From the chairman
By Curtis Davidson
OBA road trip continues.
We have reached our half way point for the OBA Spring Bankers’ Night Out events. Attendance has been great at all three locations; Lawton, Oklahoma City and Tulsa. Over 300 bankers and vendors have come together to do what we do best; eat and socialize.
We also learned about the latest Federal and State legislative and regulatory issues. No surprise, but we are finding that common sense legislative change is not that easy. Our president and CEO, Roger Beverage, continues to drive home the point that our top two priorities, the TAILOR Act and Qualified Mortgage Portfolio Lending are low hanging fruit and provides immediate benefits to our customers with zero cost. If legislators thought more about their constituents and less about their party and reelection, these bills would sail through Congress.
Randy McDaniel, Chairman of Banking, Financial Services and Pensions, for the Oklahoma House of Representatives, also spoke about his committee working over the last seven years to avert a crisis in our state’s retirement systems. By making prospective changes and modernizing our state employee pension plans, his committee has reduced our unfunded liabilities by half.
Who says government can’t make improvements. Under the leadership of Rep. McDaniel disaster has been avoided. There is a reason why we aren’t talking about the unfunded pension costs this session. The House Pension Committee continues to make pragmatic recommendations that won’t burst our state’s budget and still provide an excellent retirement system for our state employees.
This month continues the OBA road trip to Guymon, Enid and Krebs. It’s not too late to sign up. I hope to see you soon.
Have a great week!
State associations meet with Fed president in Kansas City
Thursday, state association executives from the 10th Federal Reserve District met with Esther George, Diane Raley and Kevin Moore in Kansas City to talk about various matters of interest to bankers. The topics ranged from candidates for the Fed Board to legislation that’s intended to provide regulatory relief for traditional community banks.
“It was a good meeting, as is always the case when we can sit down with Esther and her key staff members to talk about things that really matter and be ‘off the record,’ so to speak,” said Roger Beverage, president and CEO of the OBA. “As I’ve noted in previous Updates, one of the important things was that all state associations – those connected with the ICBA in Washington, and those of us who are affiliated with the ABA – were invited to the meeting, and most attended.
“In my view, it represents something I’ve been saying for almost as long as I’ve been in Oklahoma: ‘we are stronger together.’ It applies to trade associations and especially to bankers of all sizes.
“Unless you are one of the six largest banks in the country with trillions in assets and armies of lobbyists in Washington, the trade groups are the most effective way for bankers to make their collective views known and to push for legislation that’s favorable to his or her bank’s business operating model. And, the more we can avoid carrying different messages, the better the result for member banks. After all, that’s the whole point for our existence.”
Back Row: (L-R) Don Childears, Colorado Bankers; Craig Buford, CBAO; Roger Beverage, OBA; Richard Baier, Nebraska Bankers; Kurt Yost, Nebraska Independent Bankers; Chuck Stones, Kansas Bankers; Kevin Moore; Front Row: (L-R) Diane Raley, Chief of Staff; Doug Wareham, Kansas Bankers; Max Cook, Missouri Bankers; Esther George; Shawn Mitchell, Community Bankers of Kansas; Mike Geesey, Wyoming Bankers.
Non-QM lending fell in 2016 as banks grapple with regulatory overload
According to a recent ABA survey, 95 percent of bankers agreed the increasing amount of regulation has had a negative impact on business production and consumer credit availability. The ABA’s Real Estate Lending Survey was released late last week.
A majority of respondents said they have seen increased compliance costs and have had to hire additional compliance staff to keep pace with the avalanche of new regulations that have significantly complicated the residential mortgage process. In addition, lenders reported making fewer non-qualified mortgages last year. The share of banks’ non-Qualified Mortgage loans fell from 14 percent in 2015 to 9 percent in 2016.
“What stood out to me was the fact that more than 30 percent of the respondents said they have stopped making non-QM loans altogether,” said OBA President and CEO Roger Beverage. “That’s what I’ve been trying to tell Congress, the president and federal banking regulators for over a year. Smaller traditional banks in particular are simply not going to take the risks associated with such loans in spite of Richard Cordray’s ridiculous statement that this conclusion is ‘not supported by the data.’
“Who cares about Cordray’s data? How about looking at the reality that 45 percent of Oklahoma banks are no longer in the mortgage business.”
