STATE BANKING BOARD OF ILLINOIS

Meeting of Wednesday, August 2, 2000

Office of Banks and Real Estate
310 South Michigan Avenue, Suite 2130 Chicago, Illinois 60604-4278

MEMBERS PRESENT

William Darr
Commissioner
Office of Banks and Real Estate
Chicago, Illinois 60604-4278

A. Dean Decker
President and CEO
Central Trust and Savings Bank
Geneseo, Illinois 61254-0089

John Eck
Senior Vice President
ABN AMRO Bank N.V.
Chicago, Illinois 60603

Mark G. Field
Chairman, President and CEO
The Farmers Bank of Liberty
Liberty, Illinois 62347-0196

Donald Gutowski
Class A Member
Norridge, Illinois 60656

Lee J. Plummer
Class A Member
Jerseyville, Illinois 62052

Everett G. Rand
Class A Member
Chicago, Illinois 60615

Paul V. Reagan
Sr. Vice President & US General Counsel
Harris Trust and Savings Bank
Chicago, Illinois 60606

Asif Yusuf
Class A Member
Westchester, Illinois 60154

STAFF PRESENT

Arthur J. Appl, Jr., Division Director
Division of International Bank Supervision

Andrea Sonkin, Assistant Legal Counsel
Bureau of Banks and Trust Companies

Gary W. Joyner, Assistant Division Director
Fiduciary Activities Section – Division of Specialized Activities Supervision

Marc Edwards, Policy and Procedures Administrator
Bureau of Banks and Trust Companies

Robert L. Burke, Division Director
Division of Commercial Bank Supervision – Chicago

Scott D. Clarke, Assistant Commissioner
Bureau of Banks and Trust Companies

Russell E. Curry, Division Director
Division of Commercial Bank Supervision – Springfield

Michael Morehead, Chief Legal Counsel
Bureau of Banks and Trust Companies

Dale R. Turner, General Counsel
Office of Banks and Real Estate

Commissioner Darr opened the meeting and thanked everyone for attending.

Mr. Eck made a motion to accept the minutes of the last meeting of June 25, 1999. Mr. Reagan seconded the motion. The motion was unanimously approved.

Mr. Art Appl, Director, International Division, reported that there are 28 foreign banking offices representing 12 countries in Chicago. He also reported that there are 43 representative offices. Mr. Appl reported that with the exception of one “3” rated bank, all offices are rated satisfactory or higher. There were two enforcement actions issued in the past year. A trend of continued reduction in offices was noted resulting from downsizing and mergers. Currently seeing much more emphasis on regulator cooperation on a global basis.

Mr. Russ Curry, Director of Commercial Bank Supervision – Springfield, stated that the farm community banks look pretty good right now. There are 2 types of information actions; both are a resolution for corrective action.

• bank rating appeal
• 2 orders of removal no longer in banks
• issued order

Mr. John Eck stated that downstate community bankers are very conservative. John would like to have an overall composite rating done bureau wide and not by Division.

Mr. Robert Burke, Director of Commercial Bank Supervision – Chicago, reported that there are 165 banks assigned to the Chicago Division of Commercial Bank Supervision. Those banks have assets that total approximately $80 billion. He summarized the overall condition of the banks assigned to the division and stated that the division has spent a considerable amount of personnel resources to supervise two problem banks.

Mr. Marc Edwards, Policy and Procedures Administrator, reported on corporate activity through June 30, 2000 and two proposed policy changes.

Mr. Gary Joyner, Assistant Director of Specialized Activities, discussed how the “Specialized Activities Division” is organized. Gary pointed out that currently there are 12 examiners in the “Fiduciary Activities Section” and 12 examiners in the “Information Systems Section”.

Gary also covered the examination requirements for both the Fiduciary and Information Systems area.

Gary reported that we have revealed our first “Internet Only” bank application. After discussion some of the members stated this might be a good item to put on the agenda for “A Day with the Commissioner: to find out what all is involved with an “Internet Only Bank”.

Michael Morehead, Chief Counsel, provided the Banking Board with a brief summary of the legal interpretive letters issued since January 1, 2000.

Scott Clarke said that Cash Station was purchased by a company called Concord and that you may exchange Cash Station for Concord.

Mr. Clarke reported that e-mail notification service should be provided to all subscribers. For those people who do not have access to the Internet, service will be made public to all current banks on a fax and demand service system; free of charge; with a toll free number. All corporate activities will be provided and people will be informed right away.

All Field Service Examiners laptops will be replaced right after January, 2001.

The Commissioner took possession and control of Independent Trust Corporation on April 14, 2000. The trust company had $2.1 billion in trust assets and had $68.1 million of trust funds misappropriated. This is the first failure of a trust company since 1934. PriceWaterhouseCoopers was selected as the receiver for the failed trust company. The company had 17,500 customers of which 3,000 customers were from Illinois. The customers may suffer a loss of 8.6 percent.

Commissioner Darr reported on Predatory Lending. On August 16, 2000, Commissioner Darr will be attending a meeting with the FDIC and with the Joint Committee on Administrative Rules (JCAR) concerning the adjusting of thresholds for loan default rates.

NOTE:

It was the consensus of the board to schedule the next meeting in Chicago, on a Tuesday or Wednesday, during the later part of October or early November prior to the upcoming holidays. Several dates will be forwarded to members to choose from.

Mr. Lee J. Plummer made a motion to adjourn. The motion was seconded by Commissioner Darr and was unanimously approved. The meeting adjourned at 2:05 p.m.