cases or, if an assumption proves impossible, to provide direct 

assistance to keep the bank in operation. 

Actually, I believe we could accomplish 

about the same result with only very 

minor statutory changes which would 

give the FDIC Board of Directors greater 

discretion in arranging assumptions or in 

providing direct assistance to open banks. 

Some would object to putting greater 

discretionary authority in the hands of 

the FDIC Board on these matters without 

also having clearer Congressional direction as to the policy to be followed.

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2. One of the simpler proposals, and 

perhaps the most promising, is to provide

100 percent insurance o f demand deposits and lim it insurance on time deposits, if any insurance is provided for

such deposits at all, to something less

than $100,000. Large CDs for which 

Regulation Q ceilings are not applicable 

would carry only limited insurance or, 

perhaps, none at all. Such "deposits," in 

most cases, are really money market instruments and logically could be distinguished from deposits. The SEC, for 

example, has long argued that they are 

securities. Keeping these funds at risk 

would retain some market discipline for 

banks, since it would place limits on the 

ability of the bank operating at high risk 

to bid successfully for funds on a regional 

and national basis.

One appeal of this proposal is that it 

would not represent a substantial departure from present de facto arrangements. 

Unless a bank fails very suddenly (perhaps as a result of some kind of fraud or 

theft), demand depositors generally can 

get out quickly by closing accounts, reducing balances to the level of their outstanding loan, or borrowing an amount 

equivalent to their demand balance. 

Under present arrangements, perhaps unfortunately, demand depositors frequently protect themselves by getting out, 

further exacerbating the bank's problem. 

If demand balances were 100 percent 

insured, protection for these depositors 

would not require the outflow of deposits. CDs would run off in periods of 

adverse publicity, but this would be a 

function of the maturity structure of the 

bank's CDs, rather than a sudden collapse. The troubled bank would generally 

have more time to work out its problem 

and the overall deposit outflow would be 

less.

3. A third approach toward expanding 

deposit insurance, one already suggested, 

would be to combine 100percent deposit

insurance with minimum capital ratios,

limitations on asset composition, or some

combination o f the two. A t the present 

time, the supervisory agencies' attitude 

toward capital adequacy is not subject to 

explicit rules. Many variables are considered in determining whether a bank's 

capital is adequate, including such factors 

as subjective as the quality of the bank's 

management. We may urge some banks to 

increase their capital (or their liquidity), 

but some may not do so, either because 

they are not able to or because they do 

not agree with our assessment. Actually, 

the supervisory agencies tend to be most 

successful in this area when the bank 

needs agency approval in connection with 

some application (say for a branch or 

holding company acquisition). Also, some 

bankers are more easily intimidated by 

the examiner or by the agency than 

others. Rules and standards are thus not 

always evenly implemented or adhered 

to. As a result, supervisory standards do 

not always seem uniform—within as well 

as between agencies.

In view of this situation, perhaps it 

would be desirable if all insured banks 

were required to adhere to an explicit 

minimum capital-to-deposit or capital-toloan ratio. Such a requirement would not 

necessarily have to be related to deposit 

insurance. However, the imposition of 

such a standard could mesh well with a 

move toward 100 percent deposit insurance and would probably be necessary if 

there is 100 percent insurance. Banks 

would be prevented from using the expanded insurance to expand their leverage 

drastically.

4. A modest variation on this alternative would be to allow banks to get

expanded or 100 percent insurance if

they meet some minimum capital ratio or

other standard. However, it would be 

crucial under such a fluctuating system 

that there be no doubt or misconception 

in the depositor's mind as to whether his 

deposit was fully insured.

5. Another proposal would combine

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ance premiums. The idea of a variable 

rate insurance premium has been discussed periodically, particularly by academic economists, and not necessarily in 

conjunction with expanded deposit insurance. While there is no necessary link between the two concepts—the proposal for 

a variable rate premium can be analyzed 

on its own—the variable rate premium 

could conceivably provide a substitute for 

the market discipline that is lost under 

100 percent deposit insurance.

The advantage of a variable rate insurance premium in this setting is that premiums are geared to risk. The conservatively run bank whose operations pose 

little risk to the insurance fund is rewarded with a low premium rate and vice 

versa, just as now the capital requirements serve as a rough approach to the 

same end.

It is extremely difficult to put risk of 

failure on anything like an actuarial basis. 

We have not had that many failures during the past four decades, and despite the 

substantial efforts in recent years to zero 

in on those variables providing early 

warning about failures, few, if any, would 

attempt to construct and defend a rational premium system based on research 

that has been completed so far. Similarly, 

while we try very hard to standardize our 

criticism of assets, there is sufficient variation between reviews to make it unfair 

to base any finely tuned system on an 

asset-classification foundation.

I would not necessarily rule out the 

idea of variable rate insurance premiums 

because a rational, actuarially sound system cannot be constructed. It might be 

feasible to establish a simple, seemingly 

arbitrary system that has the effect of 

putting banks into, say, three, four, or 

five risk categories. These might be based 

on a few simple ratios relating such variables as capital ratios, asset mix, income 

ratios, etc., without attempting to defend 

the premiums in actuarial terms. Rather, 

they would be related to things the supervisors consider relevant and their level

would be set so as to bring about some 

desired result in terms of bank portfolios. 

Insofar as a bank placed into a high-risk 

class was unhappy about that, it could 

adjust its policies to change its risk category. In that sense, there could be an 

element of choice in such a system.

If premiums were set sufficiently high 

for banks in the highest risk category, the 

system might have a self-regulating quality such that the discipline of the uninsured depositor might not be necessary, 

and such a system of insurance premiums 

could mesh with 100 percent deposit 

insurance.

I recognize that the premiums set 

under such a system, and the levels of 

particular financial ratios, would be essentially arbitrary. But that is not so far 

removed from our present system. The 

level of premiums at the present time 

appears adequate for the present risks of 

the banking system, but we cannot be 

sure that it is precisely correct or even 

anywhere near some hypothetical "correct" level. Also, under the present supervisory system, while we attempt to coax 

many banks to raise capital, the results 

are certainly not uniform, and the figures 

we aim at are essentially arbitrary—except 

that we know "more is better."

How steep would the variable rate 

structure have to go to discourage excess 

risk-taking while still keeping overall premium income in about the same relationship to deposits as exists today? How do 

you appraise the capital position and 

asset mix of a bank where half its resources are in foreign branches? Should 

we base premiums on subsidiary banks or 

should they be applicable for an entire 

holding company system? All these are 

questions that would have to be answered 

before variable premium rate insurance 

could be adopted.

Let me conclude not with a selection 

or advocacy of a particular position but 

w ith some few additional comments 

about the present system. I have heard 

complaints from small banks that the

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present structure of deposit insurance and 

assessment is unfair to small banks. I have 

heard the same claim made by large 

banks. Perhaps we can simply assume that 

if both small and large banks think the 

present system is unfair to them, then it 

must be pretty good. But I think the issue 

is more complicated than that.

Small banks argue that we provide 100 

percent insurance for large banks but not 

small banks in that we have never had a 

payout of a large bank with losses to uninsured depositors, whereas we have had 

such treatment of small bank failures. 

The small banks argue that this inhibits 

their ability to compete for large deposits. A large depositor may decide to 

put his uninsured deposit in a large bank, 

not necessarily because it is better run or 

a sounder institution, but because of his 

belief that in case of difficulty the FDIC 

will not allow a payoff in a large bank 

situation. As I mentioned earlier, statistics do support this argument. The 

FDIC has paid off only one failed bank 

with deposits over $41 million, that one a 

$67-million Texas bank, even though 15 

banks of over $41 million have either 

failed or required FDIC assistance to stay 

open.

Large banks sometimes complain 

about the fact that deposit insurance premiums are based on the total domestic 

deposits of the bank, not just on insured 

deposits. Thus a bank with a large percentage of its domestic deposits above 

$40,000 pays a premium that is higher in 

proportion to those insured deposits than 

a small bank with fewer uninsured deposits. Originally, this was done intentionally to provide for a subsidization of 

the insurance fund by a large bank for the 

benefit of small banks. Since we now 

have a world in which large banks can and 

do fail, it does not appear that large bank 

premiums are subsidizing the cost of

small bank failures. Furthermore, large 

banks have many correspondent accounts 

and clearly benefit from a strong banking 

system. Small banks also argue that the 

assessment system is equitable since, in 

practice, large banks have had 100 percent deposit insurance and hence it is 

only reasonable that they pay insurance 

premiums on 100 percent of their deposits.

There is another complicating issue 

involved here, however. Deposit insurance 

premiums are based on total domestic 

deposits. Large banks now obtain a significant percentage of their deposits from 

branches abroad. These deposits are not 

subject to insurance assessments, nor are 

they insured under the law. In practice, 

however, since we have always had assumption transactions for large banks, 

these foreign deposits as well as all other 

unsubordinated liabilities of the bank 

have been protected in full. This appears 

to be an inequitable arrangement, though 

it is not clear in what direction we should 

move to resolve it. Perhaps deposits of 

American branches abroad should receive 

the same deposit insurance protection as 

their domestic offices. And perhaps these 

deposits, insured or not, should be subject to insurance premiums. These are just 

a few of the considerations I will leave for 

others to discuss.

While I have suggested six proposals 

fo r dealing with expanded insurance 

coverage, each has several possible variations. As a result, there are lots of possibilites—some relatively simple and easy to 

implement such as 100 percent insurance 

on demand deposits. On the other hand, 

proposals related to variable rate premiums are much more complicated.

I am not sure where I come out at this 

moment. I believe, however, that the 

banking system would benefit from public discussion of these issues.

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Address by Robert E. Barnett, Consumer

Issues*

I would like to discuss today a conglomeration of ideas relating to laws and 

attitudes concerning banks and their customers. Just as the consumer movement 

relating to banking has grown like Topsy, 

so has this speech. It has no logical sequence, reaches no major conclusions, 

and makes no dramatic philosophical 

statement. Still, in it I hope to address 

myself to issues which cause as much 

bitterness and frustration among bankers 

as any issues now outstanding, to laws 

whose enforcement is very costly and 

whose benefits remain unknown, and to 

questions the answers to which have had 

or will have dramatic impact on the 

three-way relationship of the regulator, 

the banker, and the public.

I

Congress has addressed itself to the 

relationship between the bank and its 

customer in several areas. In recent years, 

this has been most obviously and notably 

in truth-in-lending, fair credit reporting, 

real estate settlement procedures, fair 

credit billing, fair housing lending, equal 

credit opportunity, and home mortgage 

disclosure.

If nothing else can be said about these 

laws, it can at least be stated that their 

enforcement has been controversial.

As we at the FDIC discuss issues with 

bankers around the country, it is clear 

that this panoply of consumer laws has 

caused more irritation and frustration 

than almost anything else they care to 

discuss with their regulators. Similarly, as

I visit with FDIC bank examiners as I 

attend our regional meetings around the 

country, similar frustration is voiced. 

Congress likewise is unhappy with the 

enforcement of some of these laws. And 

the presumed benefits to the consumer

* Presented b e fo re th e 7 4 t h A n n u a l C o n v e n tio n

o f T h e Savings B anks A s s o c ia tio n o f C o n n e c tic u t, D o ra d o B e ach , P u e rto R ic o , O c to b e r

2 5 , 1 9 7 6 .

have yet to be measured.

The complaint raised by both the regulated and the regulator in some respects is 

quite similar—there are too many new 

laws and regulations and they are too 

complicated; we can't keep up with them. 

We want to obey (or enforce) the letter as 

well as the spirit of the law, but we can't 

be sure we know what it is.

Many bankers go on to say (particularly those 12,800 bankers who run 

mutual and commercial banks $50 million or smaller in size) that they are diverted from their main banking responsibilities by this mass of confusing laws 

and regulations, and that customers of 

their banks are being charged higher 

prices on bank services and products 

because of the added expense of complying with laws the substance of which 

they had never violated anyway.

The typical FDIC bank examiner says 

that enforcement of consumer laws conflicts directly with his primary charge to 

see that banks operate safely and remain 

solvent. As he is required to adopt more 

and more of an adversary position with 

the banker in the consumer area, especially in light of the examiner's belief that 

95 percent of the banks try hard to be 

law-abiding and fair, and to provide a 

service to their community, the cooperation he will receive from the banker in 

conducting traditional safety and soundness examinations of the bank will diminish, costs will escalate, and the accuracy 

of the examination will suffer.

Examiners could add that their training has been to deal confidentially with 

banks and supervise them in such a way 

that they will remain solvent, their problems will remain private, the confidence 

of the public in the banking system will 

endure, and the public will benefit as a 

result. They are very thorough by training 

and find it hard to take shortcuts in 

analyzing a problem. When faced with the 

tremendous number of consumer transactions that take place during the course 

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tomers, if the proper supervisory posture 

to be adopted is one of retroactive remedy rather than prospective compliance, 

examiners will argue that it will be essential to review all consumer transactions so 

that everyone is treated fairly, a procedure which will be overwhelmingly costly 

and time-consuming.

The Senate and House Banking Committees are dissatisfied with the enforcement of these consumer laws by the 

FDIC and the other banking agencies. As 

a quotation from a recent Committee 

Report states: 'The Committee found an 

unsatisfactory level of enforcement activities by all three agencies."

There is a yearning for simplicity 

found in the reports of these committees 

quite similar to the yearning for simplicity in the irritation expressed by the 

banks and the frustration expressed by 

the bank examiners. The Senate Committee, for example, criticizes the Federal 

Reserve Board for creating regulations 

"that are lengthy, complex, and technical .... with the result that both compliance and enforcement are made more 

difficult." That same committee also 

renewed its recommendation that the 

FDIC, the Comptroller of the Currency, 

and the Federal Reserve Board institute 

fair housing lending regulations, including 

a requirement for racial recordkeeping. 

Actually, last August the FDIC and the 

Comptroller of the Currency began testing fair housing lending forms and announced at that time that those forms 

were a necessary prologue to the creation 

of corrective regulation in the field. The 

chairman of the Senate committee has 

objected informally to the FDIC that 

those data collection forms are too complex and lengthy and will frustrate the 

purposes of the Fair Housing Lending 

Act. While we disagree and feel the data 

requested are essential if we are to enforce the act effectively, we also share 

this desire for simplicity and believe that 

our data collection in this area probably 

can be met by most banks without the

use of additional forms beyond what 

they're already using.

While I certainly agree that a simple 

law, a simple regulation, or a simple form 

is easier to follow or to complete, the fact 

remains that to enforce adequately the 

laws adopted by Congress one needs more 

than a simple regulation or a simple form. 

It is the statute, the purpose of the statute, and the complexities of the society 

in which we live, which lead to the regulations or the forms which create the d ifficulties in compliance and enforcement. 

Nevertheless, the yearning for simplicity 

combined with effective compliance and 

enforcement exists in the Congressional 

Committees.

Beyond that, however, there seems to 

be an implicit belief that the bank regulatory agencies should become consumer 

advocates vis-a-vis the banks those agencies regulate. This may well be the crux 

of the difficulties that I see in continuing 

to expect the bank regulatory agencies to 

adequately enforce the consumer laws.

While this is what we hear from bankers, bank examiners, and Congress, I 

cannot summarize what consumers have 

told us since we have no organized way of 

meeting with consumers. Our Office of 

Bank Customer Affairs, the unit created 

in the FDIC in response to recent legislation, has only been staffed for a few 

months and so far has not generated 

systematic input from consumers relating 

to their judgment of the benefits they 

have received from these many pieces of 

legislation or to the cost, both direct and 

indirect, they have paid. While proposed 

regulations are published for comment, 

we almost never receive a comment from 

an individual consumer. On the basis of 

inquiries received, it appears that consumers are more concerned about insurance coverage and interest rates than 

about recently enacted consumer protection laws. I expect that over time we will 

develop improved means of learning of 

consumer concerns and interests.

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II

It is important that you be aware of 

the framework within which the FDIC 

operates. The FDIC is a creature of Congress. When Congress passes laws which 

we are supposed to enforce, we'll enforce 

them, even if we might have disagreed 

with the creation of the law. If the appropriate Congressional Committee disagrees 

with the way we are enforcing laws, we 

must and will consider their comments.

While we think our enforcement activities have generally been in accord with 

our statutory responsibilities, two recent 

reports by Congressional Committees 

have been critical of the consumer protection enforcement activities of the bank 

regulatory agencies. One was issued by 

the Subcommittee on Consumer Affairs 

of the Senate Committee on Banking, 

Housing and Urban Affairs, and the other 

was a staff report of the Subcommittee 

on Consumer Affairs of the House Committee on Banking, Currency and Housing.

The House subcommittee staff report 

included a survey of approximately 20 

percent of the consumers who sent w ritten complaints to the agencies in 1976. 

We received some good reviews and some 

bad reviews. The good news is that "the 

Federal Deposit Insurance Corporation 

had the highest percentage of consumers 

who considered the agency's overall complaint handling process to be excellent." 

The bad news is that only 32 percent of 

the consumers surveyed called our handling "excellent," and only 27 percent 

indicated that they were satisfied with 

our resolution of their problem. While the 

subcommittee staff considers this to be 

rather poor performance, I am not so 

sure. Remember, consumers complain to 

us only after they have tried without 

success to get their bank to resolve the 

matter without our intervention. If we 

were able to effect a solution satisfactory 

to 27 percent of these unhappy bank 

customers that does not seem bad to me. 

In effect, the staff report seems to imply

that in any dispute between a consumer 

and a bank, the customer is always right. 

I don't agree with this, though neither do 

I agree with the attitude of some bankers 

that "we never make a mistake, and 

hence, if there is a disagreement, the customer must be wrong."

The committee reports make a number 

of recommendations, most of which are 

already in effect or which make a good 

deal of sense if we accept the view that 

the FDIC should play a greater role as a 

consumer advocate with respect to banking problems. The fact remains that there 

is a strong body of opinion in the Congress that has put a number of consumer 

laws on the books and would like to see 

the bank regulatory agencies become 

more of a consumer advocate than they 

have been.

I believe it is informative for our agencies as well as the banking industry to list 

some of the major recommendations 

made by these Congressional Committees:

1. The FDIC should promulgate regulations on fair housing lending, requiring notations of the race and sex of 

applicants.

2. We should consider whether compliance examinations should be conducted separately from regular examinations and by separately trained 

investigators.

3. The FDIC should insist upon affirmative remedies for violations of 

consumer laws, retroactive as well as 

prospective.

4. The FDIC should not hesitate to 

publicize violations of consumer laws.

5. The FDIC should create an "outreach" capability so that consumers 

will be able to file more easily their 

complaints with the FDIC; this would 

require not only an expansion of the 

Office of Bank Customer Affairs into 

the regions but apparently beyond the 

regional office.

6. The FDIC should educate consumers on their rights vis-a-vis the

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banks, by the use of leaflets, posters, 

toll-free telephone numbers, and shopping guides.

7. The FDIC should expand the Office of Bank Customer Affairs so that 

it will review and resolve all complaints received from consumers within its own unit rather than making use 

of bank examiners already existing in 

the Division of Bank Supervision.

8. The FDIC should create and distribute a consumer complaint form.

Ill

Whatever else may be the case, it is 

clear that the examination system already 

in existence gives the banking agencies a 

much greater ability to enforce consumer 

legislation in banks than any other existing agencies. The banking agencies periodically examine each and every bank in the 

United States. No other existing agency 

that might take over this enforcement 

responsibility periodically and systematically examines the entities it regulates. 

For example, the Federal Trade Commission has the responsibility of enforcing truth-in-lending laws with respect to 

furniture stores, appliance dealers, etc., 

but the commission obviously can enforce such laws only as a result of a 

complaint. They are not on the premises 

examining the records of furniture stores 

or appliance dealers on an annual basis. 

The banking agencies, on the other hand, 

are in the bank every year looking in 

detail at the loan transactions of the 

bank. Thus, in the normal course of bank 

examination, we find some violations of 

law that would never be found by the 

Federal Trade Commission if it were the 

enforcing agency.

To some extent we have been given 

these responsibilities because we already 

have an enforcement mechanism in place. 

But the mere fact that there is an examination force in operation does not mean 

that using that force to enforce consumer 

laws is free. All of our examiners are already at work full-time. Using an examination approach to enforcing consumer

laws requires the creation, in effect, of an 

additional examination force. We currently estimate that about 10 percent of 

our supervisory effort is taken up with 

reviewing compliance with laws and other 

matters not related to safety and soundness. This amounts to approximately $5 

million annually. Said another way, we 

have added approximately 230 employees 

to our work force to enforce consumer 

laws. This is tending to increase as the 

number of our responsibilities increases 

and as we seek to do a better job in this 

area. We need to add, for example, a substantial additional training program, since 

the regulations are extremely complex, 

and as I mentioned earlier, I hear complaints from our examiners that they do 

not understand all the rules and are hard 

put to find the time to keep up with 

changes and additions.

Since the area is not a static one, it is 

difficult to predict just what the cost will 

be ultimately in enforcing these laws 

through the examination process. Vigorous enforcement along the lines the 

committees have recommended would 

cost substantially more than the current 

$5 million—at least double that amount. 

It is not up to us to determine whether 

the benefits justify these costs: that is a 

matter on which reasonable men may 

differ. I believe that Congress should and 

will consider these costs if we present 

them in an understandable way. We hope 

to be able to do that during the next 

session of Congress. Of course, we have 

no way of estimating the cost to the consumer because of the additional costs 

added to the banking system itself but, 

obviously, the total additional cost to the 

banking system dwarfs the costs to the 

FDIC.

An additional factor supporting this 

role for the banking agencies is the fact 

that in the past both the banking community and the banking agencies have 

supported the idea that any kind of legislation affecting banks should be enforced 

by the banking agencies rather than other

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governmental agencies. That has been the 

policy that has led to the enforcement of 

the financial disclosure laws by the banking agencies rather than the SEC and the 

definition of deceptive banking practices 

by the Federal Reserve Board rather than 

the Federal Trade Commission. That view 

on the part of the banking community in 

the past was based partly on the view that 

the banking agencies are more knowledgeable about the real day-to-day problems and operations of banks than other 

agencies would be. That is still valid today. It may also have been based on the 

view that the banking agencies would not 

enforce the laws as vigorously as other 

government agencies. I doubt that this 

was valid in the past, and I certainly do 

not believe that it is today. It may be 

time to rethink the general policy that 

enforcement of a wide variety of laws be 

enforced, with respect to banks, by the 

banking supervisory agencies.

IV

In considering whether the FDIC 

should take a stronger role as a consumer 

advocate, that is, go beyond what we already are doing, I am troubled by one 

important consideration: Will our taking 

a stronger adversary position vis-a-vis the 

bank with respect to consumer matters 

adversely affect the performance of our 

major activity, examination of the safety 

and soundness of banks? It has frequently 

been said before that the examination 

process is a cooperative one between the 

examiner and the bank rather than an 

adversary proceeding. If the banks begin 

to perceive the examiner as an enemy, 

will that destroy some of the free exchange of information and general cooperation that facilitates an examination? 

I do not know whether that would be the 

case, but it is obviously a matter of great 

concern. I have raised this question in a 

number of recent meetings with our 

examiners and supervisors. A very large 

majority felt that increased enforcement 

activity on consumer matters would 

adversely affect their ability to do a good

job on safety and soundness examinations. They may be wrong, of course, but 

their perception of the situation will alter 

the way the job gets done.

It is possible that this effect differs 

with respect to the condition of the bank. 

It may be that with respect to a bank 

whose condition is poor and which is subject to substantial criticism from the examiner, the relationship is already an 

adversary one and would not be affected 

by what we would do in the consumer 

area. On the other hand, most of our examination time is spent in the overwhelming majority of banks that are in good 

condition. If in that majority of cases the 

ability of the examiner to do his job is 

going to be impeded and examination is 

going to take significantly longer, then 

that would be a severe loss to our examination program as well as a substantial 

increase in cost.

I am concerned about this because I 

think that our performance in what up to 

now has been our major responsibility, 

the supervision of safety and soundness 

of banks, has been very good. I am reluctant to see changes in that that may upset 

the quality of that performance in the 

absence of a clear-cut understanding of 

what we are doing. I recognize, however, 

that in some areas within the general area 

of safety and soundness our relationship 

with banks is becoming more formal and, 

in some cases, more of an adversary relationship. We now issue many more ceaseand-desist orders in matters relating to 

bank safety and soundness. We recently 

imposed fines on banks that were delinquent in submitting required reports to 

us. These are evidences of a more armslength rather than cooperative relationship between supervisor and supervised.

V

It is useful, I believe, to make a comment at this time about the approach of 

the State of Connecticut and its banking 

department to truth-in-lending, as compared with the approach of the FDIC.

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The FDIC handles complaints differently from violations discovered during 

the course of an examination. With respect to complaints, about 60 percent of 

which are handled in the Regional Office 

and the remainder in the Washington Office of Bank Customer Affairs, either the 

Regional Office or the Office of Bank 

Customer Affairs attempts to resolve the 

complaint either by telephone with the 

affected party and the bank or by authorizing a field investigation by an examiner. 

If in the judgment of the examiner, the 

Regional Office, or the Office of Bank 

Customer Affairs the complainant has 

had his or her rights violated, the examiner or the Regional Office will tell the 

bank the conclusion that they have 

reached and recommend that the bank 

make restitution or take whatever other 

affirmative action is necessary to remedy 

the violation. In nearly all cases, the bank 

is willing to do that.

If a violation of a consumer law is discovered during the course of a bank 

examination, however, the efforts of the 

Corporation are devoted to insuring that 

the bank will not continue the procedures 

which result in that violation in the future. In other words, the remedy is prospective rather than retrospective. The 

customer affected by the violation is not 

notified by the FDIC and the bank is not 

urged to take affirmative action with 

respect to that individual customer. It 

should be said that only a sample of 

truth-in-lending transactions is reviewed 

during the examination, a sample sufficiently large to permit the examiner to 

judge whether the bank is complying with 

the law.

The State of Connecticut, on the other 

hand, has a separate corps of examiners 

whose only examination responsibility is 

to examine banks and other financial institutions to insure that they are complying with the Connecticut truth-inlending law. Rather than reviewing a 

limited sample, these examiners review 

nearly every consumer transaction that

has taken place in the bank since the last 

State bank examination. Every violation 

discovered, even those which in no way 

are harmful to the customer, is written up 

and discussed with the banker. As I 

understand it, the Connecticut examiner 

and the department then make a decision 

on what affirmative action to take with 

respect to the violation and in many cases 

require the bank to compensate its customer for damages suffered as a result of 

the violation.

We are convinced that the Connecticut 

Banking Department and its compliance 

examiners do a more thorough job of 

reviewing the truth-in-lending violations 

in the State of Connecticut than the 

FDIC examiners do. Whether the additional cost the State incurs is worth the 

benefits to the Connecticut consumers we 

feel is a question for the State of Connecticut to answer, not the FDIC or the 

Federal Government.

Connecticut is one of five States (the 

others being Maine, Massachusetts, Oklahoma, and Wyoming) which the Federal 

Reserve, the Federal agency which has 

been given the authority by Congress to 

make such decisions, has exempted from 

the Federal truth-in-lending laws.

The FDIC has decided that its examiners should no longer examine banks in 

these five exempt States to see if they are 

complying with the truth-in-lending laws. 

It clearly is an unnecessary duplication 

with the activities already being conducted by the state examiners in those 

States.

VI

Let me turn to some specific issues 

and conflicts in dealing with consumer 

matters. I mentioned earlier that in some 

cases where we find consumers have been 

treated unfairly, we have been successful 

in gaining restitution for the consumer. 

But our legal basis for this is not completely clear. Under section 8(b) of the 

Federal Deposit Insurance Act, the FDIC 

is empowered to order an insured nonmember bank to cease and desist from

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any violation of law, "and further, to 

take affirmative action to correct the conditions resulting from any such violations." While the limits of this authority 

have not been tested in the consumer 

protection context, we believe that the 

authority probably includes the power to 

order restitution in appropriate cases. 

What is an appropriate case, of course, 

will depend on a number of considerations, not the least of which is the particular nature of the consumer's injury and 

whether restitution is necessary to compensate for that injury. Our existing 

authority may be sufficient, but we believe 

it would be preferable to have a specific 

legislative authorization and mandate to 

require restitution. Despite comments by 

Congressional Committees that we should 

do more in protecting consumers, we 

have not been given this specific legislative mandate nor, we must confess, have 

we specifically sought it.

These considerations rest heavily on 

interpretations of law and regulation, and 

are somewhat afield from the a re a of re a l

expertise of our examiners. I mentioned 

that over time we could fill this gap with 

appropriate training of our bank examination force. An alternative approach would 

be to have a separate consumer compliance staff to handle enforcement in 

this area and separate compliance examinations. We already have had the experience of separate compliance examinations 

in three States in which, on an experimental basis and to a limited extent, we 

are not conducting safety and soundness 

examinations. While we have dropped the 

concept of separate examinations, there is 

strong support among our examiners for a 

separate staff of specialists. In part that is 

because they find the work dull, in part 

because they feel it is a deviation from an 

examiner's career path, in part it is because they feel the purposes of the two 

examinations are inevitably in conflict, 

and in part it is because it is too difficult 

to stay current with the changing laws 

and regulations in addition to their other

responsibilities. As I mentioned before, if 

we do develop a separate corps of consumer law examiners conducting separate 

examinations, there will obviously be a 

substantial additional cost to the FDIC, 

the banks, and the general public.

Should we publicize a bank's mishandling of customer transactions? As I 

have indicated, we have usually been 

successful in getting banks to agree to 

change practices that we believe violate 

existing laws and regulations. We see no 

purpose to be served by public announcement of past violations we have discovered which have been inadvertent or 

technical, or have been corrected. If we 

are unable to gain agreement by the bank 

to change the offending practice, we can 

take some formal action under section 

8(b) of the Federal Deposit Insurance 

Act. It should be said, however, that we 

have seldom been unable to get the correction made, and so seldom have considered a section 8 action. Once we initiate such a formal enforcement action, 

there may be some merit in publicizing 

that fact, the nature of the charges, and 

the eventual result. Such publicity may 

well have a legitimate deterrent effect, 

without generally carrying with it the 

same potential for mischief present in the 

case of publicizing formal cease-and-desist 

actions involving unsafe or unsound practices.

Nevertheless, it is quite probable that 

the threat of publicity may aid us in getting the bank to resolve disputes in favor 

of the customer even if the bank feels it 

has acted fairly. I have serious reservations about using the threat of unfavorable publicity as a means of coercing a 

bank to do something it does not believe 

it is legally required to do. If there are 

differences concerning the legality or fairness of certain practices, those should be 

resolved in accord with the judicial process and not by a threat of unfavorable 

publicity. After all, our judgment is not 

infallible so why should we be permitted or 

encouraged to enforce it as though it were.

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The idea of greater publicity leads to 

other problems as well. What if the bank 

has serious supervisory problems? In that 

situation the conflict between safety and 

soundness and enforcement of consumer 

laws is most obvious.

I do not plan to discuss the merits of 

the consumer protection legislation that 

has been enacted. I must stress, however, 

that the merits deserve attention, review, 

and analysis. The experience of RESPA is 

a case in point. There undoubtedly were 

some abuses in real estate settlement 

procedures, and some changes in law were 

probably warranted. The specific action 

that Congress took, however, was too 

elaborate, too complex, and too cumbersome. When the results of the law became 

apparent, Congress recognized reality and 

substantially revised the law, and I think 

the Congress deserves credit for that. You 

may feel that the shortcomings of the 

original law were obvious beforehand; in 

fact, many real estate lenders pointed out 

its shortcomings to the relevant Congressional Committees. Obviously, their testimony was not persuasive, perhaps because Congress has heard nothing but 

opposition to c o n s u m e r legislation f r o m

bankers and no longer pays any attention 

to it. The experience of RESPA should 

improve the credibility with Congress of 

those who responsibly point out burdens 

in proposed consumer legislation in the 

future.

Truth-in-lending is another example 

where the costs of the legislation are being recognized by the Congress. The 

Senate Banking Committee has called on 

the Federal Reserve to propose revisions 

in the law to simplify the regulations.

It is difficult for us to articulate clearly the estimated costs of compliance with 

consumer protection laws. But it is even 

more difficult to show the actual benefits 

to consumers from such legislation. The 

original objective of the truth-in-lending 

law was to enable consumers to shop for 

the lowest source of credit. The law does

make that possible, but we do not know 

whether consumers are taking advantage 

of that possibility and, hence, whether 

they are being benefited by the law. A 

study completed a few years ago concluded that:

Consumers who borrowed on installment loans since the truth-in-lending 

law went into effect are more aware of 

the true rate of interest that they are 

paying than were consumers who borrowed before the law was enacted. In 

spite of this improvement, however, 

borrowers are still largely unaware of 

the rate of interest they are paying 

even though this rate has, by law, been 

imparted on them. Only one-tenth of 

borrowers can estimate the rate of 

interest they are paying on a car loan 

with a 10 percent margin of error, and 

nearly half of all borrowers miss the 

mark by 50 percent or more.

I think an updating of this sort of 

study is important, as well as a determination of whether consumers are actually 

shopping for credit. If consumers aren't 

benefiting from this legislation, then a lot 

of time and money is being wasted. If 

they are benefiting, then Congress has a 

way to measure the value of the legislation and to demonstrate, if that is the 

case, that these benefits outweigh the 

costs.

The essential point here is simply that 

increased consumer protection laws have 

both benefits and costs. The net effect of 

every increased piece of consumer protection legislation is not necessarily to the 

good, nor is the resulting increased regulation of banks necessarily bad. We need 

more objective calculation and evaluation 

of these costs and benefits.

It is pretty clear, however, that we are 

going to have a substantial volume of 

legislation designed to protect consumers 

in their dealings with banks and other 

lenders, and we hope to contribute to a 

careful analysis of the costs and benefits 

of such legislation.

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VII

These are just a few of the issues raised 

by the creation of legislation designed to 

establish standards of performance for 

banks in this country vis-a-vis consumers 

of banking services. The FDIC is in the 

midst of trying to adapt to the additional 

role given to it by this legislation. In 

many respects, this new role conflicts 

directly with the traditional role and

function of the Corporation as a regulator 

of the safety and soundness of banks. 

While the costs and benefits are just now 

becoming apparent, I do not feel that it is 

the function of the Corporation to judge 

the merits of the legislation against these 

costs and benefits, but that it is our function to bring the costs and benefits to the 

attention of Congress.

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Address by Robert E. Barnett, Bank Examination and Supervision*

The FDIC examines and supervises 

8,628 commercial banks and 331 mutual 

savings banks with combined deposits of 

over $285 billion. The Comptroller of the 

Currency examines and supervises 4,745 

commercial banks with deposits of $450 

billion. The Federal Reserve System 

examines and supervises 1,032 banks with 

deposits of $143 billion. While the number and size of banks examined by the 

Comptroller of the Currency have remained relatively constant in relation to 

the growing number and size of banks in 

the country, the number and size of those 

examined by the FDIC have increased 

faster than the averages, and those examined by the Federal Reserve have 

dramatically decreased. Over 60 percent 

of the deposits supervised by the Federal 

Reserve, for example, now are concentrated in only 22 banks.

The Corporation is thought of as the 

Federal agency that supervises only small 

banks; the Comptroller and the Federal 

Reserve are thought of as the agencies 

that supervise the large banks. This no 

longer is accurate. We now supervise three 

times as many banks with deposits over 

$100 million as the Federal Reserve and 

are approaching the number supervised 

by the Comptroller. We supervise more 

banks with deposits of over $1 billion, 

commercial and mutual savings combined, than does the Federal Reserve.

The trends over the past few years also 

support the growing importance of the 

FDIC as a Federal supervisor of banks. In 

1956, 20 years ago, the Corporation 

supervised 6,983; the Comptroller, 4,651; 

and the Federal Reserve, 1,807. In 1966,

10 years ago, the Corporation supervised 

7,724 banks with deposits of $108 billion; the Comptroller, 4,799 banks with 

deposits of $207 billion; and the Federal

*P re s e n te d b e fo re th e M issouri B an kers Assoc ia tio n 's B a n k D ire c to rs ' C o n fe re n c e , Osage

B each, M iss o u ri, N o v e m b e r 1 1 , 1 9 7 6 .

Reserve, 1,350 banks with deposits of 

$86 billion. Five years ago, the numbers 

showed the FDIC with 8,211 banks with 

$183 billion deposits; the Comptroller, 

4,600 banks with $316 billion deposits; 

and the Federal Reserve, 1,128 banks 

with $112 billion deposits. If those trends 

continue, especially if the 22 large banks 

currently supervised by the Federal Reserve were to cease to be supervised by 

the Federal Reserve, either by withdrawing from Federal Reserve membership or by converting to national charters, 

there will be only 2 rather than 3 Federal 

bank supervisory agencies.

It is extremely important, therefore, 

that the FDIC make known its views on 

bank examination and supervision. The 

public, Congress, and the banking industry should know what we view as the 

strengths and weaknesses in FDIC supervision, and what changes appear to be 

desirable, and perhaps even essential, in 

the near future.

I

Let me begin by saying that we expect 

bank examinations to continue. We recognize that an argument can be constructed 

that concludes that it would be cheaper 

and no more risky to eliminate all bank 

examinations and use the money saved to 

pay off the "few " additional banks that 

might fail, to increase the capital position 

of weak banks, etc. The most important 

response to these arguments at this time 

is simply to say that we have had bank 

examinations in this country for 147 

years and that we see no sign that we"ll 

eliminate them in the foreseeable future. 

The public expects banks to be examined 

by governmental agencies.

It is more fruitful for the Corporation 

to attempt to analyze weaknesses that 

may exist in our supervisory process and 

to attempt to correct those weaknesses.

II

First, a quick review of the bank regulatory environment is in order. The 

1960s and 1970s have brought changes

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which have important implications for 

the process of bank examination and 

supervision. One of these changes is 

simply the fact that banks have gotten 

bigger. As I have mentioned above, this is 

a much more significant change for the 

FDIC than for the other supervisory agencies. I don't think we have completely 

adjusted to our new situation yet.

Not only have banks gotten bigger, but 

banking has become more complex and a 

riskier business, particularly for these 

larger banks. Some years ago, we used to 

think that big banks could not get into 

serious trouble and that the real focus of 

bank supervision should be on the smaller 

banks. While there are many different 

ways to define the riskiness of different 

parts of the banking system, none of 

them perfect, it does appear that there 

has been an increase in risks in some large 

banks. One statistic which has received 

increasing attention in the last year or so 

has been the size of our "problem list." 

Although 971/2 percent of all banks are 

not on any problem list, we are concerned about both the number and the 

size of banks which are on the problem 

list, some of them larger banks. Let me 

say quickly that the problem list reflects 

the condition of banks when they are 

examined, not necessarily their current 

condition. There is a substantial time lag 

between the time that a bank is found to 

be in a "problem" condition and the time 

it appears on the FDIC problem list; in 

cases of large banks, the time lag may be 

as much as 10 months. To a great extent, 

therefore, our problem list reflects the 

condition of the industry some time ago. 

It is our judgment, for example, that the 

condition of the banking industry is 

much better now than it was at the beginning of the year, even though there were 

fewer banks on our problem list then.

Another important change in the 

banking environment has been the entry 

of the consumer movement into banking, 

the result of which has been a sizable 

volume of consumer protection legislation enacted by the Congress in recent 

years. The major part of a typical bank 

examination has been and still is loan 

evaluation. The bank examiner, however, 

is responsible now for many other aspects 

of banking than the extension of loans 

and other aspects of the loan than its 

credit quality. The bank examiner must 

enforce truth-in-lending, equal credit 

opportunity, fair housing lending, home 

mortgage disclosure, and several other 

consumer protection laws. The banking 

agencies have been criticized in recent 

months for devoting inadequate resources 

to consumer protection. I think some of 

this criticism has been justified and we 

are increasing our attention to these matters. But with limited time and resources, 

this has implications for our ability to do 

the job of examining the safety and 

soundness of banks with current techniques.

We used to carry out the process of 

bank examination and supervision in an 

atmosphere of confidentiality and secrecy. Banks felt no obligation to disclose 

bad news about their operations, and the 

supervisory agencies certainly did little to 

encourage the disclosure and publication 

of bad news—in fact, just the opposite. 

There was such general acceptance of this 

as the appropriate approach in the banking field, I am told, that even if reporters 

or newspapers came across damaging information about banks, they did not 

think of publishing such information.

That situation has changed. Banks are 

subject to disclosure under the securities 

laws, and the banking agencies as well as 

the SEC are prodding for increased disclosure. Whatever reluctance the media 

may have had to publish bad news about 

banks has certainly disappeared. Although I am not happy about the elements of sensationalism that have occasionally crept into some stories, I think 

the move toward broader disclosure is 

appropriate and desirable. But regardless 

of our feelings as to the desirability of 

increased disclosure, it is a fact of life and

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STATEMENTS BY CORPORATION DIRECTORS 187

is going to remain with us.

These are some of the changes in the 

environment which have taken place in 

the past few years. I will discuss other 

changes in the context of specific changes 

we have made in our supervisory process 

to deal with them.

Ill

In the light of these changes, let me 

simply list what we at the Corporation 

have perceived as the most apparent defects of our examination and supervision 

policies:

1. The best run and soundest banks 

have been examined too often. They 

are on approximately the same schedule as poorly operated institutions. 

Over the past several years the record 

of examinations by all Federal authorities showed that two-thirds of the 

banks examined received almost no 

exam iner criticism. The criticized 

banks tended to be the same banks 

year after year.

2. Large banks and small banks have 

been examined in much the same way, 

even though the differences in the 

banks may be such that an objective 

observer would argue that they are not 

even in the same business.

3. The weakest banks have not been 

examined often enough. Nor have the 

deficiencies revealed by examination 

always been followed up by the indicated degree of aggressive action. Fair 

banks become poor before sufficient 

pressure for changes is applied to 

management and the directors and 

then it is often too late.

4. Too small a part of the examination has been dedicated to an in-depth 

analysis of matters other than the loan 

portfolio.

5. Insufficient attention has been 

given to changes in liquidity, securities 

portfolio, and source of funds. A 

bank's liquidity may be quickly eroded by a change in investment policy or 

a change in liquidity needs.

6. Insufficient attention has been 

given to current earning trends. Quarterly or semi-annual income data are 

becoming widely available for the first 

time, which will provide the basis for 

closer monitoring of earnings deterioration.

7. Too much of the examiner's time 

has been taken up on verification and 

audit-type work. Insufficient emphasis 

has been placed on evaluating and improving internal controls.

8. Examination costs in travel and 

manpower are very high because of the 

great number of very small banks 

examined.

9. The training of a bank examiner 

has relied too much on an apprenticeship system, even though we have created during the past few years a superior educational and training program 

which uses the classroom as its training 

ground. In addition, our judgment as 

to how good an examiner is has been 

based too much on his ability to assess 

loans.

We appreciate that this is a lengthy list 

for a confessional. Nevertheless, we feel 

we have identified these weaknesses and 

we are attempting to deal with them.

IV

Rather than attempting a complete 

detailing of all the changes that have been 

made in bank examination and supervision in recent years, I want to highlight 

some specific changes which are significant and illustrative of the adaptation of 

supervision to changing conditions.

Several months ago, we instituted a 

new regulation relating to insider transactions. We found that about half of our 

bank failures resulted from abuse of the 

bank by insiders. Some people would 

favor severe restrictions on or even prohibitions of insider transactions. We did 

not feel that this is appropriate because in 

many cases the bank's board of directors 

comprises the best sort of customers for 

the bank. Others favored the idea of

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broader disclosure of insider transactions, 

which are required in any event for registered banks. But we still have some concern for the confidential nature of individual custom er's transactions and 

adopted instead an approach that requires 

board of directors' approval of all loans 

and other transactions of certain sizes 

with insiders. We think this approach puts 

the responsibility where it should be, 

with the board of directors, and does so 

without a blanket prohibition or widespread public disclosure of what are 

appropriately personal transactions.

Linder section 8 of the Federal Deposit 

Insurance Act, we have long had powers 

to take legal action against banks which 

are following practices we regard as unsafe and unsound. Traditionally, bank 

supervision has been a relatively informal 

process with the examiner, supervisors, 

and senior FDIC staff meeting and discussing with bankers the problems we see 

in their bank. That informality is still 

characteristic of most of the bank supervisory process, but there has been a perceptible shift to greater use of formal 

actions. In 1960, there were two section 

8 actions taken by the FDIC. This rose to 

four in 1965. In October 1966, the Corporation received cease-and-desist powers, 

and since then section 8 activity has increased with 7 actions in 1970 and 13 in 

1975. Already during just the first 10 

months of 1976, the FDIC has issued or 

authorized our lawyers to begin the process of issuing 49 cease-and-desist orders. 

This is a reflection of our experimentation with these powers and our finding 

that there are some situations that call for 

formal action, and that the response we 

get from some banks in some situations is 

better with a formal action.

We have taken several actions aimed at 

making the bank examination process 

more efficient. In some cases, these actions were necessitated by the fact that 

although the size of our examination 

force has increased, their responsibilities 

have increased even more rapidly. I mentioned earlier that the source of these 

increased responsibilities lies in the increased size of banks, the increased complexity of banking, and the increased 

responsibilities of the examiner for enforcement of laws and regulations not 

related to safety and soundness of the 

bank.

One of the most important changes we 

have made is a greater delegation of 

authority to our Regional Directors. A 

number of relatively routine actions can 

now be approved in the Regional Office 

without their being referred to Washington at all. This includes establishment of 

a new branch, moving an office, approval 

for a new issue of capital notes, and 

others. We have not delegated authority 

to deny applications and we have not 

delegated authority in certain difficult 

cases, but the change in the flow of paper 

and the burden in our Washington Office 

can be illustrated by the fact that in 

1970, 527 applications for new branches 

were decided by the Board of Directors 

(after substantial analysis by Washington 

Office staff as well as field staff), while in 

1975, only 137 such applications were 

decided by the Board of Directors. Some 

368 were handled by our Regional Directors under delegated authority, with a 

savings in manpower we estimate at 9,000 

man-hours in 1975 alone.

Another attempt to be more efficient 

has been our withdrawal experiment. For 

the last 3 years, we have been carrying 

out an experiment in three States whereby the FDIC foregoes its normal examination of the safety and soundness of a certain number of banks, and instead leaves 

that examination to the State banking 

department. We went through a careful 

and detailed process before selecting the 

States of Washington, Iowa, and Georgia 

for this experiment. There are some 

pluses and minuses to this experiment 

and we are not ready to provide a complete evaluation at this time. It may be 

that the responsibility for certain functions, e.g., audit-type functions in banks

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lacking adequate internal controls, can be 

delegated to State supervisors while our 

examiners concentrate on loan and management evaluation. It may be that we 

should withdraw from examining certain 

sized banks, or certain banks of longstanding proven quality. It may be that 

we should withdraw entirely from examining in certain States. It may be that we 

should simply drop the experiment and 

judge it a good effort but unsuccessful. 

At any rate, the experiment has been one 

means by which we have attempted to 

deal with the pressure on our resources, 

the desire of some States to take a greater 

role in banking supervision, and the general concern over duplication and overlapping in government regulation and 

supervision.

Banking operations have become increasingly computerized over the last 10 

years or so, and so have bank records. 

Examination of the bank now involves 

analysis of files that consist of magnetic 

tape rather than neatly organized paper 

records. A whole new line of EDP courses 

have been created to train our examiners 

to use these new techniques. We have 

developed data processing packages to 

simplify the task of examining data centers and computerized banks. These are 

programs designed to work on a variety 

of computer configurations that produce 

the output needed by the examiner. This 

minimizes the disruption of a bank's 

computer center during an examination 

and provides our examiners with the information in precisely the format they 

need.

In part because of these steps to make 

bank examination more efficient, some 

routine has been eliminated from examination. We are encouraging more discretion on the part of the individual examiner and the Regional Director. We have 

included some special pages in the examination report to be used when the Corporation feels they are needed for evaluating a bank's trust operations and 

nondomestic loans. We have tried to cut

what seems least essential and to rely on 

generally accepted sampling techniques 

rather than exhaustive reviews and 

counts. We don't believe there is any significant risk in our being less detailed, but 

it is correct that the examination is somewhat less complete than it used to be. We 

are experimenting with specialization 

among examiners, which has the potential 

for more sophisticated and streamlined 

examination procedures, as well as more 

thorough examination in the fields in 

which the specialization is developed.

Some changes in the bank examination 

process have been the result of policy 

decisions rather than attempts at better 

management of existing functions. For 

example, we have changed our policy to 

encourage more frequent meetings between the bank examiner and the board 

of directors of the bank examined. A 

number of years ago, we introduced a 

policy of a meeting of the examiner and 

the board of directors at the conclusion 

of an examination. We found that represented a waste of time since most banks 

were in relatively clean condition and 

getting the directors together for a meeting with no real substance represented an 

undesirable imposition on the Board 

members, so the policy was discontinued. 

In the last couple of years, however, conditions have changed. Now there usually 

is some matter appropriate for a discussion among the examiner and the 

directors, regardless of the condition of 

the bank. Directors have been more eager 

to meet with our examiners. The Comptroller of the Currency has recently 

changed its policy so that national bank 

examiners are required to schedule a 

meeting with the directors immediately 

after each examination. We have not yet 

made such meetings a universal policy but 

have certainly encouraged more meetings 

between examiners and boards of directors.

In addition to developing specialists 

among our examiners and expanding their 

training to make them more cognizant of

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recently enacted legislation, we are expanding the pool of people from which 

we hire our examiners. Our examination 

force now has by far more female examiners and members of minorities than was 

the case 5 or 10 years ago. Some of this 

change results from the elimination of 

past policies which were based on a feeling that some characteristics of the job of 

bank examiner, for example, the constant 

travel involved, were such as to create 

problems for women. But more of the 

change is due to an affirmative action on 

the part of the FDIC to recruit members 

of minorities and women for examination 

positions.

We have changed the policy of examining every bank every year, and now use 

various modifications of a full examination in different situations. Hopefully, 

this will permit us to spend more time 

examining banks that need the attention. 

As our newly revised examination policy 

states:

. . . the scope of the examination may 

be curtailed. Full use should be made 

of the bank's EDP and management 

reports, sampling should be utilized 

wherever possible, and proof and verification procedures may be eliminated 

or substantially limited unless circumstances indicate additional effort is 

needed in these areas. Additionally, 

the volume of loans subjected to analysis may be reduced, and less important branches need not be examined. 

Emphasis at these modified examinations should be placed on management 

policies and performance; the evaluation of asset quality, alignment, and 

liquidity; capital adequacy; and compliance with applicable laws and regulations.

That policy goes on to say that, in certain circumstances, "fixed assets schedules may be omitted from these examination reports," examiners may "utilize the 

output of (the bank's) systems, cash 

counts and proof and verification procedures may be omitted, branch offices

which do not have a significant volume of 

important assets need not be examined, 

the Corporation's automated bank examination programs and monitoring systems 

will be used wherever possible in an effort 

to provide increased efficiency and conserve manpower, and sampling techniques 

should be used wherever possible."

The changes I have described are significant and we are now in the process of 

developing additional training programs 

to ensure their complete integration into 

operations. I would like to turn now to 

some additional changes in the process of 

bank examination that are not completely integrated in operations today but 

which will be in a relatively short time.

V

First, a comment about the efforts of 

the Comptroller of the Currency. The 

Comptroller of the Currency is just starting to im plem ent some substantial 

changes resulting from the review of that 

office and its procedures by Haskins & 

Sells. It is difficult to summarize these 

changes but, to a great extent, they represent a reorientation of examination 

philosophy. Our present procedures start 

with a lot of detailed investigations of 

various aspects of the bank's activities 

and culminates in a meeting with top 

management of the bank to discuss overall findings and bank policy. The changes 

being made by the Comptroller's Office 

involve starting out with a review of selected statistical data in a bank to be 

examined followed by a discussion of 

bank policy with top management of the 

bank, that then followed by an attempt 

to evaluate how well the bank is implementing its own policies. This may well 

be the philosophy upon which bank 

examinations of large banks must be conducted, and we are watching the Comptroller's efforts very closely.

The future is going to see more use of 

the computer by bank examiners. I have 

already mentioned the packages developed by the FDIC for assistance in examining the computerized records of the

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bank, but we are going to see in the future more use of techniques that the computer makes possible. Work has been 

done at the FDIC and at a number of 

other places aimed at developing early 

warning systems for spotting bank problems. Development of early warning 

systems rests on the fact that we routinely collect massive amounts of financial data on the operations of banks. We 

have the computer capability to manipulate these vast amounts of data, and there 

are statistical techniques available which 

allow us to develop profiles of banks likely to become problems in the future, 

unless appropriate action is taken. These 

systems are becoming operational, but 

there are definite weaknesses in them 

now, the most distressing of which is the 

length of time required to process the 

reports. We must do better. In part, we 

feel that the fines we have levied on 

banks which have filed late reports will 

assist us in accelerating the processing, 

but we must, in addition, change some of 

our techniques.

Our early warning systems generate a 

list of banks that have similarities with 

banks that develop problems. These lists 

are circulated to our Regional Offices. In 

some cases, the regional staff is familiar 

with the bank's situation and knows that 

despite the ominous financial figures, 

there is really no cause for concern. In 

other cases, the lists include banks that 

the supervisory staff knows are problems 

and has been following closely. In some 

cases, however, the early warning system 

represents a new source of information to 

the bank examiners concerning potential 

problems.

It may be possible to go further with 

this approach in the future. But I think 

that the emphasis in the future will be on 

greater use of financial analysis techniques to spot banks that deviate substantially from the average. The financial 

analysis techniques are needed to fill the 

gap between the output of early warning 

systems and the costly detail of a fullscale, on-site examination. We think it will 

be possible to develop techniques whereby skilled financial analysis can review 

the inform ation available concerning 

bank operations to determine which ones 

require closer attention, more frequent 

examination, or special kinds of review.

Incidentally, our work on early warning systems has reached the same conclusion of some leading bank analysts that 

income ratios and operating results frequently are very important indicators of 

future banking problems. The traditional 

bank examination has given primary 

attention to the balance sheet and capital 

ratios and our discovery that the income 

report and income ratios provide useful 

indicators of future troubles may well be 

extremely important in determining future directions of examination and supervision.