“Non-QM loans have been subject to heightened regulatory requirements and risk, reducing the willingness of banks to extend these loans to even the most creditworthy borrowers,” said ABA EVP Bob Davis. “Despite ongoing regulatory hurdles, community banks remain resilient in their ability to manage risk levels, increase productivity and introduce more first-time homebuyers into the market.”
The ABA survey showed that single-family mortgage lending to first-homebuyers was up in 2016, rising to 16 percent — a record high in the survey’s 24-year history. The foreclosure rate fell from 0.63 percent in 2015 to 0.37 percent in 2016, while the single-family delinquency rate ticked up from 1.27 percent to 1.42 percent. The 30-year fixed-rate mortgage remained the most popular loan type on the market, at 47.7 percent.
According to the ABA, as we look ahead to 2017, bankers reported they are most concerned about increased regulatory overkill — including compliance with the TILA-RESPA integrated disclosure rule. What also stands out is the concomitant issues of rising interest rates, inventory in the housing market and increased operating costs.
A total of 159 banks participated in the survey, 76 percent from institutions with less than $1 billion in assets. Click here to read the report.
Still looking for examples of regulatory overload’s impact on consumers
Bankers who have been reading the Update for a while know we’ve been asking for examples of things your bank has had to do, or is prevented from doing, because of the regulatory avalanche – specifically as it impacts your customers.
“Here’s an example of the kind of information I’m looking for as to how DF has gotten in the way of another traditional community bank’s ability to take care of its customers,” said OBA President and CEO Roger Beverage. “Triumph Bancorp, in Dallas, has agreed to sell Triumph Capital Advisers, a firm that manages collateralized loan obligations, to Pine Brook, a private-equity firm that specializes in the financial services and energy sectors.
“This sale eliminates the bank holding company’s concern about the risk retention rules. According to the American Banker report, this sale will be of significant benefit to shareholders, but it hurts the very people Congress claims it’s trying to help.”
Click here to read the American Banker report.
“Thanks very much to Travis Dennett, Vice President at the Bank of Vici who provided some very specific instances of the impact the new rules and regulations have had on his customers,” Beverage said.
OBA education corner …
Live programs and webinars are going full speed ahead in the education department! Check out the following:
- Basic New Accounts, April 11, Oklahoma City — This program will provide an overview of state law requirements in the area of new accounts, plus federal requirements for disclosures, basic TIN compliance, CIP, anti-money laundering, and deposit insurance.
- Regulation CC – Check Holds, April 11, webinar — Can we place a hold on a cashier’s check? How many days can we hold checks on a new account? Does this apply to business accounts? Do we have to give the hold while the customer is there or can we mail it later? These questions will all be addressed in this informative and easy to follow program for the frontline.
- 2017 Ag Conference, April 12, Oklahoma City — Bankers in agricultural and rural markets should plan to attend this year’s conference.
- Basic Bankruptcy for Bankers, April 13, webinar — This webinar will introduce you to the world of bankruptcy.
- Essential Teller Issues Seminar, April 17 – Oklahoma City; April 18 – Woodward; April 19 – Tulsa; April 20 – Krebs — The program zeroes in on six modules that remind your tellers of the importance of what they do, how they do it, what they say, and how they deliver customer service.
- Dealing with Appraisals: Regulations and Requirements, April 18, webinar — Learn in-depth details of the appraisal and valuation process, from both the lender and appraiser side of the game.
- Investment & Interest Rate Risk Management, April 26, Oklahoma City — This seminar is developed specifically for managers of financial institutions. Designed to meet the challenges of 2017, it is an in-depth examination of current topics.
- HR Seminar, April 27, Oklahoma City — Attending this seminar will provide information to allow HR managers and staff to comply with changes and support the overall compliance function.
- CECL Update, May 3, Oklahoma City — This workshop will provide a brief background on FASB’s new credit impairment standard, which represents a significant change from the existing probable incurred losses model.
- 2017 Advanced Commercial Lending Series, May 10-Financial Statements & Cash Flow; May 11-Advanced Tax Return Analysis; May 12-C&I Lending, Oklahoma City — Commercial lenders, credit analysts, relationship managers and credit administrators should attend one of these three sessions.
In additional news, now is the time to GET INVOLVED with your industry and your Association! The easiest and best way to do this is to join an OBA committee. There are several to choose from, ranging from school boards to agriculture and bank fraud. Click here to learn more about OBA committees and to download a Committee Interest Form!