http://www.Jacksonville.com/tu-online/stories/120999/bus_1474796.html

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Thursday, December 9, 1999

Story last updated at 10:47 p.m. on Wednesday, December 8, 1999

First Bank stumbles on Y2K Not satisfied with planning, FDIC inspectors say

By Simon Barker-Benfield Times-Union business writer

In the world of U.S. banking, Jacksonville has achieved a dubious distinction: It is home to the only bank in the United States that has not satisfied federal regulators that it is ready to handle the year 2000 date rollover.

Federal Deposit Insurance Corporation chairwoman Donna Tanoue said this week that every bank except First Bank of Jacksonville has passed Y2K tests with the highest possible ratings from regulators. The FDIC insures deposits at about 10,300 U.S. banks.

First Bank of Jacksonville does not dispute the fact that it has not satisfied the FDIC. But officials at the bank say they are ready for the date change nonetheless.

"I can't say I am compliant until the FDIC says I am compliant," said Dale Ferguson, a loan officer who also functions as the Y2K coordinator for the bank.

But, said Ferguson yesterday, "Our customers' money is safe."

Ferguson said the FDIC's problems with First Bank are not related to its equipment, but rather to how the bank has handled its planning for Y2K and business resumption should there be a problem after the date change.

"I guess that it [the planning] was just too complex for our bank," said Ferguson.

If electricity fails on Jan. 1, he said, the bank will be able to obtain electricity from a generator. And if that doesn't work or other equipment fails, the bank will be able to operate manually.

First Bank has been working with the FDIC to adapt its business resumption plan to suit regulators, Ferguson said. The bank has been receiving monthly visits from FDIC staff; after the November visit, the bank was upgraded from an "unsatisfactory" rating to "needs to improve," Ferguson said.

The category above that is "satisfactory," and its leaders hope that the bank will receive that rating soon.

"We anticipate and hope we will receive a 'satisfactory' rating," said Clyde N. Wells Jr., founder of the bank and chairman of its board of directors.

Late yesterday afternoon, the bank issued a statement saying that its equipment passed muster by the FDIC earlier this year, and that the FDIC had signed off on its Y2K plan but not on the business resumption plan.

The statement said the bank also had hired a firm of accountants to provide extra staffing if needed.

Although the FDIC's Tanoue has discussed First Bank in public, the agency's staff in Washington declined to comment on First Bank's Y2K rating or the prospect of it receiving a passing grade.

"We don't comment on open and operating institutions," said David Barr, a spokesman.

First Bank of Jacksonville operates out of a single location at 11100 San Jose Blvd. The bank has seven employees, according to the June quarterly report the bank filed with regulators. It also has $8.3 million in assets and $4.8 million in deposits.

The report says the bank is financially strong but is not making a lot of money. First Bank lost $33,000 in the first six months of the year, compared to a profit of $79,000 for the same period last year.

According to its sign out front, the bank shares quarters with the law offices of its embattled founder. Wells has other fires to put out, in addition to the Y2K flap.

State regulators and some shareholders want Wells removed from the bank, according to regulatory orders and a lawsuit filed by a handful of shareholders.

After jousting for years with federal regulators who did not approve of the way he operated the bank, Wells was forced by the FDIC to step down from executive management last year. The FDIC complained that, under Wells, the bank has been unable to balance its books and had poor internal controls.

Then, earlier this year, the state of Florida's Division of Banking said it wanted Wells out of the picture altogether.

The state office told Wells' fellow board members in July to remove him from the board and prohibit him "from taking any action of any type on behalf of the bank in any capacity."

Meanwhile, shareholders, who include prominent Jacksonville businessmen, filed suit saying Wells and the bank's board of directors had done a poor job managing the bank.

-- Homer Beanfang (Bats@inbellfry.com), December 09, 1999

Answers

http://www.bangkokpost.com/today/091299_Business01.html

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MILLENNIUM BUG

ATMs may stop on New Year

Banks can't agree on how to work system

Cholada Ingsrisawang

Local bankers and regulators insist they are completely Y2K compliant, after spending hundreds of millions of baht on computer upgrades, contingency planning and systems tests in the past year.

However, commercial banks could be forced to close down the ATM network over the New Year if a consensus on how to manage users is not found.