There are some other changes in procedures which are starting to take place 

and which will become more important in 

the future. One of these worth mentioning is a system started by the Comptroller's Office to develop a uniform classification system for national credits. 

That is, when a large national firm is borrowing from a large number of banks, 

that credit should be classified in the 

same way at each bank that is lending to 

that firm. It is wasteful and inefficient 

(and occasionally embarrassing when different conclusions are drawn) to have the 

examiner in each of those banks do his 

own analysis of the financial position of 

the borrower. This responsibility can be 

centralized in one group of examiners 

which will produce a uniform classification of that loan for use by all examiners. 

We have participated in these reviews 

with the Comptroller when we have nonmember banks which are participants in 

the credits. The Comptroller's Office, 

whose national banks have more of these 

national credits in their portfolios than 

others, has spearheaded this effort. But as 

nonmember banks become larger, they 

are making more of these loans, and the

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FDIC is planning to lead similar efforts.

VI

I would like to conclude by commenting on some, but certainly not all, of the 

other issues of examination and supervision which I have not discussed.

The question that comes up most frequently in discussions between the FDIC 

and bankers concerning supervisory practices is that of capital adequacy. There is 

clearly not the time for a full discussion 

of the FDIC's views on capital adequacy.

I might just mention that there have been 

some analyses attempting to determine 

whether the supervisory agencies have 

much impact on the capital decisions of 

banks. Some of these suggest that we do 

not have much influence and that may be 

the way it should be. Our real efforts are 

aimed at nudging banks that we think 

have less capital than they should to raising more. I recognize that it is easier to 

prod than it is to actually raise the capital. In the last few years, both debt and 

equity markets have been difficult for 

banks to tap, and bank earnings have not 

been growing at a rate rapid enough to 

allow retained earnings to meet all capital 

needs. We do seem to have much greater 

influence on bank capital decisions when 

a bank is asking us for something, say, 

approval for a new branch. We do take 

advantage of this leverage and use these 

opportunities to require banks to raise 

additional capital. The Federal Reserve 

has done the same when bank holding 

companies have brought applications 

before the Board. There is some criticism 

of this practice, and some question as to 

whether it is fair and equitable that banks 

coming to us with applications should 

thus be subject to more effective pressure 

than banks that are not asking for something. This possible inequity troubles me, 

but not so much that I am willing to forego the opportunity to get additional capital from banks whose capital accounts 

are clearly below what they should be.

The last Congressional session saw the

introduction of a bill to create a Federal 

Bank Examination Council. This council 

would be intended to provide uniformity 

and consistency of examination standards 

for all of the examining agencies. We can 

see some benefits and some problems 

with such an institution. Let me quote 

briefly from our letter to the Senate 

Banking Committee on this proposal: 

While we heartily endorse the bill's 

objective of promoting "progressive 

and vigilant bank examination," we 

have serious reservations as to the need 

for nationally uniform examination 

standards and procedures. If there is 

any merit to the concept of separate 

Federal supervisory agencies, and to a 

dual banking system with State and 

Federal supervision of banks, the benefit would seem to be the opportunity 

to try different approaches and to 

have a diversity of examination and 

supervisory procedures. The possibility 

of useful innovation and improvement 

in the bank examination and supervisory processes is greater if there are 

several agencies trying different approaches than if every change in examin a tio n methodology required approval of all the agencies. The changes 

in the examination process now being 

made by the Comptroller of the Currency at the recommendation of his 

consultants are a worthwhile experiment that all supervisors will follow 

with careful attention. Implementing 

such changes should not, however, require the approval and commitment of 

each of the other Federal bank regulatory agencies.

I mentioned earlier our experiment in 

which we have withdrawn from some 

parts of bank examination in three States. 

We are facing the issue of whether this 

experiment should be put into more general operation or be simply terminated. 

That is, should we certify that certain 

States are able to take over the bank 

examination process and thus allow the

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FDIC to drop that function and responsibility? If we are to do this in certain 

States, how are we to determine which 

States? Or should we do this in all States? 

That is, should the FDIC get out of the 

bank examination business and leave it 

completely to the States? We do not feel 

that many States, if any, have adequate 

bank examination capability at the present time, but it is possible that if we 

simply stopped examining banks, and 

that left a real unfilled need, perhaps the 

States would move to fill that need. Or 

should we, as I mentioned before, withdraw from part of the banks—i.e., those 

which contribute the least risk to the 

deposit insurance fund? The other side, if 

you will, of that coin is for the FDIC to 

examine national banks or State member 

banks.

I mentioned earlier the interesting 

characteristic of the training and development of bank examiners by the use of the 

apprenticeship system, modified in recent 

years by a substantial classroom training 

program which is clearly the best among 

the agencies. Essentially, all of our examination personnel have developed as generalists through this type of training. This 

was an ideal approach when our examination mission consisted of examining the 

safety and soundness of mostly small 

banks, with examiners having few other 

responsibilities. Now, as I have indicated, 

our responsibilities have broadened and 

the types of banks and activities we are 

examining have diversified. For the most 

part, however, we have viewed the bank 

examiner as the Jack or Jill of all trades, 

able to examine competently all aspects 

of banking activity.

We have made some modest moves in 

the direction of specialization. We have 

recently set up specialists in trust examinations in several of our regions, though 

these specialists are bank examiners and 

not lawyers. Some examiners have received special training to enable them to 

examine computer facilities. Again, these 

are bank examiners trained in data processing and not computer professionals 

trained in banking. We have been giving 

consideration to, though have yet taken 

no steps to implement, the possibility of 

having a special examination force to 

examine for compliance with consumer 

protection laws. The possibility of increased reliance on financial analysis techniques in bank examination also may require different expertise and specializatio n than the traditional apprentice 

training route to the general bank examiner.

We may have to consider different 

career paths for different specializations 

or perhaps the hiring of bank examiners 

at different levels and with different 

backgrounds to fill particular needs rather 

than relying on our traditional hiring and 

training system.

The development of bank holding 

companies has been an important facet in 

the growth of banks and the increasing 

complexity of banking activities. The 

holding company movement obviously 

creates some problems for the process of 

bank supervision. Some of those problems have been delegated by the Congress 

to the Federal Reserve to worry about, 

such as the question of allowable activities for holding companies, for example, 

and the passing on specific applications of 

specific holding companies. We are more 

concerned with the relationship between 

the bank holding company and the bank 

and other affiliates of a holding company. 

We have seen in some recent major failures, e.g., American City Bank & Trust 

Co. in Milwaukee and Hamilton National 

Bank in Chattanooga, how a series of 

transactions with a holding company 

affiliate brought down a bank. The FDIC 

already has some authority to examine 

bank holding companies and the affiliates 

of insured nonmember banks. We have 

not generally exercised this authority, 

however, and we are now wrestling with 

the question of whether we should do 

more examination of bank holding companies than we do. It may well be that we

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should urge Congress to pass bank holding company supervision and examination 

to the agency with the responsibility for 

supervising the lead bank.

Perhaps the most important issue in 

the future will be the treatment of large 

and small banks. I noted that we still 

examine large and small banks in much 

the same way. I think this is inappropriate, but I am not sure in which direction we should move. Since it is mostly 

small banks that fail, and small banks are 

most likely to be in need of advice and 

suggestions about operations, it can be 

argued that we should devote a greater 

effort to examination of small banks. 

Large banks have access to competent 

management and advice, and generally 

can be assumed to know what they are 

doing, and hence, it may be argued, need 

our examination less. On the other hand, 

we have found that there is not much 

public concern about small bank failures.

Part of the FDIC's responsibility is to 

maintain confidence in the banking system, and even a sizable number of small 

bank failures appear not to shake that 

confidence. A few large bank failures 

might, however.

This would make the case for more detailed investigation of large banks. Certainly, the deposit insurance fund covers 

more insured deposits in the approximately 2,000 banks with over $50 million 

in deposits than in the 12,700 under $50 

million. We have to think this through, 

and we have not reached any conclusion. 

At this point, however, I am leaning in 

the direction of the view that the FDIC 

should concentrate its examination efforts and resources on a more detailed 

investigation of large banks with a resulting less frequent emphasis on small bank 

examinations. That is the current thrust 

of our examination policy, and I believe 

it is a step in the right direction.

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Address by Robert E. Barnett,

Disclosure*

During the past few years, senior staff 

and Board members of the FDIC have 

spent a great deal of time on problems 

related to accounting, financial reporting, 

and disclosure. Proposals and decisions 

affecting the form and substance of bank 

accounting and reporting have been generated in great quantity over the last 

couple of years from the Financial Accounting Standards Board, the AICPA, 

and the SEC, as well as from the FDIC 

itself and from the other banking agencies. I would like to review these developments, my attitude toward them, and the 

implications they have for banks and 

supervisors.

I

It was not many years ago that the 

bank supervisor's primary concern was 

that banks be able to raise capital when 

needed. The attitude with respect to 

buyers of securities was essentially that 

the investor, large depositor, borrower, 

creditor, and the general public really did 

not need much information because the 

supervisor had plenty of information and 

was using his best efforts to see that the 

bank did not fail. Even where Congress 

and the SEC took actions to improve disclosure in other industries, banking was 

left almost solely to the banking agencies.

Five years ago, disclosure to the public 

of the individual bank information we 

collected was not a major consideration 

at the FDIC or, for that matter, at any of 

the Federal bank regulatory agencies. The 

contents of the annual reports of income 

of individual banks were regarded as 

strictly confidential, except for a few 

hundred banks with 500 or more shareholders subject to the 1964 amendments 

to the Securities Exchange Act of 1934. 

Those banks had, since 1964, been com­

* Presented b e fo re th e C P A S o c ie ty a n d R o b e rt

M o rris A ssociates, S t. L o u is, M iss o u ri, N o v e m ­

b e r 1 8 , 1 9 7 6 .

plying with the registration, annual reports, proxy rules, insider trading regulations, and other requirements of Federal 

securities laws. But for the overwhelming 

majority of the banks, this was not so. 

While the front of the Report of Condition, the balance sheet information, was 

public, the detailed loan schedules on the 

back of the Reports of Condition were 

confidential. An important item in each 

special survey questionnaire we sent to 

banks was the notice that returns would 

be treated as confidential and results 

would be released only as aggregates or 

averages. A t that time, no outsider had 

managed to gain access to internal files or 

to photocopy reports of examination, 

listings of banks on the problem list, or 

critical memoranda by the regulators. 

And even if he had, newspapers would 

probably not have published such material.

But even 5 years ago there were signs 

of growing interest in the details of the 

operations of individual banks. Some of 

the nation's large banks were publishing 

in their annual reports a considerable 

amount of information about their own 

operations beyond what regulatory rules 

required. Competition among banks and 

between banks and other types of financial institutions was increasing and with it 

was an increased interest in what individual competitors were doing. Moreover, 

whenever a bank submitted an application to merge with another bank, it was 

required to give an account of the competitive factors that were involved in the 

relevant market areas. With mergers the 

vogue at that time, there was a brisk demand for information about competing 

institutions which would enable bankers 

to measure market shares of the various 

banks operating in local and regional markets. At the FDIC, we were receiving 

large numbers of requests not only for 

the aggregated data we regularly compiled, but also data aggregated in special 

ways for small areas and for particular 

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sieging banks and the bank regulatory 

agencies with requests for individual bank 

data to enable them to carry on comparative analyses involving a whole host of 

other issues with broad public policy 

implications. And the accounting profession was hard at work on bank accounting problems, persistently but with a 

somewhat piecemeal approach. In short, 

there was evidence of growing interest in 

unpublished bank data.

The SEC gained more clout over the 

banking industry about this time, although almost by accident. While banks

were exempt from much of the securities 

legislation of the 1930s, bank holding

companies were not. Thus the expansion 

of the bank holding company movement 

of the 1960s and early 1970s led, incidentally, to more power for the SEC over 

bank subsidiaries of holding companies.

The long tradition of the banking 

agencies has been tied to confidentiality 

of unfavorable news. This has reflected 

the viewpoint of banks, their depositors, 

their borrowers, their creditors, and the 

supervisors. Bankers have been willing to 

discuss their problems forthrightly with 

examiners, and examiners have been w illing to relay their suspicions to the banker 

because each appreciates that the entire 

procedure is treated in confidence. The 

examiner wouldn't discuss his findings 

with a newspaper reporter, and the banker has felt no obligation to report the 

examiner's judgments to his stockholders. 

When a bank has been found to be in very 

weakened condition, the FDIC and the 

other agencies have attempted to explore 

possible solutions (or to seek potential 

purchasers). Obviously, the more publicity given to such a situation, the more 

difficult it is to solve the problem successfully.

I doubt if much thought was given to 

the need for data by security-holders, 

creditors, large depositors, or the general 

public. During this period, banks did not 

generally have securities outstanding 

other than stock and of that, most was

closely held and not actively traded. If 

any further thought was given to stockholders, I suspect the conclusion drawn 

was that what benefited the bank and its 

depositors probably benefited securityholders as well.

The situation has changed. In all publicly held corporations, the obligations on 

management and insiders for full disclosure of the financial condition of their 

company have become more clear-cut. 

Banks and bank holding companies have 

more securities outstanding and they are 

traded on a regular basis. As a result of a 

series of Congressional actions, it has 

become clear that the banking agencies 

cannot rely on the confidentiality that 

has been a basis of traditional regulation.

II

The move toward broader disclosure 

has taken several different directions. 

There has been a clear requirement for 

more disclosure of relevant information 

concerning the finances of the bank. 

Until about 5 years ago, for example, 

many banks did not distribute, even to 

stockholders, an annual income statement. The banking agencies had always 

collected such a statement but, until 

1972, treated it as confidential.

The FDIC led the way in 1972 in 

making public the Reports of Income and 

C ondition for individual banks. Our 

thinking at the time was that publishing 

this information provided equal access to 

information then known only to "in ­

siders," greater competition in good 

banking markets, incentive for banks to 

perform well, better access to capital markets for banks making such disclosure, 

availability of more complete data for 

researchers and legislative committees, 

development of more uniform accounting 

rules, and consistency with the spirit of 

the Freedom of Information Act. It is a 

sign of change in only 4 years to recall 

that at the time the decision to make this 

information public was a controversial 

one—one on which we received many comments including some compliments and

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some complaints. Despite the complaints, 

we think this has proven to be a constructive development. We have supplied 

copies of thousands of documents to 

bankers, academicians, and other analysts. We are continuing to push for 

meaningful disclosure in this area, and are 

attempting to increase both the quality 

and the timeliness of the reports sent in 

by the banks.

In the last few years, the need for 

additional information by the public has 

grown. Economic developments—unusually severe inflation, fluctuating foreign 

exchange rates, the most serious recession 

in 40 years—and banking developments 

such as rapid expansion of overseas operations of multinational corporations and 

greater reliance on borrowed funds—all 

have combined to produce a growing 

interest by diverse groups in the financial 

results of bank operations. In the past 2 

to 3 years, losses have been sustained by 

shareholders in many commercial banks 

and holding companies as the market has 

turned down on bank stocks. Partly as a 

result, public accountants, bank stock 

analysts, and the SEC, among others, 

have stepped up their efforts to dig deeper into bank financial operations. Bankers 

are being pressed not only to describe 

what they are doing, but to predict where 

they think they are going.

My personal position is that the disclosure of information which reveals the 

earnings characteristics of the asset base, 

its stability and profitability, will subject 

those banks in bank holding companies 

whose stock and debt are traded on exchanges or over-the-counter to market 

forces which in turn will be a powerful 

force in compelling the banks to correct 

weak asset conditions. A t the same time, 

banks in good condition should be rewarded by the market with easier and 

cheaper access to the capital markets, 

solid growth, and good profitable opportunities. Too often supervisory pressure 

on bank managements whose policies are 

dilatory or involve excessive risk-taking

are ineffective. Supervisors seldom criticize bank management in public on the 

assumption that publicity might have adverse effects on the stability, or even solvency, of the bank. Investors informed by 

adequate disclosure, however, can affect 

the price of that bank's securities in a 

manner which will promptly compel 

management attention. This is not to say 

that disclosure should or could displace 

regulatory surveillance; both are tools to 

strengthen the banking system and they 

can be complementary.

A t the other extreme, there have been 

unauthorized disclosures of information 

about banks and bank holding companies 

that we consider best left confidential. 

Bank examination reports and names of 

banks on agency problem lists, for example, probably will help sell newspapers, 

but it is doubtful that their publication 

contributes to confidence in the banking 

system. Even if the stories in which such 

information is revealed would emphasize 

or even explain the nature of problem 

lists or examination reports, which they 

seldom do accurately or thoroughly, most 

regulators will argue that such stories do 

much more harm than good.

Each of the banking agencies has its 

own list of problem banks or problem 

holding companies. These are classified in 

accord with the differing criteria of the 

different agencies in accord with their 

differing responsibilities. We find these 

classifications useful even though they are 

reached through subjective judgments. As 

Chairman of the FDIC, I want to know 

all the banks that our examiners, in their 

best opinion, think pose a risk to the Corporation. I want to know which banks 

they are, even if the examiner cannot provide conclusive proof that the bank is in 

poor shape (by that time it may be too 

late to do anything about it). This means 

that the list, in addition to being subjective, will include some banks which will 

easily recover from their difficulties. It 

will most certainly reflect the condition 

of the banks as the review process began,

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sometimes many months before, and not 

necessarily the condition of the bank at 

the time it appears on the problem list. In 

part because of these reasons, we do not 

generally formally notify even the management or directors of a problem bank 

that the bank is on our problem list. 

Obviously then, we do not want the problem list publicized.

Likewise, we consider the examination 

report part of a confidential process. 

Bankers are willing to discuss frankly the 

weaknesses in their loans because they are 

confident that anything told to an examiner will be treated in confidence. Bank 

examination represents an independent 

assessment of a bank's condition by a 

trained professional. The necessary information gathering and loan discussion are 

facilitated because the banker views it as 

a cooperative affair rather than an adversary process. Time and money can be 

saved if this cooperation continues, and 

our career examiner employees are convinced that the data gathered through this 

process and the criticism extended by our 

examiners are both honest and thorough. 

If the confidentiality is lost or the process 

becomes adversary, there quite possibly 

would be a deterioration in the quality of 

examinations.

Ill

I feel that what has been discussed so 

far is rather clear-cut. There is need for 

disclosure of financial information about 

banks and there is some information 

which should not be made public. There 

are difficult areas that fall somewhere 

between these poles, however. In recent 

months, we have seen various groups, including the FASB, the AICPA, and the 

SEC, propose accounting and disclosure 

treatments that may lie beyond what is 

essential but perhaps is not a violation of 

necessary confidentiality. Some of the 

accounting changes that have been made, 

which we have supported, were intended 

to correct obvious deficiencies of traditional bank accounting. Until recently, 

for example, bank accounting for loan

loss reserves did not distinguish realistic 

provisions for losses from allowances set 

up on a formula basis to accord with tax 

provisions. Now it does. That, plus treatment of deduction of unearned discount 

on loans, inclusion of capital notes as 

liabilities, and others, are examples of 

improvements in bank accounting made 

in recent years with the concurrence and 

support of the banking agencies, the accounting profession, and the SEC. Reporting has been improved this year by 

the requirement for semiannual income 

reports from all banks and quarterly reports from the large banks. Some of these 

changes have been traumatic to some 

bank managements, but these changes 

have not involved difficult issues of principle or caused interagency controversies. 

There are controversial issues that remain, 

however.

Let me look first at the recent FASB 

proposal that theoretical market losses on 

corporate stock held by a bank must be 

reflected on its balance sheets. This has 

lim ite d applicability to commercial 

banks, since banks in only a few States 

can hold corporate stock. Mutual savings 

banks, however, hold large amounts of 

common and preferred stocks. These 

investments are made as a permanent 

commitment of funds, and the banks 

generally have the liquidity and the staying power to hold these securities indefinitely. We, therefore, opposed running 

these losses (and subsequent gains) 

through the income statement and capital 

accounts, although we favored disclosure 

of the amounts involved.

I would like to spell out some of our 

reasons for opposing this accounting 

change because it is relevant to other accounting issues that have arisen. I am not 

an accountant and I will not argue the 

fine points of accounting theory. I do believe that accounting should be a guide 

for management and investors which presents financial statements that serve as the 

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oped. In order to be a useful guide, accounting rules followed logically should 

lead to correct managerial and investment 

decisions. Yet the opposite may occur 

here. If mutual savings banks must write 

down to market price theoretical losses in 

preferred stocks, or if they must show 

losses and gains on theoretical transactions that they have never contemplated entering into, they might be discouraged from making such investments. 

But, according to most State laws, preferred stocks are an appropriate investment for savings banks (and, in some 

cases, for commercial banks). I do not 

like to see an investment deemed appropriate by legislative action refused simply 

because of an accounting rule. (One 

might argue that investment in preferred 

stock is not a good bank investment, regardless of what State legislatures have 

decided. But I feel that those who wish to 

argue this point should do so directly in 

the legislature.)

A t the same time, I recognize that our 

present accounting rules do not necessarily lead to correct decisions with respect to securities transactions. Some 

bankers are reluctant to sell securities at a 

loss, if they must recognize it as such, 

even when tax laws and reinvestment 

opportunities make that the right economic decision. Our present accounting 

requires such recognition of a loss if they 

sell.

Of more concern than the FASB decision on equity securities is the possibility 

that the FASB may seek to expand this 

decision to debt securities as well. That 

has not yet become a proposal of FASB, 

and perhaps it will not. If it does, I suspect that the FDIC will want to testify 

along the lines that I have outlined.

While we were not able to convince 

the FASB of the error in their position 

that theoretical losses on corporate stock 

should be taken, we like to think that our 

comment to the FASB on that proposal 

had some influence on the final decision 

to require writedowns directly against

capital accounts thereby avoiding impact 

on the net income line.

Of more significance than the accounting for losses on securities is the consideration by the FASB of a proposal for 

writedown of loans that have been restructured. Several days of public hearings were held on this matter and many 

banks and bank trade associations registered their disapproval. The FDIC submitted a comment on the proposal in 

accord with principles I have referred to.

I believe that investors are entitled to 

meaningful information about the quality 

of a bank's loan portfolio. Where loans 

have been restructured—that is where the 

maturity has been extended or the interest rate reduced-full and complete disclosure of material information regarding 

the restructured debt should be included 

in supplementary schedules and footnotes. The disclosure should include a 

comparison of the principal values, the 

interest rates, the maturity dates, and a 

computation of any material effect on 

future earnings. On the other hand, it 

would clearly get into the realm of confidential matters for the bank to disclose 

the details of particular loans subject to 

new terms.

The real issue goes to the appropriate 

accounting for these restructured loans. 

We cannot agree that the loans in question should be revalued to some approximation of market value. Loan restructuring is not an unusual experience in a 

bank loan. If a borrower is having d ifficulty meeting the original terms of a loan, 

extending the maturity or lowering the 

rate may be the best way of assuring that 

the principal will ultimately be paid in 

full. A writedown to "market value" has 

several shortcomings. It implies that a loss 

of principal has occurred or will occur 

and, hence, is likely to be misleading. 

Moreover, its impact on management 

might well be perverse. The requirement 

for writedown may cause bank managements to be more reluctant to agree to 

the restructuring that may, as I have

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noted already, actually improve chances 

of full recovery. Even worse, if temporary 

difficulties with loans are going to be subject to such accounting treatment, perhaps the bank will decide not to make the 

normal risk loans that can lead to such 

difficulties, or will elect to take adverse 

action against the borrower rather than to 

effect workout arrangements. If banks 

change their lending policy away from 

one of assuming normal risks and toward 

one of making only riskless investments, 

small business, farmers, and the whole 

economy will be the losers. I appreciate 

that this exaggerates the possible result 

but it does, I believe, illustrate the point.

Again, as a non-accountant, I view any 

accounting treatment that leads to poorer 

management decisions as poor accounting. We thus opposed the FASB proposal 

and noticed the large number of comments from various sectors of the financial community in agreement with our 

position. Let me stress that we are not 

opposing investors' and depositors' right 

to know what is relevant to them. We 

favor disclosure of the aggregate amount 

of loans that have resulted in renegotiated 

terms. Disclosure is important to investors and depositors. Reflection on 

financial statements as a writedown, however, is a separate question—one which 

goes to the ultimate theory and purpose 

of accounting statements.

I have stressed that we favor appropriate disclosure for investors in bank 

securities and for bank depositors. Securities laws provide that firms publicly offering securities, including bank holding 

companies, must make certain disclosures 

to investors and potential investors. This 

reporting requirement does not directly 

apply to banks, though all issuers of 

securities are subject to the fraud provisions of the law.

IV

The Comptroller of the Currency has 

recently issued proposed regulations for 

an offering circular describing information that must be furnished by all national banks before they may issue new 

debt or equity securities. Two years ago, 

the FDIC issued a proposed offering circular regulation covering the offering of 

securities by nonmember banks. We received many comments on that proposed 

regulation, and while our staff has 

worked on revisions of the proposal, we 

have never issued it in final form. The 

reasons are relatively simple. Adopting 

SEC-type regulations for smaller institutions involves a substantial burden on 

small banks seeking to issue securities. 

This burden, plus less-than-bullish information which might be revealed by some 

banks, might make it more difficult for 

some banks to raise capital. These are 

difficult hurdles for our agency to overcome. On the other hand, it is clearly 

appropriate that potential investors have 

the information at hand to determine 

whether the securities they are planning 

to buy are worth the price. We certainly 

recognize that banks are susceptible to 

lawsuits based on common law fraud and 

violations of section 10(b)(5) in the sale 

of their securities.

We have been reviewing the Comptroller's proposal and find it similar to 

ours in most basic respects, although the 

Comptroller's proposal would exempt 

only issues of under $100 thousand while 

ours would exempt issues under $500 

thousand. While our Board of Directors 

has not reached a conclusion on the staff 

revision, the proposed regulation remains 

on our pending agenda. The extent to 

which we treat large and small banks 

differently is an important part not only 

of this issue, but of a great many other 

supervisory issues.

This discussion of SEC-type regulation 

of offering circulars brings us to what is 

the most recent issue we have had concerning disclosure, and that is negotiations concerning the SEC's Guides 3 and 

61 that apply to new issues of securities 

and to annual reports of bank holding 

companies or banks subject to SEC regulation. The banking agencies have been

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STATEMENTS BY CORPORATION DIRECTORS 201

discussing these matters with the SEC for 

about 2 years. At that time, the SEC was 

concerned that bank holding companies 

were not making sufficient disclosure 

concerning the quality of their subsidiary 

banks' loan portfolios. The initial SEC 

proposal was that banks be required to 

disclose the amount of loans classified 

substandard, doubtful, and loss by bank 

examiners. We objected to that for the 

reasons I mentioned earlier. We would 

view it as compromising the confidential 

nature of the bank examination process. 

For over a year since that time, we have 

been discussing, both at the staff level 

and among the heads of agencies, what 

the best substitute for classified loans 

would be in attempting to get some measure of the quality of loan portfolio.

We have had mixed success on the 

basic issues discussed. The SEC, for example, recognized the difficulty in getting 

comparable figures on loan commitments 

and so dropped that requirement. On the 

other hand, the SEC is now requiring that 

all bank holding companies offering 

securities disclose the amount of loans 

past due and the amount of loans on 

which the terms have been renegotiated. 

Incidentally, the SEC calls these "nonperforming" loans. A more accurate description, in my judgment, is "underperforming." While different people may 

differ as to whether loans past due should 

include loans 30 days past due or 60 or 

90, at least these are reasonable objective 

categories and we support the effort to 

show the potential income impact of 

underperforming loans. Our disagreement 

has focused on the SEC's desire for 

another category of underperforming 

loans—loans that raise in management's 

mind "serious doubts" that the borrower 

will be able to meet the original terms of 

the loan. We think this is too subjective 

and, in any case, that the principal 

amount of such loans is rather meaningless.

Our discussions over the months with 

the SEC have produced some agreements

and some moderation of original SEC 

positions. I feel that this is a tribute to 

the ability of the individuals at the different agencies to reach positions acceptable 

to each other, even though the statutory 

philosphy (i.e., disclosure versus confid e n tia lity ) often was dramatically 

opposed.

I believe I can summarize my views on 

this whole matter rather simply. I favor 

broad and full disclosure. I believe that 

depositors and investors in bank securities 

should have full information on which to 

base their investment or deposit decisions. I do not want to see details of individual transactions made public, nor do I 

want to see the confidentiality of the 

supervisory examination function seriously compromised. I believe that the accounting procedures followed by banks 

should be in accord with accounting principles and procedures accepted by the 

accounting profession and applied to 

other industries, making only those 

changes and exceptions for banks that are 

warranted by the nature of the banking 

business. If a proposed accounting principle leads to worse economic or business 

decisions, serious consideration should be 

given to the wisdom of adopting such a 

principle, even if it seems to make sense 

from an accounting standpoint. If an 

accounting change by itself, leads banks 

to make poorer investment decisions, or 

leads them to refuse to consider a debt 

restructuring that may benefit both the 

bank and the borrower, or leads the bank 

to reject a swap proposal from a REIT 

that would benefit all parties, then I 

would send the accountants back to the 

drawing board. Likewise, of course, if a 

banker chooses to make poor business 

decisions (such as holding or selling securities) just because of the way he has to 

reflect such actions on his books in the 

short run, I would like to send him down 

to the minor leagues.

In any case, and regardless of differences of opinion on accounting principles, we are going to see a trend toward

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wider disclosure that I think is healthy 

and desirable. We do intend to defend to 

the greatest extent possible the preservation of confidentiality in those areas that 

should be confidential and we will seek to 

avoid disclosures that we think would be 

misleading or harmful.

V

Thus far today I have been talking 

about accounting and financial disclosure. 

But there is another type of disclosure 

opportunity available to the banking 

industry today that may not be available 

much longer. That is the opportunity to 

disclose voluntarily and in their own way 

the extent to which banks are meeting 

what many view as the "social responsibilities" of banks. Most businesses are not 

subject to pressure along these lines, and 

bankers may object to being singled out 

for special treatment rather than welcoming the pressure as an opportunity. 

But bankers have often argued that banking is different in that it has greater implications for public welfare and, thereby, 

themselves have supported the arguments 

that it may be appropriate to subject 

banks to higher social standards.

One area in which banks have lost the 

opportunity to tout their own accomplishments is the area of disclosure of 

investments in mortgages. The Home 

Mortgage Disclosure Act now requires 

most banks to disclose, by zip codes or 

census tracts, the location of their home 

mortgage lending activity. By waiting 

until Congress acted, banks may have lost 

the opportunity to lead disclosure in this 

area. This legislation grew out of concern 

with redlining and disinvestment in our 

cities. While I have grave doubts that this 

disclosure will shed much light on the

problem of urban disinvestment, this is an 

example of interest by the public in the 

way the deposits of the public are being 

administered and invested by the banks, 

and I believe an example in which banks 

generally had a good story to tell but in 

which they lost the opportunity to tell it 

voluntarily.

As I have already indicated, some 

types of financial disclosure by banks can 

represent violations of privacy or may be 

unwise for other reasons. The same may 

be true of disclosures of "social responsibilities" information. There are some in 

our society who favor governmentdictated, mandatory credit allocation to 

see that what they regard as high priority 

credit needs are met. I personally hope 

that we can avoid any more government 

interference than we already have with 

the bank lending function but this may 

not be possible or, some would argue, 

even desirable. I think we must recognize 

that there is a broad social interest in the 

lending decisions of the banking industry. 

Somehow, bankers must find some way 

of disclosing meaningful information to 

the public about the nature and character 

of their investment decisions. Most banks 

probably do a creditable job of meeting 

high priority credit needs. But that fact 

has not always been demonstrated very 

thoroughly or convincingly. If bankers 

want to avoid greater pressure on the 

direction of government-directed, mandatory credit allocation, they are going to 

have to understand the public perception 

of desirable lending and get their message 

across as to the type of lending activity 

they are conducting. This is a different 

type of disclosure than balance sheets and 

the forms of financial reports, but it is a 

real need.

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STATEMENTS BY CORPORATION DIRECTORS 203

Address by Robert E. Barnett, Liquidation Activity*

Over the last few months I have given 

a series of talks on .the major functions of 

the Federal Deposit Insurance Corporation. These talks have discussed as frankly 

and as openly as possible some of the 

problems and issues raised by our existing 

procedures and policies, and have explored various proposals for change. 

These talks have covered our deposit insurance function, bank examination and 

supervision, our handling of consumer 

protection regulations, and our responsibilities for overseeing financial reporting 

and disclosure by banks. There is one 

major area of FDIC activity and responsibility that I have not yet discussed—the 

liquidation activity of the FDIC.

When a bank fails, we either pay off 

the insured depositors or we arrange for 

another bank to assume the liabilities and 

to purchase some of the assets of the 

failed bank. In either case, we have a sizable liquidation task. In the case of a payout, we are left to liquidate all of the 

assets of the failed bank. In the case of a 

purchase and assumption, we are usually 

left with the bulk of the assets to liquidate, including all of the poor quality 

assets. This responsibility for liquidation 

of failed bank assets has a number of 

aspects which I wish to discuss today. 

The two most striking aspects are the size 

and growth of that activity.

In terms of assets administered, the 

FDIC Liquidation Division is the largest 

REIT in the country, the 17th largest 

diversified financial firm in the country 

(ahead of such giants as Beneficial Finance and First Boston), and the 49th 

ranking conglomerate on the Fortune

magazine list of the 500 largest corporations in the country (just ahead of Armco 

Steel, Sperry Rand, and Honeywell). 

There are 78,000 assets being admin­

* Presented b e fo re th e P u e rto R ic o B ankers

A s s o c ia tio n , San J u a n , P u e rto R ic o , D e c e m ­

b e r 9 , 1 9 7 6 .

istered by our liquidators with an aggregate book value of $2.6 billion. Over 

$900 million of these assets are real estate 

related.

To administer these assets, our Liquidation Division employs only 583 men 

and women operating in 30 States, covering over 79 liquidations. It operates at a 

cost of approximately 2 percent of collections, substantially below the costs of 

15-20 percent found in nonbanking corporate bankruptcies.

This massive size is a recent development albeit, in our judgment, not necessarily a temporary one. In 1974, our 

Liquidation Division consisted of 233 

employees and comprised about 7 percent of all FDIC employees. In 1976, its 

583 employees account for over 16 percent of all FDIC employees. As recently 

as 1972, the assets in our liquidations 

totaled under $300 million.

The recent rapid growth of the liquidation activity can be easily understood 

when we realize that the eight largest 

bank failures in FDIC history have occured since October 1973. That 1973 failure was U.S. National Bank of San Diego 

which left us with $1.2 billion of assets to 

liquidate, our first massive liquidation. 

We were trying to absorb that when the 

Franklin National Bank failure dropped 

$3.6 billion of assets in our laps. All this 

can be said as emphatically by saying that 

these 8 largest failures consisted of over 5 

times as many assets as all the 500 banks 

liquidated by the FDIC from its beginning until the failure of U.S. National 

Bank. This contrasts with the situation 

about 15 years ago when our biggest 

worry in liquidation cases was the problem of how to value and sell the banking 

house of a failed $5-million bank.

Our e ntire liquidation activity is 

guided by one overriding tenet: we are a 

fiduciary. That is, we are attempting to 

liquidate assets so as to recover the funds 

advanced by the Federal Deposit Insurance Corporation and to recover funds 

for other creditors and stockholders, all

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of whom are ultimate beneficiaries of the 

receivership estate.

In the case of a payout, all insured 

depositors are paid promptly by the 

FDIC. Usually, but not always, the FDIC 

is appointed receiver of the failed bank. 

The Federal Deposit Insurance Corporation, as a result of subrogation of the 

insured depositors' claims, becomes a 

sizable creditor of the bank and, hence, 

has a sizable claim against the receivership. But there are other creditors who 

have a claim equal with that of the FDIC. 

Frequently there will be subordinated 

creditors that have a claim that ranks 

behind the FDIC and the other general 

creditors. There are always stockholders 

who have a residual claim if the liquidation of the assets generates sufficient 

funds to meet all of the creditors' claims. 

Wearing our hat as receiver, therefore, we 

have an obligation to collect as much as 

possible on every asset so as to protect 

the rights of creditors and stockholders of 

the failed bank.

When we arrange a purchase and 

assumption transaction, the FDIC becomes the major creditor with a claim 

against the estate of the failed bank. But 

even in this case there are claimants, such 

as subordinated creditors and stockholders, who are entitled to any funds 

remaining after payment of all general 

creditors and after the FDIC recovers the 

full amount of its advance (plus interest). 

In either case, therefore, whether we have 

a payout or a purchase and assumption 

transaction, the FDIC is operating as a 

fiduciary with an obligation to recover as 

much as possible for the ultimate claimants on the estate of the failed bank.

The Federal Deposit Insurance Act 

itself provides some specific instructions 

to the Corporation in its liquidation activity. Our liquidations are to be conducted 

"having due regard to the condition of 

credit in the locality." Essentially, this 

means that the disposition of assets of a 

failed bank is to be conducted in an 

orderly manner, rather than on a forcedsale basis. This is consistent with both 

concern for the impact of forced liquidation on the local community and concern 

with recovering the maximum amount 

possible for the beneficiaries of the liquidation. Receiverships of failed banks, like 

any receivership, are conducted under the 

jurisdiction of the court, and sales of 

assets by the receiver are subject to approval by the court.

The receiver's actions, as you would 

expect, are more circumscribed and subject to more limitations than an on-going 

bank would have in dealing with the same 

assets. That is, a bank can take account of 

its whole business relationship with a 

customer in dealing with the treatment of 

a particular loan. For example, in making 

a decision whether to foreclose or extend 

a loan in default, an operating bank may 

consider the deposit business it gets from 

the borrower, or the existence of trust 

business, or the business of associates of 

the borrower that may be promoted or 

endangered depending on the decision on 

the particular loan. The receiver can make 

no such trade-offs and consider no such 

outside factors. He must make a credit 

decision on the best way to handle a particular loan so as to maximize recovery 

on that asset. These characteristics of the 

liquidation pose some knotty problems 

for us to which I will return later in this 

talk.

One reason why our liquidation activities have not been discussed very much 

in public by past Chairmen of the FDIC is 

that until rather recently our liquidation 

activity was modest in size and scope. It 

was also a rather simple and straightforward activity, not requiring direct and 

frequent involvement by the Board of 

Directors of the FDIC (other than final 

approval of sales of assets). One illustration of that is the fact that during World 

War II our entire liquidation activity was 

moved to Chicago and operated very well 

800 miles away from the Board of Directors of the Corporation. Now, however, 

liquidation activities are bigger and more

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complex and require the frequent involvement of FDIC Board members.

I have described the massive size of 

our liquidation activity and its extremely 

rapid growth. These facts, however impressive they may be, do not adequately 

convey the change that has taken place in 

our liquidation operations. Now we have 

not only a higher dollar amount of assets, 

but we are getting assets which are much 

more complex to administer, let alone sell 

or liquidate.

Our philosophy of an orderly liquidation frequently requires us to manage 

assets for lengthy periods before they can 

be sold or collected. In pursuing that 

philosophy, we have operated a sizable 

navy with a fleet consisting of tuna boats, 

shrimp boats, and oil tankers. Running a 

navy is a complicated business. We have 

even had difficulty keeping our boats 

afloat. We had an oil tanker run aground 

off Havana, and we had a shrimp boat 

blown into the main street of Aransas 

Pass, Texas, by Hurricane Celia. We have 

acquired a loan to the distributor of 

movies, one of whose properties is a 

major X-rated film. Our prospects for 

ultimate collection of that loan depend 

on good attendance at that film . We became creditor of an individual whose 

main source of income to repay our loan 

was rental paid for the use of a property 

as a bawdy house. We had interests in 

taxicab fleets in California, Arizona, and 

New York, and in real estate of literally 

all kinds in all forms of development and 

nondevelopment throughout the United 

States.

We have faced the problems of abandoning or developing farm properties 

such as citrus orchards or vineyards in all 

stages of development. We have bought 

47 wind machines to protect our citrus 

crops from freezing (at a total cost of 

$427 thousand) and have had to purchase 

beehives to assure pollination of our 

almond trees. Religion has been part of 

our business also. We have foreclosed on 

abandoned churches and synagogues although, fortunately, we have never had to 

evict a congregation. We also have possession now of a copy of the Koran valued 

in seven figures.

While these may appear to be unusual 

assets to be acquired as a result of bank 

failures, it is important to realize that we 

never get to liquidate the assets of a normal bank. We are always liquidating the 

assets of failed banks, and banks that fail 

tend to be unusual and into some oddball 

financial ventures. Back in the 1950s and 

early '60s, when it was mostly small rural 

banks that were failing, the liquidation 

activity was a simpler one. We took over 

an assortment of loans (consumer loans, 

home mortgage loans, farm loans, small 

business loans) with which our liquidators 

built up some familiarity and expertise. 

We may have had to wait several years to 

collect the final payment of a home mortgage loan, and there may have been some 

difficult work-out situations on farm 

loans, but our liquidators developed expertise in appraising farm property in 

many parts of the country and determining the best way to deal with those 

loan situations. Oil tankers, movies, vacation home condominiums, taxicab fleets, 

and international loans were a different 

kind of activity. The liquidator who was 

perfectly comfortable in dealing with a 

loan secured by 300 acres of cotton in 

Texas was not so comfortable in dealing 

with 30,000 acres in California on which 

oranges, avocados, and grapes were being 

grown and wine produced.

In this talk, I can describe the scope of 

our liquidation activities and tell you how 

we have been operating. The scope and 

nature of our operation have changed so 

dramatically in the last few years that it is 

unlikely that the management or procedural approach that was best for the 

1960s is still optimal today. We have a 

number of studies of our liquidation effort under way, and I expect that there 

will be both organizational and procedural changes introduced in the near future. Clearly the speed with which we

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have been forced to deal with larger and 

more complex assets has necessitated 

going outside our organization to hire 

consultants with knowledge in some of 

these particular areas, rather than try to 

develop our expertise internally. The 

costs associated with this approach disturb all of us at the FDIC because we 

have always taken pride in our low collection expenses. I suspect that we must be 

very careful not to be penny-wise and 

pound-foolish in this area, however.

Our administrative and collection costs 

have run 2.3 percent of collections over 

the years. That is an extremely low figure 

compared with any similar business. I recognize that that is not a completely fair 

comparison since the FDIC bears some 

costs that could reasonably be charged to 

liquidations but, in any case, a 2.3 percent cost ratio is impressively low. I 

might note that one reason for the low 

costs is that our salary structure is comparatively low—our liquidators would be 

happy to switch to the 1.5 to 2.0 percent 

or more commission basis that private 

firms in the liquidation business are 

awarded.

Up until the failure of U.S. National 

Bank of San Diego, the FDIC recovered, 

through its liquidation efforts, 90 percent 

of its total cash outlay. That record has 

deteriorated recently because of the U.S. 

National Bank failure, a failure which left 

in the receivership a lot of very poor quality assets. If all our liquidations had assets 

like that, our recovery record would be 

miserable. As to realization on classified 

assets, our collections have averaged 

about 30 percent recovery on loans and 

other assets classified as “ loss” by examiners. We have collected 50 percent of 

assets classified as "doubtful" and about 

68 percent of assets classified as "substandard." As an aside, I would suggest 

that this might show that examiners' evaluation of assets is pretty accurate.

Because they represent 62 percent of 

the assets in the liquidation inventory, it 

is worth reviewing our current status with

respect to our largest failures, Franklin 

National Bank and U.S. National Bank.

The Corporation has succeeded in collecting $1.06 billion on the assets acquired in the Franklin liquidation and has 

paid over $1 billion of this amount to the 

Federal Reserve Bank of New York, 

thereby reducing the principal amount 

due on the “ window" loan extended to 

FNB at the time of closing October 8,

1974, from $1.7 billion to $707 million. 

Interest at the rate of 7.52 percent per 

annum on the note will not be due until 

the note matures on October 8, 1977. 

The principal book value of assets remaining to be liquidated is $1.25 billion compared with the principal and accrued 

interest on the FDIC's outstanding debt 

to the Federal Reserve Bank of New York 

of $901 million.

On October 8, 1977, it will probably 

be necessary for the Corporation to advance an estimated $465 million to $665 

million from its accumulated trust fund 

in order to pay the Federal Reserve Bank 

the remaining balance due on the original 

$1.7-billion obligation which was owed 

by FNB as of its closing. Based on a number of assumptions as to the duration of 

the receivership, the pace of collections, 

and the results of matters in litigation, it 

appears that the Corporation itself will 

not suffer any loss in this liquidation.

In the case of U.S. National, the Corporation has collected $73 million on the 

assets acquired and has used $53.3 million of this amount to repay the Corporation for monies advanced to the receivership. The principal book value of assets 

remaining to be liquidated is $392 million. The question in this liquidation is 

how large the loss to the Corporation will 

be, not whether there will be one. A t the 

present time, we have estimated a 

$150-million loss.

I have mentioned the complexity of 

the current liquidation activities and 

mentioned the requirement we now have 

for greater expertise in particular lines of 

business and types of loans. We have also

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Federal Reserve Bank of St. Louis
STATEMENTS BY CORPORATION DIRECTORS 207

had a great need for massive legal expertise not only because of the great number 

of legal problems, but also because of the 

legal complexities of the new liquidations. Obviously, we have had to employ 

private attorneys to assist our own staff.

In arranging a purchase and assumption transaction, we retain private counsel 

for advice and assistance with respect to 

questions of State law and to present the 

transaction to the local court. In every 

liquidation we need expertise in specialized areas of State law in connection with 

collection litigation and foreclosures. 

Some of these claims involve the Bankruptcy Act or arrangement of complex 

loan restructurings or workouts. In the 

recent large liquidations we have been 

involved in unusual and specialized areas 

of law. These include class actions, violations of securities laws, common law 

fraud, obligations under letter of credit, 

attorney's and accountant's malpractice, 

and admiralty law.

We spent $4.3 million in legal fees in 

connection with liquidation activities in

1975, and expect to spend about $7 million in 1976. While these figures seem 

large, if we relate them to the assets we 

are liquidating, it appears that legal fees 

run well under one-half of 1 percent of 

the assets being administered, and under 

1 percent of collections. I think this is an 

impressively low figure when we compare 

it with the legal fees involved in corporate 

bankruptcies and receiverships. In fact, 

the legal fees individual home buyers 

incur in the course of an ordinary sale of 

a home, uncomplicated by bankruptcy or 

receivership, tend to be higher. We are 

concerned about the magnitude of these 

costs, however, and have been giving 

some consideration to whether we should 

expand our own in-house legal staff to 

handle some of these legal matters rather 

than relying, as we do now, primarily on 

hiring local counsel. One problem with 

doing the legal work in-house is that we 

are conducting liquidations in a variety of 

different States and successful work on

these liquidation matters requires a 

knowledge of local law. It may be cheaper for us to hire local counsel with the 

knowledge of local law at hourly rates 

than to attempt to educate and maintain 

the fixed costs of an in-house staff to deal 

with particular loan situations.

A n o th e r problem that arises frequently in liquidation activities involves 

further extension of credit. Federal deposit insurance arose because of concern 

about bank depositors. We have been so 

successful in our major function that 

bank depositors rarely lose when banks 

fail. Now it frequently turns out that the 

injury to borrowers is more significant 

than losses to depositors. In many cases, 

borrowers are not affected when a bank 

fails. If a borrower has a mortgage loan 

from a bank that fails, the FDIC may end 

up taking over that loan but the borrower's rights are not affected at all. 

There is a greater problem for the business borrower who is expecting to borrow 

on a continuing basis from a bank.

A receivership, of course, is not in the 

money-lending business. While most business borrowers are able to shift their 

business to another bank and are not significantly inconvenienced or injured by a 

bank failure, some borrowers are faced 

with a real problem, or even risk of financial ruin, in the case of a bank failure. 

The borrower who has run into difficulty 

with his loan and would like additional 

funds advanced is going to have a hard 

time dealing with a receiver. There may 

be some cases in which a receiver will 

extend additional credit, but they are 

infrequent. Take the situation of a builder who has a project underway with construction financing being provided by the 

failed bank. He may need additional 

funds to complete the project. The receiver is not inclined to throw good 

money after bad and is not in a situation 

of a bank lender who may be reluctant to 

admit the original mistake. The receiver 

may feel that if the project is a good one, 

the builder should be able to get credit

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somewhere else.

About the only case in which the 

FDIC liquidation can advance additional 

funds to a borrower is when it is concluded that such an advance will improve 

the net recovery to the estate of the 

failed bank. Our concern is with protecting the assets that are our responsibility. 

The FDIC has occasionally been criticized 

for its tight-fisted attitude on the extension of additional credit. While we can 

understand and sympathize with the 

plight of the borrower, such criticism 

misses the point that we are operating in 

a fiduciary capacity with our decision 

scrutinized by a court from the point of 

view of the ultimate claimants on the 

failed bank's estate. It is irrelevant to 

look at the assets of the FDIC and argue 

that the FDIC can afford to extend additional credit. In the final analysis, it is not 

FDIC funds that are being loaned. The 

funds involved belong ultimately to the 

receivership estate of the bank.

While not as painful as the decision to 

extend or not to extend additional credit 

to a borrower, a much more common problem is the choice between sale of an asset 

and continued holding of it. A liquidator 

is always anxious to sell an asset when he 

feels he has been offered a good price for 

it. But if the loan or other asset seems to 

pose no credit risk and is paying interest 

at an acceptable rate, there may be a 

tendency to hold the asset in the hope 

that a better offer will materialize or that 

the accumulated interest on the asset will 

lead to larger total collections. We are 

attempting to use the most modern portfolio management techniques to make 

correct sell-or-hold decisions but this is a 

difficult task, particularly when we are 

faced with a divergence of interests between those who would like to get their 

money as soon as possible and those 

claimants who recognize that their only 

hope of any recovery on their investment 

is that the liquidation lasts a long time 

and earns a great deal of interest income.

Although we have always tried to

make the optimal decisions in these cases, 

some years ago our policy favored holding rather than liquidating assets as quickly as possible. Besides that seeming like 

the best philosophy for ultimate recovery, we had an additional reason for 

taking that approach. The FDIC did not 

have a great deal of liquidation activity 

for a number of years and we felt some 

need to maintain trained liquidators so 

that we would be prepared for any emergency that might arise. This no longer is a 

problem. We now have more than enough 

work to be done in our on-going liquidations. In fact, with liquidation assets now 

amounting to a significant fraction of the 

insurance fund, we have every incentive 

to sell assets as quickly as possible if to 

do so maximizes recovery.

Perhaps the most difficult areas of 

decisionmaking with respect to liquidation activity are those choices involving 

social considerations. We are under an 

obligation to do as well as we can for the 

ultimate claimants on the estate of the 

failed bank. While we try to do well, we 

would also like to do good. In many 

cases, the borrower whose loan is in default has faced some adversity, frequently 

not of his doing. In many cases, we would 

like to tell a debtor, after hearing his tale 

of woe, that because of his hard luck we 

are going to forgive his repayment of his 

obligation to us. Unfortunately, we are 

not in a position to do that.

To stress once again, we have a fiduciary obligation to collect all we can on 

the assets we inherit from a failed bank. 

We try to be firm but reasonable and 

ethical collectors, but collectors we are 

and collectors we must be. While this may 

be clear in principle, in practice we have 

great difficulties. Take this example: We 

have taken over a loan to a private school. 

The school is in default in its obligation. 

The school's physical plant and land is 

security for the loan. We can foreclose 

and sell off the land and buildings and 

recover enough to come out whole. We 

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Federal Reserve Bank of St. Louis
STATEMENTS BY CORPORATION DIRECTORS 209

tion out of business, yet we have to meet 

our fiduciary responsibility.

While we may have difficult decisions 

to make with respect to how hard to 

press honest borrowers who have fallen 

on hard times, we have no difficulty in 

deciding to press our remedies to the 

fullest in dealing with the people that we 

feel are responsible for the demise of the 

bank. In many cases, these are insiders— 

managers and directors of the bank. Since 

1960, we have filed 32 suits against directors and we have 15 additional cases 

under consideration. We believe that firm 

prosecution in these cases not only is a 

means of adding to our recoveries for the 

benefit of the bank's creditors and stockholders, but firm action may be a useful 

deterrent to insiders in similar situations. 

This aspect of our liquidation activities 

thus becomes an intrinsic part of the total 

program of bank supervision.

In summary, then, the rapid growth of 

our liquidation assets has fundamentally 

changed the nature of our liquidation 

activity. These new liquidations are not 

only bigger and more complex, they are

going to be longlasting. While we hope 

and expect that the rapid growth of our 

liquidation assets is over, we do not expect the size of the operation to shrink 

back to its 1973 levels in the foreseeable 

future. It will take a long time to completely wrap up the affairs of Franklin 

and U.S. National Bank, and in the meantime we will inevitably be acquiring other 

assets. The failure of International City 

Bank of New Orleans within the last 

week, for example, added over $100 

million to our liquidation portfolio.

In reflection of the size, diversity, and 

complexity of our liquidation activity, we 

are going to continue to adopt modern 

management techniques and make greater 

use of outside expertise even though we 

recognize that this may add to our costs.

What will be unchanged in the future 

is the conduct of our liquidation activities 

in a manner befitting the fiduciary nature 

of our responsibilities. We expect that our 

liquidation operations will be carried on 

as efficiently and effectively in our present complex environment as in the simpler pre-billion-dollar failure days.

