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level by the FDIC and at the State level by the Department of
Financial Institutions of the State of Indiana (IDFI). The FDIC
and the IDFI share regulatory responsibilities and exchange
documents, reports and examinations, and correspondence
concerning the institutions that they both supervise and
regulate.
Although Peoples was chartered with the powers of a
commercial bank, it displayed the characteristics of a thrift.
Its loan portfolio was heavily concentrated in residential real
estate loans that were held until maturity; Peoples did not sell
or service loans. The asset structure of Peoples was heavily
weighted toward investment securities, and the loan-to-deposit
ratio was below 50 percent. Despite the powers granted under its
charter, Peoples was not equipped to operate as a commercial bank
without significant expenditures to update its systems and
procedures to process commercial lending and deposit products.
Accordingly, for purposes of valuing the estate shares, Peoples
should be treated as a thrift, rather than a commercial bank.
2. Safety and Soundness
Both FDIC and IDFI conduct regular compliance and safety and
soundness examinations of Peoples using a composite ratings
system based on six areas of concern: (1) Capital adequacy,
(2) asset quality, (3) management competency, (4) earnings level
and trend, (5) level of liquidity, and (6) interest rate
sensitivity. FDIC conducted examinations of Peoples as of the
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