R. Kinney Williams - Yennik, Inc.
R. Kinney Williams
Yennik, Inc.

The Community Banker
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Bank Regulatory News
February 1999


February 26, 1999 - JANUARY FDIC SURVEY FINDS REAL ESTATE MARKETS STILL
FAVORABLE

The ongoing expansion in the nation's residential and commercial real estate markets slowed
during the late fall and early winter, according to the FDIC's latest quarterly opinion survey.
Assessments of trends in local real estate markets remained positive but were not as frequent as
in earlier favorable surveys. Increased reports of "no change" in market conditions in the January
survey signal a slowing of the robust commercial and residential markets' expansion.

February 26, 1999 - FDIC MAKES PUBLIC JANUARY 1999 ENFORCEMENT ACTIONS;
NO ADMINISTRATIVE HEARINGS SCHEDULED FOR MARCH

The Federal Deposit Insurance Corporation (FDIC) today released a list of orders of administrative enforcement actions taken against banks and individuals in January. No
administrative hearings are scheduled for March.

February 26, 1999 - OCC Issues Second Quarter 1999 CRA Examination Schedule
WASHINGTON, D.C. -- The Office of the Comptroller of the Currency (OCC) today released its projected schedule of Community Reinvestment Act (CRA) examinations to be conducted in the second quarter of 1999.

February 24, 1999 - OCC Highlights Basle and IOSCO Consultative Paper on Trading and
Derivatives Activities of Banks and Securities Firms

WASHINGTON, DC--The Office of the Comptroller of the Currency (OCC) advises national banks today that the Basle Committee on Banking Supervision and the Technical Committee of the International Organization of Securities Commissions (IOSCO) have issued a consultative paper with recommendations for public disclosure of trading and derivatives activities of banks and securities firms.

February 25, 1999 - The Federal Reserve Board today announced the issuance of a Consent Order against Daniel K. Walker, senior vice-president, a director, and an institution-affiliated party of the Farmers and Merchants Bank of Long Beach, Long Beach, California, a state member bank.

February 24, 1999 - Comptroller Warns that Senate Proposal Would Compromise Safety and Soundness of National Banking System
WASHINGTON -- Comptroller of the Currency John D. Hawke, Jr. told a Senate panel today
that a legislative proposal requiring banks to conduct new activities in holding company
affiliates "would have a profound long-term detrimental effect on the safety and soundness of the banking system."

February 22, 1999 - Comptroller Cautions Community Banks About Shortcomings in Financial Modernization Legislation
ORLANDO -- In his first speech, Comptroller of the Currency John D. Hawke Jr. cautioned today that pending financial modernization legislation, if not structured properly, could give rise to an era of "prolonged marginalization" for community banks.

February 22, 1999 - The Federal Reserve Board today requested comment on proposed changes to its Regulation CC, Availability of Funds and Collection of Checks, that would provide more flexibility to depository institutions to experiment with methods to return unpaid checks electronically. Comment is requested by April 30, 1999.

February 19, 1999 - REVISED POLICY FOR CLASSIFYING RETAIL CREDITS - FFIEC Revises Uniform Retail Credit Classification and Account Management Policy
The Federal Financial Institutions Examination Council (FFIEC) has revised the Uniform Retail
Credit Classification and Account Management Policy issued in 1980. The amendments
update and expand the classification policy for retail credit loans. The amended policy is
attached.

February 19, 1999 - TRUST PREFERRED SECURITIES - Authority of State Banks to Invest in Trust Preferred Securities
The Federal Deposit Insurance Corporation (FDIC) has recently received numerous requests
for clarification about the extent of a state bank's ability to invest in "trust preferred securities,"
which are hybrid instruments possessing characteristics typically associated with debt obligations.
Several insured state nonmember banks have asked whether section 24 of the Federal Deposit
Insurance Act (12 U.S.C. 1831a) or the FDIC's implementing regulations (12 C.F.R. Part
362) impose limits on the authority of a state nonmember bank to invest in trust preferred
securities.

February 18, 1999 - YEAR 2000 CUSTOMER COMMUNICATION OUTLINE - Interagency Guidance on Customer Communication
The Federal Financial Institutions Examination Council (FFIEC) has previously issued guidance
on developing a Year 2000 customer awareness program. The guidance encourages institutions
to make a concerted effort to inform their customers of the Year 2000 issue and steps they are
taking to minimize the risk that customers may be affected by Year 2000-related computer problems. The attached FFIEC "Year 2000 Customer Communication Outline" provides guidance on the elements necessary for effective communication statements on Year 2000 readiness.

February 17, 1999 - Year 2000 Customer Communication Outline
This advisory is to alert you to the recent release of the FFIEC Customer Communication Outline. This guidance supplements previous FFIEC guidance on Year 2000 customer awareness programs and encourages national banks to consider doing the following in future customer communications.

February 12, 1999 - The Federal Reserve Board today announced its approval of the applications of First Banks, Inc., Creve Coeur, Missouri, and First Banks America, Inc., Clayton, Missouri, to acquire Redwood Bancorp ("Redwood"), and thereby indirectly acquire Redwood's subsidiary bank, Redwood Bank, both in San Francisco, California.