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Federal Reserve Bank of St. Louis
STATISTICS OF BANKS 

AND DEPOSIT INSURANCE 

PART SIX

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Federal Reserve Bank of St. Louis
NUMBER OF BANKS AND BRANCHES

Table 101. Changes in number and classification of banks and branches in the United States (States and 

other areas) during 1976

Table 102. Changes in number of commercial banks and branches in the United States (States and other 

areas) during 1976, by State

Table 103. Number of banking offices in the United States (States and other areas), December 31, 1976

Banks grouped by insurance status and class of bank, and by State or area and type o f office

Table 104. Number and assets of all commercial and mutual savings banks (States and other areas), 

December 31, 1976

Banks grouped by class and asset size

Table 105. Number, assets, and deposits of all commercial banks in the United States (States and other 

areas), December 31, 1976

Banks grouped by asset size and State

212 F E D E R A L DEPO SIT IN S U R A N C E C O R P O R A T IO N

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Banks: Commercial banks in c lu d e th e fo llo w in g catego ries o f b a n k in g

in s titu tio n s :

N a tio n a l b a n k s :

In c o r p o ra te d S ta te b a n k s , tru s t c o m p a n ie s , an d b a n k an d tru s t c o m p a n ies

re g u la rly eng aged in th e business o f re c e iv in g d ep o sits, w h e th e r d e m a n d o r

tim e , e x c e p t m u tu a l savings b an ks;

S to c k savings b a n k s , in c lu d in g g u a ra n ty savings ban ks in N e w H a m p s h ire ;

In d u s tria l a n d M o rris P lan b an ks w h ic h o p e ra te u n d e r general b a n k in g

cod es, o r a re s p e c ific a lly a u th o riz e d b y la w to a c c e p t dep o sits and in p ra c tic e

d o so, o r th e o b lig a tio n s o f w h ic h are regarded as d ep osits fo r d e p o s it in s u rance;

A re g u la te d c e r tific a te d b a n k in G e o rg ia ; g o v e rn m e n t-o p e ra te d ban ks in

N o rth D a k o ta a n d P u e rto R ic o ; a savings in s titu tio n , k n o w n as a " tr u s t c o m ­

p a n y ," o p e ra tin g u n d e r special c h a rte r in T ex as; th e Savings B anks T ru s t

C o m p a n y in N e w Y o r k ; th e Savings B a n k and T ru s t C o m p a n y N o rth w e s t

W a s h in g to n in th e S ta te o f W a s h in g to n ; a n d branches o f fo re ig n ban ks e n ­

gaged in a gen eral d e p o s it business in Illin o is , M assachusetts, N e w Y o r k ,

O re g o n , W a s h in g to n , P u e rto R ic o , a n d V irg in Islands;

P riv a te b an ks u n d e r S ta te s u p e rv is io n , and such o th e r p riv a te ban ks as are

re p o rte d b y re lia b le u n o ffic ia l sources to be engaged in d e p o s it b an kin g .

Nondeposit trust companies in c lu d e in s titu tio n s o p e ra tin g u n d e r tru s t

c o m p a n y c h a rte rs w h ic h are n o t re g u la rly engaged in d e p o s it b an k in g b u t are

engaged in fid u c ia r y business o th e r th a n th a t in c id e n ta l to real estate t it le o r

in v e s tm e n t a c tiv itie s .

Mutual savings banks in c lu d e all b an ks o p e ra tin g u n d e r S tate b a n k in g

codes a p p ly in g to m u tu a l savings b an ks.

Institutions excluded. In s titu tio n s in th e fo llo w in g categories are e x ­

c lu d e d , th o u g h such in s titu tio n s m a y p e rfo rm m a n y o f th e sam e fu n c tio n s as

c o m m e rc ia l an d savings b an ks:

B a n ks th a t h av e su s p en d ed o p e ra tio n s or have ceased to accept n ew

d ep osits an d are p ro c e e d in g to liq u id a te th e ir assets and p a y o ff existin g

dep osits;

B u ild in g an d lo an asso ciatio n s, savings an d lo an associations, c re d it

unions, p erso n al lo an c o m p a n ie s , an d s im ila r in s titu tio n s , c h a rte re d u n d e r

laws a p p ly in g to such in s titu tio n s o r u n d e r gen eral in c o rp o ra tio n law s, regardless o f w h e th e r such in s titu tio n s are a u th o riz e d to a c c e p t dep osits fro m

th e p u b lic o r fro m th e ir m e m b e rs and regardless o f w h e th e r such in s titu tio n s

are ca lle d " b a n k s " (a fe w in s titu tio n s a c c e p tin g d ep o sits u n d e r p ow ers

gran ted in special ch a rters are in c lu d e d );

M o rris Plan c o m p a n ie s , in d u s tria l ban ks, lo an a n d in v e s tm e n t co m p a n ies ,

and s im ila r in s titu tio n s e x c e p t th o se m e n tio n e d in th e d e s c rip tio n o f in s titu ­

tion s in c lu d e d ;

B ran ches o f fo re ig n b an ks and p riv a te ban ks w h ic h c o n fin e th e ir business

to fo re ig n exc h an g e d ealings and d o n o t receive "d e p o s its " as th a t te rm is

c o m m o n ly u n d e rs to o d ;

In s titu tio n s c h a rte re d u n d e r b a n k in g o r tru s t c o m p a n y law s, b u t o p e ratin g as in v e s tm e n t o r t it le in su ran ce c o m p a n ie s an d n o t engaged in d e p o s it

b an k in g o r fid u c ia ry a c tiv itie s ;

F ed eral R eserve B anks an d o th e r ban ks, such as th e F e d e ra l H o m e Loan

B anks and th e Savings and L o a n B a n k o f th e S ta te o f N e w Y o r k , w h ic h

o p e ra te as re d is c o u n t ban ks and d o n o t a c c e p t d ep o sits e x c e p t fro m fin a n c ia l

in s titu tio n s .

Branches; Branches in c lu d e all o ffic e s o f a b a n k o th e r th a n its head

o ffic e , at w h ic h d ep o sits are re c e iv e d , ch e cks p a id , o r m o n e y le n t. B a n kin g

fa c ilitie s sep arate fro m a b a n k in g h ou se, b a n k in g fa c ilitie s at g o v e rn m e n t

esta b lis h m e n ts , o ffic e s , agencies, p a y in g or receivin g s ta tio n s , d riv e -in fa c ilities, a n d o th e r fa c ilitie s o p e ra te d fo r lim ite d purpo ses are d e fin e d as

b ranches u n d e r th e F e d e ra l D e p o s it In s u ra n c e A c t, sec tio n 3 ( o ) , regardless o f

th e fa c t th a t in c e rta in S tates, in c lu d in g several th a t p r o h ib it th e o p e ra tio n

o f b ran c h es, such lim ite d fa c ilitie s are n o t co n s id e re d branches w ith in th e

m e a n in g o f S ta te la w .

N U M B ER OF BANKS AND B R A N C H E S 2 1 3

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Table 101. CHANGES IN NUMBER AND CLASSIFICATION OF BANKS AND BRANCHES IN THE UNITED STATES

(STATES AND OTHER AREAS) DURING 1976

All banks Commercial banks and nondeposit trust companies Mutual savings banks

Insured Noninsured

Type of change

Total Insured

Noninsured Total

Total

Members F.R. 

System

Not

members

F.R.

System

Banks

of

deposit

Nondeposit

trust

companies1

Total Insured

Noninsured

National State

ALL BANKING OFFICES

Number of offices, December 31,1976 .................................................................... 48,654 47,858 796 46,101 45,733 21,460 5,695 18,578 278 90 2,553 2,125 428

Number of offices, December 31,1975 .................................................................... 47,239 46,466 773 44,917 44,569 21,073 5,453 18,043 264 84 2,322 1,897 425

Net change during year............................................................................................ 1,415 1,392 23 1,184 1,164 387 242 535 14 6 231 228 3

Offices opened................................................................................................... 1,819 1,767 52 1,574 1,539 691 197 651 26 9 245 228 17

Banks............................................................................................................... 193 162 31 192 161 65 11 85 23 8 1 1 0

Branches......................................................................................................... 1,626 1,605 21 1,382 1,378 626 186 566 3 1 244 227 17

Offices closed...................................................................................................... 404 390 14 391 381 198 67 116 7 3 13 9 4

Banks............................................................................................................... 153 144 9 150 141 58 20 63 6 3 3 3 0

Branches......................................................................................................... 251 246 5 241 240 140 47 53 1 0 10 6 4

Changes in classification................................................................................... 0 +15 -1 5 +1 +6 -1 0 6 +112 0 - 5 0 -1 +9 -1 0

Among ban ks............................................................................................... 0 +8 -8 + 1 +6 -1 4 -1 4 +34 - 5 0 -1 +2 -3

Among branches . . .♦................................................................................ 0 +7 -7 0 0 -9 2 +126 -3 4 0 0 0 +7 -7

BANKS

Number of banks, December 3 1 ,1 9 7 6 ....................................................................... 15,170 14,740 430 14,697 14,411 4,737 1,023 8,651 2074 794 473 329 144

Number of banks, December 3 1 ,1 9 7 5 ....................................................................... 15,130 14,714 416 14,654 14,385 4,744 1,046 8,595 195 74 476 329 147

Net change during year............................................................................................ +40 +26 +14 +43 +26 - 7 -2 3 +56 +12 +5 -3 0 -3

Banks beginning operation................................................................................ 193 162 31 192 161 65 11 85 23 8 1 1 0

New banks...................................................................................................... 180 162 18 179 161 65 11 85 13 5 1 1 0

Banks added to count2 ................................................................................ 13 0 13 13 0 0 0 0 10 3 0 0 0

Banks ceasing operation................................................................................... 153 144 9 150 141 58 20 63 6 3 3 3 0

Absorptions, consolidations, and mergers.............................................. 144 141 3 141 138 57 20 61 2 1 3 3 0

Closed because of financial difficulties..................................................... 4 2 2 4 2 1 0 1 2 0 0 0 0

Other liquidations......................................................................................... 4 1 3 4 1 0 0 1 2 1 0 0 0

Discontinued deposit operation................................................................. 1 0 1 1 0 0 0 0 0 1 0 0 0

Banks deleted from c o u n t.......................................................................... 0 0 0 0 0 0 0 0 0 0 0 0 0

Noninsured banks becoming insured.......................................................................... 0 +9 -9 0 +6 0 0 +6 - 6 0 0 +3 -3

214 FEDERAL DEPOSIT INSURANCE CORPORATION

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Other changes in classification......................................................................... 0 -1 +1 +1 0 -1 4 -1 4 +28 +1 0 -1 -1 0

National succeeding State b an k................................................................ 0 0 0 0 0 +10 -2 - 8 0 0 0 0 0

State succeeding national b a n k ................................................................ 0 0 0 0 0 -2 4 +1 +23 0 0 0 0 0

Admission of insured bank to F.R. S yste m .......................................... 0 0 0 0 0 0 +10 -1 0 0 0 0 0 0

Withdrawal from F.R. System with continued insurance..................... 0 0 0 0 0 0 -2 3 +23 0 0 0 0 0

Insured bank becoming noninsured bank .......................................... 0 -1 +1 0 -1 0 0 -1 +1 0 0 0 0

Mutual savings bank converted to commercial b a n k ........................... 0 0 0 +1 +1 0 0 +1 0 0 -1 -1 0

Changes not involving number in any class

Change in title ............................................................................................... 350 347 3 344 342 124 27 191 1 1 6 5 1

Change in lo c a tio n ..................................................................................... 18 18 0 18 18 8 0 10 0 0 0 0 0

Change in title and lo catio n ...................................................................... 5 5 0 5 5 2 3 0 0 0 0 0 0

Change in name of lo c a tio n ...................................................................... 6 6 0 6 6 2 0 4 0 0 0 0 0

Change in location within c ity ................................................................... 267 263 4 262 258 85 7 166 3 1 5 5 0

Change in corporate powers

Granted trust powers.................................. . . . 94 94 0 93 93 0 0 93 0 0 1 1 0

BRANCHES

Number of branches, December 31, 19763 ............................................................. 33,484 33,118 366 31,404 31,322 16,723 4,672 9,927 71 11 2,080 1,796 284

Number of branches, December 3 1 ,19753 ............................................................. 32,109 31,752 357 30,263 30,184 16,329 4,407 9,448 694 104 1,846 1,568 278

Net change during year............................................................................................ +1,375 +1,366 +9 +1,141 +1,138 +394 +265 +479 +2 +1 +234 +228 +6

Branches opened for business......................................................................... 1,626 1,605 21 1,382 1,378 626 186 566 3 1 244 227 17

Facilities designated by Treasury............................................................. 3 3 0 3 3 2 1 0 0 0 0 0 0

Absorbed bank converted to branch....................................................... 127 127 0 125 125 65 28 32 0 0 2 2 0

Branch replacing head office relocated.................................................... 28 28 0 28 28 6 2 20 0 0 0 0 0

New branches............................................................................................... 1,418 1,398 20 1,181 1,177 524 149 504 3 1 237 221 16

Branches and/or facilities added to count2 .......................................... 50 49 1 45 45 29 6 10 0 0 5 4 1

Branches discontinued...................................................................................... 251 246 5 241 240 140 47 53 1 0 10 6 4

Facilities designated by Treasury............................................................. 8 8 0 8 8 4 1 3 0 0 0 0 0

Branches........................................................................................................ 218 213 5 208 207 129 36 42 1 0 10 6 4

Branches and/or facilities deleted from count....................................... 25 25 0 25 25 7 10 8 0 0 0 0 0

Other changes in classification......................................................................... 0 +7 - 7 0 0 -9 2 +126 -3 4 0 0 0 +7 -7

Branches changing class as a result of conversion................................. 0 0 0 0 0 -31 + 16 +15 0 0 0 0 0

Branches of noninsured banks admitted to insurance........................... 0 +7 -7 0 0 0 0 0 0 0 0 +7 -7

Branches transferred through absorption, consolidation, or merger. . 0 0 0 0 0 -6 1 +165 -1 0 4 0 0 0 0 0

Branches of insured banks withdrawing from F.R.S............................. 0 0 0 0 0 0 -5 5 +55 0 0 0 0 0

Changes not involving number in any class

Changes in operating powers of branches............................................. 5 5 0 5 5 1 1 3 0 0 0 0 0

Branches transferred through absorption, consolidation, or merger. . 485 485 0 485 483 176 264 43 0 0 2 2 0

Changes in title, location, or name of lo c a tio n .................................... 555 554 1 555 516 256 69 191 0 1 38 38 0

11ncludes noninsured nondeposit trust companies, members of the Federal Reserve System.

2Banks or branches opened prior to 1976 but not included in count as of December 31, 1975.

3 1ncludes facilities established at the request of the Treasury or commanding officer of government installations, and also a few seasonal branches that were not in operation as of December 31. 

4 Revised.

NUMBER OF BANKS AND BRANCHES 215

Digitized for FRASER 

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Federal Reserve Bank of St. Louis
Table 102. CHANGES IN NUMBER OF COMMERCIAL BANKS AND BRANCHES IN THE UNITED STATES 

(STATES AND OTHER AREAS) DURING 1976, BY STATE

State

In operation Net change 

during 1976

Beginning operation in 1976 Ceasing operation in 1976

Dec. 31, 1976 Dec. 31, 1975 Banks Branches Banks Branches

Banks Branches Banks Branches Banks Branches New Other New Other Absorptions Other Branches Other

Total United States................... 14,697 31,404 14,654 30,263 +43 +1,141 179 14 1,226 156 141 9 208 33

50 States and 0.C...................... 14,671 31,121 14,630 29,980 +41 +1,141 177 13 1,221 155 140 9 202 33

Other areas.................................. 26 283 24 283 +2 0 2 1 5 1 1 0 6 0

States

Alabam a..................................... 303 484 299 457 +4 +27 5 0 27 2 1 0 2 0

Alaska ........................................ 12 98 11 88 +1 +10 1 0 11 0 0 0 0 1

Arizona........................................ 24 458 23 443 +1 +15 2 0 20 0 0 1 5 0

Arkansas..................................... 261 341 262 318 -1 +23 0 0 22 1 1 0 0 0

C a lifo rn ia .................................. 225 3,696 216 3,585 +9 + 111 14 0 125 3 4 1 15 2

Colorado..................................... 359 56 346 54 +13 +2 9 6 2 1 1 1 1 0

C onnecticut............................... 72 572 72 564 0 +8 2 0 7 3 2 0 2 0

Delaware..................................... 18 142 18 137 NA +5 0 0 6 0 0 0 0 1

District of C olum bia............... 16 131 16 130 NA +1 0 0 4 0 0 0 3 0

F lorida........................................ 757 226 747 196 +10 +30 12 0 30 3 2 0 2 1

Georgia........................................ 442 718 444 691 -2 +27 4 0 29 11 6 0 12 1

H a w a ii........................................ 11 156 11 154 NA +2 0 0 2 0 0 0 0 0

Idaho........................................... 24 211 24 200 NA +11 0 0 12 0 0 0 1 0

Illin o is ........................................ 1,255 233 1,235 216 +20 +17 19 1 20 1 0 0 2 2

Indiana........................................ 408 948 407 909 +1 +39 3 0 37 3 2 0 1 0

Io w a ........................................... 659 421 661 408 -2 +13 0 0 15 3 2 0 3 2

Kansas........................................ 616 169 616 151 NA +18 0 0 18 0 0 0 0 0

Kentucky .................................. 343 560 342 509 +1 +51 3 0 50 1 1 1 0 0

Louisiana..................................... 254 634 254 585 0 +49 1 0 47 2 1 0 0 0

Maine........................................... 43 291 48 287 -5 +4 0 0 6 2 3 2 2 2

Maryland..................................... 113 783 115 751 -2 +32 0 0 38 2 2 0 5 3

Massachusetts............................ 148 928 150 905 -2 +23 1 1 29 4 4 0 10 0

Michigan..................................... 360 1,633 351 1,560 +9 +73 9 0 83 2 0 0 11 1

M innesota.................................. 752 57 747 52 +5 +5 5 0 5 0 0 0 0 0

Mississippi.................................. 184 577 185 546 -1 +31 1 1 32 3 3 0 3 1

M issouri..................................... 711 339 706 320 +5 +19 6 0 20 2 1 0 2 1

M ontana..................................... 158 18 156 16 +2 +2 2 0 2 0 0 0 0 0

Nebraska..................................... 456 98 453 96 +3 +2 2 1 5 0 0 0 2 1

Nevada........................................ 8 113 8 111 NA +2 0 0 2 0 0 0 0 0

New Hampshire......................... 79 119 79 112 NA +7 0 0 9 0 0 0 2 0

216 FEDERAL DEPOSIT INSURANCE CORPORATION

Digitized for FRASER 

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Federal Reserve Bank of St. Louis
New Jersey.................................. 195 1,462 209 1,417 -1 4 +45

New M exico............................... 83 210 81 206 +2 +4

New Y o r k .................................. 277 3,266 305 3,206 -2 8 +60

North C a ro lin a ......................... 92 1,621 94 1,585 -2 +36

North Dakota............................ 171 94 172 89 -1 +5

O h io ........................................... 490 1,739 496 1,674 -6 +65

O klahom a.................................. 475 104 467 99 +8 +5

Oregon........................................ 48 478 47 447 + 1 +31

Pennsylvania............................... 392 2,324 398 2,275 -6 +49

Rhode Is la n d ............................ 17 224 16 220 +1 +4

South C a ro lin a ......................... 90 607 90 601 l\IA +6

South Dakota............................ 157 129 158 125 -1 +4

Tennessee.................................. 348 814 344 772 +4 +42

Texas........................................... 1,363 157 1,342 138 +21 +19

U ta h ........................................... 67 209 64 204 +3 +5

V erm ont..................................... 30 142 32 139 -2 +3

Virginia........................................ 284 1,211 291 1,174 - 7 +37

W ashington............................... 91 722 98 685 -7 +37

West V irg in ia ............................ 222 49 219 35 +3 +14

W isconsin.................................. 630 347 628 336 +2 + 11

Wyoming..................................... 78 2 77 2 +1 NA

Other areas

Pacific Islands............................ 1 29 1 32 NA -3

Canal Zone.................................. 0 2 0 2 NA NA

Puerto R ic o ............................... 18 226 15 221 +3 +5

Virgin Islands............................ 7 26 8 28 -1 -2

NA—No activity.

2 0 47 15 16 0 14 3

2 0 7 0 0 0 2 1

10 0 67 38 38 0 37 8

2 0 35 4 4 0 3 0

0 0 5 1 0 1 1 0

3 0 65 8 9 0 8 0

7 1 5 0 0 0 0 0

2 0 33 1 1 0 3 0

0 0 58 6 6 0 15 0

0 2 5 0 0 1 1 0

0 0 12 0 0 0 6 0

1 0 2 2 2 0 0 0

5 0 49 4 1 0 11 0

25 0 18 2 3 1 0 1

3 0 5 0 0 0 0 0

0 0 3 2 2 0 2 0

5 0 35 12 12 0 9 1

2 0 31 9 9 0 3 0

3 0 14 1 0 0 1 0

3 0 10 1 1 0 0 0

1 0 0 0 0 0 0 0

0 0 0 0 0 0 3 0

0 0 0 0 0 0 0 0

2 1 5 0 0 0 0 0

0 0 0 1 1 0 3 0

NUMBER OF BANKS AND BRANCHES 217

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
TA BLE 103. NUMBER OF BA N KIN G OFFICES IN THE U NITED STATES (STATES A N D OTHER AREAS), DECEMBER 31, 1976

BANKS GROUPED BY INSURANCE STATUS AND CLASS OF BANK, AND BY STATE OR AREA AND TYPE OF OFFICE

All banks Commercial banks and nondeposit trust companies Mutual savings banks Percentage insured1

Insured Noninsured

All

banks

of

#4 n

Commercial

banks

of

deposit

State and type of hank 

or office Total Insured

Noninsured Total Total

Members F. R. 

System

Nonmembers

F.R.

System

Banks 

of deposit2

Nondeposit

trust

companies3

Total Insured

Noninsured

Mutual

savings

banks

National State

oeposit

United States-all offices............... 48,657 47,858 799 46,104 45,733 21,460 5,695 18,578 281 90 2,553 2,125 428 98.5 99.4 83.2

Banks.............................................. 15,172 14,740 432 14,699 14,411 4,737 1,023 8,651 209 79 473 329 144 97.7 98.6 69.6

Unit banks.................................. 9,039 8,744 295 8,958 8,698 2,603 526 5,569 188 72 81 46 35 97.5 97.9 56.8

Banks operating branches . . . 6,133 5,996 137 5,741 5,713 2,134 497 3,082 21 7 392 283 109 97.9 99.6 72.2

Branches4 ..................................... 33,485 33,118 367 31,405 31,322 16,723 4,672 9,927 72 11 2,080 1,796 284 98.9 99.8 86.3

50 States & D.C.-all offices. . . . 48,348 47,590 758 45,795 45,465 21,402 5,695 18,368 240 90 2,553 2,125 428 98.6 99.5 83.2

Banks.............................................. 15,146 14,726 420 14,673 14,397 4,735 1,023 8,639 197 79 473 329 144 97.7 98.7 69.6

Unit banks.................................. 9,027 8,740 287 8,946 8,694 2,602 526 5,566 180 72 81 46 35 97.6 98.0 56.8

Banks operating branches . . . 6,119 5,986 133 5,727 5,703 2,133 497 3,073 17 7 392 283 109 97.9 99.7 72.2

Branches4 ..................................... 33,202 32,864 338 31,122 31,068 16,667 4,672 9,729 43 11 2,080 1,796 284 99.0 99.9 86.3

Other Areas—all offices................... 309 268 41 309 268 58 0 210 41 0 0 0 0 86.7 86.7 0.0

Banks.............................................. 26 14 12 26 14 2 0 12 12 0 0 0 0 53.8 53.8 0.0

Unit banks.................................. 12 4 8 12 4 1 0 3 8 0 0 0 0 33.3 33.3 0.0

Banks operating branches . . . 14 10 4 14 10 1 0 9 4 0 0 0 0 71.4 71.4 0.0

Branches4 ..................................... 283 254 29 283 254 56 0 198 29 0 0 0 0 89.8 89.8 0.0

State

Alabama-all offices...................... 787 787 0 787 787 401 41 345 0 0 0 0 0 100.0 100.0 0.0

Banks.............................................. 303 303 0 303 303 97 18 188 0 0 0 0 0 100.0 100.0 0.0

Unit banks.................................. 153 153 0 153 153 35 10 108 0 0 0 0 0 100.0 100.0 0.0

Banks operating branches . . . 150 150 0 150 150 62 8 80 0 0 0 0 0 100.0 100.0 0.0

Branches........................................ 484 484 0 484 484 304 23 157 0 0 0 0 0 100.0 100.0 0.0

Alaska-all offices............................ 114 114 0 110 110 83 0 27 0 0 4 4 0 100.0 100.0 100.0

Banks.............................................. 14 14 0 12 12 6 0 6 0 0 2 2 0 100.0 100.0 100.0

Unit banks................................. 3 3 0 2 2 0 0 2 0 0 1 1 0 100.0 100.0 100.0

Banks operating branches . . . 11 11 0 10 10 6 0 4 0 0 1 1 0 100.0 100.0 100.0

Branches ........................................ 100 100 0 98 98 77 0 21 0 0 2 2 0 100.0 100.0 100.0

Arizona—all offices......................... 482 474 8 482 474 311 0 163 0 8 0 0 0 100.0 100.0 0.0

Banks.............................................. 24 16 8 24 16 3 0 13 0 8 0 0 0 100.0 100.0 0.0

Unit banks.................................. 14 6 8 14 6 1 0 5 0 8 0 0 0 100.0 100.0 0.0

Banks operating branches . . . 10 10 0 10 10 2 0 8 0 0 0 0 0 100.0 100.0 0.0

Branches ........................................ 458 458 0 458 458 308 0 150 0 0 0 0 0 100.0 100.0 0.0

218 FEDERAL DEPOSIT INSURANCE CORPORATION

Digitized for FRASER 

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Federal Reserve Bank of St. Louis
Arkansas-all offices...................... 602 598 4 602 598 242 25

Banks.............................................. 261 257 4 261 257 73 7

Unit banks.................................. 117 113 4 777 113 77 7

Banks operating branches . . . 144 144 0 144 144 56 6

Branches ........................................ 341 341 0 341 341 169 18

California-all offices...................... 3,921 3,898 23 3,921 3,898 2,778 333

Banks.............................................. 225 210 15 225 210 58 7

Unit banks.................................. 78 68 10 78 68 13 0

Banks operating branches . . .

Branches4 .....................................

147

3,696

142

3,688

5

8

147

3,696

142

3,688

45

2,720

7

326

Colorado-all offices...................... 415 337 78 415 337 163 19

Banks.............................................. 359 281 78 359 281 132 16

Unit banks.................................. 309 231 78 309 231 103 14

Banks operating branches . . . 50 50 0 50 50 29 2

Branches ........................................ 56 56 0 56 56 31 3

Connecticut-all o ffic e s ................ 983 982 1 644 643 285 83

Banks.............................................. 138 137 1 72 71 23 2

Unit banks.................................. 23 22 7 16 15 3 7

Banks operating branches . . . 115 115 0 56 56 20 7

Branches..................... .................. 845 845 0 572 572 262 81

Delaware-all offices...................... 185 184 1 160 159 9 0

Banks.............................................. 20 19 1 18 17 5 0

Unit banks.................................. 8 7 7 8 7 2 0

Banks operating branches . . . 12 12 0 10 10 3 0

Branches ........................................ 165 165 0 142 142 4 0

D.C.-all offices............................... 147 147 0 147 147 144 0

Banks.............................................. 16 16 0 16 16 15 0

Unitbanks.................................. 3 3 0 3 3 3 0

Banks operating branches . . . 13 13 0 13 13 12 0

Branches........................................ 131 131 0 131 131 129 0

Florida-all offices......................... 983 979 4 983 979 384 35

Banks.............................................. 757 753 4 757 753 306 31

Unit banks.................................. 554 550 4 554 550 230 28

Banks operating branches . . . 203 203 0 203 203 76 3

Branches ........................................ 226 226 0 226 226 78 4

Georgia—all offices......................... 1,160 1,159 1 1,160 1,159 387 82

Banks.............................................. 442 441 1 442 441 64 9

Unit banks.................................. 220 219 7 220 219 77 2

Banks operating branches . . . 222 222 0 222 222 47 7

Branches ........................................ 718 718 0 718 718 323 73

Hawaii-all offices............................ 167 161 6 167 161 13 0

Banks.............................................. 11 8 3 11 8 2 0

Unit banks.................................. 7 0 7 7 0 0 0

Banks operating branches . . . 10 8 2 10 8 2 0

Branches ........................................ 156 153 3 156 153 11 0

331 1 3 0 0 0 99.8 99.8 0.0

177 1 3 0 0 0 99.6 99.6 0.0

95 7 3 0 0 0 99.1 99.1 0.0

82 0 0 0 0 0 100.0 100.0 0.0

154 0 0 0 0 0 100.0 100.0 0.0

787 0 23 0 0 0 100.0 100.0 0.0

145 0 15 0 0 0 100.0 100.0 0.0

55 0 10 0 0 0 100.0 100.0 0.0

90 0 5 0 0 0 100.0 100.0 0.0

642 0 8 0 0 0 100.0 100.0 0.0

155 78 0 0 0 0 81.2 81.2 0.0

133 78 0 0 0 0 78.3 78.3 0.0

714 78 0 0 0 0 74.8 74.8 0.0

19 0 0 0 0 0 100.0 100.0 0.0

22 0 0 0 0 0 100.0 100.0 0.0

275 1 0 339 339 0 99.9 99.8 100.0

46 1 0 66 66 0 99.3 98.6 100.0

77 7 0 7 7 0 95.7 93.8 100.0

35 0 0 59 59 0 100.0 100.0 100.0

229 0 0 273 273 0 100.0 100.0 100.0

150 0 1 25 25 0 100.0 100.0 100.0

12 0 1 2 2 0 100.0 100.0 100.0

5 0 7 0 0 0 100.0 100.0 0.0

7 0 0 2 2 0 100.0 100.0 100.0

138 0 0 23 23 0 100.0 100.0 100.0

3 0 0 0 0 0 100.0 100.0 0.0

1 0 0 0 0 0 100.0 100.0 0.0

0 0 0 0 0 0 100.0 100.0 0.0

1 0 0 0 0 0 100.0 100.0 0.0

2 0 0 0 0 0 100.0 100.0 0.0

560 1 3 0 0 0 99.9 99.9 0.0

416 1 3 0 0 0 99.9 99.9 0.0

292 7 3 0 0 0 99.8 99.8 0.0

124 0 0 0 0 0 100.0 100.0 0.0

144 0 0 0 0 0 100.0 100.0 0.0

690 1 0 0 0 0 99.9 99.9 0.0

368 1 0 0 0 0 99.8 99.8 0.0

200 7 0 0 0 0 99.5 99.5 0.0

168 0 0 0 0 0 100.0 100.0 0.0

322 0 0 0 0 0 100.0 100.0 0.0

148 0 6 0 0 0 100.0 100.0 0.0

6 0 3 0 0 0 100.0 100.0 0.0

0 0 7 0 0 0 0.0 0.0 0.0

6 0 2 0 0 0 100.0 100.0 0.0

142 0 3 0 0 0 100.0 100.0 0.0

NUMBER OF BANKS AND BRANCHES 219

Digitized for FRASER 

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Federal Reserve Bank of St. Louis
TABLE 103. NUMBER OF BANKING OFFICES IN THE UNITED STATES (STATES AND OTHER AREAS),

DECEMBER 31, 1976-CO NTINUED

BANKS GROUPED BY INSURANCE STATUS AND CLASS OF BANK, AND BY STATE OR AREA AND TYPE OF OFFICE

State and type of bank 

or office

All banks Commercial banks and nondeposit trust companies Mutual savings banks Percentage insured1

Total Insured

Noninsured Total

Insured Noninsured

Total Insured

Noninsured

All

banks

of

deposit

Commercial

banks

of

deposit

Mutual

savings

banks

Total

Members F.R. 

System

Nonmembers

F.R.

System

Banks 

of deposit2

Nondeposit

trust

companies3

National State

Idaho-all offices............................ 235 235 0 235 235 172 10 53 0 0 0 0 0 100.0 100.0 0.0

Banks.............................................. 24 24 0 24 24 6 4 14 0 0 0 0 0 100.0 100.0 0.0

Unit banks.................................. 9 9 0 9 9 1 2 6 0 0 0 0 0 100.0 100.0 0.0

Banks operating branches . . . 15 15 0 15 15 5 2 8 0 0 0 0 0 100.0 100.0 0.0

Branches ........................................ 211 211 0 211 211 166 6 39 0 0 0 0 0 100.0 100.0 0.0

Illinois-all offices............................ 1,488 1,458 30 1,488 1,458 540 87 831 23 7 0 0 0 98.4 98.4 0.0

Banks.............................................. 1,255 1,225 30 1,225 1,225 425 70 730 23 7 0 0 0 98.2 98.2 0.0

Unit banks.................................. 1,029 999 30 1,029 999 314 54 631 23 7 0 0 0 97.7 97.7 0.0

Banks operating branches . . . 226 226 0 226 226 111 16 99 0 0 0 0 0 100.0 100.0 0.0

Branches ........................................ 233 233 0 233 233 115 17 101 0 0 0 0 0 100.0 100.0 0.0

Indiana-all offices......................... 1,362 1,360 2 1,356 1,354 601 97 656 1 1 6 6 0 99.9 99.9 100.0

Banks.............................................. 412 410 2 408 406 120 44 242 1 1 4 4 0 99.8 99.8 100.0

Unit banks.................................. 158 156 2 156 154 33 21 100 1 1 2 2 0 99.4 99.4 100.0

Banks operating branches . . . 254 254 0 252 252 87 23 142 0 0 2 2 0 100.0 100.0 100.0

Branches ........................................ 950 950 0 948 948 481 53 414 0 0 2 2 0 100.0 100.0 100.0

Iowa-all offices............................... 1,080 1,073 7 1,080 1,073 185 91 797 6 1 0 0 0 99.4 99.4 0.0

Banks.............................................. 659 652 7 659 652 100 46 506 6 1 0 0 0 99.1 99.1 0.0

Unit banks.................................. 402 395 7 402 395 52 25 318 6 7 0 0 0 98.5 98.5 0.0

Banks operating branches . . . 257 257 0 257 257 48 21 188 0 0 0 0 0 100.0 100.0 0.0

Branches ........................................ 421 421 0 421 421 85 45 291 0 0 0 0 0 100.0 100.0 0.0

Kansas-all offices............................ 785 784 1 785 784 240 25 519 1 0 0 0 0 99.9 99.9 0.0

Banks.............................................. 616 615 1 616 615 169 20 426 1 0 0 0 0 99.8 99.8 0.0

Unit banks.................................. 499 498 1 499 498 122 16 360 7 0 0 0 0 99.8 99.8 0.0

Banks operating branches . . . 117 117 0 117 117 47 4 66 0 0 0 0 0 100.0 100.0 0.0

Branches ........................................ 169 169 0 169 169 71 5 93 0 0 0 0 0 100.0 100.0 0.0

Kentucky-all offices...................... 903 902 1 903 902 312 96 494 1 0 0 0 0 99.9 99.9 0.0

Banks.............................................. 343 342 1 343 342 82 10 250 1 0 0 0 0 99.7 99.7 0.0

Unit banks.................................. 158 157 1 158 157 25 4 128 1 0 0 0 0 99.4 99.4 0.0

Banks operating branches . . . 185 185 0 185 185 57 6 122 0 0 0 0 0 100.0 100.0 0.0

Branches ........................................ 560 560 0 560 560 230 86 244 0 0 0 0 0 100.0 100.0 0.0

220 FEDERAL DEPOSIT INSURANCE CORPORATION

Digitized for FRASER 

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Federal Reserve Bank of St. Louis
Louisiana-all offices...................... 888 888 0 888 888 308 58

Banks.............................................. 254 254 0 254 254 54 7

Unit banks.................................. 79 79 0 79 79 11 1

Banks operating branches . . . 175 175 0 175 175 43 6

Branches ........................................ 634 634 0 634 634 254 51

Maine-all office s............................ 431 431 0 334 334 135 37

Banks.............................................. 74 74 0 43 43 17 3

Unit banks.................................. 12 12 0 4 4 1 0

Banks operating branches . . . 62 62 0 39 39 16 3

Branches ........................................ 357 357 0 291 291 118 34

M aryland-all o ffice s...................... 946 946 0 896 896 413 101

Banks.............................................. 116 116 0 113 113 41 6

Unit banks.................................. 32 32 0 32 32 7 1

Banks operating branches . . . 84 84 0 81 81 34 5

Branches ........................................ 830 830 0 783 783 372 95

Massachusetts-all o ffic e s ............ 1,625 1,186 439 1,079 1,068 580 183

Banks.............................................. 316 165 151 150 143 75 12

Unit banks.................................. 59 21 38 20 17 9 0

Banks operating branches . . . 257 144 113 130 126 66 12

Branches4 ..................................... 1,309 1,021 288 929 925 505 171

M ichigan-all o ffic e s ...................... 1,993 1,990 3 1,993 1,990 915 576

Banks.............................................. 360 359 1 360 359 122 89

Unit banks.................................. 85 85 0 85 85 19 18

Banks operating branches . . . 275 274 1 275 274 103 71

Branches ........................................ 1,633 1,631 2 1,633 1,631 793 487

Minnesota-all offices...................... 810 808 2 809 807 231 33

Banks.............................................. 753 751 2 752 750 203 31

Unit banks.................................. 701 699 2 700 698 180 29

Banks operating branches . . . 52 52 0 52 52 23 2

Branches........................................ 57 57 0 57 57 28 2

Mississippi-all o ffic e s ................... 761 760 1 761 760 261 24

Banks.............................................. 184 183 1 184 183 38 6

Unit banks.................................. 49 48 1 49 48 6 2

Banks operating branches . . . 135 135 0 135 135 32 4

Branches ........................................ 577 577 0 577 577 223 18

Missouri-all offices......................... 1,050 1,045 5 1,050 1,045 186 102

Banks.............................................. 711 706 5 711 706 115 62

Unit banks.................................. 431 426 5 431 426 61 32

Banks operating branches . . . 280 280 0 280 280 54 30

Branches ........................................ 339 339 0 339 339 71 40

Montana-all o ffic e s ...................... 176 173 3 176 173 64 50

Banks.............................................. 158 155 3 158 155 56 45

Unit banks.................................. 140 137 3 140 137 48 40

Banks operating branches . . . 18 18 0 18 18 8 5

Branches........... ............................ 18 18 0 18 18 8 5

522 0 0 0 0 0 100.0 100.0 0.0

193 0 0 0 0 0 100.0 100.0 0.0

67 0 0 0 0 0 100.0 100.0 0.0

126 0 0 0 0 0 100.0 100.0 0.0

329 0 0 0 0 0 100.0 100.0 0.0

162 0 0 97 97 0 100.0 100.0 100.0

23 0 0 31 31 0 100.0 100.0 100.0

3 0 0 8 8 0 100.0 100.0 100.0

20 0 0 23 23 0 100.0 100.0 100.0

139 0 0 66 66 0 100.0 100.0 100.0

382 0 0 50 50 0 100.0 100.0 100.0

66 0 0 3 3 0 100.0 100.0 100.0

24 0 0 0 0 0 100.0 100.0 0.0

42 0 0 3 3 0 100.0 100.0 100.0

316 0 0 47 47 0 100.0 100.0 100.0

305 10 1 546 118 428 73.0 99.1 21.6

56 6 1 166 22 144 52.4 96.0 13.3

8 2 1 39 4 35 36.2 89.5 10.3

48 4 0 127 18 109 56.0 96.9 14.2

249 4 0 380 96 284 78.0 99.6 25.3

499 3 0 0 0 0 99.8 99.8 0.0

148 1 0 0 0 0 99.7 99.7 0.0

48 0 0 0 0 0 100.0 100.0 0.0

100 1 0 0 0 0 99.6 99.6 0.0

351 2 0 0 0 0 99.9 99.9 0.0

543 2 0 1 1 0 99.8 99.8 100.0

516 2 0 1 1 0 99.7 99.7 100.0

489 2 0 1 1 0 99.7 99.7 100.0

27 0 0 0 0 0 100.0 100.0 0.0

27 0 0 0 0 0 100.0 100.0 0.0

475 0 1 0 0 0 100.0 100.0 0.0

139 0 1 0 0 0 100.0 100.0 0.0

40 0 1 0 0 0 100.0 100.0 0.0

99 0 0 0 0 0 100.0 100.0 0.0

336 0 0 0 0 0 100.0 100.0 0.0

757 1 4 0 0 0 99.9 99.9 0.0

529 1 4 0 0 0 99.9 99.9 0.0

333 1 4 0 0 0 99.8 99.8 0.0

196 0 0 0 0 0 100.0 100.0 0.0

228 0 0 0 0 0 100.0 100.0 0.0

59 0 3 0 0 0 100.0 100.0 0.0

54 0 3 0 0 0 100.0 100.0 0.0

49 0 3 0 0 0 100.0 100.0 0.0

5 0 0 0 0 0 100.0 100.0 0.0

5 0 0 0 0 0 100.0 100.0 0.0

NUMBER OF BANKS AND BRANCHES

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
TABLE 103. NUMBER OF BANKING OFFICES IN THE UNITED STATES (STATES AND OTHER AREAS),

D ECEMBER 31, 1976—C O N T IN U E D

BANKS GROUPED BY INSURANCE STATUS AND CLASS OF BANK, AND BY STATE OR AREA AND TYPE OF OFFICE

State and type of bank 

or office

All banks Commercial banks and nondeposit trust companies Mutual savings banks Percentage insured1

Total Insured

Noninsured Total

Insured Noninsured

Total Insured

Noninsured

All

banks

of

deposit

Commercial

banks

of

deposit

Mutual

savings

banks

Total

Members F.R. 

System

Nonmembers

F.R.

System

Banks 

of deposit2

Nondeposit

trust

companies3

National State

Nebraska-all offices...................... 554 548 6 554 548 171 10 367 0 6 0 0 0 100.0 100.0 0.0

Banks.............................................. 456 450 6 456 450 120 8 322 0 6 0 0 0 100.0 100.0 0.0

Unitbanks.................................. 383 377 6 383 377 85 7 285 0 6 0 0 0 100.0 100.0 0.0

Banks operating branches . . . 73 73 0 73 73 35 1 37 0 0 0 0 0 100.0 100.0 0.0

Branches ........................................ 98 98 0 98 98 51 2 45 0 0 0 0 0 100.0 100.0 0.0

I\levada-all offices......................... 121 121 0 121 121 82 19 20 0 0 0 0 0 100.0 100.0 0.0

Banks.............................................. 8 8 0 8 8 4 1 3 0 0 0 0 0 100.0 100.0 0.0

Unit banks.................................. 1 1 0 1 7 7 0 0 0 0 0 0 0 100.0 100.0 0.0

Banks operating branches . . . 7 7 0 7 7 3 1 3 0 0 0 0 0 100.0 100.0 0.0

Branches ........................................ 113 113 0 113 113 78 18 17 0 0 0 0 0 100.0 100.0 0.0

New Hampshire-all offices . . . . 258 256 2 198 196 132 4 60 1 1 60 60 0 99.6 99.5 100.0

Banks.............................................. 106 104 2 79 77 43 2 32 1 1 27 27 0 99.0 98.7 100.0

Unit banks.................................. 39 37 2 27 25 10 1 14 7 1 12 12 0 97.4 96.2 100.0

Banks operating branches . . . 67 67 0 52 52 33 1 18 0 0 15 15 0 100.0 100.0 100.0

Branches ........................................ 152 152 0 119 119 89 2 28 0 0 33 33 0 100.0 100.0 100.0

New Jersey-all offices................... 1,803 1,803 0 1,657 1,657 1,124 231 302 0 0 146 146 0 100.0 100.0 100.0

Banks.............................................. 215 215 0 195 195 104 19 72 0 0 20 20 0 100.0 100.0 100.0

Unit banks.................................. 34 34 0 31 31 11 0 20 0 0 3 3 0 100.0 100.0 100.0

Banks operating branches . . . 181 181 0 164 164 93 19 52 0 0 17 17 0 100.0 100.0 100.0

Branches........................................ 1,588 1,588 0 1,462 1,462 1,020 212 230 0 0 126 126 0 100.0 100.0 100.0

New Mexico-all offices................ 293 292 1 293 292 153 21 118 0 1 0 0 0 100.0 100.0 0.0

Banks.............................................. 83 82 1 83 82 38 7 37 0 1 0 0 0 100.0 100.0 0.0

Unit banks.................................. 20 19 1 20 19 8 2 9 0 1 0 0 0 100.0 100.0 0.0

Banks operating branches . . . 63 63 0 63 63 30 5 28 0 0 0 0 0 100.0 100.0 0.0

Branches ........................................ 210 210 0 210 210 115 14 81 0 0 0 0 0 100.0 100.0 0.0

New York-all offices...................... 4,417 4,361 56 3,543 3,487 1,539 1,751 197 51 5 874 874 0 98.8 98.6 100.0

Banks.............................................. 395 348 47 277 230 129 56 45 42 5 118 118 0 89.2 84.6 100.0

Unit banks.................................. 111 70 41 108 67 36 13 18 36 5 3 3 0 66.0 65.0 100.0

Banks operating branches . . .

Branches4 .....................................

284 278 6 169 163 93 43 27 6 0 115 115 0 97.9 96.4 100.0

4,022 4,013 9 3,266 3,257 1,410 1,695 152 9 0 756 756 0 99.8 99.7 100.0

222 FEDERAL DEPOSIT INSURANCE CORPORATION

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
North Carolina-all offices............ 1,713 1,702

Banks.............................................. 92 91

Unit banks.................................. 20 20

Banks operating branches . . . 72 71

Branches........................................ 1,621 1,611

North Dakota-all offices............. 265 259

Banks.............................................. 171 169

Unit banks.................................. 102 101

Banks operating branches . . . 69 68

Branches ........................................ 94 90

Ohio—all offices............................... 2,229 2,228

Banks.............................................. 490 489

Unit banks.................................. 154 153

Banks operating branches . . . 336 336

Branches ........................................ 1,739 1,739

Oklahoma-all offices...................... 579 573

Banks.............................................. 475 469

Unit banks.................................. 375 369

Banks operating branches . . . 100 100

Branches ........................................ 104 104

Oregon-all offices......................... 532 528

Banks.............................................. 49 47

Unit banks.................................. 16 15

Banks operating branches . . . 33 32

Branches4 ..................................... 483 481

Pennsylvania-all offices................ 2,903 2,895

Banks.............................................. 400 394

Unit banks.................................. 126 121

Banks operating branches . . . 274 273

Branches4 ..................................... 2,503 2,501

Rhode Island-all offices................ 315 302

Banks.............................................. 23 20

Unit banks................................... 4 3

Banks operating branches . . . 19 17

Branches ........................................ 292 282

South Carolina-all offices............ 697 697

Banks.............................................. 90 90

Unit banks.................................. 25 25

Banks operating branches . . . 65 65

Branches ........................................ 607 607

South Dakota-all offices............ 286 285

Banks.............................................. 157 156

Unit banks.................................. 108 107

Banks operating branches . . . 49 49

Branches ........................................ 129 129

11 1,713 1,702 815 5

1 92 91 28 2

0 20 20 6 7

1 72 71 22 7

10 1,621 1,611 787 3

6 265 259 68 7

2 171 169 43 4

1 102 101 21 2

1 69 68 22 2

4 94 90 25 3

1 2,229 2,228 1,244 542

1 490 489 219 113

7 154 153 45 44

0 336 336 174 69

0 1,739 1,739 1,025 429

6 579 573 255 14

6 475 469 195 13

6 375 369 138 12

0 100 100 57 1

0 104 104 60 1

4 526 522 325 0

2 48 46 7 0

7 16 15 7 0

7 32 31 6 0

2 478 476 318 0

8 2,716 2,708 1,597 203

6 392 386 237 14

5 126 121 84 4

1 266 265 153 10

2 2,324 2,322 1,360 189

13 241 228 120 0

3 17 14 5 0

7 4 3 0 0

2 13 11 5 0

10 224 214 115 0

0 697 697 317 15

0 90 90 19 6

0 25 25 3 2

0 65 65 16 4

0 607 607 298 9

1 286 285 112 40

1 157 156 32 27

7 108 107 19 19

0 49 49 13 8

0 129 129 80 13

882 11 0 0

61 1 0 0

13 0 0 0

48 1 0 0

821 10 0 0

184 6 0 0

122 2 0 0

78 7 0 0

44 7 0 0

62 4 0 0

442 1 0 0

157 1 0 0

64 7 0 0

93 0 0 0

285 0 0 0

304 5 1 0

261 5 1 0

219 5 7 0

42 0 0 0

43 0 0 0

197 4 0 6

39 2 0 1

14 7 0 0

25 7 0 1

158 2 0 5

908 6 2 187

135 4 2 8

33 3 2 0

102 1 0 8

773 2 0 179

108 12 1 74

9 2 1 6

3 0 7 0

6 2 0 6

99 10 0 68

365 0 0 0

65 0 0 0

20 0 0 0

45 0 0 0

300 0 0 0

133 0 1 0

97 0 1 0

69 0 1 0

28 0 0 0

36 0 0 0

0 99.4 99.4 0.0

0 98.9 98.9 0.0

0 100.0 100.0 0.0

0 98.6 98.6 0.0

0 99.4 99.4 0.0

0 97.7 97.7 0.0

0 98.8 98.8 0.0

0 99.0 99.0 0.0

0 98.6 98.6 0.0

0 95.7 95.7 0.0

0 100.0 100.0 0.0

0 99.8 99.8 0.0

0 99.4 99.4 0.0

0 100.0 100.0 0.0

0 100.0 100.0 0.0

0 99.1 99.1 0.0

0 98.9 98.9 0.0

0 98.7 98.7 0.0

0 100.0 100.0 0.0

0 100.0 100.0 0.0

0 99.2 99.2 100.0

0 95.9 95.8 100.0

0 93.8 93.8 0.0

0 97.0 96.9 100.0

0 99.6 99.6 100.0

0 99.8 99.8 100.0

0 99.0 99.0 100.0

0 97.6 97.6 0.0

0 99.6 99.6 100.0

0 99.9 99.9 100.0

0 96.2 95.0 100.0

0 90.9 87.5 100.0

0 100.0 100.0 0.0

0 89.5 84.6 100.0

0 96.6 95.5 100.0

0 100.0 100.0 0.0

0 100.0 100.0 0.0

0 100.0 100.0 0.0

0 100.0 100.0 0.0

0 100.0 100.0 0.0

0 100.0 100.0 0.0

0 100.0 100.0 0.0

0 100.0 100.0 0.0

0 100.0 100.0 0.0

0 100.0 100.0 0.0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

6

1

0

1

5

187

8

0

8

179

74

6

0

6

68

0

0

0

0

0

0

0

0

0

0

NUMBER OF BANKS AND BRANCHES 223

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
TABLE 103. NUMBER OF BANKING OFFICES IN THE UNITED STATES (STATES AND OTHER AREAS),

DECEMBER 31, 1976-CO NTINUED

BANKS GROUPED BY INSURANCE STATUS AND CLASS OF BANK, AND BY STATE OR AREA AND TYPE OF OFFICE

State and type of bank 

or office

All banks Commercial banks and nondeposit trust companies Mutual savings banks Percentage insured1

Total Insured

Noninsured Total

Insured Noninsured

Total Insured

Noninsured

All

banks

of

deposit

Commercial

banks

of

deposit

Mutual

savings

banks

Total

Members F.R. 

System

Nonmembers

F.R.

System

Banks 

of deposit2

Nondeposit

trust

companies3

National State

Tennessee-all offices..................... 1,162 1,160 2 1,162 1,160 427 66 667 1 1 0 0 0 99.9 99.9 0.0

Banks.............................................. 348 346 2 348 346 74 13 259 1 1 0 0 0 99.7 99.7 0.0

Unit banks.................................. 113 111 2 113 111 9 2 100 1 1 0 0 0 99.1 99.1 0.0

Banks operating branches . . . 235 235 0 235 235 65 11 159 0 0 0 0 0 100.0 100.0 0.0

Branches ........................................ 814 814 0 814 814 353 53 408 0 0 0 0 0 100.0 100.0 0.0

Texas—all offices............................ 1,520 1,514 6 1,520 1,514 621 56 837 6 0 0 0 0 99.6 99.6 0.0

Banks.............................................. 1,363 1,357 6 1,363 1,357 596 41 720 6 0 0 0 0 99.6 99.6 0.0

Unit banks.................................. 1,224 1,218 6 1,224 1,218 575 28 615 6 0 0 0 0 99.5 99.5 0.0

Banks operating branches . . . 139 139 O 139 139 21 13 105 0 0 0 0 0 100.0 100.0 0.0

Branches ........................................ 157 157 0 157 157 25 15 117 0 0 0 0 0 100.0 100.0 0.0

Utah-all offices............................... 276 275 1 276 275 115 76 84 0 1 0 0 0 100.0 100.0 0.0

Banks.............................................. 67 66 1 67 66 13 7 46 0 1 0 0 0 100.0 100.0 0.0

Unit banks.................................. 43 42 7 43 42 8 2 32 0 1 0 0 0 100.0 100.0 0.0

Banks operating branches . . . 24 24 0 24 24 5 5 14 0 0 0 0 0 100.0 100.0 0.0

Branches ........................................ 209 209 0 209 209 102 69 38 0 0 0 0 0 100.0 100.0 0.0

Vermont-all offices...................... 190 189 1 172 171 61 0 110 0 1 18 18 0 100.0 100.0 100.0

Banks.............................................. 36 35 1 30 29 14 0 15 0 1 6 6 0 100.0 100.0 100.0

Unit banks.................................. 9 8 1 7 6 4 0 2 0 1 2 2 0 100.0 100.0 100.0

Banks operating branches . . . 27 27 0 23 23 10 0 13 0 0 4 4 0 100.0 100.0 100.0

Branches........................................ 154 154 0 142 142 47 0 95 0 0 12 12 0 100.0 100.0 100.0

Virginia-all offices......................... 1,495 1,494 1 1,495 1,494 798 308 388 0 1 0 0 0 100.0 100.0 0.0

Banks.............................................. 284 283 1 284 283 108 67 108 0 1 0 0 0 100.0 100.0 0.0

Unit banks.................................. 81 80 1 81 80 16 25 39 0 1 0 0 0 100.0 100.0 0.0

Banks operating branches . . . 203 203 0 203 203 92 42 69 0 0 0 0 0 100.0 100.0 0.0

Branches ........................................ 1,211 1,211 0 1,211 1,211 690 241 280 0 0 0 0 0 100.0 100.0 0.0

Washington-all offices................... 930 923 7 813 806 589 37 180 6 1 117 117 0 99.4 99.3 100.0

Banks.............................................. 100 93 7 91 84 21 4 59 6 1 9 9 0 93.9 93.3 100.0

Unit banks.................................. 39 32 7 39 32 3 2 27 6 1 O 0 0 84.2 84.2 0.0

Banks operating branches . . .

