Wednesday, November 20, 2019

Week of Nov. 4

In This Issue…

CFPB director to meet with OBA-member  banks

CFPB Director Kathy Kraninger will make her first visit to Oklahoma City on Nov. 14 to do a number of things, including holding a briefing with OBA-member banks.

State Banking Commissioner Mick Thompson will introduce the director and help us conduct a meaningful discussion of issues that are important to those banks.

“One of the issues that’s likely to be front and center during the discussion deals with a proposed requirement to collect HMDA-like data on small business loans,” OBA President and CEO Roger Beverage said. “Section 1071 of the Dodd-Frank Act requires the Bureau to implement this new data requirement, and we’ve been articulating to the CFPB and anyone else who will listen that this requirement really can’t be applied to small business loans.

“The story below identifies a symposium that will air tomorrow (Wednesday, Nov. 6) and bankers are encouraged to listen in. I’m fairly certain this topic will be raised during the meeting with Director Kraninger.”

The meeting will be held at 11 a.m. on Thursday, Nov. 14 in the conference room at Valliance Bank, which is located at 1601 NW Expressway, Oklahoma City, OK 73118. If you plan to attend or  have any questions, please notify Adrian Beverage (adrian@oba.com or 405-424-5252) at the OBA.

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CFPB to host symposium on Sec. 1071 of Dodd-Frank

On Wednesday of this week (Nov. 6, 2019), the Consumer Financial Protection Bureau will host a symposium that addresses changes that are in the works concerning small business lending.

This is the third symposium hosted by the Bureau this year. Under the leadership of the Bureau’s new director, Kathy Kraninger, the CFPB has hosted two previous symposia dealing with enhanced consumer protections: deceptive and abusive acts or practices; and behavioral law and economics.

According to the Bureau, this three-part series is aimed at stimulating a proactive and transparent dialogue to assist the CFPB in its policy development process, including possible future rulemakings. This latest symposium includes two panel discussions: the Current and Future Outlook for the Small Business Lending Marketplace; and Implementation Issues for Section 1071.

You may recall this proposal was on track to become final before the former director, Richard Cordray, left the Agency. It requires banks to track HMDA-like data for small business lending in an effort to facilitate lending to women- and minority-owned small businesses. By doing so, the CFPB tells us, it will facilitate enforcement of fair lending laws and enable communities, governmental entities and creditors to identify business and community development needs and opportunities for these small businesses.

Data elements to be tracked include (but are not limited to) the following topics:

  • Application number and date received;
  • Action taken by the institution and date of such action;
  • Type and purpose of the loan or credit;
  • Gross annual revenue in last fiscal year;
  • Race, sex and ethnicity of the principal owners;
  • Principal place of business (census tract);
  • Amount of credit or credit limit applied for; and
  • Amount of credit transaction or credit limit approved

The program will be available to stream on Wednesday and you can access it by going to this website:  www.consumerfinance.gov/about-us/events/.

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Federal regulators release compliance guide for CBLR

Federal banking regulators have issued a compliance guide to the community bank leverage ratio. The guide can be viewed by clicking here.

In summary, the community bank leverage ratio is an optional framework for banks with less than $10 billion in total assets. Additional requirements include holding 25 percent or less of assets in off-balance sheet exposures, and 5 percent or less of assets in trading assets and liabilities.

Simply stated, the CBLR changes the requirements for calculating and reporting risk-based capital ratios for “qualifying” community banks that opt into the framework. Entities that opt in to this framework must maintain a leverage ratio of greater than 9 percent in order to satisfy the risk-based and leverage capital requirements in the agencies’ generally applicable capital rule. Such banks are also considered to have met the “well-capitalized” ratio requirements for purposes of section 38 of the Federal Deposit Insurance Act.

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Gender diversity is hot topic

Every fall, we attend meetings with our colleagues, their lobbyists and lobbyists for larger firms around the country to find out and talk about what the latest and greatest legislative issues may be that are being confronted by bankers in other states. For example, this year we learned about the new California privacy law and the state’s new authorization for local communities to create FDIC-insured banks.

The reason we attend these meetings is to find out what might be coming to Oklahoma’s legislature sometime in the next couple of years or so. Given the fact that Speaker Charles McCall is a banker himself, we usually have a pretty good chance of stopping proposals that adversely impact bank profitability. That is the reason, after all, the OBA was created some 123  years ago.

