This PDF document is the PowerPoint version with Notes included.

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2. We are going to use a custom Microso1 Excel workbook consis8ng of 3 spreadsheets
to figure everything out. It is based on a published spreadsheet for a simple
commercial bank from “Money Basics by Christopher D. Moore, 2003” (see appendix
in source document: “How To Start a Public Bank.pdf”), but with the addi8on of funds
from exis8ng city/country/state/region assets, modified for a public bank, and
modeled out 8 years.
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3. Poli8cal en88es over 100,000 people likely have enough available assets to start a
Public Bank, but you have to learn to examine the Comprehensive Annual Financial
Reports to be sure. These reports are typically hundreds of pages long, but we are
only interested in a few figures. See CAFRMAN.COM.
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4. 4

5. Startup & Fixed Costs (Tab)
A Public Bank has a simpler setup than a commercial bank. There is only one branch –
headquarters – and there is no need for most of the staff to meet the public, since
the sole, or nearly sole, depositor is the en8ty that owns the bank, in this case, the
city of Oakland.
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6. The Startup and Fixed Costs spreadsheet is split in this presenta8on but would appear
as a single sheet in the workbook. The footnotes refer to the first sec8on in the
previous slide.
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7. Note: Opera8ng Ra8os are those used by Christopher Moore in 2003. These may
have changed since then or be different in your area. Interest rates have come down
significantly from when this spreadsheet was created.
It is up to you to find out the current minimums to meet, as well as other regulatory
requirements.
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8. Here we introduce Deposits for the first 8me, taken from the General Fund Revenues
(GFR). $178m is deposited to start, but this will climb to 2/3 of the GFR, or $400m, by
year 2.
Interest rates, cost rates have been adjusted to meet current condi8ons (2016).
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9. The bank starts paying dividends back to the pension fund in year 3, a1er 2 start up
years when there is lible profit. This is only 40% of net earnings to start, but will
increase yearly as profits climb. Note the payment of dividends seemingly depresses
Performance; these would be much higher if dividends were kept by the bank.
Opera8ng ra8os are compliant and there is a moderate rate of loan losses due to
default (based on figures from the Bank of North Dakota, the na8on’s only Public
Bank).
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10. Dividend payouts increase significantly in the early years, then taper off by year 8. If
we projected beyond year 8, dividends could con8nue to slowly increase, decreasing
the 8me to “make up” the $50m in ini8al equity. Under this conserva8ve scenario,
$50m is paid back to the pension fund by year 16.
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11. By year 8, the bank is solidly profitable. There was no need for private investment,
borrowing through bonds, or for any other money-raising ac8vity.
If there was no dividend payment the figures for ROE would be 19.20% and for ROA
1.32% which compares favorably to both the original Moore sample spreadsheet and
to the balance sheet for the highly successful Bank of North Dakota.
Ques8ons?
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