Branches^ .....................................

61 61 0 52 52 18 2 32 0 0 9 9 0 100.0 100.0 100.0

830 830 0 722 722 568 33 121 0 0 108 108 0 100.0 100.0 100.0

224 FEDERAL DEPOSIT INSURANCE CORPORATION

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
West Virginia-all offices. . . .

Banks........................................

Unit banks............................

Banks operating branches .

Branches ..................................

Wisconsin-all offices...............

Banks........................................

Unit banks............................

Banks operating branches .

Branches ..................................

Wyoming-all offices...............

Banks........................................

Unit banks............................

Banks operating branches .

Branches ..................................

Other areas

Pacific Islands—all offices5. . .

Banks........................................

Unit banks............................

Banks operating branches .

Branches® ...............................

Canal Zone—all offices............

Banks........................................

Unit banks............................

Banks operating branches .

Branches7 ...............................

Puerto Rico-all offices............

Banks........................................

Unit banks............................

Banks o

Branches1

Virgin Islands—all offices. . .

Banks.....................................

Unit banks.........................

Banks operating branches

Branches9 ............................

271 271

222 222

173 173

49 49

49 49

980 975

633 628

425 420

208 208

347 347

80 80

78 78

76 76

2 2

2 2

30

1

18

1

1

0

1

0

1 1

29 17

2 0

0 0

0 0

0 0

2 0

244 223

18 12

6 4

12 8

226 211

33 27

7 1

6 0

26 26

0 271 271 130 34

0 222 222 103 29

0 173 173 76 24

0 49 49 27 5

0 49 49 27 5

5 977 972 217 54

5 630 625 130 31

5 422 417 85 21

0 208 208 45 10

0 347 347 87 23

0 80 80 47 14

0 78 78 46 14

0 76 76 45 14

0 2 2 1 0

0 2 2 1 0

12 30 18 7 0

0 1 1 0 0

0 0 0 0 0

0 1 1 0 0

12 29 17 7 0

2 2 0 0 0

0 0 0 0 0

0 0 0 0 0

0 0 0 0 0

2 2 0 0 0

21 244 223 24 0

6 18 12 1 0

2 6 4 1 0

4 12 8 0 0

15 226 211 23 0

6 33 27 27 0

6 7 1 1 0

6 6 0 0 0

0 1 1 1 0

0 26 26 26 0

107 0 0 0 0 0 100.0 100.0 0.0

90 0 0 0 0 0 100.0 100.0 0.0

73 0 0 0 0 0 100.0 100.0 0.0

17 0 0 0 0 0 100.0 100.0 0.0

17 0 0 0 0 0 100.0 100.0 0.0

701 0 5 3 3 0 100.0 100.0 100.0

464 0 5 3 3 0 100.0 100.0 100.0

311 0 5 3 3 0 100.0 100.0 100.0

153 0 0 0 0 0 100.0 100.0 0.0

237 0 0 0 0 0 100.0 100.0 0.0

19 0 0 0 0 0 100.0 100.0 0.0

18 0 0 0 0 0 100.0 100.0 0.0

17 0 0 0 0 0 100.0 100.0 0.0

1 0 0 0 0 0 100.0 100.0 0.0

1 0 0 0 0 0 100.0 100.0 0.0

11 12 0 0 0 0 60.0 60.0 0.0

1 0 0 0 0 0 100.0 100.0 0.0

0 0 0 0 0 0 0.0 0.0 0.0

1 0 0 0 0 0 100.0 100.0 0.0

10 12 0 0 0 0 58.6 58.6 0.0

0 2 0 0 0 0 0.0 0.0 0.0

0 0 0 0 0 0 0.0 0.0 0.0

0 0 0 0 0 0 0.0 0.0 0.0

0 0 0 0 0 0 0.0 0.0 0.0

0 2 0 0 0 0 0.0 0.0 0.0

199 21 0 0 0 0 91.4 91.4 0.0

11 6 0 0 0 0 66.7 66.7 0.0

3 2 0 0 0 0 66.7 66.7 0.0

8 4 0 0 0 0 66.7 66.7 0.0

188 15 0 0 0 0 93.4 93.4 0.0

0 6 0 0 0 0 81.8 81.8 0.0

0 6 0 0 0 0 14.3 14.3 0.0

0 6 0 0 0 0 0.0 0.0 0.0

0 0 0 0 0 0 100.0 100.0 0.0

0 0 0 0 0 0 100.0 100.0 0.0

NUMBER OF BANKS AND BRANCHES 225

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
Table 103. NUMBER OF BANKING OFFICES IN THE UNITED STATES (STATES AND OTHER AREAS),

D E C E M B E R 31, 1 9 7 6 - C O N T I N U E D 

B A N K S G R O U P E D B Y IN S U R A N C E S T A T U S AN D C L A S S OF B A N K , AN D B Y S T A T E OR A R E A A N D T Y P E OF O F F IC E

1 Nondeposit trust companies are excluded in computing these percentages.

2 1ncludes 14 noninsured branches of insured banks: 12 in the Pacific Islands and 2 in the Canal Zone.

3 lncludes noninsured nondeposit trust companies that are members of the Federal Reserve System. 

^California: 1 branch operated by a State nonmember bank in Puerto Rico.

Massachusetts: 1 branch operated by a noninsured bank in New York.

New York: 19 branches operated by 3 State nonmember banks in Puerto Rico.

Oregon: 1 branch operated by a national bank in California.

Pennsylvania: 2 branches operated by a noninsured bank in New York and a national bank in New Jersey. 

Washington: 3 branches operated by a national bank in California.

5United States possessions: American Samoa, Guam, and Midway Islands.

Trust Territories: Caroline Islands, Mariana Islands, and Marshall Islands.

6Pacific Islands: 28 branchesAmerican Samoa: 3 insured branches operated by a State nonmember bank in Hawaii and a national 

bank in New York.

Guam: 13 insured branches operated by 2 State nonmember banks in Hawaii, 2 State nonmember 

banks and a national bank in California, and 2 national banks in New York.

Caroline Islands: 4 noninsured branches operated by a national bank in California and a State nonmember bank in Hawaii.

Mariana Islands: 4 noninsured branches operated by a national bank and a nonmember bank in 

California and a State nonmember bank in Hawaii.

Marshall Islands: 3 noninsured branches operated by a national bank in California and a State nonmember bank in Hawaii.

Midway Islands: 1 noninsured branch operated by a State nonmember bank in Hawaii.

7Canal Zone: 2 noninsured branches operated by 2 national banks in New York.

8Puerto Rico: 23 insured branches operated by 2 national banks in New York.

9 Virgin Islands: 25 insured branches operated by 2 national banks in New York, a national bank in 

California, and a national bank in Pennsylvania.

226 FEDERAL DEPOSIT INSURANCE CORPORATION

Digitized for FRASER 

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Federal Reserve Bank of St. Louis
Table 104. NUMBER AND ASSETS OF ALL COMMERCIAL AND MUTUAL SAVINGS BANKS 

IN THE UNITED STATES (STATES AND OTHER AREAS), DECEMBER 31, 1976 

BANKS GROUPED BY CLASS AND ASSET SIZE

Insured commercial banks Noninsured 

banks 

and trust 

companies

Mutual savings banks

Asset size All

banks Total

Members F.R. System

Nonmembers 

F.R. System

Insured

Noninsured

National State

Number of banks

Less than $5.0 m illio n ......................... 1,687 1,515 223 60 1,232 171 1 0

$5.0 to $9.9 m illio n ............................ 2,888 2,857 563 165 2,129 22 5 4

$10.0 to $24.9 m illio n ......................... 5,032 4,984 1,558 335 3,091 20 13 15

$25.0 to $49.9 m illio n ......................... 2,732 2,642 1,095 198 1,349 13 48 29

$50.0 to $99.9 m illio n ......................... 1,451 1,311 655 112 544 11 82 47

$100.0 to $299.9 m illio n .................. 868 724 396 84 244 19 82 43

$300.0 to $499.9 m illio n .................. 194 145 89 25 31 14 30 5

$500.0 to $999.9 m illio n .................. 157 108 73 19 16 12 36 1

$1.0 to $4.9 b illio n ............................... 144 107 74 18 15 5 32 0

$5.0 billion or m o re ............................ 18 18 11 7 0 0 0 0

Total b an ks ............................... 15,171 14,411 4,737 1,023

(In thousanc

8,651

Is of dollars)

287 329 144

Amount of assets

Less than $5.0 m illio n ......................... 5,582,998 5,307,658 798,112 213,743 4,295,803 271,455 3,885 0

$5.0 to $9.9 m illio n ............................ 21,341,734 21,114,899 4,289,799 1,241,829 15,583,271 153,414 42,044 31,377

$10.0 to $24.9 m illio n ......................... 82,635,960 81,844,925 26,271,160 5,612,194 49,961,571 292,366 210,226 288,443

$25.0 to $49.9 m illio n ......................... 94,835,066 91,358,196 38,158,023 6,892,801 46,307,372 480,797 1,918,766 1,077,307

$50.0 to $99.9 m illio n ......................... 99,846,194 89,599,469 44,920,647 7,759,421 36,919,401 839,097 6,020,816 3,386,812

$100.0 to $299.9 m illio n .................. 141,197,371 116,862,063 63,779,61 1 13,381,321 39,701,131 2,908,173 14,635,441 6,791,694

$300.0 to $499.9 m illio n .................. 74,708,438 55,815,216 34,028,495 9,882,381 11,904,340 5,303,494 11,711,654 1,878,074

$500.0 to $999.9 m illio n .................. 111,794,869 76,126,629 51,427,793 14,132,248 10,566,588 9,255,572 25,885,964 526,704

$1.0 to $4.9 b illio n ............................... 274,200,787 204,650,613 143,298,408 42,190,889 19,161,316 9,139,143 60,411,031 0

$5.0 billion or m o re ............................ 264,644,114 264,644,114 176,376,977 88,267,137 0 0 0 0

Total assets............................... 1,170,787,531 1,007,323,7821 583,349,025 189,573,964 234,400,793 28,643,511 120,839,827 13,980,411

1 Does not include assets of branches in "Other areas" of U.S. banks.

NUMBER OF BANKS AND BRANCHES 227

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
Table 105. NUMBER, ASSETS, AND DEPOSITS OF ALL COMMERCIAL BANKS1 IN THE UNITED STATES (STATES AND OTHER AREAS),

D E C E M B E R 3 1 , 19 76 

B A N K S G RO U PED B Y A S S E T S IZ E AN D S T A T E 

(Amounts in thousands of dollars)

Banks with assets o fAll

banks

Less 

than 

$5.0 million

$5.0 million 

to

$9.9 million

$10.0 million 

to

$24.9 million

$25.0 million 

to

$49.9 million

$50.0 million 

to

$99.9 million

$100.0 million 

to

$299.9 million

$300.0 million 

to

$499.9 million

$500.0 million 

to

$999.9 million

$1.0 billion 

to

$4.9 billion

$5.0 billion 

or

more

Total United States and 

other areas2

Banks..................................... 14,698 1,686 2,879 5,004 2,655 1,322 743 159 120 112 18

Total assets3 ........................ 1,035,967,293 5,579,113 21,268,313 82,137,291 91,838,993 90,438,566 119,770,236 61,118,710 85,382,201 213,789,756 264,644,114

Total deposits3 .................. 841,888,945 4,779,644 19,034,504 74,249,818 82,663,367 80,571,153 104,615,915 50,560,186 68,032,131 162,377,297 195,004,930

States

Alabama

Banks..................................... 303 16 66 139 52 13 9 4 3 1 0

Assets..................................... 11,872,788 55,133 513,617 2,295,995 1,814,123 889,657 1,309,771 1,691,546 2,008,027 1,294,919 0

Deposits............................... 10,169,563 45,540 458,432 2,060,602 1,642,865 771,691 1,167,917 1,451,630 1,510,062 1,060,824 0

Alaska

Banks..................................... 12 0 0 2 4 1 3 1 1 0 0

Assets..................................... 1,593,077 0 0 36,840 147,419 55,054 470,472 351,609 531,683 0 0

D eposits............................... 1,374,073 0 0 30,515 132,315 50,888 395,918 306,137 458,300 0 0

Arizona

Banks..................................... 24 9 4 3 0 1 3 1 0 3 0

Assets..................................... 7,544,612 9,533 28,319 48,264 0 52,841 520,333 333,818 0 6,551,504 0

Deposits............................... 6,733,710 3,047 23,788 44,991 0 49,348 465,447 306,195 0 5,840,894 0

Arkansas

Banks..................................... 260 21 56 102 53 17 9 1 1 0 0

Assets..................................... 7,587,904 62,002 432,253 1,693,647 1,877,405 1,221,266 1,462,609 330,585 508,137 0 0

Deposits............................... 6,612,958 53,886 389,768 1,538,713 1,683,255 1,096,262 1,237,766 231,573 381,735 0 0

California

Banks..................................... 224 23 19 64 44 28 27 8 2 4 5

Assets..................................... 108,726,003 55,370 140,643 1,067,814 1,511,929 1,941,639 4,549,987 3,112,038 1,606,277 10,052,858 84,687,448

Deposits............................... 88,899,045 27,958 111,225 954,858 1,384,904 1,706,630 4,044,721 2,769,796 1,386,898 8,503,238 68,008,817

Colorado

Banks..................................... 361 108 67 109 38 26 9 1 2 1 0

Assets..................................... 9,936,731 254,506 497,782 1,712,983 1,305,454 1,751,233 1,162,123 452,638 1,523,150 1,276,862 0

Deposits............................... 8,520,261 196,937 441,212 1,544,495 1,173,201 1,556,367 1,030,478 390,040 1,247,151 940,380 0

Connecticut

Banks..................................... 72 5 5 28 13 9 4 3 3 2 0

Assets..................................... 8,992,875 19,654 34,552 455,537 466,934 627,958 692,214 1,300,102 1,901,197 3,494,727 0

Deposits............................... 7,615,606 16,842 26,103 396,483 420,487 554,388 610,328 1,086,403 1,682,572 2,822,000 0

Delaware

Banks..................................... 18 1 3 7 1 2 0 1 2 1 0

Assets..................................... 2,803,038 4,316 22,346 113,196 32,575 127,727 0 317,033 1,057,253 1,128,592 0

Deposits............................... 2,268,666 3,808 19,775 100,064 0 115,589 0 282,850 942,502 804,078 0

District of Columbia

Banks..................................... 16 0 2 1 5 3 0 1 2 2 0

Assets..................................... 4,551,476 0 19,435 20,551 188,063 234,114 0 339,833 1,122,636 2,626,844 0

Deposits............................... 3,885,286 0 15,747 19,408 166,476 206,731 0 308,504 965,799 2,202,621 0

228 FEDERAL DEPOSIT INSURANCE CORPORATION

Digitized for FRASER 

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Federal Reserve Bank of St. Louis
Florida

Banks..................................... 757 34 120 262 176

Assets..................................... 30,533,816 125,517 914,084 4,276,0-2 6,268,847

Deposits............................... 26,776,283 96,695 787,127 3,851,611 5,676,464

Georgia

Banks..................................... 442 62 101 179 63

Assets..................................... 15,965,119 201,068 747,994 2,916,943 2,061,604

Deposits............................... 12,891,885 175,250 669,151 2,611,919 1,838,194

Hawaii

Banks..................................... 11

1 1 2

0

Assets..................................... 3,265,115 330 9,166 35,704

0

Deposits............................... 2,893,434

0

0 22,976

0

Idaho

Banks..................................... 24 0 7

6

5

Assets..................................... 3,302,747 0 54,415 98,923 169,389

Deposits............................... 2,950,020

0 49,828 90,982 150,937

Illinois

Banks..................................... 1,255 124 243 400 239

Assets..................................... 81,810,312 441,299 1,832,848 6,396,952 8,493,935

Deposits............................... 63,101,895 367,301 1,626,820 5,787,865 7,594,819

Indiana

Banks..................................... 408 19 43 140 105

Assets..................................... 23,085,155 63,409 323,036 2,338,280 3,531,227

Deposits............................... 19,579,743 53,646 294,326 2,140,342 3,210,998

Iowa

Banks..................................... 659 59 199 251 102

Assets..................................... 14,628,063 222,822 1,457,762 4,076,482 3,325,337

Deposits............................... 13,054,966 200,441 1,324,033 3,726,380 3,020,358

Kansas

Banks..................................... 616 163 158 185 75

Assets..................................... 11,128,990 544,151 1,141,010 2,890,329 2,546,572

Deposits............................... 9,749,221 487,999 1,035,608 2,606,370 2,291,176

Kentucky

Banks..................................... 343 32 66 143 61

Assets..................................... 12,291,764 105,176 486,866 2,445,454 2,186,716

Deposits............................... 10,614,898 91,402 436,989 2,223,649 1,978,577

Louisiana

Banks..................................... 254 10 30 91 71

Assets..................................... 15,369,442 35,534 228,528 1,597,819 2,449,740

Deposits............................... 13,106,310 31,507 202,971 1,445,359 2,221,883

Maine

Banks..................................... 43 0 4 18 9

Assets..................................... 2,451,315

0 29,810 334,789 295,982

Deposits............................... 2,156,771 0 27,163 302,071 266,380

Maryland

Banks..................................... 113

4 22 33 27

Assets..................................... 11,204,340 17,780 173,251 570,825 965,076

Deposits............................... 9,472,695 14,579 154,998 516,015 874,231

Massachusetts

Banks..................................... 148 5 12 50 26

Assets..................................... 18,842,134 14,654 95,329 852,587 995,868

Deposits............................... 14,798,810 10,093 84,528 736,227 880,861

112

7,827,877

7,052,684

22

1,620,183

1,410,1950001

79,872

72,648

152

10,564,854

9,223,450

60

4,078,659

3,712,831

30

2,004,566

1,802,346

24

1,519,260

1,316,935

26

1,884,615

1,723,112

24

1,567,362

1,399,6176

392,632

347,690

16

1,170,305

1,059,611

24

1,719,037

1,516,278

46

6,953,334

6,118,687

10

1,619,284

1,429,4785

922,261

848,2582

404,155 

. 364,055

76

11,516,755

9,591,282

33

5,490,805

4,868,397

14

1,940,127

1,708,263

10

1,937,341

1,582,2669

1,187,242

1,067,808

17

2,977,301

2,609,4455

1,088,021

942,9764

564,727

515,812

21

3,440,818

3,027,365

6

2,414,483

1,843,6061

404,122

333,5110001

392,365

355,163

13

4,665,278

3,302,6944

1,488,639

1,292,3453

965,897

794,1400003

1,134,763

906,5295

1,886,863

1,563,8001

310,081

270,4912

878,164

753,6385

1,906,978

1,699,961

0001

722,660

535,6680001

925,967

806,8333

2,321,181

2,029,0281

690,020

482,7171

635,070

479,0051

550,327

428,8671

609,188

480,3785

3,217,582

2,508,8710002

1,775,849

1,555,5401

525,557

433,974

1

1,753,592

1,349,4093

5,671,261

3,888,5192

2,297,654 2 ,022,2001

1,177,661

1,059,5743

8,813,987

6,493,6703

5,081,080

3,524,1410000002

2,251,744

1,706,4541

1,408,713

1,122,8570003

5,088,363

4,028,2714

9,291,306

6,409,523

0000000000002

26,763,223

17,084,966000000000000000000000000

NUMBER OF BANKS AND BRANCHES 229

Digitized for FRASER 

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Federal Reserve Bank of St. Louis
Table 105. NUMBER, ASSETS, AND DEPOSITS OF ALL COMMERCIAL BANKS1 IN THE UNITED STATES (STATES AND OTHER AREAS),

D E C E M B E R 3 1 , 1 9 7 6 - C O N T I N U E D 

B A N K S G RO U PED B Y A S S E T S IZ E AN D S T A T E 

(Amounts in thousands of dollars)

All

banks

Banks with assets o fLess 

than 

$5.0 million

$5.0 million 

to

$9.9 million

$10.0 million 

to

$24.9 million

$25.0 million 

to

$49.9 million

$50.0 million 

to

$99.9 million

$100.0 million 

to

$299.9 million

$300.0 million 

to

$499.9 million

$500.0 million 

to

$999.9 million

$1.0 billion 

to

$4.9 billion

$5.0 billion 

or

more

Michigan

Banks..................................... 360 12 41 114 92 47 37 7 4 5 1

Assets..................................... 36,925,844 36,931 312,394 1,874,082 3,209,938 3,297,959 5,896,645 2,790,159 3,190,466 9,942,478 6,374,792

Deposits............................... 31,762,715 25,090 275,808 1,702,765 2,918,985 2,995,518 5,365,046 2,521,121 2,808,918 8,411,284 4,738,180

Minnesota

Banks..................................... 752 125 235 246 92 40 11 0 0 3 0

Assets..................................... 19,635,845 465,207 1,682,809 3,905,883 3,077,534 2,671,512 2,007,192 0 0 5,825,708 0

Deposits............................... 16,216,155 422,046 1,542,943 3,568,772 2,798,726 2,418,598 1,659,184 0 0 3,805,886 0

Mississippi

Banks..................................... 184 14 37 70 36 17 7 1 2 0 0

Assets..................................... 7,264,680 47,015 287,153 1,176,458 1,210,606 1,117,978 1,297,382 303,207 1,824,881 0 0

Deposits............................... 6,404,449 37,071 258,367 1,071,086 1,093,829 1,003,178 1,171,824 265,905 1,503,189 0 0

Missouri

Banks..................................... 711 113 164 249 111 45 23 0 4 2 0

Assets..................................... 23,168,612 378,231 1,177,081 4,085,368 3,778,243 2,993,001 3,469,026 0 3,092,862 4,194,800 0

Deposits............................... 19,014,388 332,681 1,062,632 3,698,244 3,362,236 2,687,909 2,970,440 0 2,205,553 2,694,693 0

Montana

Banks..................................... 158 19 41 61 20 12 5 0 0 0 0

Assets..................................... 3,570,331 65,134 293,159 974,544 667,439 826,361 743,694 0 0 0 0

Deposits............................... 3,203,247 56,394 266,645 891,527 601,635 739,517 647,529 0 0 0 0

Nebraska

Banks..................................... 456 155 114 135 29 16 2 4 1 0 0

Assets..................................... 7,707,473 483,564 828,512 2,148,582 1,003,868 998,830 213,395 1,440,453 590,269 0 0

Deposits............................... 6,718,439 425,291 747,453 1,934,347 904,068 891,382 186,753 1,171,401 457,744 0 0

Nevada

Banks..................................... 8 0 0 1 0 1 4 1 0 1 0

Assets..................................... 2,372,489 0 0 14,834 0 67,423 812,685 443,538 0 1,034,009 0

Deposits............................... 2,143,151 0 0 12,317 0 61,791 735,650 395,088 0 938,305 0

New Hampshire

Banks..................................... 79 7 15 31 16 7 3 0 0 0 0

Assets..................................... 2,131,876 22,478 108,144 528,856 536,318 473,403 462,677 0 0 0 0

Deposits............................... 1,900,380 20,043 96,950 473,650 480,837 415,467 413,433 0 0 0 0

New Jersey

Banks..................................... 195 1 8 39 57 36 29 8 13 4 0

Assets..................................... 26,807,588 4,402 65,675 679,863 1,999,502 2,597,043 5,217,332 3,119,635 8,393,027 4,731,109 0

Deposits............................... 23,463,784 2,932 54,712 601,249 1,786,707 2,334,242 4,679,165 2,751,988 7,274,421 3,978,368 0

New Mexico

Banks..................................... 83 3 5 35 24 9 5 1 1 0 0

Assets..................................... 3,699,204 7,625 34,949 610,924 842,326 586,738 636,015 383,669 596,958 0 0

Deposits............................... 3,319,732 5,941 30,856 552,993 767,415 534,951 572,960 335,227 519,389 0 0

New York

Banks..................................... 277 16 19 64 42 39 42 15 21 11 8

Assets..................................... 191,725,555 51,524 148,774 1,117,149 1,461,536 2,897,253 7,233,065 6,020,267 15,358,522 23,857,731 133,579,734

Deposits............................... 137,745,313 34,206 123,159 971,564 1,265,932 2,362,331 5,904,179 4,109,240 9,603,738 16,574,190 96,796,774

230 FEDERAL DEPOSIT INSURANCE CORPORATION

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
North Carolina

Banks..................................... 92 3 14 28 20

Assets..................................... 15,951,025 12,707 107,465 472,093 700,747

Deposits............................... 13,148,924 10,528 90,900 410,602 623,728

North Dakota

Banks..................................... 171 18 51 66 23

Assets..................................... 3,595,674 69,380 391,302 956,353 767,166

Deposits............................... 3,196,353 62,228 353,949 862,993 686,618

Ohio

Banks..................................... 490 18 68 161 115

Assets..................................... 40,082,286 71,655 502,758 2,696,026 4,047,900

D eposits............................... 33,306,393 64,457 452,850 2,422,945 3,596,493

Oklahoma

Banks..................................... 476 87 125 152 69

Assets..................................... 13,328,788 296,887 861,173 2,445,244 2,366,990

Deposits............................... 11,561,600 261,634 771,660 2,222,446 2,134,272

Oregon

Banks..................................... 48 4 5 15 12

Assets..................................... 8,457,140 13,382 36,645 231,038 412,750

Deposits............................... 6,867,662 11,278 33,708 206,154 358,792

Pennsylvania

Banks..................................... 392

9 42 113 97

Assets..................................... 58,855,897 30,595 317,951 1,913,563 3,437,304

Deposits............................... 46,894,398 25,377 276,026 1,727,430 3,109,164

Rhode Island

Banks..................................... 17 2

3

5

1

Assets..................................... 4,338,660 1,700 22,504 79,246 40,943

Deposits............................... 3,535,380 1,279 17,793 70,547 36,639

South Carolina

Banks..................................... 90 11 19 34 13

Assets..................................... 5,107,695 38,090 152,535 548,204 478,749

Deposits............................... 4,427,318 33,246 131,937 486,286 421,066

South Dakota

Banks..................................... 157 24 65 44

9

Assets..................................... 3,559,403 85,870 479,554 698,067 305,720

Deposits............................... 3,229,056 77,383 436,660 637,292 278,607

Tennessee

Banks..................................... 348 33 70 120 67

Assets..................................... 16,422,846 112,890 532,822 2,025,949 2,293,801

Deposits............................... 14,250,174 98,009 479,720 1,841,167 2,068,334

Texas

Banks..................................... 1,363 174 253 483 250

Assets..................................... 63,400,779 581,214 1,860,682 8,009,779 8,585,873

Deposits............................... 53,014,873 504,961 1,657,961 7,265,387 7,763,381

Utah

Banks..................................... 67 15 12 25 6

Assets..................................... 4,293,953 47,726 81,749 394,878 222,137

Deposits............................... 3,801,934 38,882 73,776 358,999 202,240

Vermont

Banks..................................... 30

3

2 12 4

Assets..................................... 1,637,919 4,640 17,295 240,979 121,062

Deposits............................... 1,486,037 3,906 15,327 219,744 110,982

10

716,309

624,529

10

754,333

678,633

62

4,164,753

3,670,766

32

2,117,820

1,904,1215

324,297

297,994

59

4,000,720

3,604,4190006

341,894

307,4429

532,510

483,391

40

2,631,514

2,385,742

116

7,674,017

6,909,6392

161,794

143,0795

353,454

317,773

9

1,970,929

1,766,6582

209,631

190,361

44

6,712,786

5,939,7696

1,023,819

920,1124

687,316

586,830

42

6,987,797

6,296,1803

360,135

318,7092

376,604

341,4714

719,086

643,2449

1,437,955

1,252,463

57

8,816,846

7,893,2543

579,501

494,7724

900,489

818,305

3

1.207.011

1.075.0121

447,509

361,5718

3,070,807

2,698,3461

388,148

300,5131

446,623

391,154

11

4,334,952

3,866,7910001

325,254

294,4242

738,596

672,4792

864,438

752,452

16

5,844,072

4,918,4781

316,654

277,536000

0000006

4,707,675

3,892,6702

1,657,347

1,447,4060007

4,648,305

4,172,2651

991,168

806,9134

2,846,365

2,411,4460003

2,067,240

1,730,1707

4,819,832

3,952,1352

1,363,544

1,239,068000

5

10,763,764

8,546,9670008

14,107,926

10,568,0972

2,171,360

1,599,4362

6,305,089

4,981,752

10

19,945,793

15,440,5532

2,842,964

2,283,5000000004

4,456,237

3,642,1177

17,208,464

12,149,6771

1,125,970

973,582000

0000000000000002

13,238,917

8,376,193000000000000000000000

N U M BER OF B A N K S AND B R A N C H E S 231

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
Table 105. NUMBER, ASSETS, AND DEPOSITS OF ALL COMMERCIAL BANKS1 IN THE UNITED STATES (STATES AND OTHER AREAS),

D E C E M B E R 3 1 , 1 9 7 6 —C O N T I N U E D 

B A N K S G RO U PED B Y A S S E T S IZ E AN D S T A T E 

(Amounts in thousands of dollars)

Banks with assets o fAll

banks

Less 

than 

$5.0 million

$5.0 million 

to

$9.9 million

$10.0 million 

to

$24.9 million

$25.0 million 

to

$49.9 million

$50.0 million 

to

$99.9 million

$100.0 million 

to

$299.9 million

$300.0 million 

to

$499.9 million

$500.0 million 

to

$999.9 million

$1.0 billion 

to

$4.9 billion

$5.0 billion 

or

more

Virginia

Banks..................................... 284 23 53 80 75 18 25 5 3 2 0

Assets..................................... 16,994,757 81,236 392,326 1,346,148 2,649,656 1,124,861 3,879,063 2,051,576 2,298,769 3,171,122 0

Deposits............................... 14,854,842 64,462 348,125 1,218,140 2,399,844 1,014,315 3,510,854 1,774,965 1,851,799 2,672,338 0

Washington

Banks..................................... 91 14 16 29 14 5 5 3 2 3 0

Assets..................................... 13,651,330 48,723 118,477 449,402 499,279 379,410 783,932 1,130,589 1,741,782 8,499,736 0

Deposits............................... 10,841,778 36,350 104,141 408,104 416,976 343,042 572,963 797,016 1,474,669 6,688,517 0

West Virginia

Banks..................................... 222 11 34 93 48 23 12 1 0 0 0

Assets..................................... 7,252,81 1 37,660 253,667 1,575,765 1,616,395 1,591,945 1,802,149 375,230 0 0 0

Deposits............................... 6,195,486 31,886 224,845 1,414,626 1,463,333 1,412,398 1,405,239 243,159 0 0 0

Wisconsin

Banks..................................... 630 61 129 249 127 41 19 1 2 1 0

Assets..................................... 19,026,593 207,580 939,378 4,083,043 4,284,521 2,858,484 2,773,268 399,488 1,406,733 2,074,098 0

Deposits............................... 16,485,504 180,487 854,925 3,719,855 3,870,623 2,548,943 2,409,939 337,314 1,059,101 1,504,317 0

Wyoming

0 Banks..................................... 78 9 10 33 16 8 2 0 0 0

Assets..................................... 2,099,297 31,529 72,926 553,014 556,521 516,497 368,810 0 0 0 0

Deposits............................... 1,877,756 26,829 66,658 504,215 506,279 447,764 326,011 0 0 0 0

Other areas

Guam

Banks..................................... 1 0 0 0 0 1 0 0 0 0 0

Assets..................................... 50,182 0 0 0 0 50,182 0 0 0 0 0

Deposits............................... 45,173 0 0 0 0 45,173 0 0 0 0 0

Puerto Rico

Banks..................................... 18 2 0 2 1 3 6 0 2 2 0

Assets..................................... 5,170,342 7,888 0 25,961 29,974 219,700 1,062,393 0 1,554,695 2,269,731 0

Deposits............................... 3,560,591 4,482 0 22,477 27,245 176,391 879,294 0 1,305,637 1,145,065 0

Virgin Islands

0 Banks..................................... 7 4 1 0 0 1 1 0 0 0

Assets..................................... 193,603 3,396 5,408 0 0 65,860 118,939 0 0 0 0

Deposits............................... 189,861 3,354 4,426 0 0 65,424 116,657 0 0 0 0

11ncludes nondeposit trust companies: 8 in Arizona, 3 in Arkansas, 15 in California, 1 in Delaware, 3 in Florida, 3 in Hawaii, 7 in Illinois, 1 in Indiana, 1 in Iowa, 1 in Massachusetts, 1 in Mississippi, 4 in Missouri, 3 in Montana, 

6 in Nebraska, 1 in New Hampshire, 1 in New Mexico, 5 in New York, 1 in Oklahoma, 2 in Pennsylvania, 1 in Rhode Island, 1 in South Dakota, 1 in Tennessee, 1 in Utah, 1 in Vermont, 1 in Virginia, 1 in Washington, and 5 in 

Wisconsin.

2Excludes data for branches in U.S. territories of banks headquartered in the United States, and excludes data for 19 insured branches in New York of 3 insured nonmember banks in Puerto Rico and 1 insured branch in 

California of an insured nonmember bank in Puerto Rico.

3 Does not include assets and deposits of branches in "Other areas" of U.S. banks.

232 FEDERAL DEPOSIT INSURANCE CORPORATION

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
ASSETS AND LIABILITIES OF BANKS

Table 106. Assets and liabilities of all commercial banks in the United States (States and other areas), June

30, 1976

Banks grouped by insurance status and class o f bank

Table 107. Assets and liabilities of all commercial banks in the United States (States and other areas), 

December 31, 1976 

Banks grouped by insurance status and class o f bank

Table 108. Assets and liabilities of all mutual savings banks in the United States (States and other areas), 

June 30, 1976, and December 31, 1976 

Banks grouped by insurance status

Table 109. Assets and liabilities of insured commercial banks in the United States (States and other areas), 

December call dates, 1971-1976 

Table 110. Assets and liabilities of insured mutual savings banks in the United States (States and other 

areas), December call dates, 1971-1976 

Table 111. Percentages of assets, liabilities, and equity capital of insured commercial banks operating 

throughout 1976 in the United States (States and other areas), December 31, 1976 

Banks grouped by amount o f assets

Table 112. Percentages of assets and liabilities of insured mutual savings banks operating throughout 1975 

in the United States (States and other areas), December 31, 1976 

Banks grouped by amount of assets

Table 113. Distribution of insured commercial banks in the United States (States and other areas), 

December 31, 1976

Banks grouped according to amount of assets and by ratios o f selected items to assets or

deposits

Commercial banks

Insured banks having resources o f $25 m illion or more are required to 

report their assets and liabilities on the basis of accrual accounting. A t the 

option of the bank, trust department accounts may be reported on a cash 

basis. Where the results would not be significantly different, certain other 

particular accounts may be reported on a cash basis. Banks not subject to 

full accrual accounting are required to report the instalment loan function 

on an accrual basis, or else to subm it a statement of unearned income on 

instalment loans carried in surplus accounts. All banks are required to'report 

income taxes on an accrual basis.

Each insured bank having foreign offices is required to submit a consolidated report including these offices; however, the tables in.this report contain only the domestic assets and liabilities of banks. Beginning in 1969, all

majority-owned premises subsidiaries are fu lly consolidated; other m ajorityowned domestic subsidiaries (but not commercial bank subsidiaries) are 

consolidated if they meet any of the following criteria: (a) any subsidiary in 

which the parent bank's investment represents 5 percent or more of its 

equity capital accounts; (b) any subsidiary whose gross operating revenues 

amount to 5 percent of the parent bank's gross operating revenues; or (c) 

(beginning in December 1972) any subsidiary whose “ Income (loss) before 

income taxes and securities gains or losses” amounts to 5 percent or more of 

the "Incom e (Loss) before income taxes and securities gains or losses" of the 

parent bank. Beginning in 1972, investments in subsidiaries not consolidated 

in which the bank directly or indirectly exercises effective control are reported on an equity (rather than cost) basis w ith the investment and undivided profits adjusted to include the parent's share of the subsidiaries' net 

worth.

ASSETS AND LIABILITIES OF BANKS 233

Digitized for FRASER 

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In the case o f insured banks w ith branches outside the 50 States, net 

amounts due from such branches are included in "O ther assets” and net 

amounts due to such branches are included in "O ther liabilities." Branches 

of insured banks outside the 50 States are treated as separate entities but are 

not included in the count of banks. Data for such branches are not included 

in the figures fo r the States in which the parent banks are located.

From 1969 through 1975, all reserves on loans and securities, including 

the reserves fo r bad debts set up pursuant to Internal Revenue Service rulings, were included in "Reserves on loans and securities" on the liability side 

of the balance sheet. Beginning in 1976, the IRS reserve is divided as fo llows: (a) the "valuation" portion of the reserve (plus any other loan loss 

reserve) is shown on the asset side of the face of the report as an offset to 

gross loans; (b) the "deferred income ta x " portion is included in "other 

liabilities” ; and (c) the "contingency" portion is included in "undivided 

profits,” or "reserves fo r contingencies and other capital reserves" (preferably the form er). The valuation reserve on securities, form erly shown on the 

liabilities side, is included in "reserve fo r contingencies and other capital 

reserves" beginning in 1976.

"Unearned income on loans,” previously reported in "other liabilities," is 

reported separately as an exclusion from total loans and total assets beginning December 31, 1976.

Individual loan items are reported gross. Instalment loans, however, are 

ordinarily reported net if the instalment payments are applied directly to the 

reduction of the loan. Such loans are reported gross if, under contract, the 

payments do not immediately reduce the unpaid balances of the loan but are 

assigned or pledged to assure repayment at m aturity.

The category "Trading account securities" was added to the condition 

report of commercial banks in 1969 to obtain this segregation for banks that 

regularly deal in securities w ith other banks or w ith the public. Banks occasionally holding securities purchased fo r possible resale report these under 

"Investm ent securities."

Assets and liabilities held in or administered by a savings, bond, insurance, real estate, foreign, or any other department of a bank, except a trust 

department, are consolidated w ith the respective assets and liabilities of the 

commercial department. "Deposits o f individuals, partnerships, and corporations" include trust funds deposited by a trust department in a commercial 

or savings department. Other assets held in trust are not included in statements of assets and liabilities.

Demand balances w ith, and demand deposits due to, banks in the United 

States, except private banks and American branches of foreign banks, exclude reciprocal interbank deposits. (Reciprocal interbank deposits arise 

when tw o banks m aintain deposit accounts w ith each other.)

In 1976, the caption "Capital notes and debentures" was changed to 

"subordinated notes and debentures," to be shown in the liabilities section

of the Report of Condition. Accordingly, "capital accounts" became the 

"equity capital" section.

Asset and liability data for noninsured banks are tabulated from reports 

pertaining to the individual banks. In a few cases, these reports are not as 

detailed as those submitted by insured banks.

Additional data on assets and liabilities of all banks as of June 30, 1976 

and December 31, 1976, are shown in the Corporation's semiannual publication Assets and Liabilities—Commercial and M utual Savings Banks.

Mutual savings banks

The Reports of Condition and Income for mutual savings banks were 

revised in major respects in 1971. Among the changes was a requirement for 

consolidating the accounts of branches and subsidiaries w ith the parent 

bank, on a comparable basis w ith commercial bank reports (see above). A 

1972 revision broadened the criteria for consolidated reporting; it also provided for the reporting of investments in unconsolidated subsidiaries on an 

equity basis, comparable w ith commercial bank reporting.

One objective of the revisions in 1971 was to provide a simplified reporting form . To this end, the schedules fo r deposits and securities were condensed and simplified.

Several changes were made in the reporting of specific items. Loans are 

reported in somewhat more detail than form erly. In real estate loans, construction loans are shown separately, and loans secured by residential properties are detailed as to those secured by 1- to 4-fam ily properties and by 

m ultifam ily (5 or more) properties.

Another im portant change shifted various reserve accounts which had 

been carried as deductions against assets (about $200 m illion in 1971) into 

the surplus accounts.

Beginning June 30, 1972, mutual savings banks w ith total resources of 

$25 m illion or more are required to prepare Reports of Condition on the 

basis of accrual accounting. A ll banks, regardless of size, are required to 

report income taxes on an accrual basis.

Foreign assets of banks

Since June 30, 1974, a consolidated statement of domestic and foreign 

assets and liabilities of U.S. banks has been published semiannually by the 

Corporation in Assets and Liabilities—Commercial and M utual Savings

Banks. On June 30, 1976, the consolidated assets of insured commercial 

banks totaled $1,101.3 billion, compared to domestic assets of $949.5 b illion (see table 107). The 141 insured commercial banks that reported foreign 

operations held consolidated assets of $599.8 billion.

Sources of data

Insured banks: see p. 256; noninsured banks: State banking authorities 

and reports from individual banks.

234 FEDERAL DEPOSIT INSURANCE CORPORATION

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Federal Reserve Bank of St. Louis
Table 106. ASSETS AND LIABILITIES OF ALL COMMERCIAL BANKS IN THE UNITED STATES (STATES AND OTHER AREAS),

J U N E 3 0 , 1976 

B A N K S G RO U PED BY IN S U R A N C E S T A T U S AN D C L A S S OF B A N K 

(Amounts in thousands of dollars)

Insured banks Noninsured banks

Asset, liability, or equity capital item Total

Total

Members of 

Federal Reserve System

Not 

members 

of F.R. 

System

Total

Banks

of

deposit1

Nondeposit

trust

companies2Total National State

Total assets.................................................................................................. 972,793,518 949,527,514 732,120,775 552,476,068 179,644,707 217,406,739 23,266,004 22,843,515 422,489

Cash and due from banks-total.............................................................. 129,299,134 124,808,261 106,117,626 75,695,179 30,422,447 18,690,635 4,490,873 4,456,254 34,619

Cash items in process of co lle ction .................................................... 45,765,409 45,659,879 44,023,996 28,841,893 15,182,103 1,635,883 105,530 105,495 35

Demand balances with banks in the United S tates......................... 31,114,886 28,927,646 17,868,497 12,175,900 5,692,597 11,059,149 2,187,240 2,155,053 32,187

Other balances with banks in the United States............................... 6,973,433 6,173,248 3,823,843 3,416,052 407,791 2,349,405 800,185 797,923 2,262

Including interest bearing balances................................................. 6,573,247 5,837,576 3,700,186 3,321,802 378,384 2,137,390 735,671 733,986 1,685

Balances with banks in foreign countries........................................... 5,169,938 3,793,024 3,186,258 1,927,638 1,258,620 606,766 1,376,914 1,376,892 22

Including interest bearing balances................................................. 4,158,107 3,317,090 2,739,669 1,685,201 1,054,468 577,421 841,017 841,017 0

Currency and c o in ................................................................................ 12,061,882 12,040,878 9,001,446 6,930,799 2,070,647 3,039,432 21,004 20,891 113

Reserve with Federal Reserve Bank.................................................... 28,213,586 28,213,586 28,213,586 22,402,897 5,810,689 0 0 0 0

Securities-total......................................................................................... 238,747,838 235,286,450 166,384,175 128,357,992 38,026,183 68,902,275 3,461,388 3,311,156 150,232

Investment se curities-to tal................................................................. 231,413,565 228,045,581 159,486,168 123,609,479 35,876,689 68,559,413 3,367,984 3,250,035 117,949

U.S. Treasury securities.................................................................... 88,231,425 87,699,469 62,507,021 47,410,419 15,096,602 25,192,448 531,956 504,965 26,991

M aturity-1 year and less............................................................... 34,069,413 33,782,244 24,839,719 19,007,898 5,831,821 8,942,525 287,169 266,897 20,272

Maturity-Over 1 through 5 years................................................. 46,840,988 46,642,651 33,073,372 24,754,636 8,318,736 13,569,279 198,337 193,290 5,047

Maturity-Over 5 through 10 years.............................................. 6,417,003 6,386,796 3,925,547 3,080,784 844,763 2,461,249 30J07 28,799 1,408

Maturity-Over 10 years................................................................. 904,021 887,778 668,383 567,101 101282 219,395 16,243 15,979 264

Obligations of other U.S. Government agencies and corps. . . . 33,671,530 33,136,256 20,049,125 16,506,342 3,542,783 13,087,131 535,274 530,614 4,660

Maturity-1 year and less.............................................................. 10,327,754 9,970,045 5,786,658 4,799,659 986,999 4,183,387 357,709 355,704 2,005

Maturity-Over 1 through 5 years................................................. 16J978,018 16,888,410 10,188,090 8,314,610 1,873,480 6,700,320 89,608 87,430 2,178

Maturity-Over 5 through 10 years.............................................. 3,641,408 3,603,795 2,193,102 1,803,379 389,723 1,410,693 37,613 37285 328

Maturity-Over 10 years................................................................. 2,724,350 2,674,006 1,881,275 1,588,694 292,581 792,731 50,344 50,195 149

Obligations of States and political subdivisions............................ 102,850,323 101,889,864 73,463,570 56,912,632 16,550,938 28,426,294 960,459 906,098 54,361

Maturity-1 year and less.............................................................. 17,608^34 17,361,759 13,464,409 10,153,766 3,310,643 3,897,350 246,475 207,058 39,417

Maturity-Over 1 through 5 years................................................. 29,231,295 28,643,672 19,524,007 15,428,008 4,095,999 9,119,665 587,623 583,645 3,978

Maturity-Over 5 through 10 years.............................................. 29,573,354 29,512,123 20,290,157 15,981,543 4,308,614 9^21,966 61,231 56254 4,977

Maturity-Over 10 years................................................................. 26,437,440 26,372,310 20,184,997 15,349,315 4,835,682 6,187,313 65,130 59,141 5,989

Other bonds, notes, and debentures.............................................. 6,660,287 5,319,992 3,466,452 2,780,086 686,366 1,853,540 1,340,295 1,308,358 31,937

Maturity-1 year and less.............................................................. 2,293,110 1,060,635 564,120 475,369 88,751 496,515 1,232,475 1203,884 28,591

Maturity-Over 1 through 5 years................................................. 1,940,670 1,890,593 1,279,013 1,075,365 203,648 611,580 50,077 49,121 956

Maturity-Over 5 through 10 years.............................................. 1,060,739 1,046,814 687,625 517,773 169,852 359,189 13,925 13,135 790

Maturity-Over 10 years................................................................ 1,365,768 1,321,950 935,694 711,579 224,115 386,256 43,818 42,218 1,600

Corporate stock...................................................................................... 1,539,449 1,495,536 1,244,329 923,577 320,752 251,207 43,913 11,630 32,283

Trading account securities.................................................................... 5,794,824 5,745,333 5,653,678 3,824,936 1,828,742 91,655 49,491 49,491 0

Federal funds sold and securities purchased under agreements to

re s e ll-to ta l......................................................................................... 36,218,662 34,281,373 26,820,516 21,701,787 5,118,729 7,460,857 1,937,289 1,891,904 45,385

With domestic commercial banks....................................................... 31,051,345 29,487,855 22,171,546 18,030,587 4,140,959 7,316,309 1,563,490 1,518,605 44,885

With brokers and dealers in securities and fu n d s ............................ 2,660,470 2,460,671 2,375,755 2,082,119 293,636 84,916 199,799 199,799 0

With o th e rs ............................................................................................ 2,506,847 2,332,847 2,273,215 1,589,081 684,134 59,632 174,000 173,500 500

ASSETS AND LIABILITIES OF BANKS 235

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Table 106. ASSETS AND LIABILITIES OF ALL COMMERCIAL BANKS IN THE UNITED STATES (STATES AND OTHER AREAS),

JUNE 30, 1976—CONTINUED 

BANKS GROUPED BY INSURANCE STATUS AND CLASS OF BANK 

(Amounts in thousands of dollars)

Insured banks Noninsured banks

Asset, liability, or equity capital item Total

Total

Members of 

Federal Reserve System

Not 

members 

of F.R. 

System

Total

Banks

of

deposit1

Nondeposit

trust

Total National State companies2

Loans, n e t................................................................................................... 503,171,628 491,142,844 377,027,408 286,109,442 90,917,966 114,115,436 12,028,784 11,952,278 76,506

Plus: Reserve for possible loan losses................................................. 6,221,670 6,149,901 4,918,094 3,563,964 1,354,130 1,231,807 71,769 71,049 720

Loans, to t a l............................................................................................... 509,393,298 497,292,745 381,945,502 289,673,406 92,272,096 115,347,243 12,100,553 12,023,327 77,226

Plus: Unearned income on loans . •................................................... 12,078,777 12,018,031 8,304,185 6,805,205 1,498,980 3,713,846 60,746 60,121 625

Loans, gross................................................................................................ 521,472,075 509,310,776 390,249,687 296,478,611 93,771,076 119,061,089 12,161,299 12,083,448 77,851

Real estate lo ans-total.......................................................................... 143,698,778 143,369,924 101,587,579 80,315,012 21,272,567 41,782,345 328,854 315,208 13,646

Construction and land development.............................................. 17^30,354 17,214,773 14,076,462 10,528,128 3,548,334 3,138,311 15,581 15,581 0

Secured by farmland.......................................................................... 6,363,365 6,351,163 2,717,325 2,209,615 507,710 3,633,838 12,202 11,787 415

Secured by 1- to 4-fam ily residential properties:

Insured by FHA and guaranteed by V A ..................................... 8,570,867 8,535,611 7,206,740 6,033,227 1,173,513 1,328,871 35,256 35,109 147

Conventional................................................................................... 68,113,559 67,941,884 47,696,523 38,429,376 9,267,147 20,245,361 171,675 159,109 12,566

Secured by multi-family (5 or more) residential properties:

Insured by FHA................................................................................ 429,667 429,076 321,113 184,412 136,701 107,963 591 591 0

Conventional................................................................................... 3,997,296 3,991,369 2,883,811 2,114,875 768,936 1,107,558 5,927 5,927 0

Secured by non farm nonresident!al properties............................ 38,993,670 38,906,048 26,685,605 20,815,379 5,870,226 12,220,443 87,622 87,104 518

Loans to financial in stitutio ns-tota l................................................. 41,834,761 36,783,173 34,742,470 22,966,290 11,776,180 2,040,703 5,051,588 5,048,689 2,899

To real estate investment trusts and mortgage companies .... 10,616,704 10,570,435 10,172,087 6,894,785 3277,302 398,348 46,269 46,269 0

To domestic commercial banks....................................................... 5,268,489 3,207,793 2,530272 1,914,997 615275 677,521 2,060,696 2,060,696 0

To banks in foreign countries........................................................... 8,631,795 6,076,080 5,907,436 3,373,198 2,534,238 168,644 2,555,715 2,555,715 0

To other depository institutions.................................................... 1,664,985 1,599,392 1,449,455 1,209,987 239,468 149,937 65,593 65,593 0

To other financial institutions........................................................... 15,652,788 15,329,473 14,683,220 9,573,323 5,109,897 646,253 323,315 320,416 2,899

Loans for purchasing or carrying securities-total............................ 11,776,021 11,539,769 10,763,677 6,022,136 4,741,541 776,092 236,252 236,252 0

To brokers and dealers in securities................................................. 7,743,327 7,521,606 7,390,097 3,344,357 4,045,740 131,509 221,721 221,721 0

Other loans for purchasing or carrying securities......................... 4,032,694 4,018,163 3,373,580 2,677,779 695,801 644,583 14,531 14,531 0

Loans to farm e rs................................................................................... 22,181,908 22,156,350 12,379,981 10,825,193 1,554.788 9,776,369 25,558 25,554 4

Commercial and industrial lo a n s ........................................................ 176,583,562 171,035,263 141,017,919 105,366,398 35,651,521 30,017,344 5,548,299 5,508,699 39,600

Loans to individuals-total.................................................................... 111,274,886 110,833,004 77,877,404 62,610,185 15,267,219 32,955,600 441,882 420,259 21,623

To purchase private passenger automobiles on instalment basis. 37,171,422 36,882,538 24,232,711 20,006,885 4225,826 12,649,827 288,884 267,422 21,462

Credit cards and related plans:

Retail (charge account) credit card plans................................... 9,570,888 9,569,734 8,572,206 6,870,574 1,701,632 997,528 1,154 1,154 0

Check credit and revolving credit plans...................................... 2,697^70 2,694,294 2,206,143 1,436,651 769,492 488,151 2,976 2,976 0

To purchase other retail consumer goods on instalment basis:

Mobile homes (excludes travel trailers)........................................ 8,722,932 8,720,532 6237,584 5,354,544 883,040 2,482,948 2,400 2,392 8

Other retail consumer goods........................................................... 6,879,284 6,858,824 4,493,793 3,760,387 733,406 2,365,031 20,460 20,456 4

Instalment loans to repair and modernize residential property . 6,148,883 6,146,582 4,336,040 3,504,307 831,733 1,810,542 2,301 2,301 0

Other instalment loans for household, family, and other

personal expenditures.................................................................... 17,095,879 17,034,293 11,425,682 9,047,803 2,377,879 5,608,611 61,586 61,567 19

Single-payment loans for household, family, and other

personal expenditures.................................................................... 22,988,328 22,926,207 16,373245 12,629,034 3,744,211 6,552,962 62,121 61,991 130

All other loans......................................................................................... 14,122,159 13,593,293 11,880,657 8,373,397 3,507,260 1,712,636 528,866 528,787 79

Total loans and securities.............................................................. 778,138,128 760,710,667 570,232,099 436,169,221 134,062,878 190,478,568 17,427,461 17,155,338 272,123

236 FEDERAL DEPOSIT INSURANCE CORPORATION

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Direct lease financing............................................................................

Bank premises, furniture and fixtures, and other assets

representing bank prem ises.............................................................

Real estate owned other than bank prem ises.................................

Investments in unconsolidated subsidiaries and associated

companies............................................................................................

Customers' liability on acceptances o utstan d ing...........................

Other assets............................................................................................

Total liabilities and equity capital.............................................................

Business and personal deposits-total....................................................

Individuals, partnerships, and corporations-demand.....................

Invididuals, partnerships, and corporations-savings.....................

Individuals and nonprofit organizations-savings........................

Corporations and other profit organizations-savings..................

Individuals, partnerships, and corporations-tim e...........................

Deposits accumulated for payment of personal loans-time . . . . 

Certified and officers' checks, travelers' checks, letters of 

cre dit-dem and...................................................................................

