In observance of Presidents' Day, the IBAT office will be closed on Monday, February 16, 2015. We will resume to regular business hours on Tuesday, February 17.
Late last month, the Federal Reserve proposed a rule that would expand the regulatory relief provided by its small bank holding company policy statement. While the legislation was passed by Congress in December, the proposed rule would raise the statement’s asset threshold from $500 million to $1 billion as well as extend coverage to savings and loan holding companies. Comments are due by March 4.
We here at IBAT and American Banker have put our heads together to leverage our relationship and we are pleased to provide a special offer for you to attend the 2015 Retail Banking Conference. Since the event is in Austin this year, American Banker has set up an opportunity for local IBAT members to join us for the first time.
Join us at Retail Banking 2015, March 9-11 in Austin, Texas!
IBAT has secured a special member rate of only $795. That’s an $800 savings! Give me a call today at 212-803-6072 or email me at email@example.com. Make sure to mention the code IBAT for your member rate.
Attend up to 4 of our tracks at the conference:
The 58th annual session of the SW Graduate School of Banking (SWGSB) will be held May 25 – June 5, 2015 at Southern Methodist University's Cox School of Business. For bank officers looking to take their career to the next level, this is an ideal option. One of the nation's leading graduate banking schools, SWGSB is a three-year program that meets for two-week sessions. The first year covers banking essentials, the second year focuses on leadership development and the third year tackles strategic vision and thinking.
Program highlights include curriculum created by industry experts, the ability to tailor the program through a choice of electives and a continuous focus on leadership and team building.
The second Economic Growth and Regulatory Paperwork Reduction Act (EGRPRA) Outreach Meeting was held at the Dallas Fed on February 4, 2015. The purpose was to receive information on regulatory burden, and the regulators got an earful from community bankers participating in the panels. Washington was well represented with FDIC Chairman Martin Gruenberg, Fed Governor Jerome Powell and OCC Senior Deputy Comptroller Toney Bland (filling in for Comptroller Curry who was snowed in). Texas Banking Commissioner Cooper and Deputy Comptroller Barker completed the regulatory side of the program.
The rules under review are divided into groups with separate panels tasked with commenting on specific sections. IBAT was well represented in Panel One with past Chairs Pat Hickman, Robert Hulsey and David Williams as well as Director Jeff Wilkinson. Panel Two included representatives from six consumer and community affairs organizations, including CDFIs. A number of community bankers served on the panels with representation from large and small institutions as well as bankers from urban and rural areas. Click here for the agenda and panelists.
Although the EGRPRA review doesn't include consumer rules under the CFPB's control, that didn't stop the panelists from observing that the rigid Dodd-Frank Act requirements are driving many community bankers out of residential mortgage lending. Specific issues raised in other areas included extending the exam cycle to two years, simplifying the call report, amending the Reg D limits on auto transfers for savings/MMDA accounts, adjusting size standards for community banks in various rules, revisiting CRA requirements, bringing decisions back from D.C. to the local regions, increasing the size requirement on certified appraisals, simplifying ALLL for community banks, adjusting the monetary instrument and CTR thresholds for BSA/AML rules, increasing thresholds on Reg O for board approval of loans and executive officer loan caps, revisiting capital rules (particularly the HVCRE requirements), improving ombudsman/appeals process and stopping the trickle down of "Best Practices" in mega banks as requirements for community banks. This is only a quick review as there were many more excellent recommendations.
IBAT commented on the first round of rules for review and will follow up with additional comments. As of the hearing, only 44 comments had been filed. IBAT encourages members to take time to comment on the rules currently under review. You can do so electronically through the FFIEC website.
TechMecca 2015 drew 400 community bankers and industry supporters to Dallas last week to consider the future of community banking and the technology that will drive that future. The show, which included two days of education for bankers as well as 75 exhibiting companies, is the largest bank technology trade show in the Southwest.
One issue that was front and center at TechMecca 2015 was the advent of new technology that is driving customer experiences in the branch setting. In a survey of more than 100 TechMecca attendees, 44% identified "enhanced customer experience" as their top objective for 2015.
Speaking directly on the issue of disruptive technology was Brett King, author of "Bank 3.0," who joined the TechMecca audience virtually on Monday. King rejected the idea that inserting new technology in the branch setting will cause a resurgence in branch traffic. "People are not visiting the branch because they don't need to as much as they used to," King said, citing that the average bank customer will only visit a branch two times this year. "Branches are going to be with us for some time but you can no longer rely on branches for revenue or relationships going forward. They will become just another part of the overall bank strategy."
King challenged bankers to think beyond the four walls of the physical branch to build a diverse presence to drive revenue and future transactions. "No industry has successfully defended its business model from technological disruption," King said. "Banks have to understand the shift that's happening from physical communities to digital communities."
TechMecca also afforded the IBAT family an opportunity to honor Robert and Riter Hulsey of American National Bank of Texas, who were welcomed onto the Wall of Heroes and Legends of Texas Community Banking. More information on the recognition will be featured in an upcoming issue of The Texas Independent Banker magazine. All of the photos from TechMecca 2015 can be found here.
As anticipated, Speaker Joe Straus released committee assignments for the Texas House last week. The vast majority of legislative activity of concern to IBAT members will occur in two committees - Investments and Financial Services (IFS) and Business and Industry (B&I). The IFS Committee will be chaired by Tan Parker with returning member Oscar Longoria named Vice Chair. The B&I Committee will once again have Rene Oliveira as Chair with Ron Simmons serving as Vice Chair. There are a number of new members on each committee. We look forward to working with the leadership and members of these and several other committees as the real work of the 84th Texas Legislature now begins.
