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State-by-state comparisons indicate that banks in Texas, Pennsylvania,

Illinois and Louisiana had the greatest number and dollar volume of loans to their

own insiders. Texas had the largest number (15, 253) and volume ($1.3 billion) of

Banks with less than $50 million in total assets extended 75.5 percent

of the number of loans to their own insiders and 77.2 percent of the volume to their directors. These percentages increase with bank size. Banks with $1 to $5 billion in total assets extended 93.5 percent of the number of insider loans and 95.5 percent of the volume to directors. Average interest rates generally do not vary much among the three insider groups for either fixed- or floating-rate loans. Both fixed and floating-rates were highest for directors in banks with less than $100 million in total assets.

V. OVERDRAFTS

A. Introduction

Banks were required to report in Schedule IV of the survey the single largest and the single longest overdrafts over $500 granted between January 1,

*Banks in five other states had a larger dollar volume of loans to insiders than those in Florida but less than those in Louisiana.

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1977 and September 30, 1977 to an insider of their own banks, to an insider of

another bank or to a public official. Interest rates charged on those overdrafts, if any, were also recorded. However, information on fees that banks may charge on overdrafts was not requested. Insiders were defined to include a bank's executive officers, its major shareholders, and its directors, and their immediate families. However, their business interests were excluded. Public officials included any elected official in federal, state and local government and officials and supervisory personnel of bank regulatory agencies.

Because this part of the survey focused only on the single largest and single longest overdrafts over a 9-month period, the data are neither indicative of the amount of overdrafts outstanding at any time to insiders or public officials, nor representative of the typical overdraft.

Some information intended to indicate bank policies regarding overdrafts generally was also collected. Banks were required to state the frequency with which they waived customary overdraft charges to their own insiders, to insiders of other banks and to public officials. Data were also collected on the daily average number and dollar volume of all overdrafts outstanding during each of three months: March, June and September 1977.

Data on overdrafts are subject to several limitations. It is not known how long the largest overdraft was outstanding, what fees other than interest were charged, whether the overdraft was eventually converted to a loan on which interest was charged, what kind of insider relationship was involved, whether sufficient funds were on deposit in other accounts of the same customer at that bank, or to what extent the insider or public official was

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more leniently accommodated than other bank customers of similar credit

standing who were not insiders of the reporting bank, insiders of another bank, or public officials.

B. Table 8

According to Table 8, 13, 571 of the 14, 137 reporting banks (96 percent) had overdrafts outstanding during September 1977. The daily average dollar volume of overdrafts during September was $1.9 billion and the average daily number was 2 million. However, the average daily volume of overdrafts was 0.3 percent of all loans and overdrafts reported by insured commercial banks for September 1977. The average number, dollar size and dollar volume of overdrafts per bank rises with bank asset size. For example, the amount of the average overdraft ranged from $248 at the smallest banks to $2,239 at the banks with $1 to $5 billion in total assets.

Except for the largest banks, there was some growth both in the number and amount of overdrafts over the 9-month period. The observed growth could reflect the general growth in the economy or could be a seasonal pattern.

C. Table 5A, 5B, and 5C

For the most part, banks responding to the survey did not, as a matter of practice, extend large overdrafts, those over $500, to insiders and public officials during the survey period. Of the 14, 137 reporting banks, 66.9 percent had no such overdrafts to their own insiders during the 9-month period (Table 5A), 95.1 percent reported no overdrafts to insiders of other banks (Table 5B), and 90.7 percent had no such overdrafts to public officials (Table 5C).

Interest rate charge policies of the banks reporting overdrafts differed little for their own insiders, insiders of other banks, and public officials. There were 4, 676 banks that reported an overdraft over $500 to one of their own insiders, and 91 percent bore no interest charge. About 90 percent of the 687 banks reporting large overdrafts of insiders of other banks and 88 percent of the 1, 315 banks reporting large overdrafts of public officials also charged no interest. Furthermore, no interest was charged on 79 percent of the overdrafts over $50,000 of a bank's own insiders. About 83 percent of the overdrafts over $50,000 of insiders of other banks and 87 percent of those over $50,000 of public officials were treated similarly.

The percentage of overdrafts of insiders of the reporting bank that were charged interest increased as the size of the overdraft grew larger. For example, 74 percent of those overdrafts in excess of $100,000, 82 percent of those between $50,000 to $100,000, and 84 percent of those between $25,000 and $50,000 were not charged interest. No similar relationship can be observed for the overdrafts of insiders of other banks or public officials. When interest rates were charged, they were generally high. Of those bearing interest, over half were charged 10 percent or more.

Large overdrafts are the exception rather than the rule. Most banks

do not charge interest on overdrafts but may assess a fixed fee. Thus, in

all cases where no interest charge was reported, a fee may have been charged.

The three agencies are conducting a telephone survey to determine how

frequently fees are levied.

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D. Table 6

Table 6 shows the frequency distribution in days of the longest duration

of a continuous overdraft position. Because each bank was required to report only the overdraft outstanding for the longest continuous time, the results presented in Table 6 cannot be viewed as representative, in any way, of the duration of overdrafts. Even though the survey focused on the longest overdraft, almost 53 percent of such overdrafts of a bank's own insiders was cleared in 5 days or less. Comparable figures for insiders of other banks and public officials were 53 percent and 39 percent, respectively. Moreover, 77 percent of the longest overdrafts of a bank's own insiders had a life no longer than 15 days. That compares to 79 percent for insiders of other banks and 64 percent for public officials. Of the longest overdrafts to public officials, 13.2 percent had durations in excess of 50 days, compared with 6.4 percent of overdrafts to insiders of other banks, and 6.7 percent of overdrafts to insiders of the reporting banks.

Data on the longest overdraft duration cannot be linked to data on the largest overdrafts. Banks were asked to report the single overdraft, exceeding $500, of longest duration to any customer for each of the three groups covered by the survey. Thus, the longest overdraft was not necessarily the largest.

E. Table 7

Table 7 shows the percentages of banks reporting overdrafts over $500 that always, frequently, infrequently or never waived overdraft fees to their own insiders, insiders of other banks and public officials. Banks