Government dep osits-tota l...................................................................

United States Government-demand.................................................

United States Government-savings....................................................

United States G overnm ent-tim e.......................................................

States and political subdivisions-demand.......................................

States and political subdivisions-savings...........................................

States and political subdivisions-tim e..............................................

Domestic interbank deposits-total.......................................................

Commercial banks in the United States-demand...........................

Commercial banks in the United States-savings...........................

Commercial banks in the United S tates-tim e.................................

Mutual savings banks in the United States-dem and.....................

Mutual savings banks in the United States-savings........................

Mutual savings banks in the United S ta te s -tim e ...........................

Foreign government and bank deposits-total.....................................

Foreign governments, central banks-demand.................................

Foreign governments, central banks-savings.................................

Foreign governments, central b anks-tim e........................................

Banks in foreign countries-dem and.................................................

Banks in foreign countries-savings....................................................

Banks in foreign c o u n trie s -tim e .......................................................

Total deposits...................................................................................

Demand.........................................................................................

Savings............................................................................................

Time...............................................................................................

Miscellaneous lia b ilitie s -to ta l................................................................

Federal funds purchased and securities sold under agreements

to repurchase-total............................................................................

With domestic and commercial banks...........................................

With brokers and dealers in securities and funds........................

With others.........................................................................................

Other liabilities for borrowed money.................................................

Mortgage indebtedness.........................................................................

Acceptances outstanding......................................................................

Other lia b ilitie s......................................................................................

4,683,635 4,683,072 4,462,972 3,488,528 974,444 220,100 563 563 0

16,218,619 16,124,250 11,932,939 9,609,742 2,323,197 4,191,311 94,369 65,847 28,522

2,504,905 2,486,255 2,006,442 1,358,866 647,576 479,813 18,650 5,162 13,488

2,113,184 2,104,856 2,062,735 1,609,514 453,221 42,121 8,328 6,303 2,025

10,704,879 10,327,922 9,997,337 6,222,837 3,774,500 330,585 376,957 376,957 0

29,131,034 28,282,231 25,308,625 18,322,181 6,986,444 2,973,606 848,803 777,091 71,712

972,793,518 949,527,514 732,120,775 552,476,068 179,644,707 217,406,739 23,266,004 22,843,515 422,489

663,098,603 654,921,316 484,027,630 375,115,169 108,912,461 170,893,686 8,177,287 8,157,887 19,400

237,702,850 236,511,588 179,450,785 136,671,383 42,779,402 57,060,803 1,191,262 1,186,995 4,267

182,576,171 182,104,366 129,995,388 102,845,835 27,149,553 52,108,978 471,805 471,805 0

176,497217 176,036,679 125,466,009 99,339,337 26,126,672 50,570,670 460,538 460,538 0

6,078,954 6,067,687 4,529,379 3,506,498 1,022,881 1,538,308 11267 11267 0

230,001,371 224,414,068 164,938,007 129,750,856 35,187,151 59,476,061 5,587,303 5,572,509 14,794

175,492 171,089 136,363 103,895 32,468 34,726 4,403 4,403 0

12,642,719 11,720,205 9,507,087 5,743,200 3,763,887 2,213,118 922,514 922,175 339

69,801,622 69,338,931 49,314,798 39,530,299 9,784,499 20,024,133 462,691 462,625 66

4,658,681 4,641,470 3,733,071 2,863,644 869,427 908,399 17,211 17,150 61

46,431 46,395 40,050 28,464 11,586 6,345 36 36 0

688,486 682,045 550,201 421,691 128,510 131,844 6,441 6,441 0

17,621,707 17,479,371 12,339,476 9,771,061 2,568,415 5,139,895 142,336 142,331 5

2,615,554 2,612,195 1,769,759 1,351,193 418,566 842,436 3,359 3,359 0

44,170,763 43,877,455 30,882,241 25,094,246 5,787,995 12,995,214 293,308 293,308 0

41,012,080 39,942,761 37,914,996 22,727,275 15,187,721 2,027,765 1,069,319 1,066,735 2,584

30,928,032 30,629,621 29,486,773 17,251,742 12,235,031 1,142,848 298,411 295,827 2,584

5,285 5,285 2,933 2,143 790 2,352 0 0 0

8,293,668 7,731,889 6,964,357 4,787,281 2,177,076 767,532 561,779 561,779 0

1,299,965 1,113,753 1,013,679 490,615 523,064 100,074 186,212 186,212 0

2,684 2,684 2,583 2,583 0 101 0 0 0

482,446 459,529 444,671 192,911 251,760 14,858 22,917 22,917 0

21,075,092 18,221,546 17,738,632 9,561,945 8,176,687 482,914 2,853,546 2,851,008 2,538

1,757,367 1,296,107 1,249,918 703,488 546,430 46,189 461,260 458,722 2,538

39,461 38,709 38,292 18,736 19,556 417 752 752 0

10,367,194 9,218,217 8,965,983 5,076,788 3,889,195 252,234 1,148,977 1,148,977 0

6,348,158 5,821,067 5,696,530 2,620,338 3,076,192 124,537 527,091 527,091 0

5 5 5 5 0 0 0 0 0

2,562,907 1,847,441 1,787,904 1,142,590 645,314 59,537 715,466 715,466 0

794,987,397 782,424,554 588,996,056 446,934,688 142,061,368 193,428,498 12,562,843 12,538,255 24,588

312,959,479 309213,182 242,477,319 176,115,471 66J61,848 66,735,863 3,746297 3,736,503 9,794

185^85,591 184J809,639 131,849,010 104248J959 27,600,051 52,960,629 475,952 475,952 O

296,742,327 288,401,733 214,669,727 166,570258 48,099,469 73,732,006 8,340,594 8,325,800 14,794

102,914,479 93,047,188 86,895,274 63,426,805 23,468,469 6,151,914 9,867,291 9,704,473 162,818

60,832,375 59,057,251 55,906,282 42,719,423 13,186,859 3,150,969 1,775,124 1,775,124 0

35221,697 33,976,476 32,667,475 25,065,539 7,601,936 1,309,001 1,245221 1245221 O

8,126,355 8,049,480 7,511,662 6236,616 1275,046 537,818 76,875 76,875 0

17,484,323 17 #31295 15,727,145 11,417268 4209,877 1,304,150 453,028 453/328 0

6,739,369 4,883,481 4,578,765 2,464,780 2,113,985 304,716 1,855,888 1,827,984 27,904

813,425 811,430 577,889 447,141 130,748 233,541 1,995 447 1,548

11,309,882 10,928,953 10,598,341 6,264,277 4,334,064 330,612 380,929 380,929 0

23,219,428 17,366,073 15,233,997 11,531,184 3,702,813 2,132,076 5,853,355 5,719,989 133,366

ASSETS AND LI ABI LITI ES OF BANKS 237

Digitized for FRASER 

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Federal Reserve Bank of St. Louis
Table 106. ASSETS AND LIABILITIES OF ALL COMMERCIAL BANKS IN THE UNITED STATES (STATES AND OTHER AREAS),

J U N E 3 0 , 1 9 7 6 - C O N T I N U E D 

B A N K S G RO U PED B Y IN SU R A N C E S T A T U S A N D C L A S S OF B A N K 

(Amounts in thousands of dollars)

Insured banks Noninsured banks

Asset, liability, or equity capital item Total

Total

Members of 

Federal Reserve System

Not 

members 

of F.R. 

System

Total

Banks

of

deposit1

Nondeposit

trust

Total National State companies2

Total liabilities (excluding subordinated notes and

debentures)................................................................................... 897,901,876 875,471,742 675,891,330 510,361,493 165,529,837 199,580,412 22,430,134 22,242,728 187,406

Subordinated notes and debentures....................................................... 5,002,343 4,864,369 3,934,623 2,610,607 1,324,016 929,746 137,974 136,712 1,262

Equity c a p ita l-to ta l................................................................................ 69,889,299 69,191,403 52,294,822 39,503,968 12,790,854 16,896,581 697,896 464,075 233,821

Preferred stock-par value ................................................................... 81,323 75,229 33,811 19,437 14,374 41,418 6,094 5,692 402

Preferred stock-shares outstanding (in thousands)......................... 7,134 7,066 3,807 420 3,387 3,259 68 57 11

Common stock-par value.................................................................... 16,040,604 15,913,201 11,724,203 8,960,644 2,763,559 4,188,998 127,403 75,693 51,710

Common stock-shares authorized (in thousands)......................... 2,151,875 2,056,461 1,349,797 1,117,208 232,589 706,664 95,414 52,437 42,977

Common stock-shares outstanding(in thousands)......................... 1,738,152 1,730,868 1,240,703 1,024,626 216,077 490,165 7,284 4,951 2,333

Surplus..................................................................................................... 28,018,885 27,746,889 20 677,161 15,222,322 5,454,839 7,069,728 271,996 220,893 51,103

Undivided p ro fits ................................................................................... 23,866,579 23,651,959 18,563,984 14,231,837 4,332,147 5,087,975 214,620 97,807 116,813

Reserve for contingencies and other capital reserves..................... 1,881,908 1,804,125 1,295,663 1,069,728 225,935 508,462 77,783 63,990 13,793

PERCENTAGES

Of total assets:

Cash and due from b a n k s .................................................................... 13.3 13.1 14.5 13.7 16.9 8.6 19.3 19.5 8.2

U.S. Treasury securities and obligations of other 

U.S. Government agencies and corporations.................................. 12.5 12.7 11.3 11.6 10.4 17.6 4.6 4.5 7.5

Other securities...................................................................................... 12.0 12.1 11.5 11.7 10.8 14.1 10.3 10.0 28.1

Loans (including federal funds sold and securities purchased 

under agreements to re s e ll)............................................................. 55.4 55.3 55.2 55.7 53.5 56.9 60.0 60.6 28.9

Other assets............................................................................................ 6.7 6.7 7.6 7.4 8.4 3.8 5.8 5.4 27.4

Total equity capital3 ............................................................................. 7.2 7.3 7.1 7.2 7.1 7.8 8.74 4.94 55.3

Of total assets other than cash and U.S. Treasury securities:

Total equity capital3 ............................................................................. 9.3 9.4 9.3 9.2 9.5 9.7 9.94 5.64 64.8

Number of banks......................................................................................... 14,663 14,385 5,778 4,749 1,029 8,607 278 198 80

11ncludes asset and liability figures for branches of foreign banks (tabulated as banks) licensed to do a deposit business. Capital is not allocated to these branches by the parent banks.

2Amounts shown as deposits are special accounts and uninvested trust funds, with the latter classified as demand deposits of individuals, partnerships, and corporations.

3 0nly asset and liability data are included for branches located in "other areas” of banks headquartered in one of the 50 States; because no capital is allocated to these branches, they are excluded from the computation of 

ratios of equity capital to assets.

4 Data for branches of foreign banks referred to in footnote 1 have been excluded in computing this ratio for noninsured banks of deposit and in total columns.

Note: Further information on the reports of assets and liabilities of banks may be found on pp. 233-234.

238 FEDERAL DEPOSIT INSURANCE CORPORATION

Digitized for FRASER 

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Federal Reserve Bank of St. Louis
Table 107. ASSETS AND LIABILITIES OF ALL COMMERCIAL BANKS IN THE UNITED STATES (STATES AND OTHER AREAS),

DECEMBER 31, 1976 

BANKS GROUPED BY INSURANCE STATUS AND CLASS OF BANK 

(Amounts in thousands of dollars)

Insured banks Noninsured banks

Asset, liability, or equity capital item Total

Total

Members of 

Federal Reserve System

Not 

members 

of F.R. 

System

Total

Banks

of

deposit1

Nondeposit

trust

Total National State companies2

Total assets.................................................................................................. 1,040,090,484 1,011,329,205 776,563,296 586,989,332 189,573,964 234,765,909 28,761,279 28,277,435 483,844

Cash and due from banks-total............................................................. 136,819,182 130,221,094 109,012,645 76,153,027 32,859,618 21,208,449 6,598,088 6,560,134 37,954

Cash items in process of collection.................................................... 48,494,888 48,366,003 46,567,875 30,120,105 16,447,770 1,798,128 128,885 128,365 520

Demand balances with banks in the United S tates........................ 36,918,231 33,022,738 19,717,500 13,039,645 6,677,855 13,305,238 3,895,493 3,863,253 32,240

Other balances with banks in the United States.............................. 7,090,972 5,874,949 3,629,066 3,189,407 439,659 2,245,883 1,216,023 1,210,903 5,120

Including interest bearing balances................................................. 6,335,221 5,568,150 3,474,363 3,073,814 400,549 2,093,787 767,071 762,704 4,367

Balances with banks in foreign countries........................................... 6,136,266 4,796,214 4,047,726 2,261,870 1,785,856 748,488 1,340,052 1,340,052 0

Including interest bearing balances................................................. 4,962,612 4,409,156 3,704,275 2,056,869 1,647,406 704,881 553,456 553,456 0

Currency and c o in ................................................................................ 12,209,845 12,192,210 9,081,498 7,056,236 2,025,262 3,110,712 17,635 17,561 74

Reserve with Federal Reserve Bank.................................................... 25,968,980 25,968,980 25,968,980 20,485,764 5,483,216 0 0 0 0

Securities-total......................................................................................... 253,223,706 249,976,105 177,785,391 136,062,717 41,722,674 72,190,714 3,247,601 3,132,977 114,624

Investment securities-to tal................................................................ 243,739,255 240,552,476 168,822,076 130,121,619 38,700,457 71,730,400 3,186,779 3,101,621 85,158

U.S. Treasury securities................................................................... 97,996,602 96,883,068 69,718,945 52,612,836 17,106,109 27,164,123 1,113,534 1,088,569 24,965

M aturity-1 year and less.............................................................. 37,868,154 37,114,370 26,790,566 21,233,471 5,557,095 10,323,804 753,784 736,118 17,666

Maturity-Over 1 through 5 years................................................. 50,701,523 50,418,474 36,876,115 26,880,111 9,996,004 13,542,359 283,049 278,334 4,715

Maturity-Over 5 through 10 years.............................................. 8,660,176 8,604,072 5,529,785 4,109,208 1,420,577 3,074^87 56,104 53,724 2,380

Maturity-Over 10 years................................................................ 766,749 746,152 522,479 390,046 132,433 223,673 20,597 20,393 204

Obligations of other U.S. Government agencies and corps. . . . 34,895,426 34,326,811 21,176,688 17,005,880 4,170,808 13,150,123 568,615 563,560 5,055

M aturity-1 year and less................................................................ 11,177,569 10,711,513 6,224,844 4,965,291 1,259,553 4,486,669 466,056 463,565 2,491

Maturity-Over 1 through 5 years................................................. 15,783,815 15,756,455 9,641,900 7,642,513 1,999,387 6,114,555 27,360 25251 2,109

Maturity-Over 5 through 10 years.............................................. 3,653,118 3,634,463 2,191,996 1,799,291 392,705 1,442,467 18,655 18,349 306

Maturity-Over 10 years................................................................ 4,280,924 4,224,380 3,117,948 2,598,785 519,163 1,106,432 56,544 56,395 149

Obligations of States and political subdivisions........................... 104,452,519 103,505,764 74,104,493 57,471,096 16,633,397 29,401,271 946,755 913,778 32,977

M aturity-1 year and less.............................................................. 17,004,987 16,755,606 12,843,331 9,932,149 2,911,182 3,912,275 249,381 233,648 15,733

Maturity-Over 1 through 5 years................................................. 30,379,079 29,797,439 20,202,377 15,911,985 4,290,392 9,595,062 581,640 577,012 4,628

Maturity-Over 5 through 10 years.............................................. 30,905,132 30,847,464 21,180,572 16,665,610 4,514,962 9,666,892 57,668 51,190 6,478

Maturity-Over 10 years................................................................ 26,163,321 26,105^55 19,878,213 14,961,352 4,916,861 6,227,042 58,066 51,928 6,138

Other bonds, notes, and debentures.............................................. 6,394,708 5,836,833 3,821,950 3,031,807 790,143 2,014,883 557,875 535,714 22,161

M aturity-1 year and less................................................................ 1,730,282 1290,379 706,310 577,721 128,589 584,069 439,903 420,347 19,556

Maturity-Over 1 through 5 years................................................. 2,293,568 2,227,649 1,559^47 1,247,888 311,359 668,402 65,919 65,200 719

Maturity-Over 5 through 10 years.............................................. 1,127,321 1,119,625 742,633 573,834 168,799 376,992 7,696 7242 454

Maturity-Over 10 years................................................................ 1,243,537 1,199,180 813,760 632,364 181,396 385,420 44,357 42,925 1,432

Corporate s to c k ....................................................................................... 1,580,935 1,541,489 1,312,816 967,319 345,497 228,673 39,446 10,007 29,439

Trading account securities................................................................... 7,903,516 7,882,140 7,650,499 4,973,779 2,676,720 231,641 21,376 21,349 27

Federal funds sold and securities purchased under agreements

to resell-total...................................................................................... 48,528,794 45,869,893 36,407,620 30,164,710 6,242,910 9,462,273 2,658,901 2,554,621 104,280

With domestic commercial banks....................................................... 40,310,198 37,907,597 28,784,377 23,872,468 4,911,909 9,123220 2,402,601 2299,021 103,580

With brokers and dealers in securities and funds........................ 5,786,342 5,705,042 5,499,323 4,374,445 1,124,878 205,719 81,300 81,300 0

With others............................................................. 2,432,254 2,257,254 2,123,920 1,917,797 206,123 133,334 175,000 174,300 700

ASSETS AND LI ABI LITI ES OF BANKS 239

Digitized for FRASER 

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Federal Reserve Bank of St. Louis
Table 107. ASSETS AND LIABILITIES OF ALL COMMERCIAL BANKS IN THE UNITED STATES (STATES AND OTHER AREAS),

D E C E M B E R 3 1 , 1 9 7 6 - C O N T I N U E D 

B A N K S G RO U PED B Y IN SU R A N C E S T A T U S A N D C L A S S OF B A N K 

(Amounts in thousands of dollars)

Insured banks Noninsured banks

Asset, liability, or equity capital item Total

Members of 

Federal Reserve System

Not 

members 

of F.R. 

System

Total

Banks

of

deposit1

Nondeposit

trust

Total National State companies2

Loans, n e t.................................................................................................. 533,173,947 518,731,657 395,571,230 302,339,065 93,232,165 123,160,427 14,442,290 14,405,014 37,276

Plus. Reserve for possible loan losses................................................. 6,276,386 6,186,775 4,899,797 3,589,367 1,310,430 1,286,978 89,611 89,101 510

Loans, to ta l............................................................................................... 539,450,333 524,918,432 400,471,027 305,928,432 94,542,595 124,447,405 14,531,901 14,494,115 37,786

Plus: Unearned income on lo a n s ....................................................... 12,670,956 12,617,065 8,640,126 7,147,538 1,492,588 3,976,939 53,891 53,258 633

Loans, gross............................................................................................... 552,121,289 537,535,497 409,111,153 313,075,970 96,035,183 128,424,344 14,585,792 14,547,373 38,419

Real estate loans-total.......................................................................... 151,212,618 150,904,938 105,743,837 83,946,290 21,797,547 45,161,101 307,680 302,476 5,204

Construction and land development.............................................. 17,287,047 17,273,179 13,750,392 10,304,238 3,346,154 3,622,787 13,868 13,868 0

Secured by farmland..........................................................................

Secured by 1- to 4 - family residential properties:

6,728,660 6,716,845 2,867,959 2,332,884 535,075 3,848,886 11,815 11,378 437

Insured by FHA and guaranteed by V A ..................................... 8,237,447 8,198,789 6,917,873 5,772,751 1,145,122 1,280,916 38,658 38,518 140

Conventional...................................................................................

Secured by multi-family (5 or more) residential properties:

73,045,660 72,881,477 50,719,721 41,080,081 9,639,640 22,161,756 164,183 160,189 3,994

Insured by FHA................................................................................ 423,971 423,194 343,130 218,997 124,133 80,064 777 777 0

Conventional................................................................................... 4,168,016 4,158,942 2,985,052 2,152,088 832,964 1,173,890 9,074 8,671 403

Secured by non farm nonresidential properties............................ 41,321,817 41,252,512 28,259,710 22,085,251 6,174,459 12,992,802 69,305 69,075 230

Loans to financial in stitutio ns-tota l................................................. 42,697,527 35,900,747 33,831,892 22,764,961 11,066,931 2,068,855 6,796,780 6,796,780 0

To real estate investment trusts and mortgage companies . . . . 10,065,506 9,939,141 9,534,175 6,581,108 2,953,067 404,966 126,365 126,365 0

To domestic commercial banks....................................................... 4,646,319 2,782,815 2,199,056 1,570,528 628,528 583,759 1,863,504 1,863,504 0

To banks in foreign countries.......................................................... 10,883,636 6,620,910 6,486,546 3,981,745 2,504,801 134,364 4,262,726 4262,726 0

To other depository institutions.................................................... 1,491,687 1,348,516 1,181,921 864,340 317,581 166,595 143,171 143,171 0

To other financial institutions.......................................................... 15,610,379 15209,365 14,430,194 9,767,240 4,662,954 779,171 401,014 401,014 0

Loans for purchasing or carrying securities-total............................ 15,452,083 15,089,724 14,122,017 8,637,269 5,484,748 967,707 362,359 358,170 4,189

To brokers and dealers in securities.............................................. 11,420,303 11,074,748 10,793,313 6,001,747 4,791,566 281,435 345,555 345,330 225

Other loans for purchasing or carrying securities......................... 4,031,780 4,014,976 3,328,704 2,635,522 693,182 686,272 16,804 12,840 3,964

Loans to farm ers................................................................................... 23,292,269 23,268,314 12,971,464 11,324,334 1,647,130 10,296,850 23,955 23,955 0

Commercial and industrial lo a n s ....................................................... 185,051,846 178,751,008 146,745,904 110,358,836 36,387,068 32,005,104 6,300,838 6,290,298 10,540

Loans to individuals-total.................................................................... 119,343,511 118,905,722 83,185,857 67,054,049 16,131,808 35,719,865 437,789 426,463 11,326

To purchase private passenger automobiles on instalment basis.

Credit cards and related plans:

40,104,935 39,806,519 25,824,450 21,308,028 4,516,422 13,982,069 298,416 287,544 10,872

Retail (charge account) credit card plans................................... 11,373,757 11,373,566 10^05,648 8,249,951 1,955,697 1,167,918 191 191 0

Check credit and revolving credit plans......................................

To purchase other retail consumer goods on instalment basis:

3,059,284 3,054,209 2,503,761 1,645,947 857,814 550,448 5,075 5,075 0

Mobile homes (excludes travel trailers)........................................ 8,744,615 8,743,103 6,217,654 5,363,832 853,822 2,525,449 1,512 1,504 8

Other retail consumer goods........................................................... 7,265,334 7,246,252 4,757,096 4,001,540 755,556 2,489,156 19,082 19,079 3

Instalment loans to repair and modernize residential property .

Other instalment loans for household, family, and other

6,570,272 6,567,706 4,608,507 3,718,471 890,036 1,959,199 2,566 2,557 9

personal expenditures....................................................................

Single-payment loans for household, family, and other

17,848,164 17,792,293 11,790,555 9,409266 2,381,289 6,001,738 55,871 55,437 434

personal expenditures.................................................................... 24,377,150 24,322,074 17,278,186 13,357,014 3,921,172 7,043,888 55,076 55,076 0

All other loans......................................................................................... 15,071,435 14,715,044 12,510,182 8,990,231 3,519,951 2,204,862 356,391 349,231 7,160

Total loans and securities.............................................................. 834,926,447 814,577,655 609,764,241 468,566,492 141,197,749 204,813,414 20,348,792 20,092,612 256,180

240 FEDERAL DEPOSIT INSURANCE CORPORATION

Digitized for FRASER 

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Federal Reserve Bank of St. Louis
Direct lease financing............................................................................

Bank premises, furniture and fixtures, and other assets

representing bank prem ises.............................................................

Real estate owned other than bank prem ises.................................

Investments in unconsolidated subsidiaries and associated

companies............................................................................................

Customers' liability on acceptances o utstanding...........................

Other assets............................................................................................

Total liabilities and equity capital.............................................................

Business and personal deposits-total....................................................

Individuals, partnerships, and corporations-demand.....................

Individuals, partnerships, and corporations-savings.....................

Individuals and nonprofit organizations-savings........................

Corporations and other profit organizations-savings..................

Individuals, partnerships, and corporations-tim e...........................

Deposits accumulated for payment of personal loans-time . . . . 

Certified and officers' checks, travelers' checks, letters of 

credit—dem and...................................................................................

Government deposits-tota l...................................................................

United States Government-demand.................................................

United States Government-savings....................................................

United States G overnm ent-tim e.......................................................

States and political subdivisions-demand........................................

States and political subdivisions-savings...........................................

States and political subdivisions-tim e..............................................

Domestic; interbank deposits-total.......................................................

Commercial banks in the United States-demand...........................

Commercial banks in the United States-savings...........................

Commercial banks in the United States-tim e.................................

Mutual savings banks in the United S tates-dem and.....................

Mutual savings banks in the United States-savings........................

Mutual savings banks in the United S ta te s -tim e ...........................

Foreign government and bank deposits-total....................................

Foreign governments, central banks-dem and.................................

Foreign governments, central banks-savings.................................

Foreign governments, central banks-tim e.......................................

Banks in foreign countries-dem and.................................................

Banks in foreign countries-savings....................................................

Banks in foreign c o u n trie s -tim e .......................................................

Total deposits..................................................................................

Demand.........................................................................................

Savings................................................................................... . . .

Time.........................................................................................

Miscellaneous lia b ilitie s-to ta l................................................................

Federal funds purchased and securities sold under agreements

to repurchase-total............................................................................

With domestic and commercial banks...........................................

With brokers and dealers in securities and funds ........................

With others.........................................................................................

Other liabilities for borrowed money.................................................

Mortgage indebtedness.........................................................................

Acceptances outstanding......................................................................

Other lia b ilitie s ......................................................................................

5,118,065 5,118,065 4,871,509 3,815,367 1,056,142 246,556 0 0 0

16,776,648 16,694,773 12,280,558 9,902,857 2,377,701 4,414,215 81,875 66,374 15,501

2,916,570 2,894,630 2,386,976 1,749,620 637,356 507,654 21,940 6,827 15,113

2,346,993 2,303,869 2,272,494 1,777,388 495,106 31,375 43,124 41,332 1,792

9,523,489 9,153,957 8,761,706 5,090,626 3,671,080 392,251 369,532 369,532 0

31,663,090 30,365,162 27,213,167 19,933,955 7,279,212 3,151,995 1,297,928 1,140,624 157,304

1,040,090,484 1,011,329,205 776,563,296 586,989,332 189,573,964 234,765,909 28,761,279 28,277,435 483,844

704,785,327 695,593,860 511,051,452 397,057,876 113,993,576 184,542,408 9,191,467 9,173,420 18,047

256,753,877 255,418,592 193,117,435 146,963,287 46,154,148 62,301,157 1,335,285 1,318,107 17,178

198,257,884 197,697,188 141,240,298 111,860,590 29,379,708 56,456,890 560,696 560,696 0

189,584,737 189,038,090 134,812,483 106,881,881 27,930,602 54225,607 546,647 546,647 0

8,673,147 8,659,098 6,427,815 4,978,709 1,449,106 2,231,283 14,049 14,049 0

236,657,522 230,768,986 167,509,058 132,070,447 35,438,611 63,259,928 5,888,536 5,887,998 538

150,713 146,318 117,979 87,404 30,575 28,339 4,395 4,395 0

12,965,331 11,562,776 9,066,682 6,076,148 2,990,534 2,496,094 1,402,555 1,402,224 331

72,285,537 71,883,024 50,055,992 40,453,728 9,602,264 21,827,032 402,513 402,455 58

3,058,030 3,039,886 2,110,196 1,681,067 429,129 929,690 18,144 18,091 53

56,345 56,306 48,387 42,335 6,052 7,919 39 39 0

684,081 679,580 514,340 410,149 104,191 165,240 4,501 4,501 0

18,075,657 17,985,499 12,204,931 9,857,622 2,347,309 5,780,568 90,158 90,153 5

6,060,378 6,057,276 4,672,068 3,701,874 970,194 1,385,208 3,102 3,102 0

44,351,046 44,064,477 30,506,070 24,760,681 5,745,389 13,558,407 286,569 286,569 0

45,564,839 44,480,526 42,176,172 24,143,335 18,032,837 2,304,354 1,084,313 1,067,913 16,400

36,289,906 35,958,351 34,692,076 19,356,161 15,335,915 1,266,275 331,555 315,155 16,400

10,871 10,871 7,012 5,628 1,384 3,859 0 0 0

7,238,449 6,807,485 5,926,583 4,052,455 1,874,128 880,902 430,964 430,964 0

1,684,386 1,384,810 1,253,838 553,174 700,664 130,972 299,576 299,576 0

1,232 1,232 794 594 200 438 0 0 0

339,995 317,777 295,869 175,323 120,546 21,908 22,218 22,218 0

22,421,012 18,966,712 18,322,583 10,469,477 7,853,106 644,129 3,454,300 3,454,184 116

2,414,723 1,846,518 1,813,423 1,111,331 702,092 33,095 568,205 568,089 116

103,701 102,796 91,927 18,263 73,664 10,869 905 905 0

10,080,294 8,482,379 8,217,976 4,788,636 3,429,340 264,403 1,597,915 1,597,915 0

7,418,229 6,766,596 6,511,588 3,251,854 3,259,734 255,008 651,633 651,633 0

5 5 5 5 0 0 0 0 0

2,404,060 1,768,418 1,687,664 1,299,388 388,276 80,754 635,642 635,642 0

845,056,715 830,924,122 621,606,199 472,124,416 149,481,783 209,317,923 14,132,593 14,097,972 34,621

338,660,139 333,963,028 260,770,169 188,850,644 71,919,525 73,192,859 4,697,111 4,663,028 34,083

204,490,416 203,925,674 146,060,491 115,629,289 30,431^02 57,865,183 564,742 564,742 O

301,906,160 293,035,420 214,775,539 167,644,483 47,131,056 78,259,881 8,870,740 8,870,202 538

116,660,435 103,020,572 96,350,686 70,813,471 25,537,215 6,669,886 13,639,863 13,431,397 208,466

72,979,442 70,320,490 66,899,303 51,678,941 15,220,362 3,421,187 2,658,952 2,658,952 0

42,842,543 40,636,816 39,194,674 31,328,798 7,865,876 1,442,142 2,205,727 2205,727 0

5,694,086 5,667,886 5,344,928 3,675,702 1,669,226 322,958 26,200 26,200 0

24,442,813 24,015,788 22,359,701 16,674,441 5,685,260 1,656,087 427,025 427,025 0

7,570,913 5,127,666 4,845,541 2,747,298 2,098,243 282,125 2,443,247 2,416,315 26,932

801,087 799,100 549,930 407,767 142,163 249,170 1,987 449 1,538

10,136,501 9,762,309 9,369,842 5,144,593 4,225,249 392,467 374,192 374,192 0

25,172,492 17,011,007 14,686,070 10,834,872 3,851,198 2,324,937 8,161,485 7,981,489 179,996

ASSETS AND LIABILITIES OF BANKS 241

Digitized for FRASER 

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Federal Reserve Bank of St. Louis
Table 107. ASSETS AND LIABILITIES OF ALL COMMERCIAL BANKS IN THE UNITED STATES (STATES AND OTHER AREAS),

DECEMBER 31, 1976-CONTINUED 

BANKS GROUPED BY INSURANCE STATUS AND CLASS OF BANK 

(Amounts in thousands of dollars)

Insured banks Noninsured banks

Asset, liability, or equity capital item Total

Total

Members of 

Federal Reserve System

Not 

members 

of F.R. 

System

Total

Banks

of

deposit1

Nondeposit

trust

Total National State companies2

Total liabilities (excluding subordinated notes and

debentures)................................................................................... 961,717,150 933,944,694 717,956,885 542,937,887 175,018,998 215,987,809 27,772,456 27,529,369 243,087

Subordinated notes and debentures........................................................ 5,261,430 5,123,725 4,082,288 2,726,628 1,355,660 1,041,437 137,705 136,627 1,078

Equity c a p ita l-to ta l................................................................................ 73,111,904 72,260,786 54,524,123 41,324,817 13,199,306 17,736,663 851,118 611,439 239,679

Preferred stock-par va lue .................................................................... 73,422 67,328 25,213 18,754 6,459 42,115 6,094 5,692 402

Preferred stock-shares outstanding (in thousands)......................... 6,806 6,740 3,573 491 3,082 3,167 66 55 11

Common stock-par value.................................................................... 16,320,780 16,219,259 11,884,153 9,106,275 2,777,878 4,335,106 101,521 52,142 49,379

Common stock-shares authorized (in thousands)......................... 2,172,803 2,067,077 1,294,118 1,065,235 228,883 772,959 105,726 62,552 43,174

Common stock-shares outstanding (in thousands)......................... 1,719,918 1,702,805 1,179,077 965,665 213,412 523,728 17,113 14,757 2,356

Surplus...................................................................................................... 29,326,051 28,893,882 21,409,674 15,853,738 5,555,936 7,484,208 432,169 379,720 52,449

Undivided p ro fits ................................................................................... 25,492,839 25,251,535 19,925,999 15,271,833 4,654,166 5,325,536 241,304 116,706 124,598

Reserve for contingencies and other capital reserves...................... 1,898,812 1,282,782 1,279,084 1,074,217 204,867 549,698 70,030 57,179 12,851

PERCENTAGES

Of total assets:

Cash and due from b a n k s .................................................................... 13.2 12.9 14.0 13.0 17.3 9.0 22.9 23.2 7.8

U.S. Treasury securities and obligations of other 

U.S. Government agencies and corporations.................................. 12.8 13.0 11.7 11.9 11.2 17.2 5.8 5.8 6.2

Other securities...................................................................................... 11.6 11.7 11.2 11.3 10.8 13.6 5.4 5.2 17.5

Loans (including federal funds sold and securities 

purchased under agreements to resell)........................................... 55.9 55.8 55.6 56.6 52.5 56.5 59.5 60.0 29.3

Other assets............................................................................................ 6.6 6.6 7.4 7.2 8.2 3.7 6.3 5.7 39.2

Total equity capital3 ............................................................................. 7.0 7.1 7.0 7.0 7.0 7.6 7.34 5.3 4 49.5

Of total assets other than cash and U.S. Treasury securities:

Total equity capital3 ............................................................................. 9.1 9.2 9.1 9.0 9.5 9.5 11.34 6.44 56.9

Number of banks......................................................................................... 14,698 14,411 5,760 4,737 1,023 8,651 287 1209 78

1< 2- 3' 4 See notes to table 106.

Note: Further information on the report of assets and liabilities of banks may be found on pp. 233-234.

242 FEDERAL DEPOSIT INSURANCE CORPORATION

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
Table 108. ASSETS AND LIABILITIES OF ALL MUTUAL SAVINGS BANKS IN THE UNITED STATES (STATES AND OTHER AREAS),

JUNE 30, 1976, AND DECEMBER 31, 1976 

BANKS GROUPED BY INSURANCE STATUS 

(Amounts in thousands of dollars)

Asset, liability, or surplus account item

June 30,1976 December 31,1976

Total Insured Noninsured Total Insured Noninsured

Total assets............................................................................................................................................ 128,457,216 114,013,807 14,443,409 134,820,238 120,839,827 13,980,411

Cash, balances with banks, and collection item s-total............................................................ 1,572,981 1,419,290 153,691 2,370,167 2,188,926 181,241

Currency and c o in .................................................................................................................... 336,058 283,842 52,216 395,273 338,001 57,272

Demand balances with banks in the United S tates............................................................ 585,559 502,637 82,922 1,022,366 925,344 97,022

Other balances with banks in the United States.................................................................. 550,635 544,888 5,747 816,010 807,240 8,770

Cash items in process of collection........................................................................................ 100,729 87,923 12,806 136,518 118,341 18,177

Secu rities—total................................................................................................................................ 39,404,525 35,237,267 4,167,258 41,976,649 37,984,627 3,992,022

United States Government and agency s e curities-to tal................................................... 13,361,719 1 1,783,018 1,578,701 14,764,846 13,194,506 1,570,340

Securities maturing in 1 year or less............................................................................... 1890,595 1,621,307 269288 2,274,842 1,981,205 293,637

Securities maturing in 7 to 5 years.................................................................................. 3,981,288 3,274,058 707,230 3,783,778 3237,461 546,317

Securities maturing in 5 to 10 years............................................................................... 1,787,492 1,492,423 295,069 1,655,589 1,383,006 272,583

Securities maturing after 10 years..................................................................................... 5,702,344 5,395,230 307,114 7,050,637 6,592,834 457,803

Corporate b o n d s ...................................................................................................................... 15,993,543 14,696,937 1,296,606 16,904,069 15,781,623 1,122,446

State, county, and municipal obligations............................................................................... 2,343,174 2,225,089 118,085 2,407,041 2,301,574 105,467

Other bonds, notes, and debentures..................................................................................... 3,361,651 2,889,972 471,679 3,540,853 3,019,191 521,662

Corporate s to c k -to ta l............................................................................................................. 4,344,438 3,642,251 702,187 4,359,840 3,687,733 672,107

Bank...................................................................................................................................... 543,679 376,524 167,155 548,733 387,161 161,572

Other...................................................................................................................................... 3,800,759 3^65,727 535,032 3,811,107 3,300,572 510,535

Federal funds sold and securities purchased under agreements to resell.............................. 1,874,504 1,636,845 237,659 1,535,036 1,322,316 212,720

Other loans-total............................................................................................................................. 82,121,307 72,538,149 9,583,158 85,294,638 75,990,422 9,304,216

Real estate loans-total............................................................................................................. 78,838,767 69,751,108 9,087,659 81,639,570 72,820,626 8,818,944

Construction loans............................................................................................................. 934,712 813,117 121,595 955,370 854,499 100,871

Secured by farmland.......................................................................................................... 57,298 43,319 13,979 60,016 46,364 13,652

Secured by residential properties:

Secured by 1- to 4 - family residential properties:

Insured by Federal Housing Administration...................................................... 12,151,588 11,335,565 816,023 11,846,517 11,147,343 699,174

Guaranteed by Veterans Administration............................................................ 12,284,679 11,230,240 1,054,439 12,185,076 11,221,051 964,025

Not insured or guaranteed by FHA or VA......................................................... 26,279,969 21,217,100 5,062,869 28,687,780 23,393,029 5,294,751

Secured by multifamily (5 or more) residential properties:

Insured by Federal Housing Administration...................................................... 2,267,553 2^12,618 54,935 2,444,114 2,428,166 15,948

Not insured by F H A .............................................................................................. 11,245,405 10,648,078 597,327 11,443,577 10,874,242 569,335

Secured by other properties.............................................................................................. 13,617,563 12,251,071 1,366,492 14,017,120 12,855,932 1,161,188

Loans to domestic commercial and foreign banks............................................................... 33,712 32,275 1,437 28,442 26,955 1,487

Loans to other financial in stitutio ns.................................................................................... 45,190 45,078 112 57,346 57,234 112

Loans to brokers and dealers in securities........................................................................... 0 0 0 0 0 0

Other loans for purchasing or carrying securities............................................................... 1,808 1,520 288 1,758 1,494 264

Loans to farmers (excluding loans on real estate)............................................................... 990 990 0 918 918 0

Commercial and industrial lo a n s ........................................................................................... 481,413 472,519 8,894 609,393 599,849 9,544

ASSETS AND LIABILITIES OF BANKS

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
Table 108. ASSETS AND LIABILITIES OF ALL MUTUAL SAVINGS BANKS IN THE UNITED STATES (STATES AND OTHER AREAS),

JUNE 30, 1976, AND DECEMBER 31, 1976—CONTINUED 

BANKS GROUPED BY INSURANCE STATUS 

(Amounts in thousands of dollars)

Asset, liability, or surplus account item

June 30,1976 December 31, 1976

Total Insured Noninsured Total Insured Noninsured

Loans to individuals for personal expenditures...................................................................

All other loans (including overdrafts)......................................................................................

2,607,892

111,535

2,184,137

50,522

423,755

61,013

2,862,400

94,811

2,412,478

70,868

449,922

23,943

Total loans and securities............................................................................................ 123,400,336 109,412,261 13,988,075 128,806,323 115,297,365 13,508,958

Bank premises, furniture and fixtures, and other assets representing bank premises . .

Real estate owned other than bank prem ises......................................................................

Investments in subsidiaries not consolidated.........................................................................

Other assets................................................................................................................................

1,139,611

515,838

113,633

1,714,817

1,003,968

463,473

108,493

1,606,322

135,643

52,365

5,140

108,495

1,190,297

539,844

122,338

1,791,269

1,063,867

490,059

112,754

1,686,856

126,430

49,785

9,584

104,413

Total liabilities and surplus accounts.................................................................................................. 128,457,216 114,013,807 14,443,409 134,820,238 120,839,827 13,980,411

D e p o s its -to ta l................................................................................................................................

Savings and time deposits-total...............................................................................................

Savings deposits....................................................................................................................

Deposits accumulated for payment of personal loans....................................................

Fixed maturity and other time deposits.........................................................................

Demand d e p o s its -to ta l...........................................................................................................

117,599,055

116,617,621

73,469,580

2

43,148,139

981,434

104,538,180

103,592,741

65,101,518

1

38,491,222

945,439

13,060,875

13,024,880

8,368,062

1

4,656,817

35,995

123,653,736

122,517,852

75,353,084

1

47,164,767

1,135,884

110,998,759

109,895,767

67,295,029

1

42,600,737

1,102,992

12,654,977

12,622,085

8,058,055

0

4,564,030

32,892

Miscellaneous lia b ilitie s-to ta l........................................................................................................

Securities sold under agreements to repurchase...................................................................

Other borrowings.......................................................................................................................

Other lia b ilitie s ..........................................................................................................................

2,125,610

50,290

435,906

1,639,414

1,868,279

50,290

421,214

1,396,775

257,331

0

14,692

242,639

2,112,377

72,718

362,913

1,676,746

1,865,047

69,118

356,329

1,439,600

247,330

3,600

6,584

237,146

Total lia b ilitie s .............................................................................................................. 119,724,665 106,406,459 13,318,206 125,766,113 112,863,806 12,902,307

Minority interest in consolidated subsidiaries............................................................................ 60 60 0 61 61 0

Surplus accounts-total....................................................................................................................

Capital notes and debentures..................................................................................................

Other surplus accounts..............................................................................................................

8,732,491

213,080

8,519,411

7,607,288

206,930

7,400,358

1,125,203

6,150

1,119,053

9,054,064

219,470

8,834,594

7,975,960

213,264

7,762,696

1,078,104

6,206

1,071,898

PERCENTAGES

Of total assets:

Cash and balances with other b a n k s ............................................................................................

U.S. Government and agency se curities......................................................................................

Other securities................................................................................................................................

Loans (including federal funds sold and securities purchased under

agreements to resell)...........................................................................................................

Other assets......................................................................................................................................

Total surplus accounts....................................................................................................................

1.2

10.4

20.3

65.4

2.7

6.8

1.2

10.3

20.6

65.1

2.8

6.7

1.1

10.9

17.9

68.0

2.1

7.8

1.8

11.0

20.2

64.4

2.7

6.7

1.8

10.9

20.5

64.0

2.8

6.6

1.3

11.2

17.3

68.1

2.1

7.7

Of total assets other than cash and U.S. Government obligations:

Total surplus accounts.................................................................................................................... 7.7 7.5 8.9 7.7 7.6 8.8

Number of banks................................................................................................................................... 474 328 146 473 329 144

244 FEDERAL DEPOSIT INSURANCE CORPORATION

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
Table 109. ASSETS AND LIABILITIES OF INSURED COMMERCIAL BANKS IN THE UNITED STATES (STATES AND OTHER AREAS),

DECEMBER CALL DATES, 1971-1976 

(Amounts in thousands of dollars)

Asset, liability, or equity capital item Dec. 31,1971 Dec. 31, 1972 Dec. 31, 1973 Dec. 31, 1974 Dec. 31, 1975 Dec. 31, 1976

Total assets..............................................................................................................

Cash and due from banks-total.........................................................................

Cash items in process of co lle ction .............................................................

Demand balances with banks in the United S ta tes.................................

Other balances with banks in the United States.......................................

Including interest bearing balances1 ...................................................

639,903,322 737,699,385 832,658,280 912,529,261 952,451,011 1,011,329,2055

98,690,700

38,658,890

21,962,456

2,427,914

111,844,113

45,386,844

28,156,064

2,783,379

116,939,181

44,661,826

30,128,768

2,771,041

126,081,191

47,281,289

34,414,497

4,090,428

129,024,072

47,332,821

32,168,464

7,566,509

130,221,094

48,366,003

33,022,738

5,874,949

5,568,150

4,796,214

4,409,156

12,192,210

25,968,980

Balances with banks in foreign countries...................................................

Including interest bearing balances ' ...................................................

567,033 739,928 787,960 1,449,086 2,820,929

Currency and c o in ........................................................................................

Reserve with Federal Reserve Bank.............................................................

Securities-total....................................................................................................

Investment securities-total.........................................................................

U.S. Treasury securities.........................................................................

Obligations of other U.S. Government agencies and corporations. .

Obligations of States and political subdivisions.................................

Other bonds, notes, and debentures...................................................

Corporate stock1 ...........................................................................................

7,591,590

27,482,817

8,703,008

26,074,890

10,768,844

27,820,742

11,727,595

27,118,296

12,355,374

26,779,975

169,167,078

163,859,514

62,696,667

17,071,836

80,135,021

3,955,990

183,760,796

178,632,700 

64,709,715

21,156,678

87,418,538

5,347,769

188,230,092

179,574,763

55293,300

27,538214

91,227,882

5,515,367

193,902,967

185,919,136

51,873,986

31,087,341

96,791,360

6,166,449

227,847,169

222,515,186

81,011,010

33298,668

100,801,477

7,404,031

249,976,105

240,552,476

96,883,068

34,326,811

103,505,764

5,836,833

1,541,489

Trading account securities................................................................ 7,882,140

Federal funds sold and securities purchased under agreements

to rese ll-to ta l..............................................................................................

Loans net ..............................................................................................................

5,307,564 5,128,096 8,655,329 7,983,831 5,331,983

19,643,272 25,634,862 34,379,920 38,937,288 37,345,238 45,869,893

518,731,657

6,186,775

524,918,432

12,617,065

537,535,497

150,904,938

17,273,179

6,716,845

8,198,789

72,881,477

423,194

4,158,942

41252,512

35.900.747 

9,939,141

j 2,782,815

\ 6,620,910

f 1,348,516

i 15209,365

15,089,724

11.074.748

4,014,976

23,268,314 

178,751,008 

1 18,905,722

Plus: Reserve for possible loan losses1 ......................................................

Loans, to ta l...........................................................................................................

Plus: Unearned income on loans1................................................................

Loans, gross...........................................................................................................

Real estate loans-total..................................................................................

Construction and land development1...................................................

328,225,896

82,314,290

388,902,133

99,086,276

459,755,788

118,787,181

506,378,800

131,751,383

502,289,682

136,186,930

Secured by farmland...............................................................................

Secured by 1- to 4-family residential properties:

Insured by FHA and guaranteed by V A .......................................

Conventional.....................................................................................

Secured by multi-family (5 or more) residential properties:

Insured by FHA..................................................................................

Conventional......................................................................

Secured by non farm nonresidential properties.................................

Loans to financial in stitutio ns-tota l.........................................................

To real estate investment trusts and mortgage companies1 ............

4,173,726

10,442,621

37,438,104

803,880

3,177,970

26,277,989

21,313,511

4,752270

10,418,222

46,425,199

1,225,769

4,550,113

31,714,703

29,527,538

5.420.190

10,156,517

57,639,300

1.293.191

5,636,229

38,641,754

39,696,478

6,030,620

9,348,308

65204281

939,083

6,652,445

43,576,646

45,202,429

6,370,913

8,869,801

68,149,590

513,947

5,401,104

46,881,575

38,966,705

To domestic commercial banks............................................................

To banks in foreign countries...............................................................

To other depository institutions.........................................................

To other financial institutions2 .............................................................

Loans for purchasing or carrying securities-total....................................

To brokers and dealers in securities......................................................

Other loans for purchasing or carrying securities..............................

Loans to farm e rs...........................................................................................

Commercial and industrial lo a n s ................................................................

Loans to individuals-total............................................................................

} 4,405^98

1 16,908,213

10,848,504 

7,202,440

3,646,064

12,506,206 

118,401,203 

74,796,848

6,119,843

23,407,695

15,632,717 

11,165,572

4,467,145

14,302,106 

132,497,555 

87,629,904

9,155,496

30,540,982

11,926,687

7,625,741

4,300,946

17,150,320

158,688,202

100,382,510

10,082,525

35,119,904

9,195,911

5,192,896

4,003,015

18,225,296

184,216,999

103,714,164

9,556,714

29,409,991

10,879,642

7,055262

3,824,380

20,135,056

175,922,939

106,819,480

ASSETS AND LI ABI LITI ES OF BANKS 245

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
Table 109. ASSETS AND LIABILITIES OF INSURED COMMERCIAL BANKS IN THE UNITED STATES (STATES AND OTHER AREAS),

DECEMBER CALL DATES, 1971-1976-CONTINUED 

(Amounts in thousands of dollars)

Asset, liability, or equity capital item Dec. 31, 1971 Dec. 31, 1972 Dec. 31, 1973 Dec. 31, 1974 Dec. 31, 1975 Dec. 31, 1976

To purchase private passenger automobiles on instalment basis. . .

Credit cards and related plans:

Retail (charge account) credit card plans......................................

Check credit and revolving credit plans.........................................

To purchase other retail consumer goods on instalment basis:

Mobile homes (excludes travel trailers). .........................................

Other retail consumer goods..............................................................

Instalment loans to repair and modernize residential property . . .

Other instalment loans for household, family, and other personal

expenditures.........................................................................................

Single-payment loans for household, family, and other personal

expenditures.........................................................................................

All other loans..................................................................................................

24,850,695

4,523,889

1,463,857

4,674,364

4,655,510

3,865,597

11,409,477

19,353,459

8,045,334

29,084,924

5,443,349

1,780,153

6,436,145

5,170,118

4,326,916

12,903,659

22,484,640

10,226,037

33,477,132

6,878,593

2,262,700

8,371286

6,206,851

4,906,940

14,538,048

23,740,960

13,124,410

32,949,382

8,327,292

2,810,808

8,998,167

6,514,415

5,625,691

15,491,334

22,997,075

14,072,618

33,455,998

9,551,255

2,827,207

8,720,369

6,720,411

5,955,100

16,455,919

23,133,221

13,378,930

39,806,519

11,373,566

3,054,209

8,743,103

7,246,252

6,567,706

17,792,293

24,322,074

14,715,044

Total loans and securities................................................................. 517,036,246 598,297,791 682,365,800 739,219,055 767,482,089 814,577,655

5,118,065

Bank premises, furniture and fixtures, and other assets representing

bank premises............................................................................................

Real estate owned other than bank prem ises...........................................

Investments in unconsolidated subsidiaries and associated companies .

Customers' liability on acceptances outstanding.....................................

Other assets.....................................................................................................

10,285,384

390,833

911,550

3,914,186

8,674,423

11,524,646

369,193

1,077,700

3,471,203

11,114,739

12,788,763

433,860

1,403,400

4,356,527

14,370,749

14,296,959

811,080

1,739,054

10,653,382

19,728,540

15,598,230

1,908,880

1,992,754

8,687,996

27,756,990

16,694,773

2,894,630

2,303,869

9,153,957

30,365,162

Total liabilities and equity capital............................................................................. 639,903,322 737,699,385 832,658,280 912,529,261 952,451,011 1,011,329,205

Business and personal deposits-total.................................................................

Individuals, partnerships, and corporations-demand...............................

Individuals, partnerships, and corporations-savings...............................

Individuals and nonprofit organ izati ons—savings

439,568,884

191,775,515

112,165,951

504,283,757

221,204,645

124,188,716

555,151,799

231,956,880

127,818,434

604,637,647

235,984,680

136,268,612

645,305,033

246,710,621

160,716,975

695,593,860

255,418,592

197,697,188

189,038,090

Corporations and oth&r profit orQanizations—savinc/s^ 8,659,098

Individuals, partnerships, and corporations-tim e.....................................

Deposits accumulated for payment of personal loans-tim e...................

Certified and officers' checks, travelers' checks, letters of

credit-dem and.........................................................................................

125,087,661

677,179

9,862,578

147,083,850

554,001

11,252,545

184,010,925

503,468

10,862,092

221,618,614

386,635

10,379,106

226,851,406

280,452

10,745,579

230,768,986

146,318

11,562,776

Government deposits-total................................................................................

United States Government-demand...........................................................

United States Government—savings

58,987,158

10,263,251

67,554,342

10,939,672

73,660,934

9,887,668

74,219,736

4,821,969

70,704,640

3,126,532

71,883,024

3,039,886

56,306

United States G overnm ent-tim e.................................................................

States and political subdivisions-demand.................................................

States and political subdivisions—savings

530,769

17,714,586

614,035

18,672,774

440,641

18,746,900

500,147

18,710,659

588,481

18,879,179

679,580

17,985,499

6,057,276

States and political subdivisions-tim e........................................................ 30,478,552 37,327,861 44,585,725 50,186,961 48,110,448 44,064,477

Domestic interbank deposits-total....................................................................

Commercial banks in the United States—demand.....................................

Commercial banks in the United States—savings

31,906,847

28,014,732

33,677,534

28,569,727

37,444,862

29,861,879

45,328,505

35,101,553

44,280,973

33,491,673

44,480,526

35,958,351

10,871

Commercial banks in the United S tates-tim e...........................................

Mutual savings banks in the United States-dem and...............................

