BOARD OF ILLINOIS
Friday, June 25, 1999
I. CALL TO ORDER
of the State Banking Board of Illinois was called to order at 1:00 p.m.
by Chairman William A. Darr. Roll call was taken and a quorum was present.
Thomas Bugielski, President and CEO
Founders Bank, Worth, Illinois
Office of Banks and Real Estate
A. Dean Decker, President
Central Trust and Savings Bank, Geneseo, Illinois
John G. Eck, Senior Vice President
ABN AMRO Bank, N.V., Chicago, Illinois
Mark G. Field, Chairman, President and CEO
The Farmers Bank of Liberty, Liberty, Illinois
Public Member, Norridge, Illinois
Paul V. Reagan, Senior Vice President and U.S. General Counsel
Harris Trust and Savings Bank, Chicago, Illinois
The Farmers State Bank and Trust Company, Jacksonville, Illinois
Susan J. Dubs, President
State Financial Bank, Richmond, Illinois
Gary N. Edwards, Chairman
Wemple State Bank, Waverly, Illinois
Public Member, Winnetka, Illinois
Judith Quesenberry, CEO and Vice President
The First State Bank, Grand Chain, Illinois
Arthur J. Appl,
Jr., Director, Division of International Bank Supervision
Tom Kaufmann, Assistant Director, Division of Specialized Activities,
Scott D. Clarke, Assistant Commissioner, Bureau of Banks and Trust Companies
Russell E. Curry, Director, Division of Commercial Bank Supervision-Springfield
Dina Mansour, Senior Corporate Attorney, Corporate Activities Section
Wesley Maynard, Assistant Director, Division of Commercial Bank Supervision-Chicago
Michael D. Morehead, Chief Counsel, Bureau of Banks and Trust Companies
Pamela Tiberend, Administrative Assistant, Bureau of Banks and Trust Companies
Dale Turner, General Counsel
OF OCTOBER 7, 1998 MINUTES
Chairman Darr requested additions
or corrections to the October 7, 1998 minutes. Mr. Bugielski noted that
he is President and CEO of Founders Bank, not Worth Bank and Trust. Mr.
Field moved to approve with the change and Mr. Decker seconded. The motion
III. DIVISION REPORTS
Mr. Appl, Director of International
Bank Supervision, gave a report on the situation affecting the financial
markets in the Asian and Pacific Rim countries. The crisis is winding
down, but the economic reforms have created a backlash in the Japanese
foreign branch offices here in Illinois. The assets have been transferred
to their New York offices and as a result, the Illinois offices are doing
loan and production business. Many employees were laid off as a result
of moving the assets.
Mr. Appl also reported that
the Year 2000 (Y2K) examinations are going well in the foreign branch
Mr. Curry, Director of Commercial
Bank Supervision, Springfield, provided an overview of the Commercial
examinations that have been completed as of May 31, 1999. The division
is on target to examine 100 percent of the banks they regulate this year.
Mr. Curry also provided the members with charts explaining the CAMELS
ratings and bank assets by rating, as well as the number of banks and
Mr. Curry discussed the number
of state chartered banks that as a result of mergers are now national
banks. Mr. Curry reported that since the agency has released the video
tape of the benefits of a state chartered bank over a national chartered
bank that there have been several national banks that have expressed an
interest in exploring the idea of switching to a state chartered bank.
The Commercial Division is
also looking into the possibility of issuing more Orders of Prohibition
and Removal since there has been several instances of illegal activity
of bank employees. The agency is trying to convince banks to report all
suspicious activity as this may prevent further abuse. Mr. Clarke talked
about the banks using the SAR reporting system.
Mr. Maynard, Assistant Director
of Commercial Bank Supervision, Chicago, provided an overview of the condition
of the banks in the Chicago metropolitan area. The number of banks in
Chicago have held constant over time, losing only four institutions, but
assets have been on the rise. The division has been very busy with de
novo banks this year. He also went into details of the most troubled institutions
under his supervision. Mr. Maynard discussed the types of training the
examiners have been involved in over the past year.
Mr. Kaufmann, Assistant Director,
Division of Specialized Activities, Information Systems, reported on his
section's Y2K activities. To date, 95% of our regulated entities are rated
satisfactory in their Y2K preparation. Mr. Kaufmann also gave an update
on the Corporate Fiduciary section.
Ms. Mansour, Senior Corporate
Attorney, Corporate Activities Section, reported on the various activities
in her section. She highlighted the various areas with charts that compared
various years to show how 1999 compares to previous years. The numbers
have decreased slightly this year, believed to be due to the Y2K preparations.
IV. BUREAU OF BANKS AND
TRUST COMPANIES UPDATE
Mr. Scott Clarke, Assistant
Commissioner, Bureau of Banks and Trust Companies, updated the Board on
Mr. Clarke reported that Jerry
Cavanaugh and John Geiringer resigned from our Legal Division to take
positions in the private sector. Mike Morehead has replaced Mr. Cavanaugh
and Keith Flanagan has replaced Mr. Geiringer.
The Bureau of Banks and Trust
Companies received reaccredidation from the Conference of State Bank Supervisors.
The Bureau is planning two
Day with the Commissioner programs in October for officers and directors
of banks and trust companies. The main focus of the program will be the
The Bureau is also planning
a two-day training session for all bank examiners within the Bureau of
Banks and Trust Companies. The dates are November 30 - December 1, 1999.
