The green number in the orange highlight is the figure we will take approximately 10% out of in the next spreadsheet, from the tab Returns, actually just $50m, with which to create our initial equity for the bank. We can do this, within reason, because as the last line on the CAFRs spreadsheet says:
Note: Pension funds typically payout 4-6%/year, rest is kept invested - See Returns Worksheet page for how 10% of pension money - shown here in green - might be used to capitalize a PB.
Startup & Fixed Costs (Tab)
A Public Bank has a simpler setup than a commercial bank. There is only one branch -- headquarters -- and, perhaps ironically, there is no need for most of the staff to meet the public, since the sole, or nearly sole, depositor is the entity that owns the bank, in this case, the city of Oakland. This is based on the model of the Bank of North Dakota (BND), which partners with local community banks, both supporting them and enhancing their ability to serve their local community by acting as a sort of mini-Fed. Like the BND, we're going to assume the Bank of Oakland (BOO) is staffed by Civil Service employees, whose benefits do not include stock options or lavish bonuses. All of these things cut down on both Building Setup Costs, Employee Costs and even to a limited extent, the Fixed Costs of running the building, maintaining software, insurance, etc.
The figures shown in the Fixed Costs section should be taken as estimates based on the number of staff (22) and square footage required, plus anticipated expansion. For simplicity's sake, I assumed no real estate taxes would be paid on a building owned by the city itself, like any other government building. This too is a cost savings, but only if the entire building is government owned. Adjust your figures accordingly!
The Grand Total Employee + Fixed Costs figure highlighted in pink will be updated on the Returns spreadsheet automatically and is shown as the pink highlighted Fixed Costs calculation.
The Bldg & equip. Net figure highlighted in green is carried over to the same field on the Returns spreadsheet in the Assets section. If this figure is changed, you will need to adjust your remaining Initial Equity figures -- Reserves and Cash -- to total the Initial Equity. There is a calculation -- Unallocated Initial Equity -- that will go up or down depending on how far away you are from the initial amount. Don't leave money unallocated! And remember, Initial Equity will not go up or down even when it is repaid since the bank will retain that equity even after paying back the pension fund from dividends.
The Bank License and Surety Bond amounts will vary from state to state, and in the latter case, should not be necessary at all because a public bank is essentially self-insured. Similarly, FDIC insurance is not only not necessary, but actually is not helpful because the $250k limit of FDIC insurance is far below what would be required to replace city, county or state money should something happen to it. The Public Bank has to be responsible!
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