Thursday, May 23, 2024

Week of Oct. 22

In This Issue…

We need you to tell YOUR story!
Inhofe to Mnuchin: Sub ‘S’ banks need clarity
ABA unveils new training for military veterans
OBA education corner …

We need you to tell YOUR story!

Once again, we’re reminding bankers at every level to respond to the federal banking agencies’ Advanced Notice of Proposed Rulemaking on the proposed suggestions for changing the rules around the Community Reinvestment Act.

Tell Your Story. Pick one or two of the 31 questions contained in the ANPR request and tell the regulators about your experiences and what the response of the regulators has been. If you don’t want to identify your bank for fear of exposing you to “retaliation,” send your story on to us – – and we’ll tell it AND keep your name or any identifiable information out of it!

We are nearing completion of listing some bullet points being developed by the Alliance members, which includes our sister bankers associations and the ABA. The problem is, we cannot simply write a “form” comment because the regulators will not consider it as more than one comment. That’s why we need your “story” – real-life examples of how things work in the real world.

Please call Roger – 405-424-5252 – if you have any questions or concerns.

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Inhofe to Mnuchin: Sub ‘S’ banks need clarity

Sen. Inhofe has written a letter to Treasury Secretary Steve Mnuchin asking him to revisit the new rules and regulations for Sub “S” banks. In particular, he has asked the secretary to clarify the proposed “pass through” rules that are making Sub “S” banks consider converting to “C” status.

Here’s the letter:

October 17, 2018
The Honorable Steven T. Mnuchin
U.S. Department of the Treasury
1500 Pennsylvania Avenue, N.W. Washington, D.C. 20220

Dear Secretary Mnuchin:

We write to ask you to revisit Treasury’s proposed regulation under Section 199A, particularly as it relates to community banks that have elected Subchapter S. We are hearing from many such banks in our states that the proposed rule does not reflect the intent of Congress to provide them with tax relief in the Tax Cuts and Jobs Act and is working at odds with the positive community bank reforms incorporated in the Economic Growth, Regulatory Relief, and Consumer Protection Act. We strongly believe the final regulation under Section 199A should fulfil the promise of these laws to promote growth and job creation in our communities .

Approximately 1,900 banks nationwide, or a third of all banks, have elected Subchapter S tax status. Over 75% of these Subchapter S community banks have assets under $300 million. They specialize in small business and agricultural lending and disproportionately serve rural markets. Subchapter S community banks offer a variety of services in their communities to complement their core lending services. These typically include trust and fiduciary services, insurance and securities brokerage, and wealth management. These are all services in demand in their communities and all are aspects of an integrated business model – community banking. The rule under Section 199A should recognize a business model important to so many American communities. In particular, we believe that all of the income that community banks earn as federally insured depository institutions should be eligible for the deduction created by Section 199A. Treasury’s proposed rule would unreasonably force Subchapter S banks to choose between providing the full range of banking services needed in their communities and taking full advantage of the 199A deduction. This tax relief is critical to their continued independence.

Community banks across the country have voiced their concerns that the de minimis thresholds of the proposed rule for revenues derived from specified service trades or businesses (SSTBs) are unreasonably low. Further, the definition of SSTBs should be more narrowly drawn and should exclude critical community bank services such as trust or fiduciary services, securities brokerage, and the origination and sale of mortgages and loans guaranteed by the Small Business Administration and U.S. Department of Agriculture. Loan sales allow community banks to increase lending in their communities while preserving their capital. This too is a critical part of the community bank business model. Finally, it is unclear what the consequence is for a Subchapter S bank that exceeds the de minimis thresholds. In our view, community banks should be allowed to segregate income rather than lose the deduction entirely.

Thank you in advance for taking a careful look at the 199A rule to ensure that it serves the purpose of strengthening Subchapter S community banks so that they can remain competitive, independent, and help strengthen American prosperity.


Senator Moran (R-KS) Senator Inhofe Senator Wicker (R-MS) Senator Blunt (R-MO) Senator Boozman (R-AR) Senator Ron Johnson (WI)

Senator Fischer (R-NE) Senator Capito (R-WV) Senator Rounds (R-SD)

Senator Ernst (R-IA Senator Kennedy (R-LA) Senator Hyde-Smith (R-MS)

Many, many thanks Sen. Inhofe and the others who have signed on to this letter! With 143 banks that have elected Sub S status, this issue needs clarification as soon as possible.

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ABA unveils new training for military veterans

At the ABA Convention this week, the national trade group announced a new program that will help encourage military veterans and active-duty military spouses to transition to banking as a career.

ABA has announced that it is launching a new suite of online training courses — available for free to ABA-member banks — called “Transitioning Careers: Basic Bank Training for Veterans.” This suite of eight self-paced online courses cover the basics of customer service, lending, payments and ethics.

More information about the program will be made available in the coming weeks. Bankers may call 1-800-BANKERS with questions.

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OBA education corner …

Fall is officially here and it seems even the weather has agreed to this reality! Of course, we live in Oklahoma, so the next 90-plus degree day could be just around the corner. One thing ALWAYS just around the corner are OBA educational offerings. Take note of the following:

  • Deposit Compliance Issues, Oct. 31, webinar — During this program we will cover some of the major issues that affect the compliance of your financial institution from these regulations.
  • Consumer Accounts – CIP, ID and Risk, Oct. 31, webinar — This webinar will inform you about the deposit compliance rules and tasks your FI must follow and help you turn uncomfortable customer interviews into friendly and supportive conversations.
  • 2018 OBA Operations School, Nov. 12-16, Oklahoma City — Operations School is designed to prepare junior-level officers to mid-level operations managers to manage effectively and efficiently an operations function within a bank. Students are exposed to numerous concepts that impact your bank’s bottom line.

Additionally, GSB-Wisconsin is hosting a new HOT TOPIC online seminar on Oct. 29, presented by Chad Knutson of SBS CyberSecurity. This particular seminar will focus on U.S.-Cert warnings on ATM cash-out attacks. You can read more about this seminar, and register, by clicking here.

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