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

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Bank Regulatory News
October
1998

October 30, 1998 - TEXAS BANKING COMMISSIONER URGES BANKS TO WORK WITH FLOOD VICTIMS
Texas Banking Commissioner Catherine A. Ghiglieri urges all banks operating in Texas to work with victims of the floods that have ravaged the southern part of the state. Bank examiners are being instructed to support the willingness of banks to work with their customers through this difficult period.

October 28, 1998 - SPECIAL ALERT - External Auditing Programs of State Nonmember Banks
On October 1, 1998, the FDIC's Division of Supervision issued to its examination staff the attached memorandum on external auditing programs of state nonmembers banks.

October 28, 1998 - Acting Comptroller Says Small Business Credit and Community Banking Will Thrive in Era of Mega-Mergers
McLEAN, VA. -- Although the banking industry is consolidating as a result of the mega-mergers that have been completed this year, small businesses are likely to enjoy expanded access to banking services and community banks will continue to play a vital role in the financial services industry, said acting Comptroller of the Currency Julie L. Williams.

October 28, 1998 - Joint Release: Office of the Comptroller of the Currency Federal Deposit Insurance Corporation - BASLE COMMITTEE ISSUES INTERPRETATION ON TIER 1 ELIGIBILITY
The Basle Committee on Banking Supervision has issued an interpretation on instruments that are eligible for Tier 1 regulatory capital treatment under the Basle capital framework of the Basle Accord. The Basle Accord was endorsed by the G-10 Governors in 1988 and applies to internationally active banks.

October 28, 1998 - FDIC - BASLE COMMITTEE ISSUES INTERPRETATION ON TIER 1 ELIGIBILITY
The Basle Committee on Banking Supervision has issued an interpretation on instruments that are
eligible for Tier 1 regulatory capital treatment under the Basle capital framework of the Basle
Accord. The Basle Accord was endorsed by the G-10 Governors in 1988 and applies to
internationally active banks.

October 28, 1998 - FDIC MAKES PUBLIC SEPTEMBER 1998 ENFORCEMENT ACTIONS; NO ADMINISTRATIVE HEARINGS SCHEDULED FOR NOVEMBER
The Federal Deposit Insurance Corporation (FDIC) today released a list of orders of
administrative enforcement actions taken against banks and individuals in September. No
administrative hearings are scheduled for November.

October 26, 1998 - Acting Comptroller Urges Banks to Act on Privacy Issues
AVENTURA, Fla. -- Acting Comptroller of the Currency Julie L. Williams told bankers today that privacy has become a competitive issue for their industry and urged them to prove that banks can make self regulation work.

October 23, 1998 - COMPLIANCE EXAMINATION MANUAL - Revision to the Division of Compliance and Consumer Affairs' Compliance Examination Manual
The FDIC's Division of Compliance and Consumer Affairs (DCA) is pleased to announce that the
second revision to its Compliance Examination Manual, originally published on April 30, 1996, is
now available. The revision, dated May 31, 1998, will be mailed to all current manual subscribers.
The revision is in loose-leaf format and will easily insert into the Volume I and Volume II binders.

October 22, 1998 - OCC Encourages National Banks to Work with Customers Affected By Flooding in Texas
WASHINGTON, D.C. -- The Office of the Comptroller of the Currency (OCC) has outlined measures to assist national banks and their customers affected by the flooding in Texas.

October 21, 1998 - REVISED TRUST EXAMINATION RATING SYSTEM - FFIEC Adopts Revised Uniform Interagency Trust Rating System
On October 5, 1998, the Federal Financial Institutions Examination Council (FFIEC) approved
the attached revisions to the FFIEC’s Uniform Interagency Trust Rating System (UITRS). The
revisions reflect changes that have occurred in the fiduciary industry and in supervisory policies
and procedures since the rating system was first adopted in 1978.

October 21, 1998 - OCC Advises Banks of Basle Committee's Request for Comment
The Comptroller of the Currency (OCC) is advising national banks that the Basle Committee has requested comment on a new policy paper regarding sound practices for loan accounting and
disclosures.

