In This Issue…
• Greetings from Guy
• House, Senate leaders release text of final tax reform bill
• House Financial Services Committee advances several industry-supported bills
• Information courtesy Compliance Alliance …
• OBA education corner …
Greetings from Guy
By Guy Sims
This is the time of the year many of us spend time with our family and friends celebrating the holidays. I’m celebrating this week skiing with my family in Colorado.
I’ve noticed as I get older, it’s becoming harder and harder to keep up with my kids on the slopes. Hopefully, I will return to Oklahoma with no serious damage to my body!
I want to take a few moments to congratulate the Oklahoma banking family on very successful year. After many years of hard work by the members of the OBA, CBAO, ABA and ICBA, we finally have a regulatory reform bill – S. 2155 – that has passed the House and advanced from the Senate Banking Committee – something we’ve not had happen in the past seven years.
It’s my understanding that the Senate Majority Leader, Sen. Mitch McConnell (R-Ky.) will put this bill on the Senate’s agenda shortly after the first of the year. When that happens and the bill comes to the Senate floor for a vote, it should pass on a bipartisan vote of at least 62-38. The House is set to pass the Senate’s bill and the president has said he will sign it.
We are ending the year in what appears to be a much friendlier regulatory environment with meaningful changes in leadership at the CFPB, OCC, FDIC, and Federal Reserve. In addition, the Oklahoma banking industry will post a record-earnings year for 2017. And last, but certainly not least, the OBA remains strong with a professional and dedicated staff that works tirelessly to fulfill our mission.
As Oklahoma bankers, we have much to celebrate and be thankful for this year. I want to wish everyone a merry Christmas and wonderful holiday season. Take time to enjoy your family and friends and count your many blessings.
The final legislative text of the tax bill has been approved by the conference committee and will be voted on this week. Here are some of the highlights:
- The top individual tax rate is 37 percent.
- The tax rate for C corporations at 21 percent, effective in 2018.
- There is a 20-percent deduction for Subchapter S banks and other pass-through entities.
- The interest deduction for mortgage loans is preserved for new mortgage loans of $750,000 or less;
- Deductibility of net interest expense is limited to 30 percent of adjusted gross income for businesses with more than $25 million in annual gross receipts.
- Both houses of Congress are expected to vote on the measure early next week, and news reports indicated that the bill had received enough support to pass.
The bill represents a major advocacy win for ABA.
“ABA believes the significant reforms included in this legislation will help grow the economy and create jobs,” said ABA President and CEO Rob Nichols. “We particularly applaud the provisions that significantly lower tax rates for all types of businesses beginning in 2018. Banks currently have one of the highest effective tax rates of any industry, and these important changes will allow our members to better serve their customers and the broader economy.”
Other key provisions of the final bill include:
- A top individual tax rate of 37 percent.
- Elimination of the corporate alternative minimum tax.
- Capping the mortgage interest deduction for new mortgages of $750,000 or more.
- Retention of the low-income housing and new markets tax credits.
- Deductibility of net interest expense limited to 30 percent of adjusted gross income for businesses with more than $25 million in annual gross receipts.
- Elimination of net operating loss carrybacks with a limitation on carryforwards.
Based on our conversations with the leadership and tax experts, they have offered the following caveat that we want to call to your attention:
The potential enactment of tax reform this year has important, immediate accounting and capital implications for banks, particularly those with deferred tax assets (DTAs) and liabilities (DTLs).
Under generally accepted accounting principles, if the tax law is signed before Jan. 1, it will require the immediate reevaluation of DTAs and DTLs, with the difference recorded through net income. Since the new tax rates will not be effective immediately, this could impact banks’ current quarterly earnings statements and regulatory capital levels. The … (ABA and OBA) urge all member banks to discuss the implications of the tax reform legislation with the bank’s tax and accounting advisor.
