From the chairman
By Curtis Davidson
Chambers of Commence are one of our strongest allies. Be it local or national, chambers and banks have the same goal: to support economic growth, job creation and entrepreneurship.
Last week, I watched a webcast from the U.S. Chamber of Commerce Capital Markets Summit titled “Kickstarting Growth: The Small Business Story.” I was interested because it featured Dorothy Savarese, chairman of the American Bankers Association. She is also chairman, president and CEO of Cape Cod Five Cents Savings Bank, a community bank in Massachusetts. The panel also included small business owners, an OnDeck executive and chamber research experts.
Two themes were apparent throughout the panel discussion. First, financial institutions – and, in particular, community banks – are an indispensable source of capital for small business through lending. Second, Dodd Frank has tightened access to credit, especially for the smallest businesses.
The entrepreneurs on the panel recognize what all of us know: Over-regulation has a true disparate impact on smaller businesses. They stated over-regulation takes away a banker’s best attribute: his or her common sense. These business owners understand that one’s character is the biggest “C” in the lending equation, and overregulation reduces a banker’s ability to rely on common sense when evaluating a borrower’s character.
Dorothy did an excellent job discussing this point. She correctly stated that regulators make it more difficult to work with business generally because regulators want to eliminate as much risk as possible. As Dorothy pointed out, risk is a synonym for opportunity. Bankers are experts at balancing risk and opportunity for the benefit of the bank and customer.
Common sense was an oft-repeated term. Small businesses don’t want the government to tell the banker who he or she can bank. They just want fair treatment, as well as a banker who can judge their character and provide valuable advice. In other words, a banker with common sense.
Dorothy is a great leader for our profession. Come to our Annual Meeting and Convention May 22-24 at the Embassy Suites in Norman and judge for yourself. We are delighted that Dorothy is one of our featured speakers in an outstanding lineup.
See you there
Have a great week!
The Financial CHOICE Act of 2017, otherwise known as H.R. 10, is scheduled for a mark-up by the House Financial Services Committee Tuesday morning, beginning at 10 a.m.
“Based on what I’ve been told, the many issues the bill encompasses are pretty fluid at this point,” OBA President and CEO Roger Beverage said. “One of the things that may happen, I’m told, is a Republican member of the Committee might offer an amendment that would strip the Durbin repeal language from the bill. The Durbin amendment impacts every bank in the country.”
Beverage noted the ABA has asked Oklahoma bankers to make the following points when talking to Rep. Frank Lucas’ office (202-225-5565). Lucas is on the House Financial Services Committee and is the only member of the Oklahoma delegation that is on it.
Here are the points to make:
- Durbin was a bait and switch. Members of Congress and consumers were promised savings at the register that have not materialized, while the big box retailers pocketed $8 billion per year.
- Durbin fails economics 101. Price caps may create a windfall for a few, but consumers end up paying the bill. Because of Durbin, low-income Americans have access to fewer banking products and services.
- Durbin is just plain wrong. How would a retailer feel about the government setting the price of soda, or beef or flat screen televisions? The market for card acceptance is no different and should not be subject to arbitrary interventions.
ABA is asking bankers across the country to reinforce the importance of repealing the Durbin amendment and urge them to VOTE NO on any amendment to strike the repeal provision from the CHOICE Act OR any proposed compromise to benefit retailers.
Edmond’s Jill Castilla, president and CEO of Citizens Bank in Edmond, was among the 100 delegates attending the ICBA’s Spring GR Summit who had the opportunity to meet with President Trump and Vice President Pence this morning.
“Jill is a remarkable person and I loved the picture she tweeted from the meeting itself,” OBA President and CEO Roger Beverage said. “She was a great OBA board member and I am confident her service to the industry is far from over.”
Here is the picture Jill took and posted on Twitter:
Way to go, Jill!
Kentucky Congressman Andy Barr has introduced a bill that’s similar to the one he introduced in the last Congress to help expand access to mortgage real estate mortgage loans. Friday, Barr introduced H.R. 2226 that would treat loans originated by a bank and retained by the bank in its loan portfolio as Qualified Mortgages. That means such loans would be entitled to the “safe harbor” that’s afforded QM loans, thus eliminating litigation and regulatory risks that currently exist.
ABA EVP James Ballentine said:
It’s clear that regulatory requirements have restrained mortgage lending and have made it particularly difficult for some creditworthy borrowers to obtain a home loan. This legislation is a common-sense approach that will help borrowers gain access to some of the lowest risk mortgage products offered by banks. Loans held in portfolio are well underwritten and conservative by their very nature. There is no need to create additional barriers for creditworthy borrowers for loans held in a bank’s portfolio.
