Greetings from Guy
By Guy Sims
From a banking standpoint, things are quiet in Washington – not only because of the August recess but also because the banking agenda is far down the list of priorities for the administration and Congress at this point. Somehow, we need to come up with a strategy to get our issues back on the agenda.
This effort will take leadership from both national trade associations. Unfortunately, I’m not seeing that leadership at this point.
While things may be quiet in Washington, we are entering a busy season at the Association. The OBA Compliance School was held this past week and, by all reports, it was very successful. Congratulations to those bankers who completed the school and thanks to the OBA staff and volunteer bankers who helped make the school a success.
The OBA Board of Directors will meet Wednesday. As everyone knows, there is a pressing state budget issue that must be dealt with. I’m anxious to hear other bankers’ views on this issue and how this is affecting their communities.
Bankers’ Night Out events kick off Sept. 19 in Lawton with three more BNOs scheduled for September. This is a great opportunity to catch up on the latest banking news as well as network with other bankers from your area. I encourage everyone to mark your calendar for the BNO near you.
The Washington visit is scheduled for Oct. 1-3. While I commend the nucleus of dedicated bankers who regularly attend, my goal is to get the next generation of bankers involved. The leaders of tomorrow need to be involved today.
I realize it takes time and expense to send an Emerging Leader to Washington, but I am confident the experience will pay long-term dividends. Not only will they gain a better perspective of the banking environment, but they will have valuable networking opportunities with other bankers from across the state.
The time is now to make plans for the Washington Visit!
We’ve had a number of inquiries about the horrible events in Texas as a result of Hurricane Harvey. We join with our friends and colleagues at the Texas Bankers Association, the Independent Bankers Association of Texas, the ICBA and the ABA in encouraging bankers who want to help to make a donation to the relief fund at www.texasbankers.com/harvey to donate by credit card or check.
This is an alert the TBA sent out today to its members:
Perhaps one of the more important efforts by the Consumer Financial Protection Bureau is currently pending as the Bureau seeks comments from banks and other lenders. The comment deadline is Sept. 14, 2017.
“This request for information (RFI) comes about because Dodd-Frank requires it,” OBA President and CEO Roger Beverage said. “Sec. 1071 of the Act requires banks and other lenders to provide information on small business loans, in order to ‘facilitate the enforcement of fair lending laws’ and to ‘enable communities, governmental entities, and creditors to identify business and community development needs and opportunities of women-owned, minority-owned, and small businesses.’
“The Bureau asks specific and detailed questions. Hopefully, your answers and those of your colleagues across the country will clarify that these requirements will do two things, both of which are bad: first, it will drive up the cost of credit. Second, it will make less credit available for small businesses of all kinds, operated by people without regard to race or gender. It will not improve the flow of credit to small businesses, and it will not ‘facilitate the enforcement of fair lending laws.’ That’s just one more reason why we have to work hard to repeal Sec. 1071, and soon.”
Beverage noted the law defines “small business” as having “the same meaning as the term ‘small business concern’ in section 3 of the Small Business Act.”
“That means your bank would have to use the North American Industry Classification System (NAICS-specific side standards),” he said. “The Bureau recognizes it may make more sense to define a small business as one with annual revenues of $1 million, as an example. And that’s the first question on which they ask you to comment.”
Beverage also noted there are nine statutorily-specified data points that must be included as a part of your bank’s future small business lending process. These include:
- application number;
- application date;
- type and purpose of the financing;
- amount applied for;
- amount approved;
- type of action taken and action taken date;
- census tract of the principal place of business;
- gross annual revenue in the last fiscal year of the applicant preceding the date of the application; and
- information about the race, sex, and ethnicity of the principal owners of the business.
If you have not seen the RFI, click here and file your comment before Sept. 14!
Friday, Fed Chairman Janet Yellen once again recognized the need for regulatory relief for community banks. At the monetary policy conference that’s held each year in Jackson Hole, Wyoming, Yellen again acknowledged the necessity of doing something more to help relieve the compliance burden for community banks.
Importantly, Yellen recognized community banks are the key to financing small businesses, and pointed out some firms are having a difficult time accessing credit. She told the group that the Fed will be “taking steps and examining additional steps” to help community banks.
“That’s great,” OBA President and CEO Roger Beverage said. “Now, if she’ll just communicate how important regulatory relief is for our member banks to Sen. McConnell and Speaker Ryan, we might be able to make some progress.”
Thanks to the American Bankers Association for providing the following information:
The Federal Reserve, FDIC and OCC issued a proposed rule this week that would pause the transition to the Basel III capital framework for banks not using the Basel advanced approaches. The rule comes as regulators are working on a broader effort to simplify the regulatory capital rules for non-advanced approaches banks as has been long advocated by ABA and championed in the Treasury Department report on financial reform.
“As part of the recent review of regulations under the Economic Growth and Regulatory Paperwork Reduction Act, the agencies announced that they are developing a proposal that would simplify the capital rules to reduce regulatory burden, particularly for community banks,” the agencies said. “That proposal would simplify the capital rules’ treatment of mortgage servicing assets and other items. However, under the current capital rules, the transitional treatment for those items is scheduled to be replaced with a different treatment on Jan. 1, 2018.”