“Of course, we’re very disappointed that the bill for tax reform continues the charade of credit union sanctity,” said OBA President and CEO Roger Beverage. “Large bank-like credit unions are getting a free ride while the rest of us – all of us – pay more in taxes. But Congress is so terrified that members will not be re-elected, they do nothing. Republicans and Democrats both. It’s just nuts.”
To view the ABA’s preliminary analysis, click here.
Last week, the House Financial Services Committee approved 13 industry-supported financial services bills. Two of those measures deserve special mention.
- H.R. 4545 creates a process for having an independent examination review and appeal process to an administrative law judge when there are disagreements about issues involved in the report of examination. In addition, the bill also establishes deadlines for banking agencies to issue exam reports.
- H.R. 1457 authorizes certain practices to speed up the mobile account opening process for banks and other financial institutions. Going forward, and with the customer’s permission, when personally identifying information is submitted in digital form banks will be able to keep that information in the customer’s file. The bill will also support and enhance other digital account procedures.
It’s doubtful either of these bills will make it all the way through the process, but we’re working on it – especially in the Senate.
The following information is provided courtesy of Compliance Alliance, an organization in which the OBA has invested in an effort to provide member banks with a solution to their compliance needs.
The Financial Crimes Enforcement Network (FinCEN) has updated its Answers to Frequently Asked Bank Secrecy Act (BSA) Questions, located on its website at https://www.fincen.gov/answers-frequently-asked-bank-secrecy-act-bsa-questions.
The updates removed several outdated questions, updated references to the Code of Federal Regulations, and modified the answer to question 16 regarding how to address a current issue involving the Designation of Exempt Person (DEP) form.
‘Twas the week before Christmas and all through the state, not a creature was stirring … except your friendly neighborhood banker! And, like our bankers, the OBA education department rarely rests as well. Although live seminars are rare this time of year, there’s always the ubiquitous webinars to join in with and it’s also good to plan ahead for upcoming schools and conferences. Take note of the following:
- Sexual Harassment – Establishing a Respectful Workplace, Jan. 4, webinar — In many organizations sexual harassment seems all too common. Yet in others it rarely arises and is quickly and effectively addressed. What is the difference?
- Digital Marketing: Deep Dive, Jan. 9, webinar — This presentation will be a deep dive into digital marketing geared towards people who have responsibility over marketing initiatives.
- Implementing Beneficial Owners on Legal Entities, Jan. 9, webinar — This program is designed to focus on business accounts and the opening procedures, changing ownership, implementing this process and all the questions it brings.
- Compliance Roundups 2018, Jan. 23-Oklahoma City; Jan. 25-Tulsa — The OBA’s annual compliance roundup seminars provide a comprehensive review of new bank compliance laws, amendments to existing laws and regulations, important court cases and common compliance mistakes.
- 2018 Intermediate School, Session I: Feb. 5-9; Session II: June 4-8, Oklahoma City — The school provides excellent training for bank leadership and management development. This school offers an intense curriculum that exposes participants to the overall banking functions.
Additionally, GSB-Madison will be holding its 2018 Human Resource Management School on April 15-18. Expand your knowledge of banking, human resource management and employee performance at this respected school—and establish a network of colleagues to exchange ideas for years to come. Topics are timely and relevant. Click here for more information! The GSB will also host its 2018 Bank Technology Management School on April 8-13. This state-of-the-art program will broaden your understanding of the business of banking and information technology management, improve your productivity and value at your bank. Click here for more info.
One education program, in particular, to be aware of is the OBA Intern Program. The Intern Program will again be active in 2018 and we’re looking for participating banks! For more information on this IMPORTANT program – important not only to aspiring students, but also to participating banks – Click here for more information or contact the OBA education department at (405) 424-5252!
Finally, make sure to save the date for the 2018 Community Bankers Leadership & Senior Management Conference, set this year for April 8-10 in Las Vegas. If you work for a community bank or if you’re looking for ways to improve your bank’s performance, then this event is for you! Click here for more information.