Subchapter S : a new tool for enhancing the value of community banks
Beginning in 1997, many community banks became eligible to elect a new form of ownership, referred to as Subchapter S. Through June of 2000, 18 percent of the community banks in the United States had changed to this new ownership status. The Subchapter S ownership form effectively eliminates the double taxation of dividends and capital gains, which promises to significantly increase the after-tax returns to bank shareholders. This article reviews the characteristics of banks that have converted to Subchapter S status and identifies changes in their behavior or performance subsequent to ...
New Community Reinvestment Act regulation : what have been the effects?
Effective January 1, 1996, the federal financial supervisory agencies (agencies) implemented their new Community Reinvestment Act (CRA) regulations. The new regulations currently apply to small institutions; they will apply to large institutions in 1997. ; In adopting their new regulations, the agencies sought to address complaints voiced by banks and the public about burden, relevancy, and consistency of CRA regulation under the agencies' old supervisory approach. To judge the new regulation's success in addressing these complaints, we surveyed 38 small Tenth District member banks examined ...
De novo bank performance in the seven Tenth District states
The 2001 survey of commercial banks in the Tenth Federal Reserve District : changes and challenges
Periodically, the Federal Reserve Bank of Kansas City surveys District bankers for their views on a variety of matters. In February 2001, we solicited banker opinion on a number of topics pertaining to deposit and loan competition, management and staffing challenges, Internet banking activities, funding options, operational issues, the effects of the Gramm-Leach-Bliley Act, and near-term prospects. ; This essay briefly discusses the Tenth Districts geography, economics, and demographics and thereby provides context for the survey responses we received. It introduces subsequent articles that ...
The death of a bank: assuring an orderly transition
Special issue on problem banks
The changing structure of banking : a look at traditional and new ways of delivering banking services
In the short span of just ten to fifteen years, Tenth District banking has made the dramatic leap from predominantly a unit banking or single office framework to one that encompasses both statewide branching and interstate banking. This article examines the major factors behind these changes and then looks at the District's evolving banking structure. Overall, the total number of banks operating in Tenth District states has declined by about 40 percent since 1985. This decline, though, has been accompanied by a significant increase in the number of bank branches and facilities. ; Other ...
Community Reinvestment Act lending : is it profitable?
In 1977, Congress passed the Community Reinvestment Act (CRA) to encourage federally insured depository institutions to lend in low- to moderate-income neighborhoods and to low- to moderate-income people. Since then, the profitability of the many special lending programs designed to achieve these goals has been questioned on both theoretical and practical grounds. ; The study examines the CRA loan profitability issue in the context of home mortgage lending. We surveyed 97 large institutions to explore profitability differences between their CRA and conventional home mortgage lending. ; ...
The decline in core deposits : what can banks do?
In recent years, growth in traditional deposit funding sources has failed to match the growth in assets at many banks. These funding shortfalls are raising a number of important concerns, including whether community banks will have to curtail lending to small businesses, farmers, and other local customers. This article takes a look at bank funding trends and their implications for community banks. The article also examines possible explanations for the trends, such as strong loan demand, shifts in household financial portfolios, new competition, comparative returns on other financial ...
The relationship between loan classifications and losses : the effects of a changing economy
The agriculture and energy sectors suffered dramatic declines during the 1980s in the Tenth Federal Reserve District. Bank asset quality also declined during this time period, particularly for farm banks. Using information on loan classifications and charge-offs, this study traces classified loans over time to determine their subsequent performance. ; This study found that examiners were able to identify a majority of the problem credits prior to charge-off. Additionally, examiners were able to distinguish the relative riskiness of problem credits. Economic conditions were found to have a ...
Home financing for low- and moderate-income borrowers: what are the trends in Denver?
Over the last decade, many significant developments have influenced home lending. Among these developments are the longest expansion period in U.S. history, path-breaking technological and financial innovations, new regulatory and legislative incentives for low- and moderate-income lending, and continued growth of community organizations and special home lending programs. ; This article takes a look at these trends and their possible effect on home purchase lending in the Denver metropolitan area between 1992 and 2002. The article examines changes in home financing across the entire ...