The proposed rule would pause the full transition to the Basel III treatment of mortgage servicing assets, certain deferred tax assets, investments in the capital of unconsolidated financial institutions and minority interests pending a new rulemaking addressing these topics. Since advanced approaches are principally used by banking organizations with over $250 billion in assets or foreign bank subsidiaries with over $10 billion in assets, the pause would apply broadly to community, midsize and even several regional banks.
ABA plans to comment on the proposal and will strongly urge the agencies to include the advanced approaches banks in both the extended transition period and the future rulemaking simplifying the capital framework. Comments on the proposed pause are due 30 days after the rule is published in the Federal Register.
This is great news and we encourage you to file a comment on this new proposal. Let them know how this will positively impact your bank and its ability to serve your customers. That’s the key element of this or any other proposal: What does it do to my ability to take care of consumers generally, but specifically my bank’s customers and our community?
Based on the numbers released last week by the FDIC, Oklahoma banks earned $720 million in the first half of 2017, well ahead of last year and $32 million ahead of the previous record year (2015). Total assets have grown to $114 billion (roughly $11 billion ahead of last year) while total loans have grown to $73.8 million, up from $67.1 million one year ago.
Return on assets stands at 1.27 percent through the first half of the year while return on equity is 12.22 percent. Those percentages, however, trail the 2015 percentages in both categories.
Net charge-offs are down from last year, but behind the record year of 2015 while the net interest margin has increased to 3.60. Non-current loans dropped to 2.48 percent from 2.87 percent last year and 3.18 percent in 2015.
Same as kids currently going back to school these past couple of weeks, bankers should be ready to go back to school themselves with education opportunities from the OBA! Take a peek at the upcoming events:
- BSA/AML for Lenders, Sept. 6, webinar — This two-hour program will assist your bank in determining whether your BSA Compliance Program adequately includes controls, such as training, policies and procedures, monitoring, etc., for loan products in addition to deposit products.
- Commercial Loan Agreements and Covenants, Sept. 7, webinar — This program explores the key sections in a commercial loan agreement and the goals they help achieve.
- Loan Doc for Real Estate Secured Commercial Lending, Sept. 7 – Tulsa; Sept. 8 – Oklahoma City — Attend this proactive seminar and receive a thorough overview of commercial lending “loan documentation” with an emphasis on “commercial real estate” transactions.
- Cybersecurity Seminar, Sept. 12, Oklahoma City — This interactive, in-person seminar is designed to provide education on evolving cybersecurity threats and what your institution should do to
prevent, detect and respond to these threats.
- Right of Setoff, Sept. 12, webinar — The risks of using the “Right of Setoff” process incorrectly can be costly to your financial institution. Learn how to use this process correctly.
- Best-Ever Compliance Checklists for Commercials Loans, Sept. 12, webinar — This colorful checklist, patterned after the popular Best-Ever Consumer Checklists, will guide bankers through those traps and ensure compliance.
- CRA Nuts & Bolts – Five Steps to Pass the Exam, Sept. 13, webinar — Learn five steps to pass the exam – and much more.
- What To Do When a Customer Dies, Sept. 14, webinar — We’ll walk you through the complicated process of dealing with a customer’s death – both on the deposit side and the loan side.
- Analyzing Financial Statements, Sept. 20-22, Oklahoma City — Commercial lending officers, credit department personnel, loan review personnel and operations personnel interested in learning more about commercial lending will benefit from this three-day course.
- Advanced New Accounts Seminar, Sept. 26 – Tulsa; Sept. 27 – Oklahoma City — The opening of new
accounts is about to become more complex than ever. Make sure you are prepared.
- 2017 OBA/BKD Symposium, Sept. 28, Oklahoma City — This conference is a must attend for all Directors, CEOs, CFOs and others in the banking industry who are impacted by economic, accounting, credit, legal, taxation, regulatory or other issues impacting the banking industry in these challenging times.
- 2017 OBA Consumer Lending School, Oct. 2-6, Oklahoma City — The school is designed for consumer lenders, credit administration personnel, loan secretaries and others who are involved in consumer lending.
- Supervisor Bootcamp, Oct. 11-12, Oklahoma City — Supervisor Boot Camp will help you build essential traits such as leadership, professional maturity and emotional IQ.
- Real Estate Lending Compliance Seminar, Oct. 25-26, Oklahoma City — An overview of the real estate lending requirements from each regulation is provided, along with comprehensive coverage of selected topics, policy suggestions, employee training tips, audit techniques and steps to eliminate past problems
- HMDA Essentials seminar, Oct. 27, Oklahoma City — The final amendments to Regulation C modify the types of institutions and transactions subject to the regulation, the types of data that institutions are required to collect and the processes for reporting and disclosing the required data.
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!
With these dates in mind, if you or your company would like to propose a speaker for any of these events, you can download the OBA’s Speaker Proposal Form by clicking here.