This is an opportunity to have all examiners from all the divisions together
for updates similar to those presented at the Day with the Commissioner
programs, and also provides and opportunity for recognition of outstanding
performance and accomplishments throughout the year.
A current version of the Illinois
Banking Act and Related Laws publication is being printed and will be
available within the next month. The Banking Act will also be available
in CD ROM this year. Every bank will receive two complimentary copies
which contain all the new banking laws and the agencys administrative
Mr. Clarke reported the results
of the Technology Survey that was sent out to all regulated entities.
The survey was sent out to see how our institutions would like us to communicate
with them. A large majority would like the agency to communicate with
them through the U.S. mail. Less than half of the institutions have access
to the internet in the institutions. Thirty-four percent of the institutions
have a web site, although most of the web sites are promotional, not transactional.
About 15-20% of the institutions will be setting up a web site within
the next year.
The Bureau management has been
holding ongoing meetings to set up Y2K contingency plans with respect
to our institutions. We have also been meeting with our federal counterparts
with respect to Y2K plans. The Bureau plans to do periodic checks with
respect to our institutions' liquidity status. We have a plan to begin
checking every institution that will be operating on the roll over weekend
and all institutions on January 3 and 4, 2000. Each examiner will be assigned
a small group of institutions to make a positive contact with and confirm
that the institution is operational. The Bureau has initially prohibited
all vacations of staff starting October 1 through the end of the year.
Based on the condition of our institutions the bureau probably will not
have to be as rigid on granting time off. We will have most staff working
on December 31, 1999 through January 2, 2000.
VI. LEGISLATIVE UPDATE
Mr. Clarke reported that this
was a reasonably quiet legislative year as opposed to last year. He highlighted
the following legislative actions.
HB 1281 moved responsibility
for administering the Unclaimed Property division from the Department
of Financial Institutions to the state Treasurer's office. This does not
affect our agency, except for the fact that OBRE will become responsible
for the examination of our institutions with regards to unclaimed property.
The Treasurer can request that OBRE conduct an examination if she has
reasonable cause to believe the institution has failed to report unclaimed
property. The Treasurer would notify us that an examination needs to be
conducted and we would then examine the institution at the next regularly
scheduled exam date, unless the Treasurer determines there to be a need
for an accelerated examination schedule which would be in the best interest
of the state. The Treasurer's office will pay OBRE for conducting the
HB 2204 Banking on Illinois
Act. Creates a new act which gives state chartered banks the power to
do any action, offer any product or service, that any state bank in any
other state can provide. Any power granted to state banks that are not
powers of national banks must have the approval of the FDIC. Our legal
staff is working with the FDIC and CSBS to find out what is going on in
the other 49 states, and determine an easy way to keep updated on the
changes. This provides a significant opportunity for Illinois to be the
charter location as there is no reason a bank should go to another state
to charter a bank if you can do the same business as a bank in one of
the other state. Exemptions in the bill do not allow for real estate brokerage
activity or expand branching activities.
SB 890 provides liability protection
to state and national banks in Illinois that have privity of contract
with their customers for Y2K problems. Some consumer protections in the
event a consumer cannot pay their bills due to a Year 2000 problem, gives
consumers a 60 day grace period. This bill is still pending in the General
HB 2019 allows banks to limit
their liability without having to do a charter amendment.
SB 2494 eliminates the director's
residency requirements for state chartered banks.
SB 447 provides that our examination
reports are considered confidential. Even if our records are subpoenaed
the person subpoenaing the request must come to the Commissioner's office
so that we can review the materials being requested and help protect some
of the information in our examination reports from being released.
Mr. Clarke highlighted a couple
other legislative initiatives that have not been signed into law, if they
are signed into law a summary of the bill will be sent out to every institution
and the members of the board.
Just before the meeting today,
Commissioner Darr received HR 10 by e-mail. This bill is a compromise
bill that has come out of the House of Representatives. It will move to
the Senate now. Privacy issues are the main sticking point in this bill.
VII. YEAR 2000 CONSUMER
EDUCATION ACTIVITIES UPDATE
Commissioner Darr reported
that one of his first focus' when he came to the agency, was to direct
efforts towards public education with respect to Y2K. Working with the
Governor's office, we have developed an aggressive public education program.
We have established a Speaker's Bureau for Y2K issues. There are approximately
60 employees who are prepared to go out into the community and give presentations
with regards to our efforts on Y2K. We are trying to alleviate any fears
of the public. Interestingly enough the feedback is very positive. We
have published a brochure for Y2K which we are proactively sending out
into the communities throughout the state. We are in the process of developing
a video as well. We are embarking on a public relations campaign to get
stories published in the media. We will be focusing on Y2K scams. We are
updating our web page with a specific area devoted to Y2K. We are also
embarking on a program to work with our elected officials to encourage
them to help us get the word out in regards to our efforts preparing for
Y2K. We are educating our own staff and we encourage all banks to do the
same. Finally we are working with the business community in cooperation
with the Department of Commerce and Community Affairs to encourage the
business community to understand the preparation of the banking industry
for Y2K. We want to get the word out as much as possible as to the efforts
that we as regulators have undertaken to ensure the computer systems make
a smooth transition on January 1, 2000.
VIII. OPEN DISCUSSION FOR
There were no additional items
There being no further business
before the board, Mr. Eck moved to adjourn the meeting. Mr. Decker seconded. The motion carried unanimously. The meeting adjourned at 2:48 p.m.