Mutual savings banks in the United States—savings

2,441,489

1,163,740

3,548,503

1,205,688

5,783,907

1,155,682

8,563,604

1,197,332

9,129,775

1,159,714

6,807,485

1,384,810

1,232

Mutual savings banks in the United States—tim e ..................................... 286,886 353,616 643,394 466,016 499,811 317,777

246 FEDERAL DEPOSIT INSURANCE CORPORATION

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Federal Reserve Bank of St. Louis
Foreign government and bank deposits-total................................................. 8,721,173 11,391,934 15,361,830 22,227,034 20,458,022 18,966,712

Foreign governments, central banks-dem and.......................................... 803,364 908,731 1,355,645 1,882,054 1,659,374 1,846,518

102 796

Foreign governments, central banks-tim e................................................. 5,053,554 6,517,493 8,506,931 12,078,963 11,374,159 8,482,379

Banks in foreign countries-dem and.......................................................... 2,681,096 3,637,309 5,279,635 6,339,583 5,649,939 6,766,596

5

Banks in foreign c o u n trie s -tim e ................................................................ 183,159 328,401 219,619 1,926,434 1,774,550 1,768,418

Total deposits..................................................................................... 539,184,062 616,907,567 681,619,425 746,412,922 780,748,668 830,924,122

Demand......................................................................................... 262278,862 296,391,091 309,106,381 314,416,936 321,422,611 333,963,028

Savings............................................................................................ 112,165,957 124,188,716 127,818,434 136,268,612 160,716,975 203,925,674

Time............................................................................................... 164,739,249 196,327,760 244,694,610 295,727,374 298,609,082 293,035,420

Miscellaneous lia b ilitie s-to ta l............................................................................ 47,370,832 61,514,816 85,391,650 94,152,187 93,975,434 103,020,572

Federal funds purchased and securities sold under agreements

to repurchase-total.................................................................................. 24,179,742 33,731,069 50,480,996 51,224,639 52,190,147 70,320,490

Other liabilities for borrowed money.......................................................... 1,463,429 3,919,796 7,179,644 4,867,119 4,651,050 5,127,666

Mortgage indebtedness.................................................................................. 668,331 1,160,675 771,519 724,845 774,094 799,100

Acceptances outstanding............................................................................... 4,039,643 3,570,900 4,486,309 11,226,448 9,275,803 9,762,309

' Other liabilities3 ............................................................................................ 17,019,687 19,132,376 22,473,182 26,109,136 27,084,340 17,011,007

Total liabilities (excluding subordinated notes

and debentures)............................................................................ 586,554,894 678,422,383 767,011,075 840,565,109 874,724,102 933,944,694

Subordinated notes and debentures................................................................... 2,956,180 4,092,820 4,117,351 4,259,531 4,407,892 5,123,725

Reserves on loans and securities—total4 .......................................................... 6 443,382 6,909,306 7,808,584 8,676,953 9,010,387

Reserves for bad debt losses on loans.......................................................... 6J 51,274 6,623^801 7*526744 8^3 76,683 8*6 54^714

Other reserves on loans.................................................................................. 113,427 112,167 107,994 131,581 169,113

Reserves on securities..................................................................................... 178,681 173,338 173,846 168,689 186,560

Equity c a p ita l-to ta l............................................................................................ 43,948,866 48,274,876 53,721,270 59,027,668 64,308,630 72,260,786

Preferred stock-par value............................................................................ 91,930 68,924 65,650 43,460 47,881 67,328

Common stock-par value............................................................................ 11,811,129 12,853,653 13,846,071 14,789,463 15,565,026 16,219,259

Surplus.............................................................................................................. 19,895,816 21,528,422 23,593,311 25,313,257 26,712,935 28,893,882

Undivided p ro fits ............................................................................................ 11,135,068 13,012,232 15,361,857 17,969,789 21,182,330 25,251,535

Reserve for contingencies and other capital reserves.............................. 1,014,923 811,645 854,381 911,699 800,458 1,828,782

PERCENTAGES

Of total assets:

Cash and due from b a n k s ............................................................................ 15.4 15.2 14.0 13.8 13.5 12.95

U.S. Treasury securities and obligations of other U.S. Government

agencies and corporations............................................................................ 12.5 11.6 9.9 9.1 12.0 13.05

Other securities..................................................................................................... 14.0 13.3 12.7 12.2 11.9 11.7s

Loans (including federal funds sold and securities purchased under

agreements to resell)..................................................................................... 54.4 56.2 59.3 59.8 56.7 55.85

Other assets.....................................................................................................•. . 3.8 3.7 4.0 5.2 5.9 6.65

Total equity capital............................................................................................... 6.9 6.5 6.5 6.5 6.8 7.15

Of total assets other than cash and U.S. Treasury securities:

Total equity capital................................................................................... 9.2 8.6 8.1 8.0 8.7 9.25

Number of banks........................................................................................................ 13,612 13,733 13,976 14,228 14,384 14,411

1 Not available before 1976.

2 Before 1976 included loans to real estate investment trusts and mortgage companies.

3 1ncludes minority interest in consolidated subsidiaries.

4 Reporting of reserves for losses on loans and securities was revised in 1976; see page 234. 

5Total asset data for 1976 are based on "Loans, net.''

ASSETS AND LIABILITIES OF BANKS 247

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
Table 110. ASSETS AND LIABILITIES OF INSURED MUTUAL SAVINGS BANKS IN THE UNITED STATES (STATES AND OTHER AREAS),

DECEMBER CALL DATES, 1971-1976 

(Amounts in thousands of dollars)

Asset, liability, or surplus account item Dec. 31, 1971 Dec. 31, 1972 Dec. 31, 1973 Dec. 31, 1974 Dec. 31, 1975 Dec. 31, 1976

T otal assets................................................................................................................................................... 77,891,927 87,650,051 93,012,515 95,589,401 107,280,765 120,839,827

Cash, balances with banks, and collection ite m s -to ta l...................................................................

Currency and c o in ..........................................................................................................................

Demand balances with banks in the United S ta tes...................................................................

Other balances with banks in the United States.........................................................................

Cash items in process of co lle ction ..............................................................................................

1,273,735

195,679

551,149

445,384

81,523

1,520,399

215,345

568,211

627,530

109,313

1,847,776

226,905

711,172

817,495

92,204

2,053,353

268,102

683,943

1,022,757

78,551

2,195,390

308,887

706,116

1,091,274

89,113

2,188,926

338,001

925,344

807,240

118,341

Securities-total...................................................................................................................................... 18,491,379 22,636,737 21,871,412 22,684,614 30,421,034 37,984,627

United States Government and agency s e c u ritie s -to ta l.........................................................

Securities maturing in 1 year or less.....................................................................................

Securities maturing in 1 to 5 years........................................................................................

Securities maturing in 5 to 10 years.....................................................................................

Securities maturing after 10 years.........................................................................................

5,156,321

867,992

1,823,997

832,859

1,631,473

6,386,003

968,157

1,915,014

1,095,116

2,407,716

5,971,200

831,719

1,513,476

789,936

2,836,069

5,967,835 

712,274

1,604,165

694,251

2,957,145

9,468,682

1,312,116

2,761,242

1,167,218

4,228,106

13,194,506

1,981,205

3,237,461

1,383,006

6,592,834

State, county, and municipal obligations.....................................................................................

Corporate b o n d s .............................................................................................................................

Other bonds, notes, and debentures...........................................................................................

373,810

9,293,507

1,194,941

857,353 

1 1,086,004 

1,370,862

907,013

10,026,920

1,713,867

882,620

10,560,303

1,856,557

1,488,631

13,503,561

2,329,685

2,301,574

15,781,623

3,019,191

Corporate s to c k -to ta l....................................................................................................................

Bank............................................................................................................................................

Other............................................................................................................................................

2,472,800 

288,373

2,184,427

2,936,515

329,426

2,607,089

3,252,412

364,066

2,888,346

3,417,299

348,290

3,069,009

3,630,475

374,851

3,255,624

3,687,733

387,161

3,300,572

Federal funds sold and securities purchased under agreements to re s e ll.................................... 493,536 596,255 1,252,753 964,856 897,063 1,322,316

Other loans-total...................................................................................................................................

Real estate loans-total....................................................................................................................

Construction loans....................................................................................................................

Secured by farmland.................................................................................................................

Secured by residential properties:

Secured by 1- to 4-family residential properties:

Insured by Federal Housing Administration.............................................................

Guaranteed by Veterans Administration...................................................................

Not insured or guaranteed by FHA or VA................................................................

Secured by multi family (5 or more) residential properties:

Insured by Federal Housing Administration.............................................................

Not insured by F H A.....................................................................................................

Secured by other properties..............................................................................................

Loans to domestic commercial and foreign banks................................................................

Loans to other financial institutio ns.....................................................................................

Loans to brokers and dealers in securities............................................................................

Other loans for purchasing or carrying securities................................................................

Loans to farmers (excluding loans on real estate)................................................................

Commercial and industrial lo a n s ...........................................................................................

Loans to individuals for personal expenditures...................................................................

All other loans (including overdrafts).....................................................................................

56,066,722

54,222,077

736,386

41,656

13,532,344

10,923,517

13,031,229

1,396,791

7,136,586

7,423,568

49,628 

36,492 

5,951 

3,485 

1,110 

463,001 

1,260,144 

24,834

60,950,481

59,094,330

1,002,712

51,459

13,388,433

11,413,769

14,804,568

1,399,794

8,265,926

8,767,669

29,751

29,927

28,922

3,446

1,305

252,438

1,451,401

58,961

65,870,714

63,946,513

1,090,262

51,160

12,828,775

11,728,249

17,087,533

1,523,751

9,416,887

10,219,896

13,679

29,473

4,441

2,221

1,323

173,322

1,665,365

34,377

67,449,217

65,339,748

821,250

49,185

12,052,069

11,501,239

18,275,751

1,688,126

10,076,268

10,875,860

18,339 

26,324 

743 

930 

1,416 

175,360 

1,812,329 

74,028

70,812,040

68,371,859

824,494

48,239

11,587,451

11,342,670

20,123,915

1,949,245

10,693,613

11,802,232

25,275

32,714

0

1,480

1,456

288,976

2,052,147

38,133

75,990,422

72,820,626

854,499

46,364

11,147,343

11,221,051

23,393,029

2,428,166

10,874,242

12,855,932

26,955 

57,234 

0

1,494

918

599,849

2,412,478

70,868

Total loans and securities.................................................................................................. 75,051,637 84,183,473 88,994,879 91,098,687 102,130,137 115,297,365

248 FEDERAL DEPOSIT INSURANCE CORPORATION

Digitized for FRASER 

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Federal Reserve Bank of St. Louis
Bank premises, furniture and fixtures, and other assets representing bank premises . .

Real estate owned other than bank prem ises..................................................................

Investments in subsidiaries not consolidated........................................................................

Other assets........................................................................................................

590,326

90,987

41,518

843,724

661,118

147,340

59,309

1,078,412

760,289

180,671

64,883

1,164,017

857,879

233,775

82,292

1,263,415

963,664

418,233

94,253

1,479,088

1,063,867

490,059

112,754

1,686,856

Total liabilities and surplus accounts....................................................................................................... 77,891,927 87,650,051 93,012,515 95,589,401 107,280,765 120,839,827

D e p o s its -to ta l..............................................................................................................

Savings and time deposits-total............................................................................

Savings deposits......................................................................

Deposits accumulated for payment of personal loans.......................................................

Fixed maturity and other time deposits..............................................................................

Demand deposits—t o t a l........................................................................................

71,500,831

70,818,051

57,644,100

80

13,173,871

682,780

80,571,993

79,781,381

60,573,427

25

19,207,929

790,612

84,890,128

84,008,571

57,591,849

476

26,416,246

881,557

86,814,415

85,904,825

56,497,626

295

29,406,904

909,590

98,126,107

97,133,340

62,050,661

430

35,082,249

992,767

110,998,759

109,895,767

67,295,029

1

42,600,737

1,102,992

Miscellaneous lia b ilitie s-to ta l......................................................., ..................................................

Securities sold under agreements to repurchase........................................................................

Other borrowings....................................................................................................

Other lia b ilitie s .............................................................................

975,996

(1)

100,045

875,951

1,114,469

22,757

98,980

992,732

1,609,538

26,089

445,901

1,137,548

1,952,443

217,561

667,256

1,067,626

1,815,359

108,715

465,279

1,241,365

1,865,047

69,118

356,329

1,439,600

Total lia b ilitie s ........................................................................................... 72,476,827 81,686,462 86,499,666 88,766,858 99,941,466 112,863,806

Minority interest in consolidated subsidiaries......................................................... 1 0 0 0 70 61

Surplus accounts-total.........................................................................................................................

Capital notes and debentures..............................................................................................

Other surplus accounts...........................................................................................

5,415,099

10,456

5,404,643

5,963,589

59,372

5,904,217

6,512,849

114,953

6,397,896

6,822,543

169,460

6,653,083

7,339,229

190,279

7,148,950

7,975,960

213,264

7,762,696

PERCENTAGES

Of total assets:

Cash and balances with other b a n k s ....................................................

U.S. Government and agency securities..........................................................................................

Other securities...................................................................................

Loans (including Federal funds sold and securities purchased under agreements to resell). . .

Other assets.........................................................................................

Total surplus accounts.................................................................................................

1.7%

6.6

17.1

72.6

2.0

7.0

1.7%

7.3

18.5

70.2

2.2

6.8

2.0%

6.4

17.1

72.2 

2.3 

7.0

2.1%

6.2

17.5

71.6 

2.5 

7.1

2.0%

8.8

19.5

66.8

2.8

6.8

1.8%

10.9

20.5

64.0

2.8

6.6

Of total assets other than cash and U.S. Government and agency securities:

Total surplus accounts....................................................................................................... 7.6 7.5 7.6 7.8 7.7 7.6

Number of banks...................................................................................... 327 326 322 320 329 329

1 Not reported separately prior to 1972.

ASSETS AND LIABILITIES OF BANKS 249

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
Table 111. PERCENTAGES OF ASSETS, LIABILITIES, AND EQUITY CAPITAL OF INSURED COMMERCIAL BANKS 

OPERATING THROUGHOUT 1976 IN THE UNITED STATES AND OTHER AREAS, DECEMBER 31, 1976

BANKS GROUPED BY AMOUNT OF A S S E T S

Banks w ith assets o f -

Asset, lia b ility, or equity capital item

All

banks

Less 

than 

$5 m illion

$5.0 m illion 

to

$9.9 m illion

$ 10.0 m illion 

to

$24.9 m illion

$25.0 m illion 

to

$49.9 m illion

$50.0 m illion 

to

$99.9 m illion

$ 100.0 m illion 

to

$299.9 m illion

$300.0 m illion 

to

$499.9 m illion

$500.0 m illion 

to

$999.9 m illion

$ 1.0 billion 

to

$4.9 billion

$5.0 billion 

or 

more

Total asse ts.......................................................................................... 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%

Cash and due from b a n k s .......................................................... 12.9 11.0 9.8 9.5 9.3 9.8 11.1 12.4 12.8 14.1 16.4

U.S. Treasury securities1............................................................. 9.6 16.3 14.0 12.1 11.4 10.9 10.9 9.5 9.1 8.5 7.6

Obligations of other U.S. Government agencies

and corporations1.................................................................... 3.4 8.6 7.7 6.4 5.4 4.9 5.0 3.3 3.1 2.0 1.2

Obligations of States and political subdivisions1 ................ 10.2 5.3 8.9 12.1 13.8 13.9 13.2 12.1 11.7 9.5 5.8

Other securities1 .......................................................................... .7 .7 .5 .7 .8 .8 .9 .8 1.0 .7 .3

Federal funds sold and securities purchased under

agreements to resell................................................................ 4.5 6.3 5.2 4.7 4.1 4.0 4.5 5.5 6.3 5.9 2.8

Loans, n e t....................................................................................... 51.2 49.0 51.0 51.5 51.5 51.8 50.4 51.7 50.7 49.6 52.6

Unearned income on loans.......................................................... 1.2 1.3 1.4 1.7 1.8 1.8 1.6 1.6 1.2 .9 .6

Reserve for possible loan losses................................................ .6 .4 .4 .4 .5 .5 .5 .6 .5 .5 .7

Loans, gross.................................................................................... 53.1 50.7 52.9 53.7 53.9 54.1 52.5 54.0 52.5 51.0 54.0

Real estate lo a n s .................................................................... 14.9 12.6 15.5 18.1 19.6 19.7 18.7 17.2 15.9 12.7 9.7

Loans to financial institutions............................................. 3.6 .2 .2 .2 .3 .4 1.0 1.4 2.8 4.7 8.0

Loans to purchase or carry securities................................ 1.5 .1 .1 .2 .2 .4 .6 .9 1.4 1.4 3.4

Loans to farmers (excluding loans on real estate). . . . 2.3 16.2 12.9 8.7 4.7 2.5 1.2 1.3 .9 .7 .7

Commercial and industrial lo a n s ....................................... 17.6 7.4 8.8 10.2 11.6 14.1 15.7 16.3 16.7 19.6 24.0

Instalm ent loans fo r personal e x p e n d itu re s ................... 9.3 10.4 11.2 12.0 13.1 12.8 11.8 12.9 10.0 7.9 5.0

Single paym ent loans fo r personal expenditures............. 2.4 2.9 3.2 3.3 3.5 3.3 2.7 2.9 3.1 2.2 1.0

A ll other loans.......................................................................... 1.4 .8 .9 .9 .8 .8 .8 1.0 1.6 1.8 2.1

A ll other assets................................ ................... 7.4 2.7 2.8 2.9 3.6 3.8 3.9 4.6 5.2 9.6 13.2

T otal liabilities and equity capital.................................................... 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

D e p o s its -to ta l............................................................................. 82.0 88.7 89.8 90.3 90.2 89.5 88.0 85.8 82.8 77.3 73.6

D e m a n d ............................................................................. 33.0 36.0 32.6 31.5 30.5 30.9 31.9 33.5 34.9 33.9 34.3

Time and savings............................................................. 49.1 52.7 57.2 58.9 59.7 58.5 56.1 52.3 48.0 43.4 39.3

Individuals, partnerships, and corporations-dem and. . 25.4 31.5 28.2 27.1 26.4 26.5 25.9 26.8 27.2 26.2 22.2

Individuals, partnerships, and corporations-tim e

and savings.......................................................................... 42.4 46.7 51.7 53.2 53.7 52.0 48.8 44.9 41.6 37.5 32.0

U.S. G overnm ent.................................................................... .3 .3 .4 .4 .5 .5 .4 .4 .4 .3 .1

States and political subdivisions.......................................... 6.7 9.1 8.4 8.5 8.3 8.5 9.1 8.6 8.0 6.3 3.2

Foreign governments and official in s titu tio n s ................ 1.0 (3 ) (3 ) (3 ) (3) (3) .1 (3 ) (3) .4 3.4

Commercial b a n k s ................................................................ 5.0 .3 .2 .2 .3 .9 2.6 4.1 4.4 5.5 10.9

Certified and o ffic e rs 'c h e c k s ............................................. 1.1 .7 .7 .8 .8 .9 .9 .9 1.1 .9 1.6

Federal funds purchased and securities sold under

agreements to repurchase.................................................... 6.9 .2 .3 .4 .6 1.3 2.9 5.2 7.8 11.6 12.0

Other liabilities fo r borrowed m oney....................................... .5 (3) (3) (3 ) (3 ) (3 ) .1 .1 .2 .5 1.2

A ll other liabilities2....................................................................... 2.9 .6 .7 1.1 1.3 1.3 1.4 1.5 1.9 3.1 5.6

Subordinated notes and debentures.......................................... .5 (3) (3 ) .1 .2 .3 .4 .4 .6 .7 .5

Equity c a p ita l................................................................................ 7.1 10.4 9.0 8.0 7.6 7.5 7.1 6.9 6.6 6.6 6.9

Number of ba nks................................................................................ 14,249 1,399 2,826 4,975 2,641 1,309 721 145 108 107 18

S ecurities held in trading accounts are included in "O ther assets." 

in c lu d e s m inority interest in consolidated subsidiaries.

3 Less than 0.05 percent.

Note: For income and expense data by size of bank, see tables 117 and 118. Assets and liabilities (in $000) of insured commercial banks by size of bank are contained in Assets and Liabilities-C om m ercial and M utual Savings Banks (with 1976 Report of 

Income), December 31, 1976.

250 FEDERAL DEPOSIT INSURANCE CORPORATION

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
Table 112. PERCENTAGES OF ASSETS AND LIABILITIES OF INSURED MUTUAL SAVINGS BANKS OPERATING THROUGHOUT 1976 IN 

THE UNITED STATES (STATES AND OTHER AREAS), DECEMBER 31, 1976 

BANKS GROUPED BY AMOUNT OF ASSETS

Banks with assets of—

Asset, liability, or surplus account item All

banks1

Less 

than 

$10.0 million

$10.0 million 

to

$24.9 million

$25.0 million 

to

$49.9 million

$50.0 million 

to

$99.9 million

$100.0 million 

to

$299.9 million

$300.0 million 

to

$499.9 million

$500.0 million 

to

$999.9 million

$1 billion 

or 

more

Total assets.............................................. 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%

Cash and due from b a n k s ............................................................. 1.8 4.2 2.4 2.5 1.8 2.0 1.9 1.6 1.8

United States Government and agency securities..................... 10.9 14.6 10.9 10.1 10.4 10.7 13.1 11.1 10.5

Corporate b o n d s ............................................................................ 13.1 10.1 7.2 9.2 7.3 9.3 10.3 11.9 15.7

State, county, and municipal o bliga tio ns................................. 1.9 .1 .8 1.0 1.0 1.6 2.0 1.8 2.1

Other securities............................................................................... 5.6 4.8 5.6 5.6 5.9 5.3 4.7 5.0 6.0

Federal funds sold and securities purchased under

agreements to resell.................................................... 1.1 2.2 1.6 1.5 1.9 1.5 1.7 1.4 .7

Other loans and discounts............................................................. 62.9 61.8 70.0 67.9 69.2 67.0 63.7 64.3 60.3

Real estate loans-total................................................................... 60.3 56.6 65.1 63.4 65.0 63.6 60.9 61.9 58.0

Construction loans................................................................... .7 .4 .5 1.0 1.5 1.3 .9 .6 .5

Secured by farmland................................................................ (2) .4 .5 .2 .2 (2) (2) (2) (2)

Secured by residential properties:

Insured by FHA................................................................... 11.2 4.3 1.8 2.5 4.1 5.9 10.7 11.9 13.4

Guaranteed by I/ A ............................................................. 9.3 .6 4.6 3.0 5.0 5.9 10.1 9.7 10.4

Not insured or guaranteed by FHA or VA..................... 28.4 44.1 49.5 50.2 47.5 43.0 31.1 30.1 20.8

Secured by other properties.................................................... 10.6 6.8 8.1 6.5 6.5 7.5 8.1 9.6 12.9

Commercial and industrial lo a n s ................................................. .5 .5 .5 .2 .2 .2 .2 .3 .7

Loans to individuals for personal expenditures........................ 2.0 4.7 4.3 4.1 3.9 3.0 2.3 2.0 1.4

All other loans including overdrafts.............................................. .1 .1 .2 .2 .2 .1 .2 .1 .1

Other assets.......................................................................... 2.8 2.1 1.5 2.3 2.5 2.6 2.6 2.9 2.9

Total liabilities and surplus accounts................................................. 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Deposits—t o t a l................................................................................ 91.9 91.6 92.2 91.5 91.4 91.9 91.9 91.9 91.9

Savings deposits......................................................................... 55.7 76.3 58.3 59.3 58.9 56.1 57.4 59.1 53.3

Deposits accumulated for payment of personal loans. . . . (2) (2) (2) (2) (2) (2) (2) (2) (2)

Fixed maturity and other time deposits.............................. 35.3 15.3 33.2 31.7 31.8 35.0 33.7 31.5 37.7

Demand deposits...................................................................... .9 .1 .7 .6 .8 .8 .8 1.3 .8

Miscellaneous liabilities................................................................... 1.5 .4 .9 1.0 1.2 1.3 1.1 1.3 1.9

Surplus accounts............................................................................ 6.6 8.0 6.9 7.5 7.4 6.8 6.9 6.8 6.3

Capital notes and debentures................................................. .2 .7 .3 .1 .7 .1 .1 .1 .2

Other surplus accounts............................................................. 6.4 7.2 6.6 7.5 7.3 6.7 6.9 6.7 6.0

Number of banks............................................................................. 329 6 13 48 82 82 30 36 32

1 Dollar amounts of assets and liabilities of all mutual savings banks are shown in Assets and Liabilities-Commercial and Mutual Savings Banks (with 1976 Report of Income), December 31, 1976.

2Zero or less than 0.05 percent.

ASSETS AND LI ABI LITI ES OF BANKS

Digitized for FRASER 

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Federal Reserve Bank of St. Louis
Table 113. DISTRIBUTION OF INSURED COMMERCIAL BANKS IN THE UNITED STATES (STATES AND OTHER AREAS),

DECEMBER 31, 1976

BANKS GROUPED ACCORDING TO AMOUNT OF ASSETS AND BY RATIOS OF SELECTED ITEMS TO ASSETS OR DEPOSITS

Ratios 

(In percent)

All

banks

Banks with assets of

Less 

than 

$5 million

$5.0 million 

to

$9.9 million

$10.0 million 

to

$24.9 million

$25.0 million 

to

$49.9 million

$50.0 million 

to

$99.9 million

$100.0 million 

to

$299.9 million

$300.0 million 

to

$499.9 million

$500.0 million 

to

$999.9 million

$1.0 billion 

to

$4.9 billion

$5.0 billion 

or 

more

Ratios of cash and due from banks to total assets o fLess than 5............................................................................. 1,183 126 267 451 196 92 39 6 2 4 0

5.0 to 7.49............................................................................. 3,847 328 825 1,423 795 325 128 11 11 0 1

7.5 to 9.99............................................................................. 3,853 350 704 1,374 755 396 199 41 18 16 0

10.0 to 1 2 .4 9 ....................................................................... 2,349 213 436 792 437 240 156 29 21 20 5

12.5 to 1 4 .9 9 ....................................................................... 1,319 144 247 428 224 117 79 22 29 27 2

15.0 to 1 7 .4 9 ....................................................................... 781 112 150 234 112 65 56 16 13 18 5

17.5 to 1 9 .9 9 ....................................................................... 447 66 94 131 57 33 34 7 9 15 1

20.0 to 24.99 ....................................................................... 395 90 83 99 52 28 22 8 4 7 2

25.0 to 29.99 ....................................................................... 118 42 26 27 9 7 2 3 1 0 1

30.0 or more.......................................................................... 119 44 25 25 5 8 9 2 0 0 1

Ratios of U.S. Treasury securities to total assets o fLess than 5............................................................................. 2,823 270 473 1,037 518 281 141 40 24 31 8

5.0 to 9.99............................................................................. 4,063 308 726 1,398 823 416 243 54 49 42 4

10.0 to 1 4 .9 9 ....................................................................... 3,103 268 581 1,084 617 307 173 28 21 19 5

15.0 to 1 9 .9 9 ....................................................................... 1,854 204 381 649 351 157 85 12 7 7 1

20.0 to 24.99 ....................................................................... 1,097 141 287 356 170 82 45 9 2 5 0

25.0 to 29.99 ....................................................................... 639 110 172 216 84 31 23 0 1 2 0

30.0 to 34.99 ....................................................................... 356 72 107 112 34 19 9 0 2 1 0

35.0 to 39.99 ....................................................................... 192 32 52 65 28 12 1 2 0 0 0

40.0 to 44.99 ....................................................................... 117 42 31 30 6 5 1 0 2 0 0

45.0 to 49.99 ....................................................................... 77 25 22 20 7 1 2 0 0 0 0

50.0 or more.......................................................................... 90 43 25 17 4 0 1 0 0 0 0

252 FEDERAL DEPOSIT INSURANCE CORPORATION

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Federal Reserve Bank of St. Louis
Ratios of obligations of States and political subdivisions 

to total assets o fZ e r o ......................................................................................

More than 0.0, but less than 1.0........................................

1.0 to 2.49.............................................................................

2.5 to 4.99.............................................................................

5.0 to 7.49.............................................................................

7.5 to 9.99.............................................................................

10.0 to 1 2 .4 9 ......................................................................

12.5 to 1 4.9 9 ......................................................................

15.0 to 1 7.4 9 ......................................................................

17.5 to 1 9 .9 9 ......................................................................

20.0 to 24.99 ......................................................................

25.0 or more.........................................................................

1,186

446

537

968

1,403

1,735

2,018

2,024

1,521

1,115

1,044

414

440

181

174

178

169

107

89

66

43

31

27

10

417

104

162

289

372

397

343

306

161

130

116

60

287

93

132

291

465

637

797

736

566

414

406

160

22

41

43

106

193

286

387 

500

388 

295 

271 

110

17

12

11

48

89

146

191

244

213

151

139

50

3

11

13

24

48

94

136

126

115

70

66

18

0

2

1

12

14 

21 

33

20

15 

14 

11

2

0

2

0

5

17

17

21

19

14

5

4

4

0

0

1

10

26

28

21

6

6

5

4

0

0

0

0

5

10

2

0

1

0

0

0

0

Ratios of net loans to total assets o fLess than 2 0 .......................................................................... 202 71 52 51 18 4 5 0 1 0 0

20.0 to 24.99 ...................................................................... 203 54 47 67 18 10 6 0 0 1 0

25.0 to 29.99 ...................................................................... 430 96 104 129 62 22 14 2 0 1 0

30.0 to 34.99 ...................................................................... 664 101 149 229 98 46 27 8 5 1 0

35.0 to 39.99 ...................................................................... 1,076 152 237 361 180 76 51 4 7 8 0

40.0 to 44.99 ...................................................................... 1,550 146 316 528 292 132 87 12 15 20 2

45.0 to 49.99 ...................................................................... 2,056 168 370 702 406 221 117 27 17 22 6

50.0 to 54.99 ...................................................................... 2,368 172 412 799 482 264 152 36 24 25 2

55.0 to 59.99 ....................................................................... 2,457 197 412 846 484 282 149 38 28 16 5

60.0 to 64.99 ...................................................................... 1,863 151 357 693 382 167 80 13 9 9 2

65.0 to 69.99 ...................................................................... 1,013 117 238 387 168 66 30 4 1 1 1

70.0 to 74.99 ...................................................................... 387 59 106 154 42 18 5 1 0 2 0

75.0 or more......................................................................... 142 31 57 38 10 3 1 0 1 1 0

Ratios of total demand deposits to total deposits o fLess than 2 5 .......................................................................... 2,085 109 395 800 448 211 104 8 7 3 0

25.0 to 29.99 ...................................................................... 2,537 199 504 907 529 246 116 21 6 8 1

30.0 to 34.99 ...................................................................... 2,893 275 575 1,024 558 256 156 18 18 11 2

35.0 to 39.99 ....................................................................... 2,494 232 478 874 455 259 132 27 15 18 4

40.0 to 44.99 ...................................................................... 1,791 199 366 576 336 148 90 36 18 20 2

45.0 to 49.99 ....................................................................... 1,170 153 237 383 174 108 63 15 18 17 2

50.0 to 54.99 ....................................................................... 651 105 120 222 84 44 32 11 13 17 3

55.0 to 59.99 ...................................................................... 273 59 50 88 32 17 13 2 3 8 1

60.0 to 64.99 ...................................................................... 190 39 44 50 18 12 7 6 10 4 0

65.0 to 69.99 ....................................................................... 100 31 32 24 3 6 1 0 0 1 2

70.0 to 79.99 ....................................................................... 81 32 18 18 3 3 5 1 0 0 1

80.0 to 89.99 ...................................................................... 41 18 8 10 2 1 2 0 0 0 0

90.0 or more.......................................................................... 105 64 30 8 0 0 3 0 0 0 0

ASSETS AND LIABILITIES OF BANKS 253

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Federal Reserve Bank of St. Louis
Table 113. DISTRIBUTION OF INSURED COMMERCIAL BANKS IN THE UNITED STATES (STATES AND OTHER AREAS),

DECEMBER 31, 1976-CO NTINUED

BANKS GROUPED ACCORDING TO AMOUNT OF ASSETS AND BY RATIOS OF SELECTED ITEMS TO ASSETS OR DEPOSITS

Ratios 

(In percent)

Banks with assets of

banks Less 

than 

$5 million

$5.0 million 

to

$9.9 million

$10.0 million 

to

$24.9 million

$25.0 million 

to

$49.9 million

$50.0 million 

to

$99.9 million

$100.0 million 

to

$299.9 million

$300.0 million 

to

$499.9 million

$500.0 million 

to

$999.9 million

$1.0 billion 

to

$4.9 billion

$5.0 billion 

or

more

Ratios of total equity capital to total assets o fLess than 5............................................................................. 403 13 27 122 79 60 60 17 14 7 4

5.0 to 5.99............................................................................. 1,174 30 129 375 258 166 125 32 24 32 3

6.0 to 6.99............................................................................. 2,728 128 432 980 590 304 185 31 34 39 5

7.0 to 7.99............................................................................. 3,464 231 608 1,271 757 358 178 24 21 14 2

8.0 to 8.99............................................................................. 2,547 228 531 942 479 221 102 25 7 10 2

9.0 to 9.99............................................................................. 1,469 189 346 547 241 91 36 10 5 3 1

10.0 to 1 0 .9 9 ....................................................................... 874 131 225 319 124 57 15 0 1 2 0

11.0 to 1 1 .9 9 ....................................................................... 547 99 163 186 57 27 12 2 0 0 1

12.0 to 1 2 .9 9 ....................................................................... 331 87 106 96 27 10 1 2 2 0 0

13.0 to 1 4 .9 9 ....................................................................... 341 102 127 75 20 10 5 2 0 0 0

15.0 to 1 6 .9 9 ....................................................................... 169 57 61 38 7 3 3 0 0 0 0

17.0 or more.......................................................................... 364 220 102 33 3 4 2 0 0 0 0

Ratios of total equity capital to total assets other 

than cash and due from banks, U.S. Treasury 

securities, and obligations of other U.S. 

Government agencies and corporations of—

Less than 7 . 5 ....................................................................... 971 21 72 289 215 156 128 35 24 27 4

7.5 to 9.99............................................................................. 4,350 151 567 1,571 1,033 535 309 57 60 58 9

10.0 to 1 2 .4 9 ....................................................................... 4,177 286 790 1,580 871 393 184 38 17 15 3

12.5 to 1 4 .9 9 ....................................................................... 2,151 225 553 808 327 149 68 8 5 6 2

15.0 to 1 7 .4 9 ....................................................................... 1,059 195 309 364 122 44 18 4 2 1 0

17.5 to 1 9 .9 9 ....................................................................... 550 128 191 171 35 16 7 2 0 0 0

20.0 to 22.49 ...................................................................... 327 88 114 94 18 8 5 0 0 0 0

22.5 to 24.99 ....................................................................... 203 65 83 44 5 4 1 1 0 0 0

25.0 to 29.99 ....................................................................... 250 111 91 32 12 4 0 0 0 0 0

30.0 to 34.99 ....................................................................... 106 48 42 14 1 1 0 0 0 0 0

35.0 to 39.99 ....................................................................... 82 51 20 8 2 1 0 0 0 0 0

40.0 or more.......................................................................... 185 146 25 9 1 0 4 0 0 0 0

Number of banks....................................................................... 14,411 1,515 2,857 4,984 2,642 1,311 724 145 108 107 18

254 FEDERAL DEPOSIT INSURANCE CORPORATION

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Federal Reserve Bank of St. Louis
INCOME OF INSURED BANKS

Table 114. Income of insured commercial banks in the United States (States and other areas), 1971-1976 

Table 115. Ratios of income of insured commercial banks in the United States (States and other areas), 

1971-1976

Table 116. Income of insured commercial banks in the United States (States and other areas), 1976 

Banks grouped by class o f bank

Table 117. Income of insured commercial banks operating throughout 1976 in the United States (States 

and other areas)

Banks grouped by amount of assets

Table 118. Ratios of income of insured commercial banks operating throughout 1976 in the United States 

(States and other areas)

Banks grouped according to amount o f assets

Table 119. Income of insured mutual savings banks in the United States (States and other areas), 

1971-1976

Table 120. Ratios of income of insured mutual savings banks in the United States (States and other areas), 

1971-1976

The income data received and published by the Corporation relate to 

commercial and mutual savings banks insured by the Corporation.

Commercial banks

Banks having assets of $25 m illion or more are required to report consolidated income accounts on an accrual basis. Where the results would not 

be significantly different, certain accounts may be reported on a cash basis. 

Smaller banks continue to have the option of submitting their reports on a 

cash or an accrual basis, except that unearned discount on instalment loans, 

and income taxes, must be reported on an accrual basis.

Prior to 1976, insured banks were required to submit a consolidated 

Report of Income, including all majority-owned domestic premises subsidiaries and other nonbank subsidiaries that were significant according to certain tests. Beginning in 1976, the consolidated income report must include 

also all majority-owned Edge A ct and Agreement Corporations, and all 

majority-owned significant foreign subsidiaries and associated companies to 

the extent that the income of such subsidiaries is remittable.

Banks were required to report income and expenses more frequently 

beginning in 1976. Banks having assets of $300 m illion or more submit 

quarterly statements and other insured banks submit semiannual reports. In 

this report, income data are included for all insured banks operating at the 

end of the respective years, unless indicated otherwise. In addition, when 

appropriate, adjustments have been made fo r banks in operation during part 

of the year but not at the end of the year.

INCOME OF INSURED BANKS 255

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Federal Reserve Bank of St. Louis
Several changes were made in 1976 in the form at of the income reports 

submitted by banks, m ainly involving additional separate items on the face 

of the report. Those changes are indicated in several historical data tables to 

follow , w ith explanatory notes where necessary.

In 1976, the method used for determining “ Provision for possible loan 

losses” was changed significantly. Also, beginning in 1976, "memoranda" 

data in table 114 and elsewhere on charge-offs and recoveries to loan loss 

reserves include also the gross charge-offs and recoveries on loans by banks 

not on a reserve basis of accounting (see pp. 257).

"Applicable income taxes" on income before securities gains or losses is 

an estimate of the tax liability that a bank w ould incur if its taxes were 

based solely on operating income and expenses; that is, if there were no 

security gains or losses, no extraordinary items, etc. The amount reported by 

each bank consists of Federal, State and local, and foreign income taxes, 

estimated using the tax rates applicable to the reporting bank. Income taxes 

currently payable, and deferred income taxes, are included.

The memoranda item "to ta l provision fo r income taxes" includes applicable taxes on operating income, applicable taxes on securities gains and 

losses and extraordinary items, and tax effects on differences between the 

provision for loan losses charged to operating expense and transfers to the 

reserve for bad debt losses on loans. For banks generally the transfers to 

reserve for bad debts have exceeded the provision for loan losses and consequently have tended to reduce tax lia b ility. (Since enactment of the Tax 

Reform A ct of 1969, additions to loan loss reserves for Federal tax purposes 

have been subject to a schedule o f lim itations that w ill eventually put these 

reserves on a current experience basis.)

Mutual savings banks

For a discussion of the report of income and expenses for mutual savings 

banks prior to 1971, see the 1951 Annual Report, pp. 50-52.

Beginning December 31, 1971, income and expenses for mutual savings 

banks are reported on a consolidated basis in the same manner as required of 

commercial banks, including all domestic branches, domestic bank premises 

subsidiaries, and other significant nonbanking domestic subsidiaries (see page 

255).

Beginning in 1972, banks w ith total resources of $25 m illion or more are 

required to prepare their reports on the basis of accrual accounting. All

banks are required to report income taxes on an accrual basis.

Under operating income, certain income from securities form erly in the 

"o th e r" category are shown separately beginning in 1971. Income from U.S. 

Treasury securities is combined w ith income from U.S. Government agency 

and corporation securities. Somewhat fewer items are detailed under operating expenses. Beginning in 1971, actual net loan losses (charge-offs less 

recoveries) are included as an expense item in the operating section of the 

report (see discussion below). In 1970 and prior years (table 119), the 

amounts shown fo r this expense item were "Recoveries credited to valuation 

adjustment provisions on real estate mortgage loans" less the "realized losses 

charged to valuation adjustment provisions on [these] loans," which were 

reported in those years in the memoranda section.

The nonoperating sections of the report were condensed in 1971, with 

realized gains and losses on securities, mortgage loans, and real estate reported "n e t" rather than in separate sections and captions as before. Detailed data form erly reported on reconcilement of valuation adjustment 

provisions were almost entirely eliminated, except for a simple reconciliation 

of surplus.

Sources of data

National banks and State banks in the District of Columbia not members 

of the Federal Reserve System: Office of the Com ptroller of the Currency.

State bank members of the Federal Reserve System: Board of Governors 

of the Federal Reserve System.

Other insured banks: Federal Deposit Insurance Corporation.

R E PO R TIN G O F LOSSES A N D RESERVES

FOR LOSSES ON LO ANS,

1948 - 1976

Commercial banks

Use of the reserve method of loan accounting was greatly encouraged 

when, in 1947, the Internal Revenue Service set formal standards for loan 

loss transfers to be permitted fo r Federal tax purposes. In their reports 

submitted to the Federal bank supervisory agencies prior to 1948, insured 

commercial banks included in non-operating income the amounts of recoveries on loans (applicable to prior charge-offs for losses) which included, for

256 FEDERAL DEPOSIT INSURANCE CORPORATION

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Federal Reserve Bank of St. Louis
banks using the reserve method, transfers from loan loss reserves. Direct 

charge-offs and losses on loans, and transfers to reserves were included to ­

gether in non-operating expenses. Banks using the reserve method were not 

required to report separately their actual losses, that is, charges against loan 

loss reserves. (In statements of condition prior to 1948, insured banks reported loans on a net basis only, after allowance for loan loss reserves. 

Beginning w ith the June 30, 1948 report, banks were required to report 

gross loans, w ith total valuation reserves, those set up pursuant to Internal 

Revenue Service regulations, and other reserves shown separately. However, 

instalment loans ordinarily continued to be reported net if the instalment 

payments were applied directly to the reduction of the loan.)

Beginning w ith the year 1948, the income reports were revised to show 

separately, in a memoranda section, the losses charged to reserves. These 

items continued to be combined in the non-operating expense section until 

1961. Recoveries credited to reserves were also itemized in the memoranda 

section beginning in 1948, as were the amounts transferred to and from 

reserves during the year. Each of these debits and credits were segregated as 

to reserves set up pursuant to IRS regulations, and other reserves. Losses and 

recoveries, and transfers to and from reserves, but not the specific tax-related 

transfers, were separately reported in the Corporation's published statistics.

Several im portant revisions were made in the form at of the income reports of commercial banks in 1969. A new entry entitled "Provision for loan 

losses'' was included under operating expenses. This item included actual 

loan losses (charge-offs less recoveries) during the year or, at the option of 

the bank, an amount derived by applying the average loan loss percentage for 

the five most recent years to the average amount of loans during the current 

year. Banks had the option also of providing a larger amount in any year 

than the amount indicated by the formula. Beginning in 1976, required use

of the formulas was discontinued. Banks are instructed to expense an 

amount which in the judgment of bank management w ill maintain an adequate reserve, and to provide a fully reviewable record for bank examination 

purposes of the basis for the determination o f the loan-loss provision.

Also beginning in 1976, banks not on a reserve basis report gross chargeoffs and recoveries; the difference—net losses—is reported as the "provision 

for loan losses" in operating expenses. Banks continue to report all transfers 

to and from reserves in the memoranda section of the income statement, but 

this detailed inform ation is not included in the tables to follow.

Mutual savings banks

While mutual savings banks reported loan losses and transfers to loss 

reserves prior to 1951, the Corporation's published statistics did not show 

these data separately, as was the case also for recoveries and transfers from 

reserves. When the reporting form was revised extensively in 1951, these 

various nonoperating expenses were itemized, and a memoranda section was 

added to show also the losses and recoveries in reserve accounts. "Realized" 

losses (and recoveries) for which no provision had been made, and transfers 

were included in the nonoperating expense (income) section, while direct 

write-downs and other loan losses for which provision had been made, were 

reported separately in a memoranda account.

Following 1951, the loan loss section of the reports of condition and 

income and expense remained unchanged until 1971. Beginning in 1971, the 

income report was revised in a manner similar to changes in 1969 applicable 

to commercial banks, to show actual net loan losses as operating expenses. 

(Mutual savings banks did not have the option available to commercial banks 

of reporting losses based on recent years average experience.) A t the same 

time, all valuation reserves were merged into surplus accounts on statements 

of condition submitted to the Federal supervisory agencies.

INCOME OF INSURED BANKS 257

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Federal Reserve Bank of St. Louis
Table 114. INCOME OF INSURED COMMERCIAL BANKS IN THE UNITED STATES (STATES AND OTHER AREAS), 1971-1976

(Amounts in thousands of dollars)

Income item 1971 1972 1973 1974 1975 19761

Operating income—to ta l......................................................................................... 36,364,008 40,247,555 53,036,327 68,160,779 66,558,502 80,663,853

Interest and fees on lo a n s ................................................................................ 23,069,354 25,630,498 35,375,638 47,138,740 43,379,504 51,645,260

4,486,655

Income on federal funds sold and securities purchased under

agreements to resell in domestic o ffic e s ................................................. 871,167 1,026,550 2,486,695 3,712,304 2,294,621 1,984,757

Interest on U.S. Treasury securities3 .............................................................. 3,395,663 3,396,365 3,465,192 3,441,273 4,440,640 5,976,210

Interest on obligations of other U.S. Government agencies and

corporations3 ............................................................................................... 916,559 1,144,761 1,472,467 2,018,561 2,348,937 2,415,164

Interest on obligations of States and political subdivisions of the U.S.3 . 3,127,136 3,493,981 3,864,785 4,453,876 4,918,518 5,134,676

Interest on other bonds, notes, and debentures3 ........................................

Dividends on s to c k ............................................................................................ 238,033 322,239 371,987 467,873 533,244

751,007 

105,046

534,254

Income from fiduciary a c tiv itie s .................................................................... 1,257,807 1,366,455 1,459,879 1,506,206 1,601,968 1,794,732

Service charges on deposit accounts in domestic o ffice s............................ 1,231,470 1,262,022 1,326,992 1,459,858 1,555,360 1,635,463

Other service charges, commissions, and fe e s .............................................. 989,432 1,083,104 1,251,651 1,408,525 1,653,549 2,182,927

Other income3 ................................................................................................... 1,267,387 1,521,580 1,961,041 2,553,563 3,832,161 2,017,702

Operating expenses-total...................................................................................... 29,651,263 32,997,271 44,330,459 58,910,355 57,582,040 70,750,168

Salaries and employee b en efits....................................................................... 8,394,983 9,085,213 10,127,808 11,586,433 12,686,720 14,752,297

Interest on time certificates of deposit of $100,000 or more issued

by domestic offices4 7,111,054

Interest on deposits in foreign offices2 8,749,673

Interest on other deposits................................................................................ 12,217,994 13,844,020 19,834,817 27,888,772 26,245,936 19,143,238

Expense of federal funds purchased and securities sold under

agreements to repurchase in domestic o ffice s........................................ 1,095,648 1,429,171 3,899,016 5,985,504 3,322,993 3,311,741

Interest on other borrowed m oney................................................................. 139,388 115,240 503,941 917,638 377,195 667,197

Interest on subordinated notes and debentures........................................... 142,381 213,532 254,458 283,203 294,098 344,952

Occupancy expense of bank premises, gross................................................. 1,730,402 1,926,695 2,152,621 2,438,528 2,754,742 3,262,005

Less: Rental income................................................................................... 320,212 343,157 369,665 386,183 430,098 497^01

Occupancy expense of bank premises, net.............................................. 1,410,190 1,583,538 1,782,956 2,052,345 2,324,644 2,764,804

Furniture and e qu ip m e nt................................................................................ 1,018,128 1,087,844 1,201,241 1,360,721 1,532,739 1,721,382

Provision for possible loan losses.................................................................... 867,260 973,238 1,264,695 2,286,132 3,612,410 3,691,378

Other expenses................................................................................................... 4,365,291 4,665,475 5,461,527 6,549,607 7,185,305 8,492,452

Income before income taxes and securities gains or losses............................... 6,712,745 7,250,284 8,705,868 9,250,424 8,976,462 9,913,685

Applicable income taxes......................................................................................... 1,689,146 1,707,495 2,121,100 2,084,028 1,792,696 2,290,772

Income before securities gains or losses.............................................................. 5,023,599 5,542,789 6,584,768 7,166,396 7,183,766 7,622,913

Securities gains (losses), gross................................................................................ 359,279 166,730 -73,458 -161,247 34,376 312,267

Applicable income taxes................................................................................... 146,034 74,274 -46,323 -74,195 -2,690 118,233

Securities gains (losses), n e t............................................................................. 213,245 92,456 -27,135 -87,052 37,066 194,034

Income before extraordinary items....................................................................... 5,236,844 5,635,245 6,557,633 7,079,344 7,220,832 7,816,947

Extraordinary items, gross...................................................................................... -12,552 23,953 30,817 17,877 46,823 28,104

Applicable income taxes................................................................................... -11,913 4,800 9,256 5,957 13,044 1,774

Extraordinary items, n et................................................................................... -639 19,153 21,561 11,920 33,779 26,330

5,236,205 5,654,398 6,579,194 7,091,264 7,254,611 7,843,277

258 FEDERAL DEPOSIT INSURANCE CORPORATION

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Federal Reserve Bank of St. Louis
Memoranda

Dividends declared on equity c a p ita l-to ta l.......................................................

Cash dividends declared on common sto c k ................................................

Cash dividends declared on preferred stock.................................................

2,230,556 

2,225,125

5,431

2,196,868 

2,193,052

3,816

2,429,330

2,425,633

3,697

2,768,104

2,765,674

2,430

3,032,444

3,030230

2214

3,036,222

3,033,628

2,594

Provision for income ta x e s -to ta l.........................................................................

U.S. Federal income taxes...............................................................................

U.S. State and local income taxes...................................................................

1,651,807

1,367,492

284,315

1,598,869

1,288,725

310,144

1,715,439

1,336,317

379,122

1,759,739

1,357,394

402,345

1,727,041

1225,927

501,114

2,410,779

1,371,638

491,712

547,429

3,503,246

687,401

4,190,647

Net loan losses (recoveries)-total.........................................................................

Recoveries on loans...........................................................................................

Losses on loans..................................................................................................

1,087,200

317,320

1,404,520

887,326

363,663

1,250,989

1,159,187

388,846

1,548,033

1,956,931

461,350

2,418^81

3,242,830

547,380

3,790210

Trading account income, net2 ............................................................................... 717,655

Average assets, liabilities, and equity capital5 

A ssets-total..............................................................................................................

Cash and due from b a n k s ...............................................................................

U.S. Treasury securities3 ..................................................................................

Obligations of States and political subdivisions3 .......................................

Other securities3 ..............................................................................................

Net loans6 ..........................................................................................................

All other assets.................................................................................................

603,422,720

95,673,527

59,923,562

74,606,153

18,216,064

327,633,687

27,369,727

679,113,973

102,969,933

61,978,490

84,210,396

23,863,051

376,543,347

29,548,756

776,702,572

110,168,143

58,603,925

89,241,780

29,355,715

453,238,907

36,094,102

871,394,495

122,224,773

52,822,043

94,524,535

35,256,603

519,572,131

46,994,410

924,946,738

126,838,007

65,992,148

98,953,279

39,203,344

536,061,723

57,898,237

1,123,469,176

194,312,500

88,520,749

102,733,896

51,110,347

632,696,842

54,094,842

Liabilities and equity ca pita l-to tal......................................................................

Total deposits....................................................................................................

Demand deposits........................................................................................

Time and savings deposits.........................................................................

Deposits in foreign offices . .......................................................

603,422,720

507,101,968

251,447,347

255,654,621

679,113,973

568,240,268

271,122,732

297,117,536

776,702,572

640,806,208

293,708^82

347,097,926

871,394,495

710,029,868

307,363,186

402,666,682

924,946,738

756,948,586

313,836,391

443,112,195

1,123,469,176

944,238,914

320,488,016

474,499,317

149251,581

4,865,972

105,647,909

68,716,381

Subordinated notes and debentures................................................................

Other borrowings and all other liabilities.......................................................

Total equity capital...........................................................................................

2,548,014

51,507,005

42,265,733

3,546,497

61,179,885

46,147,323

4,044,715

80,677,846

51,173,803

4,204,891

100,573,737

56,585,999

4,328,561

101,918,202

61,751,389

Number of employees on payroll (end of period)............................................. 980,660 1,025,997 1,093,616 1,160,585 1,226,415 1,255,025

Number of banks (end of period)......................................................................... 13,612 13,733 13,976 14,228 14,384 14,411

1 Data are from fully consolidated reports of income, including domestic and foreign offices (see page 255).

2Figures not available before 1976.

Securities held in trading accounts are included in "A ll other assets"; income from these securities is included in "Other income.''

in clu de d in "Interest on other deposits" before 1976.

5Averages of amounts reported at beginning, middle and end of year. 1976 averages are based on consolidated reports, domestic and foreign.