ABA issued the following official statement:
We applaud Rep. Andy Barr for introducing the Portfolio Lending and Mortgage Access Act, legislation that would expand access to mortgage credit by treating loans originated by a bank and held in portfolio as Qualified Mortgages. This important measure, which received bipartisan support in the last Congress, would help many creditworthy borrowers access safe, traditional credit that would otherwise be out of reach.
It’s clear that regulatory requirements have restrained mortgage lending, and have made it particularly difficult for some creditworthy borrowers to obtain a home loan. This legislation is a common-sense approach that will help borrowers gain access to some of the lowest risk mortgage products offered by banks. Loans held in portfolio are well underwritten and conservative by their very nature. There is no need to create additional barriers for creditworthy borrowers for loans held in a bank’s portfolio.
We stand ready to work with members of the House as they move forward with this important effort.
ABA has delivered its fifth white paper to the Department of the Treasury outlining the reasons why the Volcker Rule is a drag on the U.S. economy. The rule requires all banks, regardless of size, to refrain from doing any activities that involve “proprietary trading.”
“One of the problems is that, as worded, the Volcker rule applies to all banks, not just the large, systemically important banks,” OBA President and CEO Roger Beverage said. “We join with the ABA that has recommended that the rule be repealed in its entirety. No one knows for sure what it means, and which activities are permissible. In particular, the regulators need to make it clear that it does not apply to traditional community banks.”
“Rather than solving problems, the Volcker Rule has created problems,” the ABA said in the white paper. “It has operated to impede the efficient operation of the financial system, drive banks away from providing services valued by their customers, reduce competition in affected markets and overall act as a drag on the economy.”
Click here to read the white paper.
As you may recall, the OBA endorsed a product offered through a noted entrepreneur who has worked in Oklahoma before. Josh Siegel contacted us recently to share that StoneCastle has received approval for financing necessary to put together the next pooled subordinated debt transaction for community banks.
“We believe this product to raise community bank capital will give member banks an option or options they may not now have,” OBA President and CEO Roger Beverage said. “If you need capital for organic growth, or your bank is engaging in a share repurchase plan and needs between $2 and $12.5 million, this new offering may be of interest.
“In addition, if you are looking to expand your footprint you might consider investigating the option(s) available to you. After tax capital of less than 5 percent can be a very attractive option for community banks. Below is a table summarizing the offering.
Tier 2 capital qualifying subordinated loan, 10-year maturity
Between $2.0 and $12.5 million per borrower
Fixed for life, 6.75% – 6.99%, payable quarterly, subject to market conditions
Issuer may redeem all of a portion at face value after the fifth anniversary
If you have an interest in exploring your bank’s options with this new option that we just learned about over the week-end, please call T.W. Shannon:
Mark your calendars for the 2017 OBA Annual Convention & Trade Show, set for May 22-24 at the Embassy Suites in Norman. Keynote speaker Matt Lewis, CNN political commentator and author of the book Too Dumb to Fail: How the GOP Betrayed the Reagan Revolution to Win Elections (and How It Can Reclaim Its Conservative Roots) will discuss the upcoming Trump years in the White House.
Lewis is one of many high-quality speakers that will present. Another inspirational speaker will be Holly Hoffman on May 24. Registration is now open. Click here to view more information.
Convention is looming, as the above story mentions – but don’t forget about other education events! Check out the following:
- CIP and Customer Due Diligence 2017 Update, May 9, webinar — This program will look line-by-line at the regulations and point out avenues of change to explore in 2017.
- Call Reports: RC-C Loan Coding and Related RC-R Reporting, May 10, webinar — This webinar will help you learn the classification priority for reporting loan information correctly.
- Providing Accurate and Timely Adverse Action Notices, May 10, webinar — This webinar reviews the requirements and covers common violations and provides solutions.
- 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.
- Controlling Risk of Power of Attorney Documents, May 11, webinar — This presentation will provide financial institution personnel with best practices to use when dealing with these complex legal documents.
- Living Trust Documents, May 16, webinar — This presentation will provide financial institution personnel with best practices to use when dealing with these complex legal documents.
- Basic Underwriting, May 17, webinar — This class will give an excellent overview of the components of risk an underwriter considers in reviewing a loan.
- Escrow Account Compliance, May 18, webinar — This webinar will cover the latest requirements, guidance, best practices and compliance hot spots.
Also, take note of the Bank Trainers Conference 2017, taking place on June 13-15 in San Diego. This conference is a summit for bank and credit union trainers and can help banks come up with new ideas for their training departments. Click here for more information!