Federal Financial Institutions Examination Council, Washington, DC 20006 ANNUAL REPORT 1993 Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation, National Credit Union Administration, Office of the Comptroller of the Currency, Office of Thrift Supervision : .[ MEMBERS OF THE COUNCIL Andrew C. Hove, Jr., Chairman Jonathan L. Fiechter, Vice Chairman Acting Chairman Acting Director Federal Deposit Insurance Corporation Office of Thrift Supervision JohnP. La Ware Eugene A. Ludwig Norman E. D'Amours Member Comptroller of the Currency Chairman Board of Governors of the Office of the Comptroller of the Currency National Credit Union Administration Federal Reserve System LETTER OF TRANSMITTAL Federal Financial Institutions Examination Council Washington, D.C. March 25, 1994 The President of the Senate The Speaker of the House of Representatives Pursuant to the provisions of section 1006(f) of the Financial Institutions Regulatory and Interest Rate Control Act of 1978 (12 USC 3305), I am pleased to submit the 1993 Annual Report of the Federal Financial Institutions Examination Council. ~L.~ Andrew C. Hove Chairman TABLE OF CONTENTS vii Message from the Chairman 1 The Federal Financial Institutions Examination Council 3 Record of Actions of the Council 7 State Liaison Committee Report 9 Administration of the Council 11 Activities of the Interagency Staff Groups 21 The Federal Financial Institutions Regulatory Agencies and Their Supervised Institutions 25 Assets, Liabilities, and Net Worth of U.S. Commercial Banks and Thrift Institutions as of June 30, 1992 26 Income and Expenses of U.S. Commercial Banks and Thrift Institutions for the Twelve Months Ending June 30, 1992 29 Appendix A: Relevant Statutes 33 Appendix B: 1992 Audit Report 37 Appendix C: Maps of Agency Regions and Districts v MESSAGE FROM THE CHAIRMAN Andrew C. Hove, Jr. The Federal Financial Institutions operated successfully in 1993. Examination Council (FFIEC) expe­ Major accomplishments during the rienced a year of change in 1993. year include the Policy Statement Following the death of William on the Allowance for Loan and Taylor, Chairman of the Federal Lease Losses as well as significant Deposit Insurance Corporation progress toward an agreement for (FDIC), and pursuant to the the capital implications of "re­ Council's regular two-year rota­ course" arrangements. These tion of the Chairmanship, I became projects had been underway for Chairman of the FFIEC as well as several years and we believe the Acting Chairman of the FDIC. extensive development time con­ During this transitional period I tributed to quality products. requested that the task force chairs and members of the State Liaison Finally, I would like to offer a note of appreciation to the hard work of Committee temporarily remain the many dedicated staff members in their capacities in as much as of the FFIEC, the five constituent there were tasks to accomplish agencies, and the State Liaison within a rapidly changing regula­ members. It is with this commit­ tory environment. ment that I believe 1994 will also be With the assistance of agency and a successful and productive year state representatives, the Council for the Council. vii THE FEDERAL FINANCIAL INSTITUTIONS EXAMINATION COUNCIL The Federal Financial Institutions the Council promote consistency in ally related transactions, including Examination Council (Council) 'was federal examinations and progres­ a code of professional responsibil­ established on March 10, 1979, pur­ sive and vigilant supervision over­ ity; (2) monitoring the appraisal suant to title X of Public Law 95-630, all. Under the Financial Institutions standards established by the fed­ the Financial Institutions Regulatory Reform, Recovery, and Enforce­ eral financial institutions regulatory and Interest Rate Control Act of ment Act of 1989 (FIRREA), the agencies and the Resolution Trust 1978 (FIRA). The purpose of title X, Council was authorized also to de­ Corporation; (3) maintaining a na­ entitled the Federal Financial Insti­ velop and administer training semi­ tional registry of appraisers who tutions Examination Council Act of nars in risk management for the are certified and licensed by a state 1978, was to create a formal inter­ employees of the agencies repre­ and to perform appraisals in feder­ agency body empowered to pre­ sented on the Council and the em­ ally related transactions; and (4) scribe uniform principles, stan­ ployees of insured financial monitoring the practices, proce­ dards, and report forms for the institutions. dures, activities, and organizational federal examination of financial in­ structure of the Appraisal Founda­ stitutions by the Board of Gover­ The Council was given additional tion, a nonprofit educational corpo­ nors of the Federal Reserve System, statutory responsibilities under the ration established by the appraisal the Federal Deposit Insurance Cor­ Housing and Community Develop­ industry in the United States. poration, the National Credit Union ment Act of 1980 (section 340 of Administration, the Office of the Public Law 96-399, October 8, The Council has five members: the Comptroller of the Currency, and 1980). Among these responsibilities Comptroller of the Currency, the the Office of Thrift Supervision, are the implementation of a system Chairman of the Federal Deposit and to make recommendations to to facilitate public access to data Insurance Corporation, a member promote uniformity in the supervi­ that depository institutions must of the Board of Governors of the sion of financial institutions. The disclose under the Home Mortgage Federal Reserve System appointed Council is also responsible for de­ Disclosure Act of 1975 (HMDA) by the Chairman of the Board, the veloping uniform reporting systems and the aggregation of annual Chairman of the National Credit for federally supervised financial HMDA data, by census tract, for Union Administration Board, and institutions, their holding compa­ each metropolitan statistical area. the Director of the Office of Thrift nies, and the nonfinancial institu­ Supervision. Also, to encourage the tion subsidiaries of those institu­ In 1989, title XI of FIRREA estab­ application of uniform examination tions and holding companies. It lished the Appraisal Subcommittee principles and standards by the conducts schools for examiners em­ within the Examination Council. state and federal supervisory au­ ployed by the five agencies repre­ The functions of the subcommittee thorities, the Council has estab­ sented on the Council and makes are (1) monitoring the requirements lished, in accordance with the re­ those schools available to employ­ established by states for the certifi­ quirement of the statute, an ees of state agencies that supervise cation and licensing of individuals advisory State Liaison Committee financial institutions. It was the who are qualified to perform ap­ composed of five representatives of overall intent of the legislation that praisals in connection with feder- state supervisory agencies. 1 RECORD OF ACTIONS OF THE COUNCIL The Examination Council in Session 1993. The following section is a chrono­ tal fair value information by in­ submit its 1993 mortgage insurance logical record of the official actions sured depository institutions in an­ application data for processing and taken by the Federal Financial Insti­ nual reports filed pursuant to the distribution along with the tutions Examination Council dur­ audit and reporting requirements Council's HMDA data. ing 1993 pursuant to sections 1006, of Section 36 of the Federal Deposit 1007, 1009A of Public Law 95-630, Insurance Act and in "reports of Explanation. Section 304(£) of the Federal Financial Institutions condition" filed with the Council's HMDA requires the Council to Examination Council Act of 1978; four banking agencies. implement a system to facilitate ac­ sections 121 and 122 of Public Law cess to data required to be dis­ 102-242, the Federal Deposit Insur­ Explanation. Section 121 of FDICIA closed on home mortgage financing ance Corporation Improvement Act requires the federal banking agen­ characteristics for each metropoli­ of 1991 (FDICIA); and section 304 cies to 'jointly develop a method for tan statistical area. Availability of of Public Law 94-200, the Home insured depository institutions to the disclosure data for the mort­ Mortgage Disclosure Act (HMDA). provide supplemental fair market gage insurers' estimated 1.2 million value disclosures for their assets annual applications is expected to and liabilities, to the extent feasible enable researchers to determine the February 9 and practicable, in certain reports extent to which declinations by Action. Unanimously approved the filed with the agencies. mortgage lenders are the result of mortgage insurers' refusal to pro­ 1992 annual report of the Council to Section 1006(c) of the Federal Fi­ the Congress. vide insurance against default in lo­ nancial Institutions Examination cations considered risky. Explanation. The legislation estab­ Council Act authorizes the Council lishing the Council requires that, to develop uniform reporting sys­ not later than April1 of each year, tems for federally supervised finan­ December16 the Council publish an annual re­ cial institutions. In addition, section port covering its activities during 121 of FDICIA indicates that the Action. Unanimously approved rec­ the preceding year. agencies shall maintain uniform ac­ ommending that the four federal counting standards. banking agencies seek public