October 20, 1998 -OCC Advises National Banks to Strengthen CRA Data Collection
Processes
- WASHINGTON, D.C. -- The Office of the Comptroller of the Currency (OCC) today issued an advisory letter calling on national banks to establish or verify internal controls and procedures for collecting and reporting data required under the Community Reinvestment Act (CRA).

October 20, 1998 - Texas Department of Banking - The Year 2000: A Tangled Web We Weave By Catherine A. Ghiglieri
A lot has been written about the Year 2000 and its possible effects on computer systems. In particular, attention has been focused on our financial institutions, including the state banks in Texas over which I have regulatory authority.

October 19, 1998 - BASLE COMMITTEE REQUESTS COMMENT ON PROPOSED GUIDANCE ON LOAN ACCOUNTING AND CREDIT RISK DISCLOSURE SOUND PRACTICES
The Basle Committee on Banking Supervision issued for comment on October 14, 1998, a
proposed sound practices paper on loan accounting, credit risk disclosure and related matters.
Developed by the Basle Committee's Task Force on Accounting Issues, the paper complements
the Basle Committee's Core Principles, which outline the minimum requirements for a
supervisory system in any country to be effective.

October 16, 1998 - Acting Comptroller Warns Against Lowering Guard Against Bad Loans
SAN FRANCISCO -- A/cting Comptroller of the Currency Julie L. Williams said today that bankers and regulators "must not succumb to the temptation to declare victory over lax
underwriting of new loans."

October 15, 1998 - YEAR 2000 SAFETY AND SOUNDNESS STANDARDS- Interagency Guidelines Establishing Year 2000 Standards for Safety and Soundness
Attached are the Interagency Guidelines Establishing Year 2000 Standards for Safety and
Soundness ("Y2K Guidelines"). They were published in the Federal Register on October 15,
1998, and became effective immediately upon publication. The comment period for the Y2K
Guidelines expires on December 14, 1998.

October 15, 1998 - ELECTRONIC FUND TRANSFERS ACT, CONSUMER LEASING ACT, AND TRUTH IN SAVINGS ACT - Federal Reserve Board Amends Regulations E, M and DD
The Board of Governors of the Federal Reserve System (FRB) has adopted amendments
revising Regulation E, which implements the Electronic Funds Transfer Act. The amendments
revise the time periods for investigating errors involving point-of-sale debit cards, foreign
transactions and new accounts. The FRB also has adopted revisions to Regulation M, which
implements the Consumer Leasing Act. The changes clarify the rules on lease payments,
advertisements and rounding calculations. The revisions also make certain technical changes to
the model forms.

October 15, 1998 -HOME MORTGAGE DISCLOSURE ACT - Federal Reserve Board Amends Regulation C and Loan Application Register
The Board of Governors of the Federal Reserve System (FRB) has adopted amendments
revising Regulation C, which implements the Home Mortgage Disclosure Act. The revisions
modify the Loan Application Register to prepare for Year 2000 data systems conversion and to
delete the requirement to enter the reporting institution’s parent company on the Transmittal
Sheet. The revisions also make certain technical changes to the regulations and reporting forms.
The attached Federal Register notice contains the final rule, which went into effect September
24, 1998.

October 14, 1998 - The Federal Reserve Board today announced its approval of the proposal of Norwest Corporation, Minneapolis, Minnesota, to acquire Wells Fargo & Company, San Francisco, California, and thereby acquire all of Wells Fargo's bank, nonbank, and foreign subsidiaries.

October 8, 1998 - YEAR 2000 DISCLOSURE OBLIGATIONS - Disclosures Involving Year 2000 Issues
The Securities and Exchange Commission (SEC) on July 29, 1998, issued the attached
"Statement of the Commission Regarding Disclosure of Year 2000 Issues and Consequences by
Public Companies, Investment Advisers, Investment Companies, and Municipal Securities
Issuers." The statement, which took effect August 4, 1998, supersedes disclosure guidance
provided in SEC Staff Legal Bulletin No. 5 (see FIL-24-98, issued February 27, 1998).