Another issue making its way across the nation deals with the general concept of gender diversity. You may recall that earlier in this Congress the House Financial Services Committee Chairwoman Maxine Waters (D-Calif.) created a separate sub-committee that has specific jurisdiction over issues of diversity and inclusion in the banking space.

Even though we have to be aware of any and all proposals that deal with this subject, we may soon have to deal with it at the state level, too. That being said, it doesn’t mean such proposals are “bad” or will “harm” bank profitability. It’s not and it won’t.  Rather, it simply raises yet another compliance issue of which bankers must be aware.

A recent Maryland law establishes gender diversity in corporate management and boardrooms. The legislation would require various entities to include information relating to the number of female members of the board and the total number of members of the board with any required state filing.

This legislation does not apply to a privately held company if at least 75 percent of the company’s shareholders are family members. Companies required to report are tax-exempt, domestic, non-stock corporations with an operating budget exceeding $5 million or a domestic stock corporation with total sales exceeding $5 million.

While we do not expect such legislation to be introduced in the Oklahoma legislature any time soon, it’s something we’re keeping our eyes open and looking for such a proposal, just in case. It’s among the many issues we look for and track each December when bill drafting gets underway in earnest. The same is true for proposals dealing with state-owned banks and additional privacy requirements.

With these issues in mind, the ABA is hosting a free webinar, “What bankers need to know about the diversity self-assessment.” You will hear from the Offices of Minority and Women Inclusion at the FDIC, FRB and the OCC. Click here for more information.

Since next year is an election year, and the issues affecting your business are many, we are anticipating having a full plate when the legislature kicks off the first Monday in February. Stay tuned and let us know if you have any issues you would like to have considered by the OBA Government Relations Council and the OBA Board of Directors.

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OBA hosting meet-and-greet with Rep. Mullin on Friday

The OBA is hosting a meet-and-greet with Rep. Markwayne Mullin from 11:30 a.m.-12:15 p.m. on Friday at the OBA offices in Oklahoma City.

All bankers and any guests they would like to bring are invited. If you plan to attend, please notify Adrian Beverage (adrian@oba.com or 405-424-5252) at the OBA.

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OBA education corner …

We had our first frost of the fall in central Oklahoma this past week – heck, we also had our first SNOW of the fall last week! While pondering if this could mean a loooooong winter, check out the upcoming seminar, webinars, schools and conferences!

  • Annual Compliance Training for Commercial Lenders, Nov. 12, webinar — Real-life examples are used to explain how applicable regulations apply during the commercial loan application process.
  • Lending to Active Duty Servicemembers, Nov. 14, webinar — This 90-minute webinar will cover the two federal laws that govern the extension of credit to active duty servicemembers; the Servicemembers Civil Relief Act and the Military Lending Act.
  • Legal Account Ownerships, Titles, Sample Sig Cards & Legal Docs, Nov. 14, webinar — This program is an A-Z on account ownership and documentation. We will go from single party accounts to the more complex type of business accounts.
  • Lenders Guide to CRE Leases, Nov. 18, webinar — Reviewing leases, lease summaries and lease abstracts to extract necessary data are just some of the topic covered in this webinar.
  • Controlling the Risks of Power of Attorney Documents, Nov. 19, webinar — This presentation will provide financial institution personnel with best practices to use when dealing with these complex legal documents.
  • Opening Accounts for Marijuana-Related Businesses, Nov. 19, webinar — Are you going to bank this industry? How will you bank this industry? What is going on at the federal level? All of these questions will be addressed during this program on how to bank marijuana-related businesses (MRBs) and the risk it entails.
  • 2019 Security Seminar, Dec. 3, Oklahoma City — This interaction session is broken into four parts, covering security regulations, physical security, trending fraud and workplace violence planning/active shooter preparedness.

Also, save the date and plan ahead now! The dates and site for the 2020 OBA Convention are set! The Convention will take place May 18-20 at the Doubletree-Warren Place in Tulsa. Keep an eye out in the upcoming months for more information!

Finally, the 2020 GSB Madison HR School Scholarship  is currently available for Oklahoma bankers. This school takes place on March 29-April 3 and the scholarship deadline is Feb. 3. Click here for more information.

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