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Greetings from Guy

By Guy Sims
OBA Chairman

The House passed a tax reform bill Thursday and the Senate version is on a fast track for a vote before Christmas. Several Senate Republican have already come out against the Senate version of the bill and there is no support from Democrats at this point. 

Should the Senate pass the current bill, there will be significant differences to be worked out between the two bills. On a positive note, the harmful language for deferred compensation plans has been removed from both the House and the Senate bills.
 
As reported last week, the Senate banking committee came out with a bipartisan banking reform bill. It is my understanding the language for the entire bill has now been released. We should learn more details as to what is contained in the bill this week. 

And just when I thought no place could be more dysfunctional than Washington, the Oklahoma legislature and governor proved me wrong. On Friday, the governor vetoed most of the band-aid legislation to fix the budget hole passed by the House and Senate. 

It is unclear where this process goes from here but there are sure to be more fireworks! Likely another special session will be called by the governor, and the folks in the legislature are not going to be very happy about it.

Hope everyone has a happy and safe Thanksgiving holiday.

Respectfully,
Guy

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Oklahoma banks continue trajectory for another earnings record

Oklahoma banks continue their collective journey to another record-earnings year, according to the FDIC's release of the Quarterly Banking Profile on Monday.

“Needless to say, this is great news for the industry,” OBA President and CEO Roger Beverage said. “The previous record was set in 2015, at $1.024 billion. At the end of September, the year-to-date net income for the industry is $1.108 billion. That's great news.”

OBA Chairman Guy Sims echoed Beverage's thoughts.

“Overall earnings at FDIC-Insured Institutions were $47.9 billion in Third Quarter,” Sims said. “That's up more than 5 percent over last year at this point. But I should also point out that loan growth was modest, slowing to 3.5 percent. I also note that community bank net income (as defined by the FDIC) went up to $6 billion. That's more good news. And yes, I am trying to be optimistic.”

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Not everybody loves Senate's regulatory relief proposal

Sen. Elizabeth Warren is not the only person on record to come out against the Senate Banking Committee's bipartisan proposal for community bank regulatory relief. FDIC Chairman Marty Gruenberg also opposes the measure, for three reasons:

  • Increasing the SIFI (systemically important financial institution) threshold from $50 billion to $250 billion.
  • It changes the supplementary leverage ratio that requires banks to hold 3 percent of equity to on-balance sheet assets and off-balance sheet exposures.  SIFI's must meet a 5 percent ratio.
  • An outright exemption for smaller banks (those under the $10 billion threshold) from the Volcker Rule, preferring a “safe harbor” designation instead.

“I disagree with Chairman Gruenberg on some of his reasoning,” OBA President and CEO Roger Beverage said. “I read the Volcker Rule 'compliance' obligation as problematic for community banks. There is no 'exception' or 'exemption' to the rule today, and I can envision a situation in which an examiner requires a community bank to prove that the rule doesn't apply to his or her bank.  

“The Volcker Rule was intended for large, Wall Street firms and investment banks. I cannot imagine that anyone in Congress at the time thought that it should apply to community banks.  It's just one more example of the 'one-size-fits-all' model that Gruenberg seems to favor is at best misguided.”

Speaking of the Senate Banking Committee proposal – recently identified as S. 2155 – the OBA Board of Directors today approved a unanimous recommendation of the Association's Government Relations Council to support this measure.

“The Board met today and this recommendation was presented,” Beverage said.  “There wasn't much debate, and it quickly became obvious that the recommendation was going to be approved.  

“I've been in an email exchange over the past few days with Sen. Warren's office and her banking assistant. He's a very smart young man, but I just disagree with him about the merits of this bill. The Board felt the same way, and the primary driver was the reality that this is an imperfect compromise, but it is at least a step forward.  And it's better than a kick in the pants.”

Beverage noted the Senate Banking Committee is scheduled to consider and vote on this proposal sometime during the week after the Thanksgiving recess.  

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OBA education corner ...

Thanksgiving is this week and Christmas is just around the corner. But, even with the holidays upon us, don't forget to plan ahead for continuing education, courtesy of the OBA through our seminars, schools and webinars. Take note of the following:

  • Living Trust Documents, Nov. 28, webinar — This presentation will provide financial institution personnel with best practices to use when dealing with these complex legal documents.
  • Robbery Awareness, Nov. 30, webinar — Protect your people, prevent vulnerability, and reassure your customers that their money is safe. This program meets the requirement of Regulation H as it pertains to periodic robbery training.
  • Problem Loan Workouts, Nov. 30, Oklahoma CityThe seminar will begin with a review of the basics of how a commercial loan request "should be" processed in today's market and will then focus on what happens when a "good" loan turns into a "bad" loan.
  • HMDA-Last Minute Update, Dec. 5, webinar — This is your last opportunity to insure your financial institution is prepared and ready for massive changes.
  • 2018 Cybersecurity Forecast, Dec. 6, webinar — As the year slowly winds down, join us for a review on major information security events in 2017 and a brief look forward at what is to come in 2018
  • Opening Accounts for High Risk Customers, Dec. 6, webinar — This webinar will delve into scripts, documentation and monitoring for high risk customers.
  • Agricultural Loan Documentation & Administration, Dec. 8, webinar — Learn about agricultural collateral, risk management, loan documentation, loan administration and loan monitoring.

Also, the dates and locations for the 2018 Senior Management Conference and the 2018 OBA Convention have been set. The 2018 SMC will take place on April 8-10 at the Four Seasons Resort in Las Vegas. The convention will be held on May 21-23 at the Hard Rock in Tulsa. More details will be coming soon!