Saturday, September 21, 2019

Week of Jan. 28

In This Issue…

More information on ‘2nd Amendment auditors’
Agencies issue final rule on private flood insurance acceptance
State associations, ICBA file amicus brief in credit union field of membership case
Industry stakeholders raise broad concerns about CECL at FASB forum
OBA education corner …

More information on ‘2nd Amendment auditors’

As we touched on in a Oklahoma Banker Direct last week, there are groups going around Oklahoma communities – and into banks – testing their adherence to the 1st and 2nd Amendments by openly carrying firearms and filming customers.

To help our banks prepare for the possibility of these groups coming into their own lobbies, Pauli Loeffler, with the OBA’s legal department, released some information. You can download it by clicking here.

Additionally, the OBA’s Elaine Dodd also weighed in with her own pertinent information from the Oklahoma State Bureau of Investigation’s Self-Defense Act Lawbook, which can be downloaded by clicking here.

Please contact us for any more information or anything we can do to assist with these situation.

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Agencies issue final rule on private flood insurance acceptance

Federal banking agencies have finalized their proposed rule that deals with accepting private flood insurance. The new rule is effective on July 1, 2019. The rule is about a provision of the 2012 Biggert Waters Act that requires banks and other federally-regulated lenders to accept private flood insurance policies that meet certain statutory criteria.

The final rule contains a “compliance aid” to facilitate lenders’ acceptance of such private policies. The rule also permits lenders to accept private policies that do not meet the statutory criteria but in the judgment of the lender offer sufficient protection for a designated loan consistent with general safety and soundness principles.

Finally, the final rule permits lenders to exercise discretion in order to accept certain plans providing flood coverage issued by “mutual aid societies” such as agreements by Amish communities to cover flood losses to members’ property.

Thanks to Rob Nichols, ABA’s president and CEO for bringing this information to our attention during the recent government shutdown.

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State associations, ICBA file amicus brief in credit union field of membership case

State bankers associations from all 50 states and Puerto Rico, along with the Independent Community Bankers of America and 25 of its state-level affiliates, joined with the ABA by filing an amicus curiae brief Friday supporting ABA’s legal challenge to the National Credit Union Administration’s field of membership rule.

The challenged rule is an effort to further expand the already loose fields of membership from which federal credit unions can draw their customers.

Last year, ABA filed a cross-appeal in the case specifically challenging a portion of a decision in the U.S. District Court for the District of Columbia upholding provisions of the rule that permits credit unions to serve core-based statistical areas without serving the urban core that defines the areas.

The associations argued the final rule is “unreasonable, arbitrary and capricious and exceeds NCUA’s statutory authority.” The appellants asked that the district court’s decision on core-based statistical areas be vacated.

The final rule is simply further effort by NCUA to expand the competitive advantages of community credit unions,” we wrote. “In doing so, NCUA has adopted definitions of ‘well-defined local community” and ‘rural district’ that are certainly not ‘local.’

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Industry stakeholders raise broad concerns about CECL at FASB forum

Earlier this week, the Financial Accounting Standards Board’s “Current Expected Credit Loss” standard presents significant operational challenges and stakeholders are concerned about real and potentially severe economic effects, according to the American Bankers Association. Those concerns were expressed by participants noted at a roundtable discussion hosted by FASB on Jan. 28.

Discussion highlights included that in its current form, CECL “would change the economics of lending,”according to the ABA. The Association added the unintended consequences are likely to result in changes to credit availability, product mix and cost of credit, particularly to consumers and small businesses.”

“For some time we’ve been talking about the impact CECL will have on banks generally, but especially on community banks,” OBA President and CEO Roger Beverage said. “While larger banks may not view CECL as mission critical in their daily operations, the same is not true for smaller community banks. Again, it’s that nonsensical mindset that comes at banking-related matters with a view that one size fits all. It doesn’t. It never has and never will.”

Participants also discussed the challenges of implementing an alternative CECL model that would recognize charge-offs on unimpaired loans expected to occur more than twelve months from the balance sheet date into other comprehensive income, not earnings. The alternative model was proposed by certain banks that are concerned about the reliability of long-term CECL estimates.

ABA President Rob Nichols pointed out the ABA has voiced concerns to FASB and to the agencies about CECL’s potential effects for banks.

“We continue to strongly believe the standard should be delayed until the banking agencies conduct a quantitative impact study to determine the best way to mitigate those consequences,” Nichols said in response to the roundtable.

All we can say is, “Right on brother Nichols! CECL is nuts and makes no sense for Oklahoma banks, both large and small.”

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OBA education corner …

The dog days of winter are here. Wait … are there “dog days” in winter? If not, looking outside at the cold and gray makes on think there should be! One place you can stay warm is at OBA educational events – take note of the following:

  • Introduction to Internal Audit, Feb. 6, webinar — Understand the changing role of internal audit, how to effectively establish a risk-based internal audit function, and gain knowledge of internal controls.
  • Reg. CC Proposed Changes, Feb. 7, webinar — This webinar will discuss completely revised teller procedures on holds and hold forms as well as new disclosures at new accounts to give at account opening.
  • CRE Appraisals: Regs and Review Process, Feb. 11, webinar — This will give an overview of guidelines and issues critical to CRE appraisals.
  • What to Do When a Customer Dies, Feb. 12, 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, as well as unique issues when doing business with the decedent’s estate.
  • CRA Nuts & Bolts – 5 Steps to Pass the Exam, Feb. 12, webinar — This webinar will focus on several simple steps to ensure a successful CRA exam outcome.
  • Loan Doc: Top 10 Mistakes and How to Avoid Them, Feb. 13, webinar — Experienced bankers will benefit from confirmation of knowing “the right thing to do.” New lenders will learn to avoid the most frequent exceptions and loss-causing mistakes.
  • 2019 Basic Personal  & Business Tax Return Seminar, Feb. 21, Oklahoma City — Attend this proactive seminar and gain an understanding of the often complex and confusing topic of TAXES!

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