6 For years before 1976, data are gross loans (see page 234 and table 109).

INCOME OF INSURED BANKS 259

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Federal Reserve Bank of St. Louis
Table 115. RATIOS OF INCOME OF INSURED COMMERCIAL BANKS IN THE UNITED STATES (STATES AND OTHER AREAS), 1971-1976

Income item 1971 1972 1973 1974 1975 19761

Amounts per $100 of operating income

Operating in c o m e -to ta l......................................................................................... $100.00 $100.00 $100.00 $100.00 $100.00 $100.00

Interest and fees on loans2................................................................................ 65.84 66.23 71.39 74.60 68.62 66.49

5.56

Interest on U.S. Treasury securities................................................................. 9.34 8.44 6.53 5.05 6.67 7.41

Interest on obligations of States and political subdivisions of the U.S.. . 8.60 8.65 7.29 6.53 7.39 6.37

Interest and dividends on other securities.................................................... 3.17 3.64 3.48 3.65 4.33 4.05

Income from fiduciary a c tiv itie s .................................................................... 3.46 3.40 2.75 2.21 2.41 2.23

Service charges on deposit accounts in domestic o ffic e s ............................ 3.39 3.14 2.50 2.14 2.34 2.03

Other charges, commissions, and fees.............................................................. 2.72 2.67 2.36 2.07 2.48 2.71

Other in com e ..................................................................................................... 3.48 3.78 3.70 3.75 5.76 3.16

Operating expenses-totai...................................................................................... 81.54 81.98 83.58 86.43 86.51 87.71

Salaries and employee b e n e fits....................................................................... 23.09 22.57 19.10 17.00 19.06 18.29

Interest on deposits in domestic offices3........................................................ 33.60 34.40 37.40 40.92 39.43 32.55

10.85

Interest on other borrowed money4 .............................................................. 3.79 4.37 8.78 10.54 6.00 5.36

Occupancy expense of bank premises, net.................................................... 3.88 3.93 3.36 3.01 3.49 3.43

Furniture and e q u ip m e n t................................................................................ 2.80 2.70 2.26 2.00 2.30 2.13

Provision for possible loan losses.................................................................... 2.38 2.42 2.38 3.35 5.43 4.57

Other expenses.................................................................................................. 12.00 11.59 10.30 9.61 10.80 10.53

Income before income taxes and securities gains or losses............................... 18.46 18.02 16.42 13.57 13.49 12.29

Amounts per $100 of total assets5

Operating in c o m e -to ta l......................................................................................... 6.03 5.93 6.83 7.82 7.20 7.18

Operating expenses-total...................................................................................... 4.91 4.86 5.71 6.76 6.23 6.30

Income before income taxes and securities gains or losses............................... 1.11 1.07 1.12 1.06 .97 0.88

Net in c o m e ............................................................................................................... .87 .83 .85 .81 .78 0.70

Amounts per $100 of total equity capital5

Net in c o m e ............................................................................................................... 12.39 12.25 12.86 12.53 11.75 11.41

Cash dividends declared on common s to c k ....................................................... 5.26 4.75 4.74 4.89 4.91 4.41

Net additions to capital from income.................................................................... 7.11 7.49 8.11 7.64 6.84 7.00

Special ratios5

Income on loans per $100 of loans2 .................................................................... 7.31 7.08 8.35 9.79 8.52 8.48

Income on U.S. Treasury securities per $100 of U.S. Treasury securities . . 5.67 5.48 5.91 6.51 6.73 6.75

Income on obligations of States and political subdivisions per $100 of

obligations of States and political subdivisions........................................... 4.19 4.15 4.33 4.71 4.97 5.00

Service charges on demand deposits in domestic offices per $100 of

those deposits..................................................................................................... .49 .47 .45 .47 .50 0.51

Interest paid on time and savings deposits in domestic offices per $100 of

those deposits..................................................................................................... 4.78 4.66 5.71 6.93 5.92 5.53

Number of banks, December 31, 1976................................................................. 13,612 13,733 13,976 14,228 14,384 14,411

1 Based on consolidated (including foreign) reports of income-see table 114, note 1. 

includes Federal funds sold.

3Not available before 1976.

includes interest on Federal funds purchased, subordinated notes and debentures, and other borrowed money. 

5Ratios are based on averages of assets and liabilities—see table 114 notes 5 and 6.

260 FEDERAL DEPOSIT INSURANCE CORPORATION

Digitized for FRASER 

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Federal Reserve Bank of St. Louis
Table 116. INCOME OF INSURED COMMERCIAL BANKS IN THE UNITED STATES (STATES AND OTHER AREAS), 1976

BA N K S G R O U PED B Y C L A S S OF B A N K 

(Amounts in thousands of dollars)

Sources and disposition of income Total

Members F.R. System Nonmembers 

F.R. System

Operating 

throughout 

the year

Operating 

less than 

National State full year

Operating in c o m e -to ta l............................................................................................................................ 80,663,853 48,021,410 15,621,323 17,021,120 80,605,310 58,543

Interest and fees on lo a n s ................................................................................................................... 51,645,260 31,031,046 9,870,340 10,743,874 51,612,598 32,662

Interest on balances with banks.......................................................................................................... 4,486,655 2,946,656 1,316,570 223,429 4,484,713 1,942

Income on federal funds sold and securities purchased under agreements to resell in

domestic offices............................................................................................................................... 1,984,757 1,229,182 281,913 473,662 1,978,761 5,996

Interest on U.S. Treasury securities.................................................................................................... 5,976,210 3,193,274 1,055,437 1,727,499 5,969,414 6,796

Interest on obligations of other U.S. Government agencies and corporations........................... 2,415,164 1,210,149 264,994 940,021 2,413,101 2,063

Interest on obligations of States and political subdivisions of the U.S......................................... 5,134,676 2,801,076 885,278 1,448,322 5,131,301 3,375

Interest on other bonds, notes, and debentures.............................................................................. 751,007 492,072 119,962 138,973 750,752 255

Dividends on s to c k ............................................................................................................................... 105,046 62,149 27,385 15,512 104,897 149

Income from direct lease financing.................................................................................................... 534,254 408,438 99,161 26,655 534,167 87

Income from fiduciary a c tiv itie s ....................................................................................................... 1,794,732 1,029,203 595,440 170,089 1,794,205 527

Service charges on deposit accounts in domestic o ffice s............................................................... 1,635,463 911,467 210,563 513,433 1,633,502 1,961

Other service charges, commissions, and fe e s ................................................................................. 2,182,927 1,441,484 366,643 374,800 2,181,220 1,707

Other incom e........................................................................................................................................ 2,017,702 1,265,214 527,637 224,851 2,016,679 1,023

Operating expenses-total......................................................................................................................... 70,750,168 42,103,393 13,818,559 14,828,216 70,681,523 68,645

Salaries and employee b e n e fits ......................................................................................................... 14,752,297 8,575,522 2,726,032 3,450,743 14,733,573 18,724

Interest on time certificates of deposit of $100,000 or more issued by domestic offices. . . . 7,111,054 4,327,891 1,571,161 1,212,002 7,106,947 4,107

Interest on deposits in foreign o ffic e s ............................................................................................. 8,749,673 5,962,140 2,709,850 77,683 8,749,450 223

Interest on other deposits................................................................................................................... 19,143,238 10,595,809 2,580,003 5,967,426 19,125,752 17,486

Expense of federal funds purchased and securities sold under agreements to repurchase 

in domestic o ffic e s ......................................................................................................................... 3,311,741 2,268,120 882,602 161,019 3,310,400 1,341

Interest on other borrowed m oney................................................................................................... 667,197 454,745 183,148 29,304 667,029 168

Interest on subordinated notes and debentures.............................................................................. 344,952 179,190 93,763 71,999 344,196 756

Occupancy expense of bank premises, gross.................................................................................... 3,262,005 1,879,653 683,782 698,570 3,257,000 5,005

Less: rental income......................................................................................................................... 497,201 331,341 86,353 79,507 496,727 474

Occupancy expense of bank premises, net................................................................................. 2,764,804 1,548,312 597,429 619,063 2,760273 4,531

Furniture and equipment expense................................................................................................... 1,721,382 1,015,489 289,881 416,012 1,718,570 2,812

Provision for possible loan losses....................................................................................................... 3,691,378 2,250,427 789,155 651,796 3,689,773 1,605

Other expenses..................................................................................................................................... 8,492,452 4,925,748 1,395,535 2,171,169 8,475,560 16,892

Income before income taxes and securities gains or losses.................................................................. 9,913,685 5,918,017 1,802,764 2,192,904 9,923,787 -10,102

Applicable income taxes............................................................................................................................ 2,290,772 1,436,755 494,477 359,540 2,291,868 -1,096

Income before securities gains or losses................................................................................................. 7,622,913 4,481,262 1,308,287 1,833,364 7,631,919 -9,006

Securities gains or losses, g ro s s ................................................................................................................ 312,267 168,493 24,460 119,314 310,571 1,696

Applicable income taxes...................................................................................................................... 118,233 72,596 9,526 36,111 117,647 586

Securities gains or losses, n e t ............................................................................................................. 194,034 95,897 14,934 83,203 192,924 1,110

Income before extraordinary item s.......................................................................................................... 7,816,947 4,577,159 1,323,221 1,916,567 7,824,843 -7,896

Extraordinary items, gross......................................................................................................................... 28,104 13,303 4,229 10,572 28,192 -8 8

Applicable income taxes...................................................................................................................... 1,774 -5 8 8 1,187 1,175 1,774 0

Extraordinary items, n e t...................................................................................................................... 26,330 13,891 3,042 9,397 26,418 -8 8

INCOME OF INSURED BANKS 261

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Federal Reserve Bank of St. Louis
Table 116. INCOME OF INSURED COMMERCIAL BANKS IN THE UNITED STATES (STATES AND OTHER AREAS), 1976—CONTINUED

B A N K S G RO U PED B Y C L A S S OF B A N K 

(Amounts in thousands of dollars)

Sources and disposition of income Total

Members F.R. System Nonmembers 

F.R. System

Operating 

throughout 

the year

Operating 

less than 

National State full year

Net in c o m e ................................................................................... 7,843,277 4,591,050 1,326,263 1,925,964 7,851,261 -7,984

MEMORANDA

Dividends declared on equity c a p ita l-to ta l............................................................................................

Cash dividends declared on common s to c k .....................................................................................

Cash dividends declared on preferred stock.....................................................................................

3,036,222

3,033,628

2,594

1,821,088

1,820,000

1,088

631,063

630,876

187

584,071

582,752

1,319

3,036,109

3,033,515

2,594

113

113

0

Provision for income ta x e s -to ta l..............................................................................................................

U.S. Federal income taxes....................................................................................................................

U.S. State and local income taxes........................................................................................................

Foreign income taxes.............................................................................................................................

2,410,779

1,371,638

491,712

547,429

1,508,763

857,212

237,106

414,445

505,190

201,017

174,398

129,775

396,826

313,409

80,208

3,209

2,411,289

1,372,264

491,596

547,429

-510

-626

116

0

Net loan losses or recoveries-total...........................................................................................................

Recoveries on loans................................................................................................................................

Losses on loans......................................................................................................................................

-3,503,246

687,401

-4,190,647

-2,105,582

439,352

-2,544,934

-815,140

98,223

-913,363

-582,524

149,826

-732,350

-3,496,662

686,507

-4,183,169

-6,584

894

-7,478

Trading account income, n e t .................. 717,655 473,540 222,193 21,922 717,622 33

Number of employees (end of period) . . 1,255,025 724,313 198,710 332,002 1,252,459 2,566

Number of banks (end of period).............................................................................................................. 14,411 4,737 1,023 8,651 14,249 162

262 FEDERAL DEPOSIT INSURANCE CORPORATION

Digitized for FRASER 

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Federal Reserve Bank of St. Louis
Table 117. INCOME OF INSURED COMMERCIAL BANKS OPERATING THROUGHOUT 1976 IN THE UNITED STATES

(STATES AND OTHER AREAS)

BANKS GROUPED BY AMOUNT 0 F ASSETS 

(Amounts in thousands of dollars)

Banks with assets o fSources and disposition of income All

banks1

Less 

than 

$5 million

$5.0 million 

to

$9.9 million

$10.0 million 

to

$24.9 million

$25.0 million 

to

$49.9 million

$50.0 million 

to

$99.9 million

$100.0 million 

to

$299.9 million

$300.0 million 

to

$499.9 million

$500.0 million 

to

$999.9 million

$1.0 billion 

to

$4.9 billion

$5.0 billion 

or

more

Operating in c o m e -to ta l.................................................... 80,605,310 356,267 1,497,247 5,838,691 6,544,056 6,360,464 8,205,064 3,952,347 5,291,391 15,032,891 27,526,892

Interest and fees on lo a n s .............................................. 51,612,598 204,086 898,590 3,629,016 4,143,748 4,054,994 5,137,113 2,551,366 3,327,625 9,364,010 18,302,050

Interest on balances with banks..................................... 4,484,713 3,802 11,830 41,655 49,425 60,227 91,611 37,671 76,885 841,842 3,269,765

Income on federal funds sold and securities 

purchased under agreements to resell in 

domestic offices.............................................................. 1,978,761 15,377 54,691 193,913 192,031 170,487 228,235 125,919 169,349 481,673 347,086

Interest on U.S. Treasury securities............................... 5,969,414 55,991 200,430 660,766 690,957 641,380 789,851 333,465 428,838 1,017,655 1,150,081

Interest on obligations of other U.S. Government 

agencies and corporations........................................... 2,413,101 33,128 121,281 382,762 354,638 303,486 407,828 125,016 168,728 270,224 246,010

Interest on obligations of States and political 

subdivisions of the U.S.................................................. 5,131,301 14,819 98,452 502,795 628,846 615,058 742,959 325,395 441,997 983,614 777,366

Interest on other bonds, notes, and debentures. . . . 750,752 2,160 7,021 37,575 48,085 49,590 68,900 30,870 44,059 102,685 359,807

Dividends on s to c k .......................................................... 104,897 177 921 4,465 5,707 5,382 9,774 6,063 8,377 24,533 39,498

Income from direct lease financing............................... 534,167 155 717 4,366 9,729 13,848 25,235 31,370 25,892 129,546 293,309

Income from fiduciary a c tiv itie s .................................. 1,794,205 2,709 6,230 22,241 26,468 73,424 169,535 110,795 207,148 571,018 604,637

Service charges on deposit accounts in domestic 

o ffic e s ............................................................................. 1,633,502 9,905 47,467 187,248 209,781 183,541 211,315 101,120 129,520 286,715 266,890

Other service charges, commissions, and fe e s ............ 2,181,220 10,516 35,211 115,616 118,382 121,316 194,130 111,652 158,429 451,206 864,762

Other in com e .................................................................... 2,016,679 3,442 14,406 56,273 66,259 67,731 128,578 61,645 104,544 508,170 1,005,631

Operating expenses-total................................................. 70,681,523 311,372 1,295,640 4,970,613 5,594,742 5,489,487 7,241,447 3,523,216 4,684,176 13,290,933 24,279,897

Salaries and employee b e n e fits ..................................... 14,733,573 92,690 328,521 1,137,159 1,226,567 1,226,730 1,652,220 827,672 1,143,018 2,949,496 4,149,500

Interest on time certificates of deposit of $100,000 

or more issued by domestic offices............................ 7,106,947 8,688 47,002 246,701 357,096 444,576 712,763 384,175 512,363 1,595,605 2,797,978

Interest on deposits in foreign o ffic e s ......................... 8,749,450 539 48 761 0 0 6,786 2,908 56,427 1,066,677 7,615,304

Interest on other deposits.............................................. 19,125,752 125,915 579,129 2,307,454 2,557,103 2,339,624 2,720,499 1,155,482 1,335,252 3,082,838 2,922,456

Expense of federal funds purchased and securities 

sold under agreements to repurchase in domestic 

o ffic e s ............................................................................. 3,310,400 529 2,905 16,091 26,553 56,749 166,405 135,028 273,591 1,092,312 1,540,237

Interest on other borrowed m oney............................... 667,029 312 1,580 4,212 6,853 7,690 11,602 8,075 19,369 125,951 481,385

Interest on subordinated notes and debentures . . . . 344,196 156 1,226 9,882 16,733 20,883 37,273 19,648 29,637 105,686 103,072

Occupancy expense of bank premises, gross............... 3,257,000 12,814 52,734 194,867 234,144 256,558 384,822 202,091 274,614 723,069 921,287

Less: Rental incom e.................................................... 496,727 586 2,484 10,397 18,370 30,433 65,608 36,803 52,943 168,316 110,787

Occupancy expense of bank premises, net............... 2,760,273 12,228 50,250 184,470 215,774 226,125 319,214 165,288 221,671 554,753 810,500

Furniture and equipment expense............................... 1,718,570 9,654 38,135 136,500 151,058 153,623 223,447 118,418 162,136 356,740 368,859

Provision for possible loan losses.................................. 3,689,773 11,035 47,906 181,532 212,312 208,992 326,829 181,341 241,245 714,955 1,563,626

Other expenses................................................................ 8,475,560 49,626 198,938 745,851 824,693 804,495 1,064,409 525,181 689,467 1,645,920 1,926,980

Income before income taxes and securities gains or 

losses ................................................................................... 9,923,787 44,895 201,607 868,078 949,314 870,977 963,617 429,131 607,215 1,741,958 3,246,995

Applicable income taxes.................................................... 2,291,868 8,787 36,648 156,349 157,519 129,359 120,652 50,580 82,072 338,100 1,211,802

INCOME OF INSURED BANKS 263

Digitized for FRASER 

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Federal Reserve Bank of St. Louis
Table 117. INCOME OF INSURED COMMERCIAL BANKS OPERATING THROUGHOUT 1976 IN THE UNITED STATES

( S T A T E S A N D O T H E R A R E A S ) —C O N T I N U E D 

B A N K S G RO U PED B Y AM O UNT OF A S S E T S 

(Amounts in thousands of dollars)

Banks with assets o fSources and disposition of income All

banks1

Less 

than 

$5 million

$5.0 million 

to

$9.9 million

$10.0 million 

to

$24.9 million

$25.0 million 

to

$49.9 million

$50.0 million 

to

$99.9 million

$100.0 million 

to

$299.9 million

$300.0 million 

to

$499.9 million

$500.0 million 

to

$999.9 million

$1.0 billion 

to

$4.9 billion

$5.0 billion 

or

more

Income before securities gains or losses......................... 7,631,919 36,108 164,959 711,729 791,795 741,618 842,965 378,551 525,143 1,403,858 2,035,193

Securities gains or losses, g ro s s ........................................

Applicable income taxes.................................................

Securities gains or losses, n e t ........................................

310,571

117,647

192,924

3,045

448

2,597

13,175

2,466

10,709

47,228

11,597

35,631

46,387

13.193

33.194

41,042

14,235

26,807

52,320

22,786

29,534

10,994

5,063

5,931

28,897

12,949

15,948

23,135

10,211

12,924

44,348

24,699

19,649

Income before extraordinary items.................................. 7,824,843 38,705 175,668 747,360 824,989 768,425 872,499 384,482 541,091 1,416,782 2,054,842

Extraordinary items, gross.................................................

Applicable income taxes.................................................

Extraordinary items, n et.................................................

28,192

1,774

26,418

393

104

289

861

116

745

6,538

712

5,826

3,116

102

3,014

7,426

857

6,569

4,862

640

4,222

1,907

422

1,485

2,289

-976

3,265

800

-203

1,003

0

0

0

Net in c o m e .......................................................................... 7,851,261 38,994 176,413 753,186 828,003 774,994 876,721 385,967 544,356 1,417,785 2,054,842

Memoranda

Dividends declared on equity capital—to ta l...................

Cash dividends declared on common s to c k ...............

Cash dividends declared on preferred stock...............

3,036,109

3,033,515

2,594

9,140

9,138

2

40,292

40,269

23

176,705

176,480

225

230,695

230,378

317

251,485

251,084

401

339,149

338,147

1,002

168,264

168,127

137

259,504

259^33

271

652,023

651,807

216

908.852

908.852

0

Provision for income ta x e s -to ta l.....................................

U.S. Federal income taxes..............................................

U.S. State and local income taxes..................................

Foreign income taxes.......................................................

2,411,289

1,372,264

491,596

547,429

9,339

7,789

1,549

1

39,230

33,117

6,095

18

168,658

143,112

25,295

251

170,814

145,520

25,269

25

144,451

119,297

24,980

174

144,078

111,862

31,917

299

56,065

42,859

13,027

179

94,045

63,979

27,481

2,585

348,108

231,308

64,650

52,150

1,236,501

473,421

271,333

491,747

Net loan losses (recoveries)-total.....................................

Recoveries on loans..........................................................

Losses on loans................................................................

-3,496,662

686,507

-4,183,169

-9,542

3,016

-12,558

-39,544

15,148

-54,692

-153,742

60,198

-213,940

-191,182

65,667

-256,849

-198,326

55,459

-253,785

-278,485

69,123

-347,608

-171,760

43,778

-215,538

-237,722

47,973

-285,695

-706,949

144,070

-851,019

-1,509,410

182,075

-1,691,485

Trading account income, n e t ........................................... 717,622 3 45 169 132 1,188 12,380 11,466 39,647 243,826 408,766

Number of employees on payroll (end of period). . . . 1,252,459 9,406 32,415 111,735 122,558 119,594 157,620 76,775 101,215 239,396 281,745

Number of banks (end of period)..................................... 14,249 1,399 2,826 4,975 2,641 1,309 721 145 108 107 18

1 This group of banks is the same as the group shown in table 116 under the heading "Operating throughout the year.''

264 FEDERAL DEPOSIT INSURANCE CORPORATION

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
Table 118. RATIOS OF INCOME OF INSURED COMMERCIAL BANKS OPERATING THROUGHOUT 1976 IN THE UNITED STATES

( S T A T E S A N D O T H E R A R E A S ) 1 

B A N K S G RO U PED A C C O R D IN G TO AM O U N T OF A S S E T S

Income item

Banks with assets o fLess 

than 

$5 million

$5.0 million 

to

$9.9 million

$10.0 million 

to

$24.9 million

$25.0 million 

to

$49.9 million

$50.0 million 

to

$99.9 million

$100.0 million 

to

$299.9 million

$300.0 million 

to

$499.9 million

$500.0 million 

to

$999.9 million

$1.0 billion 

to

$4.9 billion

$5.0 billion 

or 

more

Amounts per $100 of operating income

Operating in c o m e -to ta l................................................................................... $100.00 $100.00 $100.00 $100.00 $100.00 $100.00 $100.00 $100.00 $100.00 $100.00

Interest and fees on lo a n s ......................................................................... 57.28 60.02 62.15 63.32 63.75 62.63 64.50 62.85 62.99 65.91

Interest on balances with banks................................................................ 1.07 0.79 0.71 0.76 0.95 1.08 1.02 1.13 4.32 12.07

Income on federal funds sold and securities

purchased with agreements to resell in domestic offices ............... 4.32 3.65 3.32 2.93 2.68 2.77 3.20 3.26 3.28 1.34

Interest on U.S. Treasury securities2 ....................................................... 15.72 13.39 11.32 10.56 10.08 9.64 8.42 8.14 7.15 4.18

Interest on obligations of States and political subdivisions

of the U.S.2 ............................................................................................ 4.16 6.58 8.61 9.61 9.67 9.07 8.21 8.47 6.67 3.00

Interest and dividends on other securities2 .......................................... 9.96 8.63 7.28 6.24 5.63 5.92 4.13 4.22 2.70 2.34

Income from fiduciary a c tiv itie s ............................................................. 0.76 0.42 0.38 0.40 1.15 2.07 2.79 3.98 3.68 2.35

Service charges on deposit accounts in domestic o ffice s..................... 2.78 3.17 3.21 3.21 2.89 2.58 2.55 2.47 2.03 0.98

Other charges, commissions, and fees....................................................... 2.95 2.35 1.98 1.81 1.91 2.36 2.83 2.97 2.93 3.17

Other income2 ............................................................................................ 1.01 1.01 1.03 1.16 1.28 1.88 2.35 2.50 4.26 4.66

Operating expenses-total............................................................................... 87.40 86.53 85.13 85.49 86.31 88.27 89.12 88.35 88.76 88.09

Salaries and employee b en efits................................................................ 26.02 21.94 19.48 18.74 19.29 20.16 20.89 21.77 19.99 15.19

Interest on deposits in domestic o ffic e s ................................................. 37.78 41.82 43.75 44.54 43.77 41.84 38.97 34.94 32.75 27.34

Interest on deposits in foreign o ffic e s .................................................... 0.15 (4 ) 0.01 (4 ) (4 ) 0.07 0.10 0.64 4.87 20.75

Expense of federal funds purchased and securities sold under

agreements to repurchase in domestic offices................................. 0.15 0.19 0.28 0.41 0.89 2.02 3.43 5.22 7.16 5.74

Interest on other borrowed m oney.......................................................... 0.09 0.11 0.07 0.10 0.12 0.14 0.20 0.37 0.64 1.77

Interest on subordinated notes and debentures.................................... 0.04 0.08 0.17 0.26 0.33 0.45 0.51 0.54 0.78 0.37

Occupancy expense of bank premises, n et.............................................. 3.43 3.36 3.16 3.30 3.56 3.89 4.17 4.22 3.84 2.92

Furniture and equipment........................................................................... 2.71 2.55 2.34 2.31 2.42 2.73 2.99 3.10 2.44 1.38

Provision for possible loan losses............................................................. 3.10 3.20 3.11 3.24 3.29 3.98 4.58 4.44 4.90 5.58

Other expenses............................................................................................ 13.93 13.29 12.77 12.60 12.65 12.98 13.27 13.12 11.38 7.06

Income before income taxes and securities gains or losses........................ 12.60 13.47 14.87 14.51 13.69 11.73 10.88 11.65 11.24 11.91

Amounts per $100 of total assets3

Operating in c o m e -to ta l..................................................................................

Operating expenses-total...............................................................................

Income before income taxes and securities gains or losses........................

Net in c o m e ........................................................................................................

Memoranda

Recoveries credited to reserve for possible loan losses..............................

Losses charged to reserve for possible loan losses.......................................

Provision for possible loan losses...................................................................

7.18

6.28

0.90

0.79

7.16

6.20

0.96

0.84

7.15

6.08

1.06

0.92

7.17

6.13

1.04

0.91

7.11

6.14

0.97

0.87

7.05

6.23

0.83

0.75

7.06

6.29

0.77

0.69

6.89

6.09

0.80

0.72

6.62

5.88

0.74

0.62

6.61

5.82

0.79

0.50

0.06

0.25

0.25

0.07

0.26

0.23

0.07

0.26

0.22

0.07

0.28

0.23

0.06

0.28

0.23

0.06

0.30

0.28

0.08

0.38

0.32

0.06

0.37

0.31

0.06

0.39

0.32

0.05

0.40

0.37

INCOME OF INSURED BANKS 265

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
Table 118. RATIOS OF INCOME OF INSURED COMMERCIAL BANKS OPERATING THROUGHOUT 1976 IN THE UNITED STATES

(STATES AND OTHER AREAS)1-CONTINUED 

BANKS GROUPED ACCORDING TO AMOUNT OF ASSETS

Banks with assets of—

Income item Less $5.0 million $10.0 million $25.0 million $50.0 million $100.0 million $300.0 million $500.0 million $1.0 billion $5.0 billion

than to to to to to to to to or

$5 million $9.9 million $24.9 million $49.9 million $99.9 million $299.9 million $499.9 million $999.9 million $4.9 billion more

Amounts per $100 of equity capital3

Net in c o m e ........................................................................................................ 7.55 9.28 11.41 11.78 11.54 10.63 9.90 10.84 10.26 11.16

Cash dividends declared on common s to c k ................................................. 1.77 2.12 2.67 3.28 3.74 4.10 4.30 5.15 4.78 4.92

Net additions to capital from income............................................................. 6.99 9.13 11.21 11.83 11.30 10.95 8.87 8.52 8.67 15.97

Memoranda

Recoveries credited to reserve for possible loan losses............................... 0.58 0.80 0.91 0.93 0.83 0.84 1.12 0.96 1.04 1.00

Losses charged to reserve for possible loan losses........................................ 2.44 2.88 3.24 3.65 3.78 4.22 5.51 5.51 6.41 8.87

Provision for possible loan losses.................................................................... 2.18 2.54 2.78 3.04 3.12 3.97 4.65 4.60 5.38 8.17

Special ratios3

Income on loans per $100 of loans................................................................. 8.31 8.36 8.54 8.71 8.66 8.67 8.69 8.41 8.20 7.85

Income on U.S. Treasury securities perSlOO of U.S.Treasury securities. . 6.89 6.83 6.67 6.61 6.55 6.22 6.27 6.22 5.82 5.65

Income on obligations of States and political subdivisions per $100

of obligations of States and political subdivisions.................................. 5.58 5.28 5.06 4.96 4.91 4.83 4.80 4.91 5.00 5.03

Income on other securities per S100 of other securities............................ 7.62 7.43 7.21 7.09 6.94 7.00 6.80 6.92 6.22 8.26

Service charges on demand deposits in domestic offices per $100

of those deposits......................................................................................... 0.55 0.70 0.73 0.75 0.66 0.57 0.54 0.49 0.43 0.29

Interest paid on time and savings deposits per $100 of those deposits . . 5.15 5.23 5.31 5.34 5.31 5.25 5.27 5.05 5.21 5.50

Number of banks, December 31, 1976 .......................................................... 1,399 2,826 4,975 2,641 1,309 720 146 106 104 23

1 This group of banks is the same as the group shown in table 116 under heading "Operating throughout the year." 

2lncome from securities held in trading accounts is included in "Other operating income."

3 Rati os are based on assets and liabilities reported at end of year.

4 Less than 0.005.

266 FEDERAL DEPOSIT INSURANCE CORPORATION

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
Table 119. INCOME OF INSURED MUTUAL SAVINGS BANKS IN THE UNITED STATES (STATES AND OTHER AREAS), 1971-1976

(Amounts in thousands of dollars)

Income item 1971 1972 1973 1974 1975 1976

Operating in c o m e -to ta l........................................................................................................................................ 4,529,014 5,295,449 6,064,895 6,483,654 7,179,294 8,312,692

Interest and fees on real estate mortgage loans, net.................................................................................... 3,275,859 3,690,871 4,171,520 4,503,214 4,817,741 5,225,101

Interest and fees on real estate mortgage loans, gross........................................................................... 3,344,057 3,760,908 4,240,926 4,570,902 4,883,664 5,290,560

Less: Mortgage servicing fees................................................................................................................... 68,198 70,037 69,406 67,688 65,923 65,459

Interest and fees on other loans...................................................................................................................... 163,675 178,126 283,506 337,844 283,416 334,625

Interest on U.S. Government and agency securities.................................................................................... 268,370 352,297 414,359 403,940 567,577 869,038

Interest on corporate bonds............................................................................................................................ 546,033 726,665 730,132 743,944 929,613 1,166,755

Interest on State, county, and municipal obligations..................... ........................................................... 12,789 30,857 52,982 47,028 74,858 142,958

Interest on other bonds, notes, and debentures.......................................................................................... 75,489 91,856 116,901 125,718 150,841 200,849

Dividends on corporate s to c k ......................................................................................................................... 105,592 126,256 148,781 170,273 191,401 207,398

Income from service operations...................................................................................................................... 27,669 30,072 35,771 27,875 32,968 39,825

Other operating in co m e .................................................................................................................................. 53,538 68,449 110,943 123,818 130,879 126,143

Operating expenses-total..................................................................................................................................... 581,693 671,818 811,689 938,705 1,083,192 1,310,921

Salaries.............................................................................................................................................................. 243,446 270,353 307,030 344,304 388,061 440,284

Pensions and other employee benefits......................................................................................................... 55,944 63,882 72,567 83,338 98,268 114,310

Interest on borrowed m o n e y ......................................................................................................................... 7,862 6,713 28,907 66,110 55,168 45,365

Occupancy expense of bank premises (including taxes, depreciation, maintenance, rentals), n et. . . 71,113 82,820 96,128 114,206 135,754 158,044

Furniture and equipment (including recurring depreciation).................................................................. 28,365 32,237 37,104 43,815 52,543 62,285

Actual net loan losses (charge-offs less recoveries).................................................................................... 3,328 4,500 8,994 10,034 21,836 78,732

Other operating expenses................................................................................................. 171,635 211,313 260,959 276,898 331,562 411,901

Net operating income before interest and dividends on deposits.................................................................. 3,947,321 4,623,631 5,253,206 5,544,949 6,096,102 7,001,771

Interest and dividends on deposits-total............................................................................................................. 3,418,845 3,943,233 4,480,901 4,916,724 5,495,842 6,287,966

Savings deposits................................................................................................................................................. 3,058,645 3,392,798 3,567,595 3,607,170 3,778,695 4,160,435

Other time deposits........................................................................................................................................... 360,200 550,435 913,306 1,309,554 1,717,147 2,127,531

Net operating income after interest and dividends on deposits..................................................................... 528,476 680,398 772,305 628,225 600,260 713,805

Net realized gains (or losses) o n - to ta l............................................................................................................... -58,286 -14,896 -92,357 -148,844 -63,283 20,260

Securities.............................................................................................................................................................. -44,290 3,481 -65,973 -111,501 -25,899 49,283

Real estate mortgage loans............................................................................................................................... -12,133 -25,944 -20,187 -38,556 -22,904 -21,554

Real estate........................................................................................................................................................... -1,690 -509 -673 588 -7,169 -423

Other transactions........................................................................................................................................... -173 8,076 -5,524 625 -7,311 -7,046

Less minority interest in consolidated subsidiaries.......................................................................................... 0 34 0 0 37 5

Net income before taxes..................................................................................................................................... 470,190 665,468 679,948 479,381 536,940 734,060

Franchise and income ta x e s -to ta l...................................................................................................................... 126,601 186,303 201,792 161,870 171,549 227,088

Federal income ta x ........................................................................................................................................... 63,833 108,679 114,500 81,089 66,543 107,801

State and local franchise and income ta x e s ................................................................................................ 62,768 77,624 87,292 80,781 105,006 119,287

Net in c o m e .............................................................................................................................................................. 343,589 479,165 478,156 317,511 365,391 506,972

INCOME OF INSURED BANKS 267

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
Table 119. INCOME OF INSURED MUTUAL SAVINGS BANKS IN THE UNITED STATES (STATES AND OTHER AREAS), 1971-1976-CONTINUED

(Amounts in thousands of dollars)

Income item 1971 1972 1973 1974 1975 1976

Memoranda

Change in surplus accounts, n e t.............................................................................................................................

Discount on securities, to ta l...................................................................................................................................

486,234

16,513

534,229

19,630

561,695

27,805

369,166

32,406

407,314

109,383

545,665

41,722

Average assets and liabilities1

Assets—to ta l...............................................................................................................................................................

Cash and due from b a n k s ................................................................................................................................

U.S. Government and agency securities........................................................................................................

Other securities...................................................................................................................................................

Real estate mortgage loans................................................................................................................................

Other loans and discounts................................................................................................................................

Other real estate...................................................................................................................................................

All other assets...................................................................................................................................................

Liabilities and surplus accounts—to t a l.................................................................................................................

Total deposits......................................................................................................................................................

Savings and time deposits..........................................................................................................................

Demand deposits.........................................................................................................................................

Other lia b ilitie s ..................................................................................................................................................

Total surplus accounts......................................................................................................................................

73.661.663

1,156,181 

4,437,666 

11,932,355 

52,364,759

2,309,498

75,520

1,385,684

73.661.663

67,443,302

66,784,186

659,116

982,655

5,235,706

82.995.606

1,329,972

5,740,097

15,033,388

56,553,602

2,566,460

116,406

1,655,681

82.995.606

76,226,170

75,472,194

753,976

1,074,401

5,695,035

90.850.840

1,676,216

6,299,082

16,238,983

61,600,178

2,967,740

170,868

1,897,773

90.850.840

83,212,442

82,350,237

862,205

1,381,121

6,257,277

94.426.708

1,825,066

5,950,081

16,410,896

64,695,689

3,250,960

207,125

2,086,891

94.426.708

85,994,384

85,097,902

896,482

1,763,885

6,668,439

101.714.468

2,067,540'

7,823,837

19,035,575

66,698,116

3,388,551

320,468

2,380,381

101.714.468

92,850,364

91,885,361

965,003

1,803,741

7,060,363

114.044.800

1,934,535

11,482,069

23,065,574

70,314,531

4,084,414

457,255

2,706,422

114.044.800

104,554,349

103,540,616

1,013,733

1,849,625

7,640,826

Number of employees (end of p e rio d )................................................................................................................. 30,134 32,866 35,668 37,494 40,261 45,040

Number of banks (end of period).......................................................................................................................... 327 326 322 320 329 329

1 Averages of amounts reported at beginning, middle, and end of year.

268 FEDERAL DEPOSIT INSURANCE CORPORATION

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
Table 120. RATIOS OF INCOME OF INSURED MUTUAL SAVINGS BANKS IN THE UNITED STATES (STATES AND OTHER AREAS), 1971-1976

Income item 1971 1972 1973 1974 1975 1976

Amounts per $100 of operating income 

Operating in c o m e -to ta l..................................................................................................................................................... $100.00 $100.00 $100.00 $100.00 $100.00 $100.00

Interest and fees on real estate mortgage lo a n s -n e t............................................................................................. 72.33 69.70 68.78 69.45 67.11 62.86

Interest and fees on other loans.................................................................................................................................. 3.61 3.36 4.68 5.21 3.95 4.03

Interest on U.S. Government and agency securities ............................................................................................. 5.93 6.65 6.83 6.23 7.91 10.45

Interest on corporate bonds........................................................................................................................................ 12.06 13.72 12.04 11.47 12.95 14.04

Interest on State, county, and municipal obligations .......................................................................................... .28 .58 .87 .73 1.04 1.72

Interest on other bonds, notes, and debentures ................................................................................................... 1.67 1.74 1.93 1.94 2.10 2.42

Dividends on corporate stock .................................................................................................................................. 2.33 2.39 2.45 2.63 2.67 2.49

Income from service operations.................................................................................................................................. .61 .57 .59 .43 .46 .48

Other operating in c o m e .............................................................................................................................................. 1.18 1.29 1.83 1.91 1.82 1.52

Operating expense-total..................................................................................................................................................... 12.84 12.69 13.38 14.48 15.09 15.77

Salaries............................................................................................................................................................................. 5.37 5.11 5.06 5.31 5.41 5.30

Pensions and other employee b enefits...................................................................................................................... 1.24 1.21 1.20 1.29 1.37 1.38

Interest on borrowed m o n e y ..................................................................................................................................... .17 .13 .48 1.02 .77 .55

Occupancy expense of bank premises (including taxes, depreciation, maintenance, rentals)-net.................. 1.57 1.56 1.58 1.76 1.89 1.90

Furniture and equipment (including recurring depreciation).............................................................................. .63 .61 .61 .68 .73 .75

Actual net loan losses (charge-offs less recoveries)................................................................................................ .07 .08 .15 .15 .30 .95

Other operating expenses........................................................................................................................................... 3.79 3.99 4.30 4.27 4.62 4.96

Net operating income before interest and dividends on deposits.............................................................................. 87.16 87.31 86.62 85.52 84.91 84.23

Interest and dividends on deposits-total......................................................................................................................... 75.49 74.46 73.88 75.83 76.55 75.64

Savings deposits2 ........................................................................................................................................................... 67.54 64.07 58.82 55.63 52.63 50.05

Other time deposits2 ..................................................................................................................................................... 7.95 10.39 15.06 20.20 23.92 25.59

Net operating income after interest and dividends on d eposits................................................................................. 11.67 12.85 12.74 9.69 8.36 8.59

Net realized gains (or losses) o n - to ta l............................................................................................................................ -1 .29 -.2 8 -1 .53 -2 .30 -.8 8 .24

Securities.......................................................................................................................................................................... -.9 8 .07 -1.09 -1 .72 -.3 6 .59

Real estate mortgage loans........................................................................................................................................... -.2 7 -.4 9 -.3 4 -.6 0 -.3 2 -.26

Real estate....................................................................................................................................................................... -.0 4 -.01 -.01 .01 -.1 0 -.01

Other transactions........................................................................................................................................................ (1) .15 -.0 9 .01 -.1 0 -.0 8

Less m inority interest in consolidated subsidiaries...................................................................................................... .00 (1) .00 .00 (1) (1)

Net income before taxes..................................................................................................................................................... 10.38 12.57 11.21 7.39 7.48 8.83

Franchise and income ta x e s -to ta l.................................................................................................................................. 2.79 3.52 3.33 2.49 2.39 2.73

Federal income ta x ........................................................................................................................................................ 1.41 2.05 1.89 1.25 .93 1.30

State and local franchise and income ta x e s ............................................................................................................ 1.38 1.47 1.44 1.24 1.46 1.43

Net in c o m e .......................................................................................................................................................................... 7.59 9.05 7.88 4.90 5.09 6.10

INCOME OF INSURED BANKS 269

Digitized for FRASER 

http://fraser.stlouisfed.org/ 

Federal Reserve Bank of St. Louis
Table 120. RATIOS OF INCOME OF INSURED MUTUAL SAVINGS BANKS IN THE UNITED STATES (STATES AND OTHER AREAS),

1971 —1976—CONTINUED

Income item 1971 1972 1973 1974 1975 1976

Amounts per $100 of total assets2

Operating in c o m e -to ta l..................................................................................................................................................... 6.15 6.38 6.68 6.87 7.06 7.29

Operating expense-total..................................................................................................................................................... .79 .81 .90 .99 1.06 1.15

Net operating income before interest and dividends on d eposits.............................................................................. 5.36 5.57 5.78 5.88 5.99 6.14

Interest and dividends on d e p o s its -to ta l...................................................................................................................... 4.64 4.75 4.93 5.21 5.40 5.51

Net operating income after interest and dividends on deposits................................................................................. .72 .82 .85 .67 .59 .63

Net realized gains (or losses)-total................................................................................................................................... -.0 8 -.0 2 -.1 0 -.1 6 -.0 6 .02

Net income before taxes..................................................................................................................................................... .64 .80 .75 .51 .53 .64

Franchise and income taxes—t o t a l................................................................................................................................... .17 .22 .22 .17 .17 .20

Net in c o m e ........................................................................................................................................................................... .47 .58 .53 .34 .36 .44

Special ratios2

Interest on U.S. Government and agency securities per $100 of U.S. Government and agency securities .... 6.05 6.14 6.58 6.79 7.25 7.57

Interest and dividends on other securities per $100 of other securities..................................................................... 6.20 6.49 6.46 6.62 7.07 7.45

Interest and fees on real estate mortgage loans per $100 of real estate lo a n s ......................................................... 6.26 6.53 6.77 6.96 7.22 7.43

Interest and fees on other loans per $100 of other loans.............................................................................................. 7.09 6.94 9.55 10.39 8.36 8.19

Interest and dividends on deposits per $100 of savings and time deposits............................................................... 5.12 5.22 5.44 5.78 5.98 6.07

Net income per $100 of total surplus accounts............................................................................................................. 6.56 8.41 7.64 4.76 5.18 6.64

Number of banks (end of period)...................................................................................................................................... 327 326 322 320 329 329

1 Less than 0.005.

2See note to table 119.

270 FEDERAL DEPOSIT INSURANCE CORPORATION

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Federal Reserve Bank of St. Louis
Table 121. 

Table 122.

Table 123.

Table 124. 

Table 125. 

Table 126. 

Table 127. 

Table 128.

BANKS CLOSED BECAUSE OF FINANCIAL DIFFICULTIES;

FDIC INCOME, DISBURSEMENTS, AND LOSSES

Number and deposits of banks closed because of financial difficulties, 1934-1976

Insured banks requiring disbursements by the Federal Deposit Insurance Corporation during

1976

Depositors, deposits, and disbursements in failed banks requiring disbursements by the 

Federal Deposit Insurance Corporation, 1934-1976

Banks grouped by class of bank, year o f deposit payoff or deposit assumption, amount o f

deposits, and State

Recoveries and losses by the Federal Deposit Insurance Corporation on principal disbursements for protection of depositors, 1934-1976

Analysis of disbursements, recoveries, and losses in deposit insurance transactions, January 1, 

1934-December 31, 1976

Income and expenses, Federal Deposit Insurance Corporation, by year, from beginning of 

operations, September 11, 1933, to December 31, 1976

Protection of depositors of failed banks requiring disbursements by the Federal Deposit 

Insurance Corporation, 1934-1976

Insured deposits and the deposit insurance fund, 1934-1976

BANKS CLOSED AND DEPOSIT INSURANCE DISBURSEMENTS 271

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Deposit insurance disbursements

Disbursements by the Federal Deposit Insurance Corporation to protect 

depositors are made when the insured deposits of banks in financial d ifficu lties are paid off, or when the deposits of a failing bank are assumed by 

another insured bank w ith the financial aid of the Corporation. In deposit 

payoff cases, the disbursement is the amount paid by the Corporation on 

insured deposits. In deposit assumption cases, the principal disbursement is 

the amount loaned to failing banks, or the price paid for assets purchased 

from them; additional disbursements are made in those cases as advances for 

protection of assets in process of liquidation and for liquidation expenses.

Under its section 13(c) authority, the Corporation has made disbursements to four operating banks. The amounts of these disbursements are 

included in table 125, but are not included in tables 123 and 124.

Noninsured bank failures

Statistics in this report on failures of noninsured banks are compiled 

from inform ation obtained from State banking departments, field supervisory officials, and other sources. The Corporation received inform ation on 

one failure during 1976: American Bank and Trust Company of Rhode 

Island, North Providence. Deposits: $0.8 m illion; date of closing: 11-12-76.

For detailed data regarding noninsured banks that suspended in the years 

1934-1962, see the A n n u a l R epo rt for 1963, pp. 27-41. For 1963-1976, see 

table 121 of the report, and previous reports for respective years.

Sources of data

Insured banks: books of bank at date of closing; and books of FDIC, 

December 31, 1976.

272 FEDERAL DEPOSIT INSURANCE CORPORATION

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Federal Reserve Bank of St. Louis
Table 121. NUMBER AND DEPOSITS OF BANKS CLOSED BECAUSE OF FINANCIAL DIFFICULTIES, 1934-1976

N oninsured1

W ithout 

disbursements 

by F D IC 2

W ith 

disbursements 

by F D IC 3

Deposits (in thousands o f dollars)

N oninsured1

W ithou t 

disbursements 

by F D IC 2

W ith 

disbursements 

by FD IC 3

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 .

1975 .

1976 .

61

32

72

84

81

72

48

17

23

5 

2 

1

2

6

3 

9 

5 

5

4

3

9

84

6

3 

6

4

144

17

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

9

25

69

75

74

60

43

15

20

5

2

1

1

5

3

5,022,564

37,332 

13,988 

28,100 

34,205 

60,722 

160,211 

142,788 

29,796 

19,540 

12,525 

1,915 

5,695 

494 

7,207 

10,674 

9,217 

5,555 

6,464 

3,313 

45,101 

2,948 

11,953 

11,690 

12,502 

10,413 

2,593 

7,965 

10,611 

4,231 

23,444 

23,867 

45,256 

106,171 

10,878 

22,524 

40,134 

55,2444 

132,152 

99,784 

971,296 

1,575,832 

340,5744 

865,659

143,500

35,364

583

592

528

1.038

2,439

358

79

355

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

42 3 4 

’ 79,304

1,0004

800

4,879.064

1,968

13,405

27,508

33,677

59,684

157,772

142,430

29,717

19,185

.12,525

1,915

5,695

347

7,040

10,674

6,665

5,513

3,408

3,170

44,711

998

11,953

11,330

11,247

8,240

2,593

6,930

8,936

3,011

23,444

23,438

43,861

103,523

10,878

22,524

40,134

54,821

132,152

20,480

971,296

1,575,832

339,574

864,859

85 

' 328

4,837,917

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

23,444

23,438

43,861

103,523

10,878

22,524

40,134

54,821

132,152

20,480

971,296

1,575,832

339,574

1 For in fo rm a tio n regarding each of these banks, see table 22 in the 1963 A nnual R eport (1963 and prio r years), and explanatory notes to tables regarding banks closed because of financial d ifficu ltie s in subsequent annual reports. One noninsured 

bank placed in receivership in 1934, w ith no deposits at tim e o f closing, is om itte d (see table 22, note 9). Deposits are unavailable fo r 7 banks.

2 For in fo rm a tio n regarding these cases, see table 23 of the A n n u a l R eport fo r 1963.

3 For in fo rm a tio n regarding each bank, see the A n n u a l R eport fo r 1958, pp. 4 8 -8 3 and pp. 9 8 -1 2 7 , and tables regarding deposit insurance disbursements in subsequent annual reports. Deposits are adjusted as of December 31, 1976.

4 Revised.

BANKS CLOSED; FDIC INCOME, DISBURSEMENTS, AND LOSSES 273

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Table 122. INSURED BANKS REQUIRING DISBURSEMENTS BY THE FEDERAL DEPOSIT INSURANCE CORPORATION DURING 1976

Case

number Name and location

Class 

of bank

Number of 

depositors or 

accounts1

Date of closing or 

deposit assumption

First payment to 

depositors or 

disbursement by FDIC

FDIC

disbursement2

Receiver or liquidating agent 

or assuming bank

Deposit

payoff

307 Mt. Zion Deposit Bank 

Mt. Zion, Kentucky

NM 388 June 25,1976 June 28,1976 $ 541,361 Federal Deposit Insurance Corporation

308 Coronado National Bank 

Denver, Colorado

N 3,770 June 25,1976 June 28,1976 2,423,963 Federal Deposit Insurance Corporation

309 Citizens State Bank 

Carrizo Springs, Texas

NM 4,088 June 28,1976 July 8,1976 8,901,376 Federal Deposit Insurance Corporation

Deposit

assumption

220 The Bank of Bloomfield 

Bloomfield, New Jersey

NM 15,700 January 10, 1976 18,876,761 First National State Bank of New Jersey 

Newark, New Jersey

221 Bank of Woodmoor 

Woodmoor, Colorado

NM 3,590 January 12, 1976 3,084,098 The El Paso County Bank 

Woodmoor, Colorado

222 The Hamilton National 

Bank of Chattanooga 

Chattanooga, Tennessee

N 120,000 February 16, 1976 102,659,315 First Tennessee National Bank 

Chattanooga, Tennessee

223 South Texas Bank 

Houston, Texas

NM 6,498 February 25, 1976 5,650,303 South Loop National Bank 

Houston, Texas

224 First State Bank of 

Northern California 

San Leandro, California

NM 34,760 May 21, 1976 28,838,328 Lloyds Bank California 

Los Angeles, California

225 Northeast Bank of Houston 

Houston, Texas

NM 9,652 June 3, 1976 6,750,331 First City Bank - Northeast N.A. 

- Houston, Texas

226 First State Bank of 

Hudson County 

Jersey City, New Jersey

NM 15,759 June 14,1976 7,367,491 First Jersey Bank (National Association) 

Jersey City, New Jersey

227 The New Boston Bank and Trust 

Company

Boston, Massachusetts

NM 2,660 September 14, 1976 4,384,191 Capital Bank and Trust Company 

Boston, Massachusetts

228 American Bank & Trust 

Company

New York, New York

SM 26,000 September 15, 1976 123,087,171 Bank Leumi Trust Company of New York 

New York, New York

229 The Hamilton Bank and Trust 

Company 

Atlanta, Georgia

NM 8,128 October 8, 1976 23,110,548 The National Bank of Georgia 

Atlanta, Georgia

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230 Centennial Bank 

Philadelphia, Pennsylvania

m 13,756 October 19, 1976 6,654,355 Lincoln Bank

Bala-Cynwyd, Pennsylvania

231 First State Bank & Trust 

Co.