Several banks, including Siam Commercial Bank and Siam City Bank, have said they would temporarily shut down ATM usage near midnight for precautionary reasons.

Other banks say this could cause their own systems to be overloaded, touching off transmission or network problems unrelated to Y2K.

One idea would be to attach signs banning use of ATM cards issued by banks intending to close services for Y2K at machines in operation. Yet this also could touch off widespread customer resentment and infighting among local banks.

"Closing off the entire ATM pool might be the only way. The Thai Bankers' Association plans to hold further talks on the issue. In any case, if some banks insist they want to remain open, they have to accept the risks," one banker said.

Somchai Sakulsurarat, president of Bangkok Metropolitan Bank, said local banks were trying to minimise their Y2K risks by asking for the understanding and co-operation of clients. Many banks, for instance, were asking corporate clients to accelerate payroll payments for December to before Christmas, instead of the end of the month.

This would give borrowers the chance to withdraw funds several days before year end, reducing the load on bank computer systems, Mr Somchai said. Typically, ATM usage was highest at the end and beginning of the month, just after companies make direct payroll deposits for their employees.

Since Bangkok Metropolitan Bank does not offer 24-hour ATM usage, and will close services at its machines at 10 p.m. as normal on New Year's Eve, the bank has alerted customers to withdraw sufficient funds early to meet their holiday needs.

Vanchai Ariyabuddhiphongs, senior executive vice-president at Siam City Bank, said his bank would close ATM services starting 6 p..m on December 31, until 6 a.m. the following day.

The bank would shut down programmes used to calculate customer account balances, then use hard copy printouts to reconcile figures after midnight.

Dr Vanchai said large banks operated two separate printing systems, which allowed them to continue ATM operations while performing checks.

Siam City Bank, like other banks, had increased its cash reserves to cope with higher demand over the period.

Thai Farmers Bank says it will maintain full services throughout the New Year, according to Somkiat Sukdheva, executive vice-president.

He said the bank was confident it was fully prepared for Y2K, and did not want to inconvenience its customers.

Credit card customers, meanwhile, would be unaffected. Retailers were able to process transactions manually if electronic confirmation systems failed.

Thai Farmers Bank planned to set aside 8.5 billion baht, twice normal reserves, for the period.

At Siam Commercial Bank, executives would close ATM services starting at 10 p.m. until 5 a..m on January 1, to minimise risks, according to Charamporn Jotikasthira, bank executive vice-president.

The bank will notify all clients well ahead of the New Year, but he believes the number of customers affected will be relatively small.

Other banks, including Bank of Asia, BankThai, DBS Thai Danu and Standard Chartered Nakornthon, say they will maintain 24-hour ATM services.

At Krung Thai Bank, one executive said the bank would not change its existing ATM operating hours. Currently, the state bank operates more than 300 24-hour ATMs, with another 400 operating until 10 p.m.

Bankers express concern over ATM security over the holiday season.

"Each bank will definitely fill up each ATM machine to the maximum, about five million baht. We have asked our own security guards, as well as the police, to be extra vigilant over the period," one banker said.

Executives say while no Y2K problems are expected, it is better to be safe than sorry.

Each institution, together with the Bank of Thailand, plans to maintain a 24-hour watch centre over the New Year, to guard against any potential problems and field customer queries.

Mr Somkiat at TFB recommends customers take five precautions before December 31: update account passbooks; ask for written account summaries and balances; prepare extra cash to avoid ATM use in case of outages; request account statements from credit card issuers; and conduct any necessary foreign exchange transactions well in advance. Daily Main Entrance Page Local News Business Outlook Weekly IT news Horizons Travel NiteOwl (Trink) Real.Time Motoring Student Weekly Entertainment & Lifestyle What's on Dining out Recipe of the week Movies Music Book Review Beauty Fitness Nutrition NEW! Prominent Businesses

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-- Homer Beanfang (Bats@inbellfry.com), December 09, 1999.

FWIW - The FDIC has been after these guys for some time now. Looks like they're holding the ace with their contingency plans (or lack of).

Deano

-- Deano (deano@luvthebeach.com), December 09, 1999.

sacrificial lamb

-- nothere nothere (notherethere@hotmail.com), December 09, 1999.