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Pat Quinn, Governor
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State Banking Board of Illinois

MINUTES

STATE BANKING BOARD OF ILLINOIS

Meeting of Thursday, March 19, 1998

Chicago, Illinois

I. CALL TO ORDER

The meeting of the State Banking Board of Illinois was called to order at 10:05 a.m. by Chairman Jack Schaffer. Roll call was taken and a quorum was present.

Members Present

Joy French Becker, Chairman
The Farmers State Bank and Trust Company, Jacksonville, Illinois

R. Cary Capparelli
Public Member, Park Ridge, Illinois

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

Susan J. Dubs, President
Richmond Bank, Richmond, Illinois

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

Gary N. Edwards, President and CEO
Wemple State Bank, Waverly, Illinois

Mark G. Field, President and Chairman
The Farmers Bank of Liberty, Liberty, Illinois

Dennis B. Long, Chairman and CEO
Bank of Rantoul, Rantoul, Illinois

Paul V. Reagan, Senior Vice President and U.S. General Counsel
Harris Trust and Savings Bank, Chicago, Illinois

Jack Schaffer, Chairman
Office of Banks and Real Estate

Charles Waterman, Chairman and CEO
South Holland Trust & Savings Bank, South Holland, Illinois

Members Absent

Donald Gutowski
Public Member, Norridge, Illinois

Sondra Healy
Public Member, Winnetka, Illinois

Judith Quesenberry, CEO and Vice President
The First State Bank, Grand Chain, Illinois

Staff Present

Patrick F. Andre, Assistant Director, Fiduciary Activities
Arthur J. Appl, Jr., Director, Division of International Bank Supervision
Young Brockhouse, Supervisor, Compliance Reporting
Robert Burke, Director, Division of Commercial Bank Supervision-Chicago
Jerry D. Cavanaugh, Assistant General Counsel
Scott D. Clarke, Assistant Commissioner, Bureau of Banks and Trust Companies
Russell E. Curry, Director, Division of Commercial Bank Supervision-Springfield
Kathy Glynn, Administrative Assistant, Bureau of Banks and Trust Companies
Dale Turner, General Counsel

Guests

Rick Kaglic
Federal Reserve Bank, Chicago, Illinois

II. APPROVAL OF SEPTEMBER 30, 1997 MINUTES

Chairman Schaffer asked if there were any additions or corrections to the September 30, 1997 minutes. Mr. Dennis Long noted a correction to his bank address. There being no other corrections, Sue Dubs moved to approve the minutes. Dean Decker seconded. The motion carried unanimously.

III. REPORT ON ECONOMIC CONDITIONS

Mr. Rick Kaglic of the Federal Reserve Bank of Chicago gave a presentation assessing the midwest economy. A handout was provided and a question and answer session followed.

IV. UPDATE ON PACIFIC RIM SITUATION IMPACT ON ILLINOIS

Mr. Art Appl, Director of International Bank Supervision, gave an update on the impact the Pacific rim situation has had on Illinois and noted several factors which may have caused the problems in Asia. He noted actions taken by the agency in regard to this situation.

Because of the crisis, we lost two Japanese banks and will have a few more reduce several billion dollars of assets from their business at their Chicago branch. We will also lose one Korean bank. Mr. Appl noted California was affected more than Illinois since they have a higher concentration of Asian banks. Illinois now has the second largest representation of foreign banking assets in the nation.

V. LEGISLATIVE UPDATE

Chairman Schaffer noted we did not introduce any agency legislation this session; however, we did work with the various industries that did in order to get the necessary corrective legislation in place.

Mr. Clarke reported several bills affecting the industry have passed. Mr. Jerry Cavanaugh gave a legislative update on those bills pending. He reported the number of bills have been much more manageable than in previous years.

VI. UPDATE ON PROPOSED RULE MAKING ACTIVITIES

Mr. Clarke gave an update on proposed rule making activities and discussed the provisions briefly. A copy was included in the meeting packet for board members' review and comment prior to publishing for public comment.

VII. OPEN DISCUSSION FOR BOARD MEMBERS

Mr. Paul Reagan had a question in regard to whether or not there is a conflict with the state's civil rights law relating to preconviction action. Discussion followed. Mr. Clarke suggested Mr. Cavanaugh and Mr. Turner prepare a memo on this issue outlining the Commissioner's ability to remove someone before they are convicted and outlining the powers of the State Banking Board. The memo should also contain specific statutory immunities board members have in regard to their liability.

There was an inquiry in regard to charter activity. Mr. Clarke provided an update on recent activities and geographic trends.

Mr. Gary Edwards asked about De Novo branching issues. Brief discussion followed.

Chairman Schaffer stated he recently met with State Farm Insurance Company. He noted they have applied for a unitary thrift holding company. They are planning on creating this entity initially only to make deposits for their own employees; however, they are also interested in mortgages and car loans. They plan to move into this slowly. Allstate has also applied. In addition, independent insurance agents are currently working with us to get their employees involved in mortgage business.

Mr. Clarke reported the Coalition for Consumer Rights held a press conference regarding a survey they conducted on ATM machines to ensure compliance with law. Discussion regarding compliance followed.

A question in regard to banks selling insurance was raised. Mr. Curry and Mr. Burke reported on activity in their areas.

Mr. Eck asked if any new four rated banks have come up in recent examinations. Division directors gave brief updates of activity in their divisions.

Mr. Clarke congratulated Ms. French-Becker on her recent promotion to President of Farmers State Bank and Trust Company in Jacksonville, Illinois.

Mr. Clarke briefly updated board members on pawnbroker activity within the agency.

Mr. Turner requested a motion to approve the hearing rules for the board's hearing authority. Ms. Dubs motioned. Mr. Decker seconded. The motion carried and was approved unanimously.

VIII. ADJOURNMENT

There being no further business before the board, Ms. Dubs moved to adjourn the meeting. Mr. Decker seconded. The motion carried unanimously. The meeting adjourned at 12:10 p.m.

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