|Illinois Department of Financial & Professional Regulation|
|Bryan A. Schneider, Secretary|
Arthur J. Appl, Jr., Director,
Division of International Bank Supervision
Senator Patrick J.
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.
II. APPROVAL OF MINUTES
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.
III. OLD BUSINESS
IV. NEW BUSINESS
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.
A summary of all 1996 and 1997
transactions was provided to the Board for their review.
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,
V. OPEN DISCUSSION
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.