Rio Grande City, Texas

NM 8,982 November 19, 1976 9,741,761 First National Bank of Rio Grande City 

Rio Grande City, Texas

232 International City Bank and 

Trust Company 

New Orleans, Louisiana

NM 67,000 December 3, 1976 1 17,068,611 The Bank of New Orleans and Trust Company 

New Orleans, Louisiana

Assets1 Liabilities and capital accounts

Case

number Cash and 

due from banks

U.S. Government 

obligations

Other

securities

Loans, 

discounts, and 

overdrafts

Banking house, 

furniture and 

fixtures

Other real 

estate

Other

assets

Total Deposits Other

liabilities

Capital

stock

Other capital 

accounts

Deposit

payoff

307 $ 57,090 $ 49,390 $ 10,000 $ 332,429 $ 4,999 $ 29,544 $ 24,000 $ 507,451 $ 554,603 $ 55,025 $ (102,176)

308 506,207 662,966 212,000 1,039,376 137,922 45,496 8,725 2,612,693 2,609,968 200,000 (197,275)

309 755,174 219,330 3,036,467 11,899,934 90,273 27,788 1,381,018 17,409,983 15,942,717 295,500 1,171,765

Deposit

assumption

220 1,411,426 765,000 4,140,877 24,414,317 756,552 163,701 31,651,873 25,968,695 1,398,623 1,023,070 3,261,485

221 91,291 48,953 1,339,521 2,140,537 272,048 132,434 8,272 4,033,056 3,548,559 45,535 200,000 238,963

222 42,454,599 17,370,131 59,228,033 225,638,697 9,255,003 36,189,308 21,971,408 I 412,107,179 336,292,086 50,091,408 8,250,000 17,473,686

223 873,257 206,578 150,000 5,632,728 273,802 516,103 103,730 7,756,199 7,074,044 79,737 500,000 102,417

224 2,778,646 1,400,798 9,796,242 40,617,138 675,773 263,669 485,883 56,018,148 53,404,510 370,858 1,000,000 1,242,781

225 1,278,901 5,356,963 1,194,412 6,295,816 625,414 3,385,548 4,199 18,141,251 17,451,565 187,391 316,671 185,624

226 1,515,397 - 2,851,916 8,246,898 487,014 541,516 429,357 14,072,098 13,789,671 1,329 1,000,000 (718,903)

227 361,225 196,612 456,625 5,270,261 224,438 21,995 131,026 6,662,182 5,335,391 912,166 750,000 (335,375)

228 16,021,493 11,268,629 27,273,667 153,516,904 1,021,792 - 15,399,838 2^4,502,323 165,079,261 30,402,232 12,847,400 16,173,430

229 2,320,417 5,622,461 749,438 26,803,626 511,883 482,575 3,584,856 40,075,256 32,022,256 3,772,500 2,500,000 1,780,500

230 922,866 1,657,411 2,799,823 7,759,571 324,757 93,352 112,014 13,669,795 12,311,591 491,729 950,000 (83,525)

231 292,092 307,248 929,387 11,492,887 202,330 - 529,674 13,753,619* 12,081,841 325,138 700,000 646,640

232 10,771,986 14,330,680 21,583,693 102,937,772 3,364,173 3,957,213 19,374,057 176,319,574 161,638,640 2,765,730 3,018,116 8,897,088

1 Figures as determined by FDIC agents after adjustment of books of the bank immediately following its closing. 

2 Includes disbursements made to December 31, 1976, plus additional disbursements required in these cases.

BANKS CLOSED; FDIC INCOME, DISBURSEMENTS, AND LOSSES 275

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Table 123. DEPOSITORS, DEPOSITS, AND DISBURSEMENTS IN FAILED BANKS REQUIRING DISBURSEMENTS BY THE 

FEDERAL DEPOSIT INSURANCE CORPORATION, 1934-1976 

BANKS GROUPED BY CLASS OF BANK, YEAR OF DEPOSIT PAYOFF OR DEPOSIT ASSUMPTION, AMOUNT OF DEPOSITS, AND STATE

Classification

Number of banks Number of depositors1

Deposits1 

(in thousands of dollars)

Disbursements by FDIC1 

(in thousands of dollars)

Total Payoff

cases

Assumption

cases

Total Payoff

cases

Assumption

cases

Total Payoff

cases

Assumption

cases

Principal disbursements

Advances and 

expenses2

Total Payoff

cases3

Assumption

cases4

Payoff

cases5

Assumption

cases6

All banks................................................. 535 303 232 3,304,942 623,006 2,681,936 4,837,917 468,139 4,369,778 2,039,635 325,518 1,714,117 7,505 88,862

Class of bank

N ational........................................... 99 36 63 1,492,039 108,812 1,383,227 3,060,050 113,779 2,946,271 843,573 65,237 778,336 2,660 16,918

State member F.R.S........................ 30 10 20 428,129 88,894 339,235 438,232 34,388 403,844 309,470 26,506 282,964 634 21,741

Nonmember F.R.S........................... 406 257 149 1,384,774 425,300 959,474 1,339,635 319,972 1,019,663 886,592 233,775 652,817 4,211 50,203

Year7

1934 ................................................. 9 9 15,767 15 767 1 968 1,968 941 941 43

1935 ................................................. 25 24 ’ ’ 1 44,655 32,331 12,324 13,320 9,091 4,229 8,891 6,026 2,865 108 272

1936 ................................................. 69 42 27 89,018 43,225 45,793 27,508 11,241 16,267 14,460 7,735 6,725 67 934

1937 ................................................. 75 50 25 130,387 74,148 56,239 33,349 14,960 18,389 19,481 12,365 7,116 103 905

1938 ................................................. 74 50 24 203,961 44,288 159,673 59,684 10,296 49,388 30,479 9,092 21,387 93 4,902

1939 ................................................. 60 32 28 392,718 90,169 302,549 157,772 32,738 125,034 67,770 26,196 41,574 162 17,603

1940 ................................................. 43 19 24 256,361 20,667 235,694 142,430 5,657 136,773 74,134 4,895 69,239 89 17,237

1 9 4 1 ................................................. 15 8 7 73,005 38,594 34,411 29,717 14,730 14,987 23,880 12,278 11,602 50 1,479

1942 ................................................. 20 6 14 60,688 5,717 54,971 19,185 1,816 17,369 10,825 1,612 9,213 38 1,076

1943 ................................................. 5 4 1 27,371 16,917 10,454 12,525 6,637 5,888 7,172 5,500 1,672 53 72

1944 ................................................. 2 1 1 5,487 899 4,588 1,915 456 1,459 1,503 404 1,099 9 37

1945 ................................................. 1 1 12,483 12,483 5,695 5,695 1,768 1,768 96

1946 ................................................. 1 1 1,383 1,383 347 347 265 265 11

1947 ................................................. 5 5 10,637 10,637 7,040 7,040 1,724 1,724 381

1948 ................................................. 3 3 18,540 18,540 10,674 10,674 2,990 2,990 200

1949 ................................................. 4 4 5,671 5,671 5,475 5,475 2,552 2,552 166

1950 ........................................... 4 4 6,366 6,366 5,513 5,513 3,986 3,986 524

1 9 5 1 ................................................. 2 2 5,276 5,276 3,408 3,408 1,885 1,885 127

1952 ................................................. 3 3 6,752 6,752 3,170 3,170 1,369 1,369 195

1953 ................................................. 2 2 24,469 24,469 18,262 18,262 5,017 5,017 428

1954 ................................................. 2 2 1,811 1,811 998 998 913 913 145

1955 ................................................. 5 1 17,790 8,080 9,710 11,953 6,503 5,450 6,784 4,438 2,346 106 665

1956 ................................................. 2 1 1 15,197 5,465 9,732 11,330 4,702 6,628 3,458 2,795 663 87 51

1957 ................................................. 1 1 2,338 2,338 1 163 1,163 1,031 1,031 20

1958 ................................................. 4 3 ' i 9,587 4*380 5,207 8,240 4,156 4,084 3,026 2,796 230 38 31

1959 ................................................. 3 3 3,073 3,073 2 593 2 593 1,835 1,835 51

1960 ................................................. 1 1 11,171 11,171 6,930 6,930 4,765 4,765 82

276 FEDERAL DEPOSIT INSURANCE CORPORATION

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1 9 6 1 ................................................. 5 5 8,301 8,301

1962 .................................................

1963 ................................................. ' ' 2 ‘ 2 36,433 36,433

1964 ................................................. 7 7 19,934 19,934

1965 ................................................. 5 3 ' ' 2 15,817 14,363

1966 ................................................. 7 1 6 95,424 1,012

1967 ................................................. 4 4 4,729 4,729

1968 ................................................. 3 ’ ' 3 12,850

1969 ................................................. 9 ’ '4 5 27,374 6,544

1970 ................................................. 7 4 3 31,433 20,403

1 9 7 1 ................................................. 6 5 1 71,950 31,850

1972 ................................................. 1 1 23,655 23,655

1973 ................................................. 6 3 ‘ '3 349,699 8,382

1974 ................................................. 4 4 704,283

1975 ................................................. 13 ' '3 10 110,367 21,925

1976 ................................................. 16 3 13 340,731 8,246

Banks with deposits of

Less than $100,000......................... 107 83 24 38,347 29,695

$100,000 to $250,000 .................. 109 86 23 83,370 65,512

$250,000 to $500,000 .................. 62 37 25 92,179 57,287

$500,000 to $1,000,000............... 72 36 36 160,388 74,296

$1 000,000 to $2,000,000............ 57 21 36 209,818 70,334

$2,000,000 to $5,000,000............ 55 22 33 293,164 89,123

$5,000,000 to $10,000,000. . . . 33 7 26 293,248 50,445

$10,000,000 to $25,000,000 . . . 20 9 11 337,294 146,430

$25,000,000 to $50,000,000 . . . 7 1 6 308,637 12,481

$50,000,000 to $100,000,000 . . 6 1 5 244,265 27,403

$100,000,000 to $500,000,000. . 5 5 279,232

$500,000,000 to $1,000,000,000. 

$1,000,000,000 or m ore...............

State

1

1

1

1

335.000

630.000

Alabam a...........................................

Arizona..............................................

4

1

2 2

1

9,170 

2 692

2,059

Arkansas........................................... 8 ’ 6 2 6^350 4,541

C a lifo rn ia ........................................ 6 3 3 390,819 17,890

Colorado........................................... 8 4 4 18,852 6,082

Connecticut..................................... 2 2 5,379 5,379

Florida.............................................. 5 2 ' ‘ 3 14,082 1,725

Georgia.............................................. 11 8 3 17,538 8,797

Idaho................................................. 2 2 2,451 2,451

Illin o is .............................................. 23 10 ’ 13 101,651 44,379

Indiana.............................................. 20 15 5 30,006 12,549

Io w a ................................................. 10 5 5 23,824 5,736

Kansas.............................................. 11 6 5 8,065 3,824

Kentucky ........................................ 26 20 6 40,313 19,352

Louisiana...........................................

Maine..............................................

5

1

4 1

1

75,999

9,710

22,567

8,999

Maryland........................................... 5 ' i 3 6,643

Massachusetts.................................. 5 1 4 42,280 23,655

Michigan........................................... 14 5 9 172,607 10,452

M innesota........................................ 5 5 2,650 2,650

8,936 8,936 6,201 6,201 154

23,444 23,444 19,230 19,230 347

23,438 23,438 13,744 13,744 597

1,454 43,861 42,889 972 11,431 10,958 473 635 123

94,412 103,523 774 102,749 8,732 735 7,997 35 1,603

10,878 10,878 8,126 8,126 241

12,850 22,524 22,524 5 586 5 586 1,113

20,830 40,134 9,012 31,122 37,624 7,604 30*020 ’ 296 4^355

11,030 54,821 33,489 21,332 49,120 29,354 19,766 696 1,770

40,100 132,152 74,605 57,547 162,090 53,791 108,299 768 9,523

20,480 20,480 16,275 16,275 369

341,317 971,296 25,795 945,501 398',947 16,939 382,008 1,159 793

704,283 1,575,832 1,575,832 173 053 173,053 7,458

88,442 339,574 39,902 299,672 301,933 25,991 275*942 ’ 484 9,002

332,485 864,859 18,859 846,000 524,639 11,866 512,773 525 5,583

8,652 6,418 4,947 1,471 5,000 4,309 691 88 154

17,858 17,759 13,920 3,839 12,906 11,554 1,352 209 173

34,892 22,315 12,921 9,394 15,615 10,549 5,066 164 611

86,092 54,424 26,820 27,604 36,062 20,967 15,095 428 2,340

139,484 76,462 27,888 48,574 44,267 22,068 22,199 694 3,713

204,041 178,925 70,384 108,541 107,332 52,067 55,265 1,137 7,660

242,803 225,526 55,867 169,659 124,550 38,063 86,487 895 10,819

190,864 320,475 148,314 172,161 192,629 109,220 83,409 1,708 8,630

296,156 257,585 40,176 217,409 118,525 9,700 108,825 575 26,271

216,862 525,377 66,902 458,475 343,796 47,021 296,775 499 15,364

279,232 775,713 775,713 564,609 564,609 334 12,056

335,000 931,955 931,955 374,342 374,342 774

630,000 1,444,982 1,444,982 100,000 100,000 1,069

7,111 6,170 3,985 2,185 3,567 2,572 995 94 91

2,692 5,044 5,044 5,081 5 081 215

1,809 4,836 1,942 2,894 3,408 1,576 1,832 ‘ ’ 43 188

372,929 1,032,658 46,220 986,438 429,048 12,946 416,102 1,445 2,121

12,770 24,748 6,403 18,345 13,928 4,614 9,314 255 2,015

1,526 1,526 1 242 1 242 8

12,357 17,665 2,668 14,997 11,171 2,139 9,032 65 698

8,741 33,981 1,870 32,111 24,731 1,551 23,180 33 229

1,894 1,894 1,493 1 493 29

57,272 115,259 28,972 86,287 80,350 23,924 56,426 507 2,080

17,457 13,595 3,933 9,662 6,197 3,096 3,101 39 384

18,088 24,364 8,535 15,829 14,425 6,469 7,956 148 500

4,241 7,665 4,358 3,307 5,672 3,601 2,071 60 194

20,961 16,077 5,768 10,309 12,484 5,046 7,438 139 577

67,000 171,374 9,735 161,639 129,607 5,038 124,569 148 238

9,710 5,450 5,450 2,346 2,346 665

15,924 4,566 828 3,738 3,109 735 2,374 ' ' 9 371

18,625 38,696 20,480 18,216 27,226 16,275 10,951 368 1,380

162,155 194,399 13,477 180,922 142,510 12,242 130,268 206 12,138

818 818 640 640 17

BANKS CLOSED; FDIC INCOME, DISBURSEMENTS, AND LOSSES 277

Digitized for FRASER 

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Federal Reserve Bank of St. Louis
Table 123. DEPOSITORS, DEPOSITS, AND DISBURSEMENTS IN FAILED BANKS REQUIRING DISBURSEMENTS BY THE 

FEDERAL DEPOSIT INSURANCE CORPORATION, 1934-1976-CONTINUED 

BANKS GROUPED BY CLASS OF BANK, YEAR OF DEPOSIT PAYOFF OR DEPOSIT ASSUMPTION, AMOUNT OF DEPOSITS, AND STATE

Classification

Number of banks Number of depositors1

Deposits1 

(in thousands of dollars)

Disbursements by FDIC1 

(in thousands of dollars)

Total Payoff

cases

Assumption

cases

Total Payoff

cases

Assumption

cases

Total Payoff

cases

Assumption

cases

Principal disbursements

Advances and 

expenses2

Total Payoff

cases3

Assumption

cases4

Payoff

cases5

Assumption

cases6

Mississippi........................................ 4 3 1 14,351 1,651 12,700 15,686 334 15,352 12,023 257 11,766 5 350

M issou ri........................................... 52 38 14 55,554 37,977 17,577 29,151 18,166 10,985 21,293 14,027 7,266 276 1,178

M ontana........................................... 5 3 2 1,500 849 651 1,095 215 880 639 186 453 6 21

Nebraska 8 8 7,773 7,773 11,644 11,644 8,116 8,116 150

New Hampshire 1 1 1 '780 1,780 296 296 117 117 8

New Jersey........................................ 42 13 29 563,917 113,692 450,225 250,383 49,122 201,261 121,951 40,049 81,902 516 21,334

New Y o r k ........................................ 28 3 25 925,621 28,440 897,181 1,755,500 13,286 1,742,214 310,084 10,836 299,248 366 11,916

North C a ro lin a ............................... 7 2 5 10,408 3,677 6,731 3,266 1,421 1,845 2,387 1,156 1,231 23 179

North D akota.................................. 29 18 11 14,103 6,760 7,343 3,830 1,552 2,278 2,656 1,397 1,259 24 203

O h io ................................................. 5 2 3 21,251 7,585 13,666 102,838 2,345 100,493 90,758 1,610 89,148 7 2,394

O klahom a........................................ 12 8 4 27,650 20,149 7,501 18,920 11,053 7,867 10,284 7,936 2,348 178 565

Oregon.............................................. 2 1 1 3,439 1,230 2,209 2,670 1,368 1,302 1,948 986 962 11 81

Pennsylvania..................................... 31 8 23 182,590 43,828 138,762 96,907 14,340 82,567 66,803 10,133 56,670 75 10,166

South C aro lin a ............................... 3 1 2 68,080 403 67,677 113,553 136 113,417 60,650 136 60,514 5,386

South D akota.................................. 23 22 1 12,515 11,412 1,103 2,988 2,862 126 2,411 2,388 23 ' 26 9

Tennessee........................................ 13 8 5 132,358 9,993 122,365 338,234 1,620 336,614 127,937 1,164 126,773 28 2,540

Texas................................................. 46 33 13 125,964 80,941 45,023 210,252 142,044 68,208 137,986 97,550 40,436 1,640 2,530

U ta h .................. . . . 1 1 3,254 3,254 5,992 5,992 3,538 3,538 300

V erm ont........................................... 3 ’ 2 1 11,057 8,687 2,370 3,725 3,375 350 3,445 3,259 186 21 22

Virginia.............................................. 9 4 5 35,715 12,638 23,077 17,779 7,652 10,127 8,263 3,867 4,396 303 505

Washington 1 1 4,179 4,179 1,538 1,538 935 935 512

West Virginia 3 3 8 346 8,346 2,006 2,006 1,458 1,458 11

W isconsin........................................ 33 20 ' 13 62,247 18,739 43,508 112,627 5,966 106,661 116,802 5,096 111,706 54 4,559

Wyoming 1 1 3,212 3,212 2,033 2,033 202 202 19

Other Areas

Virgin Islands.................................. 1 1 11,073 11,073 14,219 14,219 8,712 8,712 173

1 Adjusted to December 31, 1976. In assumption cases, number of depositors refers to number of deposit accounts.

2 Excludes $874 thousand of nonrecoverable insurance expenses in cases that were resolved without payment of claims or a disbursement to facilitate assumption of deposits by another insured bank and other expenses of field 

liquidation employees not chargeable to liquidation activities,

in clu de s estimated additional disbursements in active cases.

4 Excludes excess collections turned over to banks as additional purchase price at termination of liquidation.

5These disbursements are not recoverable by the Corporation; they consist almost wholly of field payoff expenses.

6 1ncludes advances to protect assets and liquidation expenses of $81,566 thousand, all of which have been fully recovered by the Corporation, and $7,296 thousand of nonrecoverable expenses.

7No cases in 1962 required disbursements. Disbursements totals for each year relate to cases occurring during that year, including disbursements made in subsequent years.

Note: Due to rounding differences, components may not add to totals.

278 FEDERAL DEPOSIT INSURANCE CORPORATION

Digitized for FRASER 

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Federal Reserve Bank of St. Louis
Table 124. RECOVERIES AND LOSSES BY THE FEDERAL DEPOSIT INSURANCE CORPORATION ON PRINCIPAL 

DISBURSEMENTS FOR PROTECTION OF DEPOSITORS, 1934-1976 

(Amounts in thousands of dollars)

Liquidation All cases Deposit payoff cases Deposit assumption cases

of deposit payoff 

or deposit 

assumption

Number

of

banks

Principal

disbursements

Recoveries 

to Dec. 

31,1976

Estimated

additional

recoveries Losses1

Number

of

banks

Principal

disbursements2

Recoveries 

to Dec. 

31 ,1 97 6

Estimated

additional

recoveries Losses1

Number

of

banks

Principal

disbursements3

Recoveries 

to Dec. 

31,1976

Estimated

additional

recoveries Losses1

T o ta l................... 535 2,039,635 945,555 845,924 248,156 303 325,518 244,803 42,805 37,910 232 1,714,117 700,752 803,119 210,246

Status

A c t iv e ................

Terminated . . .

73

462

1,699,233

340,402

941

633,908

311,647

845,924 219,401

28,755

207

30

273

200,482

125,036

941

136,604

108,199

734

42,805 21,073

16,837

207

43

189

1,498,751

215,366

497,304

203,448

803,119 198,328

11,918

Year4

1934 ................... 9 734 9

1935 

1936 

25

69

8,891

14,460

19,481

30,479

67,770

74,134

23,880

10,825

7,172

1,503

6,206

12,127

15,808

28,055

3 2,682

2,333

3,672

2,425

7,152

3,796

591

24

42

6,026

7,735

12,365

9,092

26,196

4,895

12,278

1,612

5,500

404

4,274

6,397

9,718

7,908

20,399

4,313

12,065

1,320

5,376

363

1,752

1,338

2,647

1,184

5,797

582

213

292

123

40

i

27 

25 

24

28 

24

7

2,865

6,725

7,116

21,387

41,574

69,239

11,602

9,213

1,672

1,099

1,768

265

1,724

2,990

2,552

3,986

1,885

1,369

5,017

913

2,346

663

1,932

5,730

6,090

20,147

40,219

66,025

11,225

8,816

1,672

1,099

1,768

265

1,667

2,349

2,183

2,601

1,885

577

5,017

654

2,346

663

’ ’ ‘ 3 930

995

1,025

1,241

1,355

3,214

378

396

1937 ................... 75 50

1938 ................... 74 50

1939 ................... 60 60,618

70,338

23,290

10,136

7,048

32

1940 ................... 43 19

1 9 4 1 ................... 15 8

1942 ................... 20 688 6 14

1943 ................... 5 123 4 1

1944 ................... 2 1,462 40 1 1

1945 ................... 1 1,768 1,768 1

1946 ................... 1 265 265 1

1947 ................... 5 1,724

2,990

2,552

3,986

1,885

1,667

2,349

2,183

2,601

4 54 5 4 54

641

369

1,385

1948 ................... 3 641 3

1949 ................... 4 369 4

1950 ................... 4 1,385 4

1 9 5 1 ................... 2 1,885 2

1952 ................... 3 1,369

5,017

577 792 3 792

1953 ................... 2 5,017 2

1954 ............. 2 913 654 258 2

1

258

1955 ................... 5 6,784 6,554 230 4 4,438

2.795 

1,031

2.796 

1,835 

4,765 

6,201

19,230

13,744

10,958

735

8,126

4,208

2,582

1,031

2,768

230

1956 ................... 2 3,458 3,245

1,031

213 1 213 1

1957 ................... 1 1,031

3,026

1

1958 ................... 4 2,998 28 3 28 1 230 230

1959 ................... 3 1,835 1,738 97 3

1

1,738

4,765

4,699

18,792

11,949

6,346

735

6,779

97

1960 ................... 1 4,765 4,765

1 9 6 1 ................... 5 6,201 4,699 1,502

330

5 1,502

1963 ................... 2 19,230 18,792 108 2 108 330

1964 ................... 7 13,744 11,949 165 1,630 7 165 1,630

4,230

1,169

1965 ................... 5 11,431

8,732

8,126

6,672

8,217

6,779

382 4,376

484

1,169

3 382 

' 178

2 473

7,997

326

7,482

146

1966 484

1967 

7

4

33

178

1

4

6 33

1968 ................... 3 5,586

37,624

5,572

37,276

4 11 '3

5

5,586

30,020

5,572

29,832

4 11

1969 ................... 9 234 115 '4 7,604 7,444 ’ ’ 45 ' 115 189

1970 

197 1 

1972 

7

6

1

49,120

162,090

16,274

398,947

173,053

301,933

524,640

45,188

143,220

10,628

80,328

40,306

134,073

116,737

3,106

17,654

1,647

168,351

128,647

132,815

392,595

825

1,215

4,000

150,269

4,100

35,045

15,308

4

5 

1

29,354

53,791

16,274

16,939

25,857

41,434

10,628

16,644

2,773

11,142

1,647

296

725

1,215

4,000

3

1

19,766

108,299

19,331

101,786

333

6,512

100

1973 

1974 

6

4

3 '3

4

382,008

173,053

275,942

512,773

63,684

40,306

131,372

115,901

168,055

128,647

114,225

385,114

150,269

4,100

30,345

11,758

1975 

1976 

13

16

3

3

25,991

11,867

2,701

836

18,590

7,481

4,700

3,550

10

13

11ncludes estimated losses in active cases. N ot adjusted fo r interest or allowable return, which was collected in some cases in which the disbursement was fu lly recovered. 

2 Includes estimated additional disbursements in active cases.

3 Excludes excess collections turned over to banks as additional purchase price at term ination of liquidation.

4 No case in 1962 required disbursements.

Note: Due to rounding differences, components may not add to totals.

BANKS CLOSED; FDIC INCOME, DISBURSEMENTS, AND LOSSES 279

Digitized for FRASER 

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Federal Reserve Bank of St. Louis
Table 125. ANALYSIS OF DISBURSEMENTS, RECOVERIES, AND LOSSES IN DEPOSIT INSURANCE TRANSACTIONS,

JANUARY 1, 1934—DECEMBER 31, 1976 

(In thousands)

Type of disbursement Disbursements Recoveries1 Losses

All disbursements-total2 ............................................................................................................................................ $2,299,681 $2,014,650 $285,031

Principal disbursements in deposit assumption and payoff cases-total......................................................... 2,039,635 1,791,479 248,156

Loans and assets purchased in liquidations (232 deposit assumption cases):

To December 31, 1976................................................................................................................................ 1,504,617 700,752 210,246

593,619

Notes purchased to facilitate deposit assumptions, mergers, or consolidations:

To December 31, 1976................................................................................................................................ 209,500 9,000 - 0 -

Estimated additional................................................................................................................................... 200,500

Deposits paid (303 deposit payoff cases):

To December 31, 1976................................................................................................................................ 324,238 244,803 37,910

Estimated additional . . . . . . ..................................................................................... 1,280 42,805

Advances and expenses in deposit assumption and payoff cases-total......................................................... $ 96,367 $ 81,566 $ 14,801

Expenses in liquidating assets:

Advances to protect assets.......................................................................................................................... 50,906 50,906 - 0 -

Liquidation expenses................................................................................................................................... 30,660 30,660 - 0 -

Insurance expenses3 ................................................................................................................................... 7,296 - 0 - 7,296

Field payoff and other insurance expenses in 303 deposit payoff cases3................................................ 7,505 - 0 - 7,505

Other disbursem ents-total................................................................................................................................... $ 163,679 $ 141,605 $ 22,074

Corporation purchases:

To facilitate termination of liquidations:

To December 31, 1976.......................................................................................................................... 9,828 5,049 4,000

Estimated additional . . . . .................................................................................................... 779

To purchase assets from operating insured banks:

To December 31, 1976.......................................................................................................................... 32,777 1,256 17,200

Estimated additional . . . . . . . . . ................................................... 14,321

Unallocated insurance expenses3 .................................................................................................................... 874 - 0 - 874

Assistance to operating insured banks:

To December31, 19764 ............................................................................................................................. 120,200 83,200 - 0 -

Estimated additional ......................... ................................................... 37,000

1 Excludes amounts returned to closed bank equity-holders and $58.7 million of interest and allowable return received by the FDIC.

2 1ncludes estimated amounts for pending and unpaid claims in active cases.

3 Not recoverable.

4 Excludes $32 million originally disbursed as assistance to Farmers Bank of the State of Delaware and subsequently applied to assets purchased from operating insured banks.

280 FEDERAL DEPOSIT INSURANCE CORPORATION

Digitized for FRASER 

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Federal Reserve Bank of St. Louis
Table 126. INCOME AND EXPENSES, FEDERAL DEPOSIT INSURANCE CORPORATION, BY YEAR, 

SEPTEMBER 11, 1933, TO DECEMBER 31, 1976 

(In millions)

FROM BEGINNING OF OPERATIONS,

Deposit insurance 

assessments1

Investments and 

other sources2

Expenses and losses

D eposit insurance losses 

and expenses

Interest on 

capital stock3

A d m inistrative and 

operating expenses

Net income added to 

deposit insurance fu nd4

1 9 3 3 -7 6 .

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 . . . 

1 9 3 3 -3 4 .

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

296.5 

278.9

302.0

246.0

188.5 

175.8

159.3

144.0

132.4

120.7

111.7 

102.2

93.0

84.2

76.5

73.4

79.6

78.6

73.8

69.1

68.2

66.1

62.4

60.2

57.3

54.3

54.2

122.7

119.3

114.4

107.0

93.7

80.9 

70.0

56.5

51.4

46.2

40.7 

38-3

38.8

35.6

11.5

(4 )

$4,140.3

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

$1,207.6

2 1 2.35

97.5

159.2

108.2

59.7

60.3

46.0

34.5

29.1

27.3

19.9

22.9

18.4

15.1

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

$286.0

31.9

29.8 

100.0

53.8 

10.1 

13.4

3.8 

1.0

.1

2.9 

.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

$841.0

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 .26

$7,268.6

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

1 For the period from 1950 to 1976, inclusive, figures are net after deducting the po rtion of net assessment income credited to insured banks pursuant to provisions o f the Federal Deposit Insurance A ct of 1950, as amended. Assessment credits 

to insured banks fo r these years am ount to $4,435 m illion .

in c lu d e s $13 m illio n o f interest and allowable return received on funds advanced to receivership and deposit assumption cases and $46 m illion of interest on capital notes advanced to fa cilita te deposit assumption transactions and assistance to 

open banks.

3 Paid in 1950 and 1951, bu t allocated among years to w hich it applies. In itia l capital of $289 m illion was retired by paym ents to the U.S. Treasury in 1947 and 1948.

A ssessm ents collected from members o f the tem porary insurance funds w hich became insured under the perm anent plan were credited to th eir accounts at the te rm ination o f the tem porary funds and were applied toward paym ent of subsequent assessments becom ing due under the perm anent insurance fund, resulting in no income to the Corporation from assessments during the existence o f the tem porary insurance funds.

5 Includes net loss on sales o f U.S. G overnm ent securities o f $105.6 m illion .

6 Net after deducting the po rtio n of expenses and losses charged to banks w ithdraw ing from the tem porary insurance funds on June 30, 1934.

BANKS CLOSED; FDIC INCOME, DISBURSEMENTS, AND LOSSES 281

Digitized for FRASER 

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Federal Reserve Bank of St. Louis
Table 127. PROTECTION OF DEPOSITORS OF FAILED BANKS REQUIRING 

DISBURSEMENTS BY THE FEDERAL DEPOSIT INSURANCE CORPORATION,

1934-1976

Item

All cases 

(535 banks)

Deposit payoff cases 

(303 banks)

Deoosit assumption cases 

(232 banks)

Number or 

amount Percent

Number or 

amount Percent

Number or 

amount Percent

Number of depositors or accounts-total1 .................................................... 3,304,942 100.0 623,006 100.0 2,681,936 100.0

Full recovery received or available........................................................... 3,298,314 99.8 616,378 98.9 2,681,936 100.0

From FDIC2............................................................................................ 3,250,847 98.4 568,9113 91.3 2,681,936 100.0

From offset4 .............................................................. 41,046 1.2 41,046 6.6

From security or preference5 ............................ 3,279 0.1 3,279 0.5

From asset liquidation6 3,142 0.1 3,142 0.5

Full recovery not received as of December 31 1976 6,628 0.2 6,628 1.1

Terminated cases ............................ 3,443 0.1 3,443 0.6

Active cases .................................................................... 3,185 0.1 3,185 0.5

Amount of deposits (in thousands)-total.................................................... 4,837,917 100.0 468,139 100.0 4,369,778 100.0

Paid or made available................................................................................ 4,818,237 99.6 448,459 95.8 4,369,778 100.0

By FDIC2 ............................................................................................... 4,695,370 97.0 325,5927 69.6 4,369,778 100.0

By offset8 .............................................................. 23,136 0.5 23,136 4.9

By security or preference® ...................... 53,035 1.1 53,035 11.3

By asset liquidation1® .............................................................. 46,696 1.0 46,696 10.0

Not paid as of December 31 1976 ......................... 19,680 0.4 19,680 4.2

Terminated cases .......................................................... 2,682 0.1 2,682 0.6

Active cases11 ................................................. 16,998 0.3 16,998 3.6

1 Number of depositors in deposit payoff cases; number of accounts in deposit assumption cases.

2Through direct payment to depositors in deposit payoff cases; through assumption of deposits by other insured banks, facilitated by FDIC disbursements of $1,714,117 thousand, in deposit assumption cases,

includes 60,033 depositors, in terminated cases, who failed to claim their insured deposits (see note 7).

in clu de s only depositors with claims offset in full; most of these would have been fully protected by insurance in the absence of offsets.

5Excludes depositors, paid in part by the FDIC, whose deposit balances were less than the insurance maximum.

6The insured portions of these depositor claims were paid by the Corporation,

includes $208 thousand unclaimed insured deposits in terminated cases (see note 3).

8 1ncludes all amounts paid by offset.

includes all secured and preferred claims paid from asset liquidation; excludes secured and preferred claims paid by the Corporation.

1 °lncludes unclaimed deposits paid to authorized public custodians.

111ncludes $5,715 thousand representing deposits available, expected through offset, or expected from proceeds of liquidations.

282 FEDERAL DEPOSIT INSURANCE CORPORATION

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Table 128. INSURED DEPOSITS AND THE DEPOSIT INSURANCE FUND, 1934-1976

Year (December 31)

Deposits in insured banks 

(in m illions)

Percentage of 

deposits insured

Deposit insurance fund 

(in m illions)

Ratio of deposit insurance fund t o -

T otal Insured1 T otal deposits Insured deposits

1976 ............................................... $941,923 $628,263 66.7% $7,268.6 .77% 1.16%

1975 ............................................... 875,985 569,101 65.0 6,716.0 .77 1.18

1974 ............................................... 833,277 520,309 62.5 6,124.2 .73 1.18

1973 ............................................... 766,509 465,600 60.7 5,615.3 .73 1.21

1972 ............................................... 697,480 419,756 60.2 5,158.7 .74 1.23

1 9 7 1 ............................................... 610,685 37 4,5684 61.34 4,739.9 .78 1.274

1970 ............................................... 545,198 349,581 64.1 4,379.6 .80 1.25

1969 ............................................... 495,858 313,085 63.1 4,051.1 .82 1.29

1968 ............................................... 491,513 296,701 60.2 3,749.2 .76 1.26

1967 ............................................... 448,709 261,149 58.2 3,485.5 .78 1.33

1966 ............................................... 401,096 234,150 58.4 3,252.0 .81 1.39

1965 ............................................... 377,400 209,690 55.6 3,036.3 .80 1.45

1964 ............................................... 348,981 191,787 55.0 2,844.7 .82 1.48

1963 ............................................... 313,30 42 177,381 56.6 2,667.9 .85 1.50

1962 ............................................... 297,5483 170,2104 57.24 2,502.0 .84 1.474

1 9 6 1 ............................................... 281,304 160,3094 57.04 2,353.8 .84 1.474

1960 ............................................... 260,495 149,684 57.5 2,222.2 .85 1.48

1959 ............................................... 247,589 142,131 57.4 2,089.8 .84 1.47

1958 ............................................... 242,445 137,698 56.8 1,965.4 .81 1.43

1957 ............................................... 225,507 127,055 56.3 1,850.5 .82 1.46

1956 ............................................... 219,393 121,008 55.2 1,742.1 .79 1.44

1955 ............................................... 212,226 116,380 54.8 1,639.6 .77 1.41

1954 ............................................... 203,195 110,973 54.6 1,542.7 .76 1.39

1953 ............................................... 193,466 105,610 54.6 1,450.7 .75 1.37

1952 ............................................... 188,142 101,842 54.1 1,363.5 .72 1.34

1 9 5 1 ............................................... 178,540 96,713 54.2 1,282.2 .72 1.33

1950 ............................................... 167,818 91,359 54.4 1,243.9 .74 1.36

1949 ............................................... 156,786 76,589 48.8 1,203.9 .77 1.57

1948 ............................................... 153,454 75,320 49.1 1,065.9 .69 1.42

1947 ............................................... 154,096 76,254 49.5 1,006.1 .65 1.32

1946 ............................................... 148,458 73,759 49.7 1,058.5 .71 1.44

1945 ............................................... 157,174 67,021 42.4 929.2 .59 1.39

1944 ............................................... 134,662 56,398 41.9 804.3 .60 1.43

1943 ............................................... 111,650 48,440 43.4 703.1 .63 1.45

1942 ............................................... 89,869 32,837 36.5 616.9 .69 1.88

1 9 4 1 ............................................... 71,209 28,249 39.7 553.5 .78 1.96

1940 ............................................... 65,288 26,638 40.8 496.0 .76 1.86

1939 ............................................... 57,485 24,650 42.9 452.7 .79 1.84

1938 ............................................... 50,791 23,121 45.5 420.5 .83 1.82

1937 ............................................... 48,228 22,557 46.8 383.1 .79 1.70

1936 ............................................... 50,281 22,330 44.4 343.4 .68 1.54

1935 ............................................... 45,125 20,158 44.7 306.0 .68 1.52

1934 ............................................... 40,060 18,075 45.1 291.7 .73 1.61

1 Figures estimated by applying, to the deposits in the various types of account at the regular Call dates, the percentages insured as determ ined from special reports secured from insured banks.

2 December 20, 1963.

3 December 28, 1962.

4 Revised.

BANKS CLOSED; FDIC INCOME, DISBURSEMENTS, AND LOSSES 283

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INDEX

V.

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287

INDEX

Absorptions:

Of insured banks requiring disbursements by FDIC. See 

Banks in financial difficulties.

Of operating banks, 1976 ............................................................................................13

Of operating banks approved by FDIC, 1976 ............................................ 13, 57-106

Of operating banks denied by FDIC, 1976 .................................................... 107-109

Regulation of .........................................................................................................12-13

Admission of banks to insurance. See also Applications from banks:

Applications for, 1976 ......................................................................................... 10-11

Number of banks admitted, by class of bank, 1976 ..............................................214

Applications from banks ................................................................................................ 10-14

Areas outside continental United States, banks and branches located in:

Number, December 31, 1976 .......................................................................... 217,225

Assessments for deposit insurance .................................................................................31-32

Assets and liabilities of F D IC ........................................................................31, 34-35, 38-39

Assets, liabilities, and capital of banks. See also Deposits:

Commercial banks:

Foreign, of U.S. banks................................................................................. 233-234

Grouped by insurance status

June 30, 1976, and December 31, 1976 ................................................ 235-242

Sources of data.......................................................................................................256

Insured commercial banks:

Amounts, December call dates, 1971-1976 .............................................. 245-247

Amounts, June 30, 1976, and December 31, 1976

by class of bank......................................................................................... 235-242

Major categories, average, 1971-1976 ..................................................................259

Percentage distribution, by size of bank, 1976 .......................................... 252-254

Percentages of items, by size of bank, 1976 .......................................................250

Methods of tabulating data ............................................................................. 233-234

Mutual savings banks:

Grouped by insurance status, June 30, 1976, and December

31, 1976 .................................................................................................... 243-244

Sources of data.......................................................................................................256

Insured mutual savings banks:

Amount, December call dates, 1971-1976 ................................................ 248-249

Major categories, average, 1971-1976 ..................................................................268

Percentages of items, by size of bank, 1976 .......................................................251

Assets, purchase of, by FDIC from banks in financial difficulties...............................17-21

Assumption of deposits of insured banks with financial aid of FDIC.

See Banks in financial difficulties.

Attorney General of the United States....................................................................12-13, 14

Attorney General of the United States, summary

reports on absorptions................................................................................................ 61-107

Audit of F D IC ....................................................................................................... 30, 129-132

Bad-debt reserves. See Valuation reserves.

Bank Merger Act of 1960 .................................................................................12-14, 142-143

Bank control, changes, regulation of ................................................................................... 14

Bank of the Commonwealth............................................................................................21, 38

Bank of New Orleans and Trust Company, T h e ...........................................................20, 39

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288 FEDERAL DEPOSIT INSURANCE CORPORATION

Bank Protection Act of 1968 ............................................................................................5, 14

Bank Secrecy A c t....................................................................................................................5

Bank supervision. See Supervision of banks; Examination of 

insured banks.

Banking offices, number of. See Number of banks and branches.

Banks in financial difficulties:

Insured banks requiring disbursements by FDIC:

Assets and liabilities o f ................................................................................. 274-275

Deposit size o f .......................................................................................................277

Deposits protected, 1934-1976 ..............................................21-22, 276-278, 282

Disbursements by FDIC, 1934-1976 ......................................................... 276-280

Failures in 1976 ............................................................................................xi, 18-20

Loans made and assets purchased by FDIC .................................................. 17-21

Location by State, 1934-1976 .................................................................... 277-278

Losses incurred by depositors.............................................................................. 282

Losses incurred by FDIC ...................................................................... 22, 279-280

Number of, 1934-1976 ...................................................................................18, 273

Number of deposit accounts, 1934-1976 .................................................. 276-278

Recoveries by FDIC on assets acquired, 1934-1976 ...................................22, 279

Noninsured banks:

Number and deposits of commercial banks closed,

1934-1976 ...........................................................................................................273

Banks, number of. See Number of banks and branches.

Board of Directors of FDIC. See Federal Deposit Insurance Corporation.

Board of Governors of the Federal Reserve System. See Federal Reserve 

authorities.

Branches:

Establishment approved by FDIC, 1976 ............................................................. 11-12

Examination of, 1975 and 1976 ...................................................................................5

Number of. See Number of banks and branches.

Call reports. See Assets, liabilities, and capital of banks;

Reports from banks.

Capital of banks. See Assets, liabilities, and capital of banks; Banks in 

financial difficulties; Income of insured commercial banks;

Examination of insured banks.

Cease-and-desist proceedings .................................................. 6-8, 25, 47-54, 125-126, 188

Charge-offs by banks. See Income of insured commercial banks;

Income of insured mutual savings banks; Valuation reserves.

Civil Rights Act .....................................................................................................24, 146, 148

Class of bank, banking data presented by:

Absorptions ...............................................................................................................214

Income of insured commercial banks, 1976 .................................................. 261-262

Insured banks requiring disbursements by FDIC, 1934-1976 ...............................276

Number of banks and banking offices, 1976 ......................................... 214, 218-226

Number of banks and assets ..................................................................................... 227

Classification of banks.........................................................................................................213

Closed banks. See Banks in financial difficulties.

Commercial banks. See Assets, liabilities, and capital of banks; Deposits;

Income of insured commercial banks; Number of banks and branches.

Commission on Federal Paperwork ................. .................................................................158

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INDEX 289

Compliance examinations............................................................................................5, 24-25

Comptroller of the

C urrency....................xii, xiv-xv, 13-14, 25, 27, 120, 125, 147, 165, 177, 190-192, 200

Consolidations. See Absorptions.

Consumer Leasing Act of 1976 ......................................................................................... 115

Credit, bank. See Assets, liabilities, and capital of banks.

Crime reports received by F D IC ............................................................................................14

Demand deposits. See Assets, liabilities, and capital of banks; Deposits.

Deposit insurance, applications fo r .................................................................................10-11

Deposit insurance national banks...................................................................................22-24

Deposits, Negotiable Orders of Withdrawal (NOW).......................................................... 115

Deposits insured by FDIC:

Estimated insured deposits, December 31, 1934-1976 ......................................... 283

Maximum per depositor, changes in ........................................................................114

Survey of, on June 30, 1976 ....................................................................................... 17

Deposits. See also Assets, liabilities, and capital of banks:

Banks closed because of financial difficulties, 1934-1976 ..................................... 274

Commercial banks:

By insurance status and type of bank, and type of account,

June 30, 1976 .................................................................................................... 237

By insurance status and type of bank, and type of account,

December 31, 1976 ............................................................................................241

By State and asset size of bank ................................................................. 228-232

Insured commercial banks:

Average demand and time deposits, 1971-1976 ................................................259

December call dates, 1971-1976 .......................................................................... 247

Mutual savings banks, by insurance status, June 30, 1976, and

December 31, 1976 ....................................................................................... 243-244

Insured mutual savings banks:

Average demand and time deposits, 1971-1976 ................................................268

December call dates, 1971-1976 .......................................................................... 249

Deposits, number of insured commercial banks with given ratios of

demand to total deposits.................................................................................................. 253

Directors of FDIC. See Federal Deposit Insurance Corporation.

Disbursements. See Banks in financial difficulties.

Disclosure of bank rep orts................................................................... 30, 123-124, 195-202

Dividends:

To depositors in insured mutual savings banks. See Income of insured 

mutual savings banks.

To stockholders of insured commercial banks. See Income of insured 

commercial banks.

Earnings of banks. See Income of insured commercial banks; Income of insured 

mutual savings banks.

Employees:

FD IC ...................................................................................................................... 28-30

Insured commercial banks,

number and compensation, 1971-1976 ...................................................... 258-259

Insured mutual savings banks, number and

compensation, 1971-1976 ............................................................................ 267-268

Equal Credit Opportunity A c t ............................................................................ 24, 115, 146

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290 FEDERAL DEPOSIT INSURANCE CORPORATION

Examination of insured banks.

By FDIC, 1976 ...........................................................................................................3, 5

Regions and regional directors ...................................................................................vi

Expenses of banks. See Income of insured commercial banks;

Income of insured mutual savings banks.

Expenses of FDIC ..................................................................................................31,36,281

Failures. See Banks in financial difficulties.

Fair Credit Reporting Act ................................................................................................5, 24

Fair Housing Lending............................................................................................xiv, 145-151

Farmers Bank of the State of Delaware .............................................................................. 21

Federal Deposit Insurance Corporation:

Actions on applications......................................................................................... 10-14

Assessments on insured banks..................................................................... 31-32, 281

Audit ..........................................................................................................................30

Banks examined by, and submitting reports t o ...................................................... 3-5

Borrowing power ........................................................................................................ 33

Capital stock...............................................................................................................281

Conferences .................................................................................................... xv, 15-16

Consumer protection ............................................................................ 24-26, 176-184

Coverage of deposit insurance........................................... 17, 114, 165-167, 169-175

Delegated authority, applications approved under ..................................................11

Deposit insurance disbursements.................................................... 18, 21-23, 274-281

Deposit insurance fund (surplus)........................................................... 32-33, 35, 283

Directors (members of the Board)..........................................................................v, 27

Disclosure.....................................................................................30, 123-124, 195-202

Divisions................................................................................................................. iv, 28

Employees ...................................................................................................... xii, 28-30

Enforcement activities ............................ 6-8,24-25,43-54, 125-128, 176-181, 188

Examination of banks.................................................. xiii-xv, 3-5, 186-187, 189-190

Financial statements, 1976 ................................................................................... 34-39

Income and expenses, 1933-1976 ............................................................................ 281

Insured banks requiring disbursements by. See Banks in 

financial difficulties.

Liquidation activities ....................................................................xii, 22, 24, 203-209

Loans to, and purchase of assets from, insured banks..............................................17

Losses incurred, 1934-1976 ............................................................................ 279-281

Methods of protecting depositors.................................xi-xii, 17-18, 20-21, 161-165

Office of Bank Customer A ffairs.................................................... .. . 25-26, 177, 181

Office of Employee Relations.............................................................................. 27-28

Officials ........................................................................................................................ v

Organization................................................................................................................. iv

Payments to insured depositors........................18-20, 21-22, 160-161, 274-278, 282

Problem banks ................................................................. xi, 8-10, 133, 137-139, 186

Public statements by D irectors........................................................................119-209

Receiver, appointment as .......................................................................... 22, 204, 274

Recoveries........................................................................................................... 279-280

Regions......................................................................................................................... vi

Regulation of bank securities .............................................................................. 26-27

Regulation of interest rates............................................................................................3

Reports from banks .............................................................................. 16-17, 152-158

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Reports of changes in bank control............................................................................ 14

Reserve for losses on assets acquired....................................................................34, 36

Rules and regulations ................................................................................................ 113

Sources and application of funds ...............................................................................37

Supervisory activities ...................................................................................3, 185-194

Surveys during 1976 .................................................................................................... 17

Training programs.................................................................................................. 14-15

Federal Flood Disaster A c t.................................................................................................. 115

Federal Home Loan Bank Board ...............................................................................xiv, 147

Federal legislation, 1976 ............................................................................................ 114-116

Federal Reserve authorities . . .xiv, 13-14, 22, 39, 120-122,125, 147, 165, 177, 192, 206 

Federal Reserve member banks. See Class of bank, banking data presented by.

Financial Accounting Standards Board............................................................. 195, 198-200

Franklin National Bank ........................................................................22, 31, 163, 206, 209

Freedom of Information Act-Privacy A c t...........................................................30, 121, 196

General Accounting O ffice .......................................................................... 30, 121, 129-132

"Government in the Sunshine" A c t ...................................................................................115

Home Mortgage Disclosure Act of 1975 ....................................................... 24-25, 150, 202

Income of F D IC ................................................................................................ 31-32, 36, 281

Income of insured commercial banks:

Amounts of principal components:

Annually, 1971-1976 ................................................................................... 258-259

By class of bank, 1976 ................................................................................. 261-262

By size of bank, 1976 ................................................................................... 263-264

Methods of tabulating d a ta .......................................................................... 255-257

Ratios of income items:

Annually, 1971-1976 ............................................................................................260

By size of bank, 1976 ................................................................................... 265-266

Sources of d a ta ...........................................................................................................256

Income of insured mutual savings banks:

Amounts of principal components,1971-1976 .............................................. 267-268

Ratios of income and expense items,1971 -1976 ............................................ 269-270

Sources of d a ta ...........................................................................................................256

Information System for Bank Agency Reporting............................................................. 158

Insider transactions ................................................................... 113-114, 126-127, 187-188

Insolvent banks. See Banks in financial difficulties.

Insured banks. See Assets, liabilities, and capital of banks; Banks in 

financial difficulties; Deposits; Income of insured commercial banks;

Income of insured mutual savings banks; Number of banks and branches.

Insured commercial banks not members of the Federal Reserve System.

See Class of bank, banking data presented by.

Insured deposits. See Banks in financial difficulties; FDIC, coverage 

of deposit insurance.

Insured State banks members of the Federal Reserve System. See Class 

of bank, banking data presented by.

Interagency Coordinating Committee.................................................................................xiv

Interest rates:

Maximum rates on deposits................................................................. 3, 113, 123, 1 57

Paid on deposits ................................................................................................260, 270

Payment on Individual Retirement A ccounts.........................................................157

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292 FEDERAL DEPOSIT INSURANCE CORPORATION

Surveys of:

Mortgage lending activity and rates ........................................................................17

Rates paid by banks.................................................................................................. 17

Investments. See Assets, liabilities, and capital of banks; Assets and 

liabilities of FDIC; Banks in financial difficulties.

Keogh retirement plans ...................................................................................................... 113

Legislation relating to deposit insurance and banking:

Federal, enacted in 1976 ................................................................................... 114-116

Loans. See Assets, liabilities, and capital of banks; Banks in financial 

difficulties.

Losses:

Of banks. See Income of insured commercial banks; Income of 

insured mutual savings banks.

Of F D IC ..................................................................................................22-23, 279-281

On loans, reserves for. See Valuation reserves.

Provision for, in insured banks ............................ 258, 260-261, 263, 265, 267, 269

Mergers. See Absorptions.

Mortgage lending by insured commercial banks, survey o f ................................................17

Municipal Securities Rulemaking B oard...............................................................................27

Mutual savings banks. See Assets, liabilities, and capital of banks;

Deposits; Income of insured banks; Number of banks and branches.

National banks. See Class of bank, banking data presented by.

National Flood Insurance Act ............................................................................................115

Negotiable orders of withdrawal (NOW )............................................................................ 115

New banks, 1976 ................................................................................................ 214,216-217

Noninsured banks. See Absorptions; Admission of banks to insurance; Assets, liabilities, and capital of banks; Banks in financial

difficulties; Classification of banks; Class of bank, banking data presented

by; Deposits; Number of banks and branches; Reports from banks.

National Commission on Productivity .............................................................................. 158

Number of banks and branches:

Banks:

By insurance status and type of bank, June 30, 1976, and

December 31, 1976 ................................................................. 238, 242,244

By insurance status, type of bank, number of branches, and

State, December 31, 1976 ............................................................... 218-226

By State and asset size of bank ......................................................... 228-232

By supervisory status and asset size ...........................................................227

Changes during 1976 .......................................................................... 214-217

Branches:

By insurance status and type of bank, December 31, 1976 ....................215

By insurance status, type of bank, and State December 31,

1976 .................................................................................................. 218-226

Changes during 1976 .......................................................................... 215-217

Insured commercial banks:

December call dates, 1971-1976 .......................................................................... 247

Distributed by capital ratios and distribution of assets and

deposits, December 31, 1976 ................................................................. 252-254

Insured mutual savings banks:

December call dates, 1971-1976 .......................................................................... 249

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Noninsured banks by State, asset size, December 31, 1976 .......................... 218-227

Unit banks, by insurance status and State, December 31, 1976 ................. 218-226

Obligations of banks. See Assets, liabilities, and capital of banks.

Officials of F D IC .................................................................................................................... v

Operating banks. See Number of banks and branches.

Payments to depositors in closed insured banks. See Banks in financial 

difficulties.

Personnel. See Employees.

Possessions, banks and branches located in. See Areas outside 

continental United States, banks and branches located in.

Problem banks.............................................................................xi, 8-10, 133, 137-139, 186

Protection of depositors. See Banks in financial difficulties; Deposit 

insurance coverage.

Real Estate Settlement Procedures Act of 1974 .........................................................24, 183

Receivership, insured banks placed in. See Banks in financial difficulties.

Recoveries:

By banks on assets charged off. See Income of insured commercial 

banks; Income of insured mutual savings banks.

By FDIC on disbursements. See Banks in financial difficulties.

Regions, F D IC ....................................................................................................................... vi

Removal proceedings ..............................................................................................................8

Reports from b anks.........................................................................................................16-17

Reserves:

Of FDIC, for losses on assets acquired ......................................................................34

Of insured banks for losses on assets. See Valuation reserves.

With Federal Reserve Banks. See Assets, liabilities, and capital of 

banks.

Rules and regulations of the FDIC. See Federal Deposit Insurance 

Corporation.

Salaries and wages of insured banks. See Income of insured commercial banks;

Income of insured mutual savings banks.

Savings and time deposits. See also Deposits .................................................... 17, 113, 134

Secretary of the Treasury.....................................................................................................xiv

Securities. See Assets, liabilities, and capital of banks; Assets and liabilities of FDIC; 

Banks in financial difficulties.

Securities Acts Amendments of 1975................................................................................... 27

Securities and Exchange Commission.....................................24, 26-27, 123, 143, 195-201

Securities, bank, regulation of ....................................................................................... 26-27

Securities Exchange Act of 1934 ........................................................................26, 143, 195

Security, bank ...................................................................................................................... 14

Selective Withdrawal Program ............................................................. xiii, 3, 5, 25, 188-189

Size of bank, data for banks classified by amount of assets:

Assets and liabilities, percentages of, insured banks, 1976 .......................... 250-251

Banks requiring disbursements by FDIC (deposit size), 1934-1976 ....................277

Income of insured commercial banks, 1976 .................................................. 263-264

Income ratios of insured commercial banks, 1976 ....................................... 265-266

Number and deposits of all banks.............................................................................227

Number and deposits of all commercial banks,

by S ta te ........................................................................................................... 228-232

Number of employees of insured commercial banks, 1976 ...................................264

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Number of insured commercial banks, grouped by ratios of selected

items to assets and deposits, December 31, 1976 ................................................254

Southern Bancorporation, Inc..........................................................................................20, 39

State banking authorities................................................................................... 3-6, 16, 24-25

State, banking data classified by:

Changes in commercial banks and branches, 1976 ....................................... 216-217

Disbursements, deposits, and depositors in insured banks requiring

disbursements by FDIC, 1934-1976 ............................................................. 277-278

Number, assets, and deposits of commercial

banks, by asset size of b a n k .......................................................................... 228-232

Number of banks and branches, by class of bank and type of office,

December 31, 1976 ....................................................................................... 218-226

Percentage of banks insured, December 31, 1976 ......................................... 218-226

State banks. See Class of bank, banking data presented by.

Stockholders of banks, net profits available for. See Income of insured 

commercial banks.

Supervision of banks by F D IC ............................................................................................3-4

Supervisory class, banks grouped by:

Assets and liabilities of, June 30, 1976, and December 31, 1976 ............... 235-242

Changes in number of, 1976 ............................................................................ 214-215

Class of bank and size .................................................................................................227

Income of insured commercial b an ks............................................................. 261-262

Number of banking offices, by State, December 31, 1976 .......................... 218-226

Suspension proceedings ...........................................................................................................8

Tax Reform Act of 1976 .................................................................................................... 115

Taxes paid by insured banks. See Income of insured commercial banks;

Income of insured mutual savings banks.

Terminations of insurance for unsafe and unsound practices...............................7-8, 43-46

Trust assets of insured commercial banks, survey o f ...........................................................17

Truth in Lending A c t ............................................................................................xiv, 5, 24-25

Unit banks, by insurance status and State, December 31, 1976 ............................ 218-226

Unity Bank and Trust Company..................................................................................... 21, 39

United States National Bank ....................................................................169, 203, 206, 209

Valuation reserves. See also Assets, liabilities, and capital of banks:

Amounts held, June 30, 1976, and December 31, 1976 .............................. 236, 240

Amounts held, December call dates, 1971-1976 ........................................... 245,247

Violations of law or regulations, banks charged w it h .......................................................6-8

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