February 12, 1999 - Comptroller Warns that H.R. 10 Would Undermine Safety of National
Banking System

WASHINGTON -- Comptroller of the Currency John D. Hawke Jr. told a House panel today that pending banking legislation would undermine the safety and soundness of the national banking system and urged Congress to question closely arguments advanced in favor of that bill by the Federal Reserve.

February 11, 1999 - The Federal Reserve Board today announced the issuance of a Prompt Corrective Action Directive against the Zia New Mexico Bank, Tucumcari, New Mexico.

February 11, 1999 - OCC ANNOUNCES NINE NEW ENFORCEMENT ACTIONS, TWO AMENDMENTS AND TWO TERMINATIONS OF EXISTING ACTIONS
WASHINGTON, DC --The Office of the Comptroller of the Currency (OCC) today announced nine new enforcement actions taken against national banks, two amendments and two terminations of existing actions. The actions released today include five formal agreements, two amendments to an existing cease and desist order, one removal, two civil money penalties, one safety and soundness order, and two terminations of existing orders.

February 11, 1999 - FAIR LENDING EXAMINATIONS - Interagency Fair Lending Examination Procedures
The Federal Financial Institutions Examination Council (FFIEC) has approved the attached fair
lending examination procedures. They are intended to provide consistency in the fair lending
examination process among the federal banking regulators through a basic, flexible framework.
The procedures provide guidance on taking a comprehensive, efficient, risk-based approach to
examining banks for compliance with the nondiscriminatory requirements of the Equal Credit
Opportunity (ECOA) and Fair Housing Acts (FHA).

February 10, 1999 - Federal Financial Institution Regulators Issue - Revised Policy For Classifying Retail Credits
Federal financial institution regulators today announced they have updated and
expanded policies for classifying delinquent retail credits.

February 9, 1999 - Report of Foreign Bank and Financial Accounts Form
This bulletin transmits the revised Report of Foreign Bank and Financial Accounts form (FBAR; Treasury form 90-22.1), that has been adopted by the Financial Crimes Enforcement Network
(FinCEN), Department of the Treasury. The form simplifies the previous FBAR form.

February 5, 1999 - UNIFORM RATING SYSTEM FOR INFORMATION TECHNOLOGY
FFIEC Adopts Updated Uniform Rating System for Information Technology

The Federal Financial Institutions Examination Council's (FFIEC) Task Force on Supervision
adopted the attached Uniform Rating System for Information Technology (URSIT). The updated
statement replaces the 1978 Uniform Interagency Rating System for Data Processing
Operations.

February 5, 1999 - BANK RATE MONITOR'S INTERNET "SAFE AND SOUND BANK AND THRIFT RATING SYSTEM" NOT AFFILIATED WITH FDIC
The Federal Deposit Insurance Corporation (FDIC) is alerting the public that Bank Rate
Monitor's "Safe and Sound Bank and Thrift Rating System," posted on its Web site, is not
affiliated with the FDIC. Bank Rate Monitor is an Internet publication.

February 5, 1999 - FDIC MAKES PUBLIC DECEMBER 1998 ENFORCEMENT ACTIONS;
NO ADMINISTRATIVE HEARINGS SCHEDULED FOR FEBRUARY

The Federal Deposit Insurance Corporation (FDIC) today released a list of orders of
adminstrative enforcement actions taken against banks and individuals in December. No
administrative hearings are scheduled for February 1999.

February 4, 1999 - The Board of Governors of the Federal Reserve System (board) published the attached advance notice of proposed rulemaking in the Federal Register on December 15, 1998. The board requests comment on the potential benefits and drawbacks of a modification to Regulation CC. This modification would shorten the availability schedule that currently applies for most nonlocal checks from five to four business days. However, a depositary bank would have the option of retaining a five-business-day schedule for selected categories of nonlocal checks. To take
advantage of this option, banks would have to certify that a significant proportion of returned checks fail to arrive within four business days.

February 3, 1999 - The Asian Crisis: What Happened?
ST. LOUIS — The recent economic crisis in Asia likely occurred because either the region’s financial systems were severely flawed, or a swift change in investors’ expectations caused massive outflows of capital that triggered and fed the crisis or both said Michelle Clark Neely, an economist with the Federal Reserve Bank of St. Louis.

February 3, 1999 - The Federal Reserve's Eighth District: Is It Marching In or Out of Step
with the National Economy?

ST. LOUIS--Labor markets in the states of the Federal Reserve's Eighth District, as in most of the nation, continue to be extremely tight. The growth of the region's payroll employment, however, has been slower than the national average and, if this trend continues, output is probably going to grow more slowly than it did six months or a year ago, observed Adam M. Zaretsky, an economist with the Federal Reserve Bank of St. Louis.

February 1, 1999 - CONSUMER EDUCATION - Educational Programs on Basic Financial Services for "Cash Consumers"
The Federal Deposit Insurance Corporation (FDIC) would like to help "cash consumers" learn
more about the benefits of a traditional banking relationship. Cash consumers have been referred
to as "unbanked" individuals and households that do not have accounts with the nation's
mainstream financial institutions. As part of this consumer awareness effort, the FDIC has
reproduced the attached comprehensive guide for FDIC-supervised institutions, with the hope
that they will integrate the guide into their community outreach and educational efforts.


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