October 8, 1998 - ACQUISITION, DEVELOPMENT, AND CONSTRUCTION LENDING
Internal and Regulatory Guidelines for Managing Risks Associated with Acquisition, Development, and Construction Lending

The U.S. has benefited from strong economic growth and generally favorable real estate markets
since the early 1990s. As a result, financial institutions in many metropolitan areas are active in
residential and commercial real estate acquisition, development, and construction (ADC) lending.
ADC lending has had a positive impact on financial institutions and the overall economy.
However, information obtained by the FDIC through the examination process and from other
sources indicates that several areas of the country are experiencing very high levels of
construction activity and an extremely competitive lending environment. The combination of these
factors often leads to thin profit margins on ADC loans and looser underwriting standards. This
letter is intended to make institutions aware of this situation and to remind them of existing
regulatory guidance for real estate lending activities.

October 8, 1998 - YEAR 2000 READINESS ASSESSMENTS - List of Service Providers and Software Vendors Examined for Year 2000 Readiness
The FDIC, along with the other member banking agencies of the Federal Financial Institutions
Examination Council (FFIEC), is issuing the attached list of service providers and software
vendors that have been examined for Year 2000 readiness.

October 7, 1998 - Uniform Interagency Trust Rating System
The Task Force on Supervision, acting under delegated authority from the Federal Financial Institutions Examination Council (FFIEC), announced today that it has approved an updated Uniform Interagency Trust Rating System (UITRS), and is recommending that FFIEC member agencies adopt and implement the updated rating system effective January 1, 1999.

October 5, 1998 - YEAR 2000 QUESTIONS AND ANSWERS - Commonly Asked Questions About the FDIC's Internal Year 2000 Program
In FIL-31-98, issued March 26, 1998, the Federal Deposit Insurance Corporation (FDIC)
addressed the steps it is taking to make its internal products and interfaces with financial
institutions that may have Year 2000 implications Y2K ready. To supplement FIL-31-98,
attached are answers to commonly asked questions that the FDIC has received from financial
institutions about its internal Year 2000 Program.

October 1, 1998 - Steps to Help Rebuild Areas Affected by Hurricane Georges
The Federal Deposit Insurance Corporation (FDIC) has announced a series of steps intended to
facilitate the process of rebuilding areas in the U.S. Virgin Islands, the Commonwealth of Puerto
Rico and the Gulf of Mexico Coastal Region of the United States damaged by Hurricane
Georges.

October 1, 1998 - FORMER MASSACHUSETTS BANK PRESIDENT, DIRECTOR INDICTED ON FRAUD AND BRIBERY CHARGES
Federal Deposit Insurance Corporation (FDIC) Inspector General Gaston L. Gianni, Jr.,
announced today that Lawrence J. King, former president and a director of Saugus Bank and
Trust Company, Saugus, MA, and Warren E. Manter, a former director of the institution, were
indicted September 29 on charges of bank fraud, misapplication of bank funds and bribery.

October 1, 1998 - INTERSTATE BRANCHING APPLICATIONS APPROVED IN TEXAS
Three interstate merger applications have been approved in Texas following the announcement on
May 13, 1998 by Texas Banking Commissioner Catherine A. Ghiglieri that the Department of
Banking would accept filings for interstate merger and branching transactions involving Texas
state-chartered institutions. All three applications were from Alabama bank holding companies:
Regions Bank, Birmingham, Alabama is beginning to fold seven Texas national banks into its system; Compass Bank, Birmingham, Alabama will merge its Texas bank in October, 1998; and Colonial Bank, Montgomery, Alabama branched First Bank Dallas on September 17, 1998.

October 1, 1998 - FIRST FAMILY TRUST COMPANY CHARTERED IN TEXAS
Texas Banking Commissioner Catherine A. Ghiglieri announced the approval for Ivy Trust Company LTA, Houston, Texas, to commence business as a Texas state-chartered limited trust association, effective September 23, 1998.

FRB Dallas Listing of Bank and Bank Holding Company Application Bulletins

Federal Reserve Board Public Information Actions, Orders, and Other Documents, all FRB districts

FRB Operating Circulars, maintained by the FRB of Chicago

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