There are several resources that you can access to help you stay active in the legislative process. Take a moment to:
- Review IBAT’s proactive legislative agenda,
- Sign up to receive legislative text alerts by texting “IBAT alerts” to 40404 and
- Register for Community Banking Day at the Capitol, April 7-8, 2015 in Austin.
Finally, if you are interested in seeing which committee assignments your lawmaker received, you can view a full list of committee appointments by member.
For many, the first week of February has been a little rocky. Seahawk fans will forever second-guess an ill-fated play call that managed to snatch defeat from the jaws of victory. Add to that, the Groundhog noticed that his shadow was showing, and Tiger Woods has again demonstrated that he is a shadow of his former self. Any bright spots? You betcha! Most observers will probably conclude that [Friday] morning’s news of 257k new jobs created last month belongs in that category. Upward revisions to October and November reports bring the three-month job creation average to 336k and that is a big bright spot. The fact that the Unemployment Rate rose to 5.7% from 5.6% is not particularly worrisome as the Participation Rate rose to 62.9% from 62.7%. Paradoxically, the return of previously discouraged workers to the labor force could exert upward pressure on the unemployment rate, even as job creation numbers grow.
IBAT was pleased to have the opportunity to attend a reception last week honoring Ann Worthy upon her retirement from the Federal Reserve Bank of Dallas. The IBAT Board expressed its appreciation to Ann in aresolution presented at the event.
“Ann Worthy has done an amazing job as the head of bank supervision for the Dallas Fed,” said Steve Scurlock, IBAT Executive Vice President. “She has been accessible, willing to deal candidly on a variety of issues and has unfailingly accepted our multiple invitations to speak at IBAT programs. I have very much appreciated the relationship we’ve all enjoyed with this exemplary public servant and wish her the very best in retirement.”
According to a survey recently released by ICBA, community bankers find new rules and requirements to be the biggest barrier to making residential mortgage loans. The survey found that 9% of banks are considering an exit from this line of lending based on these obstacles. Other findings show that nearly 80% of respondents have increased the number of staff dedicated to lending compliance during the past five years.
IBAT conducted a mortgage survey last year that found similar results - more than 8% of respondents stopped making residential mortgage loans while nearly 50% limited the types of residential mortgages loans they make.
In a statement before the U.S. House of Representatives Committee on Financial Services, Federal Housing Finance Agency Director Mel Watt said that his agency received 1,300 comments on its proposed rule that, if adopted, would require each FHLB member to maintain the following to retain FHLB membership:
- at least 1% of its assets in long-term home mortgage loans; and
- at least 10% of its assets in residential mortgage loans.
Currently, there is a one-time test at the time of application. Among the comments the agency received was IBAT’s comment letter (filed September 22, 2014) that opposes the proposed changes. Director Watt also addressed guarantee fees, Fannie Mae and Freddie Mac goals, Housing Trust and Central Magnet Fund funding, certain super priority lien programs and risk to the enterprises as well as supervision and regulatory activities related to FHLBanks.
While others proposed relief to the CFPB's definition of ‘rural areas’ in its mortgage rules based on county lines, IBAT proposed an out-of-the-box solution that CFPB staff told us got its attention in 2013. IBAT’s proposed solution points out that a definition of rural areas based on counties will always be flawed and instead offered an alternative definition based on the Census Bureau’s definition of urbanized areas. Over the last year and a half, IBAT has presented this solution in a comment letter, at several meetings with CFPB staff and during a banker meeting in Dallas with CFPB Director Cordray. On January 29, 2015, the CFPB issued proposed rules which include a definition of rural areas that is undeniably based on the rural definition IBAT consistently and doggedly presented to the CFPB.
Rather than starting from scratch, the CFPB’s proposed definition of rural areas adds to the current definition. The proposed rule would expand the definition of a rural area to include census blocks that are not in an urban area as defined by the Census Bureau. If you are a small creditor, this means that in determining whether you make at least 50% of your first-lien mortgages in rural or underserved areas - thus qualifying for certain exemptions from the mortgage rules - loans made in ‘rural areas’ of counties that the CFPB does not designate as rural areas will count as loans in rural areas toward reaching that 50% threshold. Click here for a map of Texas’ CFPB-designated rural counties. If you are a small creditor making at least 50% of your first-lien mortgage loans in a county that is designated as rural, this rule wouldn’t affect you - except that you could expand your lending into rural areas of counties not designated rural without affecting your exemption.
Also of importance, the CFPB is proposing to:
- expand the definition of small creditor from 500 first-lien mortgage loans to 2,000 mortgage loans excluding loans held in portfolio. (IBAT supports this.)
- include the asset of the creditor’s mortgage originating affiliates in calculating whether a creditor is under the $2 billion limit for small creditor status. (IBAT does not support this.)
- extend the expiration of the temporary extension under which eligible small creditors are currently able to make balloon-payment Qualified Mortgages and balloon-payment high-cost mortgages regardless of where they operate from January 10, 2016 to April 1, 2016. (IBAT supports a permanent extension.)
While most of this is good news, IBAT has and will continue to insist that none of this is necessary because loans held in portfolio should be exempt from the Dodd-Frank expansion of the already onerous mortgage rules. The comments here are preliminary as IBAT continues to digest this proposal in preparing to submit comments.
Patience is a virtue, and that makes Fed-head Janet Yellen a most virtuous central banker, indeed. We learned, following the FOMC’s annual pre-Super Bowl huddle, that the Committee would be exercising much of the aforementioned patience as it tackles the thorny question of just when to start raising interest rates. With the removal of its near-institutionalized “considerable time” reference, many observers feel that the Committee is running interference for a rate hike later this year. While citing concerns about below-target inflation, the members seem blissfully unaware that the average price for a ticket to the Big Game is over $8,000. American. The statement released following the conclave described growth as “solid,” and that’s an upgrade from "moderate."