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Bruce Rauner, Governor
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State Banking Board of Illinois



Meeting of Tuesday, March 20, 1997
Illinois State Library

Springfield, Illinois

The quarterly meeting of the State Banking Board of Illinois was called to order at 10:40 a.m. by Chairman Jack Schaffer. Roll call was taken, lacking one member for a quorum.

Members Present
Jack Schaffer, Chairman
Commissioner, Office of Banks and
Real Estate
Anna Wall Scott
Public Member, Urbana
Susan J. Dubs
Richmond Bank, Richmond
Paul V. Reagan
Harris Trust and Savings Bank, Chicago
Dennis B. Long
Bank of Rantoul, Rantoul
Harlan Yates
Cisne State Bank, Cisne
Judith F. Quesenberry
The First State Bank, Grand Chain
Members Absent
Bernard Chauvel
Caisse Nationale de Credit Agricole, Chicago
Donald Gutowski
Public Member, Norridge
A. Dean Decker
Central Trust and Savings Bank, Geneseo
Jack Lageschulte
Public Member, Barrington Hills
Gary N. Edwards
Golden State Bank, Golden
Charles Waterman
South Holland Trust & Savings Bank, South Holland
Robert Field
Bank of Homewood, Homewood

Staff Present

Arthur J. Appl, Jr., Director, Division of International Bank Supervision
John E. Arthur, Legislative Liaison
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
Debra J. Rath, Administrative Assistant, Bureau of Banks and Trust Companies
John M. Turner, Acting Assistant Director-Information Systems

Guest Present

Senator Patrick J. O'Malley
Chairman, Senate Financial Institutions Committee


For the benefit of the newly-appointed Board members, Scott Clarke reviewed the Illinois statute outlining the specific duties and responsibilities of the Board, and explained the process of reimbursement of Board travel expenses. Mr. Clarke indicated that the statute was recently changed to require the Board to meet annually instead of quarterly. However, a majority of the Board or the Commissioner could call a special meeting at anytime. Board members will be provided a State of Illinois identification card which can be used in receiving the State Government Rate for travel and lodging.

Mr. Long asked if the State Banking Board had adopted a set of By-Laws. Mr. Clarke indicated that the Board had not, but could do so if the Board wished.


Chairman Schaffer asked if there were any additions or corrections to the December 10, 1996 minutes. There being none, Ms. Scott moved and Ms. Dubs seconded the approval of the

December 10, 1996 minutes as presented. The motion carried unanimously.




Legislative Report

Senator O'Malley, Chairman of the Senate Financial Institutions Committee, stopped by to welcome Board members to Springfield during the legislative session, and offered the Committee's assistance, should the Board have a need.

John Arthur reported on legislative issues pending in the General Assembly and provided a status report of the following bills:

[HB 1288] - Commissioner's 1997 Regulatory Package

[SB 1165] - Agency Budget Request for FY 97

[HB 222-agent's proposal; HB 375-bank's proposal; HB 586-shell bill] - Banks Selling Insurance

[HB 1588] - Reverse Stock Split Authority for Banks

[HB 1777] - EFT Reciprocity

[SB 690; HB 2169] - Riegle-Neal Limits in State Law; 5-yr. Age Limit and 30% Concentration Limit

[HB 1655] - "Safe Harbor" for Banks Relying on the Rules and Interpretations of the Commissioner

[HB 1035; HB 1036; HB 1037; HB 1432] - Trust Legislation--Delegate Investment Authority; Allow Mutual Funds; Repeal Rule v. Perpetuities

[HB 1113; SB 406] - Non-Bank Check Printers Registration

[HB 271; SB 1044] - Non-Bank ATM Owners Registration


Beginning January 1, 1997, the Federal regulatory agencies and most state banking departments added the "S" component to the rating system for assessing the condition of an institution. The components of the CAMELS rating system are:

C = Capital/Adequacy; A = Assets; M = Management; E = Earnings; L = Liquidity; S = Sensitivity to Market Risk.

Mr. Curry explained the new "Sensitivity to Market Risk" component, and indicated that this is the first change in the Uniform Financial Institutions Rating System, since 1979. He also noted that market risk has always been part of the examination process, but was previously included as part of the "Liability" component. The "Sensitivity to Market Risk" component for the majority of the banks will focus on sensitivity to interest rate risk. However, the "Sensitivity to Market Risk" focus will be more in depth for larger banks who are engaged in foreign markets and commodities trading.

Mr. Reagan asked if examination personnel had been trained in the market risk area. Mr. Clarke indicated that some examiners are completing coursework to become Chartered Financial Analysts, Certified Fraud Examiners, and Certified Bank Auditors; Securities training as well as Series 3 and Series 7 training have also been provided.

Public Disclosure of Composite Ratings of Banks

A lengthy discussion took place concerning the public disclosure of banks' composite ratings. It was the consensus of the Board that permitting the disclosure of such information would not be in the best interest of Illinois state-chartered banks or the public, since the public does not generally understand the rating system and it is a point in time rating. The issue was tabled.

Banks Formed to Facilitate Interstate Banking

Mr. Clarke explained that the Agency had received inquiries from out-of-state banks regarding the chartering of an Illinois bank for one minute, solely for the purpose of bypassing Illinois' de novo branching restrictions. He asked for the Board's opinion on how to deal with these requests. The opinions expressed by Board members were not in favor of granting those types of requests.

Corporate Activities

A summary of all 1996 and 1997 transactions was provided to the Board for their review.

Proposed Rules

Mr. Clarke provided a brief overview of the following proposed rules, and indicated they would be filed May 25, 1997, published in the Illinois Register for a 45-day public comment period, and hopefully would become effective prior to June 30, 1997.

  • Blacklist Discrimination [Section 302] - Prohibits non-merit discrimination.
  • Bank Branches [Section 305] - Reduces regulatory burden.
  • Eligible State Bank [Section 380] - Banks eligible for participating in an alternating examination cycle with the Federal agencies. Provides for several changes in the language.
  • Calculation, Assessment and Collection of Periodic Fees [ Section 375] - Establishes an exit fee; establishes a new fee schedule which lowers the regulatory fees for banks over $20, $50, and $100 billion; provides for the collection of all regulatory fees through a via ACH transaction.


The Agency is currently trying to find office space for three satellite offices in downstate Illinois, to be used for off-site work by the downstate examiners. The Chicago examiners have an off-site work area located in the Chicago office.


There being no further business before the Board, Ms. Scott moved to adjourn the meeting.
Mr. Yates seconded. The motion carried unanimously. The meeting adjourned at 12:30 p.m.

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