IDOB Update

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IDOB Update Concluding Comments

• Thomas Gronstal
• Superintendent

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• Market History
• Financial Trends
• Perfect Storm
• Financial Literacy
• Community Banking Future

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Delinquent Mortgages
4th Quarter 2008 Info
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Perfect Storm
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• Federal Bank Bailout
• Rewrite of Financial Institution Regulation
• Credit Crisis

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Federal Bank Bailout

• Financial Experts cant figure out what the
  banks are doing with the money
• Lets look at Citibank vs. Iowa State Chartered
  Banks

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Balance Sheets

• Total Assets
• Iowa Banks 44 billion
• All Iowa State Chartered Banks 3.6 of Citibank
• Citibank 1.2 trillion

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Debt Securities
Bonds issued by governments, government agencies,
and corporations
Iowa banks have 19.4 of assets in debt
securities Citibank has 9.9 in debt securities
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Loans and Leases

• Iowa banks have 70 of assets in loans
• Citibank has 50.7 of assets in loans

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Trading Account Assets

• Iowa banks have less than 1 of assets in
  trading accounts.
• Citibank has 16.8 comprised of
• 77 billion of debt securities
• 24 billion of loans
• 88 billion of derivatives with a positive
• fair value
• 13 billion of other assets
• 202 billion total is more than 4 times the
• total assets of Iowa banks

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Total Deposits

• Iowa banks have 78 of assets funded by deposits
  in domestic offices
• Citibank has 19 of assets funded
• by domestic deposits, 43 by
• foreign deposits

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Trading Liabilities

• Iowa banks have no trading liabilities
• Citibank has 7 of its assets funded by trading
  liabilities
• Comprised of
• 8 billion in liabilities for short positions
• 78 billion in derivatives with negative
• fair value

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Other Borrowed Money

• Iowa banks have 7.7 of assets funded by other
  borrowed funds almost all Federal Home Loan
  Bank advances.
• Citibank has 13.5 of its assets funded by other
  borrowed money

• 85 billion on Federal Home Loan Bank
• advances
• 78 billion in other short term borrowings

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Equity Capital

• Iowa banks fund 9.9 of their liabilities with
  equity
• Citibank funds 7.5 of its assets with equity

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Derivatives

• Iowa banks have 1.24 of assets invested in
  derivatives primarily interest rate hedges.
• Citibank has 2998 of assets, or
• 399 times its equity invested in derivatives.
  The notional value
• of Citibanks credit default swaps
• is 2.4 times its total assets.

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Rewrite of Financial Institution Regulation

• Federal banking authorities have inside track on
  proposed regulation
• Treasury proposals eliminate state charter
• Congress wants to combine and reduce the number
  of regulators

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Rebuilding the Regulatory System
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Community Bankers Benefit from the Dual Banking
System

• Charter choice is valuable in reducing cost
• Charter choice helps foster appropriate
  regulation for community banks
• Decisions are made based upon their impact on the
  local and state economy
• The decision maker lives in your state

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Make Your Opinions Known

• Congress is focused on the large banks and
  systemic risk
• Federal legislation could have dire consequences
  for community banks
• Federal banking authorities have inside track on
  proposed regulation
• Treasury proposals eliminate state charter
• Congress wants to combine and reduce the number
  of regulators
• Bankers and their trade associations need to
  advocate for preservation of the dual banking
  system

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2008 Center for Economic and Entrepreneurial
Literacy(CEEL) Survey
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Highlights from the survey include

• 54 of respondents could not identify what a
  subprime mortgage was.
• 56 of respondents could not identify FICO score
  as the most important factor in getting a loan.
• 65 of respondents could not identify what would
  remain if you subtracted 25 from 8.
• One in three respondents could not compute 1 of
  50,000.

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Future of Community Banking
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Community Banking Model

• Portfolio Lender
• Depositor Confidence
• Customer Relationships
• Manageable

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Questions?
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Vaughn NoringKay AndersonRodney ReedChristy
BillsDonna Adreon
Thank you..
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Thank you..
Dan BlackNatalee Girardi Timothy Koch Steve
McCulloughJoshua Siegel Mike Stevens
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• The Federal Reserve Bank of Chicagos Iowa Office
• of Supervision Regulation
• Cordially Invites You to an
• Open House Reception
• Thursday, April 30, 2009
• 200 p.m. to 500 p.m.
• (following the Day with the Superintendent)
• No RSVP Necessary
• Questions? 800-642-6389
• South of the West Des Moines Marriott on Jordan
  Creek Dr.
• Behind Perkins Restaurant

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