Week of March 26

March 27, 2018

In This Issue…

• Greetings from Guy
• House Financial Services Committee advances more bills
• FDIC Board approaves appraisal threshold increase for CRE transactions
• Waiting on Chairman Hensarling
• Nominations being taken for ’20 Under 40 Awards’
• OBA education corner …

Greetings from Guy

Another busy week for the OBA. By the time you read this, the GRC will have met to review some pending legislative issues and, in addition, several gubernatorial candidates presented their vision for Oklahoma to the Council.

With all the issues going on at the state level, it should prove to be an interesting meeting. In addition, OBA Board Committee meetings will be held Wednesday followed by a meeting of the OBA’s full board of directors.

The Bankers’ Night Out tour will move to Enid on Tuesday evening, and back to Oklahoma City on Wednesday. The State Chamber of Commerce has provided speakers at the events to discuss the “OK2030” Initiative.

As you would guess, much of the conversation has been on the state budget impasse and teacher pay. If you haven’t signed up to attend one of the events, it’s not too late, and I sure hope you will come to the meeting in your area. I’d love to meet you and welcome you to the event.

I would like to take the liberty to recognize an outstanding banker from the Shamrock organization. Beth Brown was recently elected as the first-ever chairperson of the Oklahoma Bankers Association Emerging Leaders Division.

Beth was elected from among 457 bankers from across the state who participate in the Emerging Leaders program. In addition to serving as chairperson, Beth will also serve a two-year term on the OBA Board of Directors starting this month.

If I sound a little proud, it is because I am. Watching young employees grow and develop into outstanding bankers may be the most rewarding part of this job.

Congratulations Beth. The Shamrock family is proud of you!

Respectfully,

Guy

House Financial Services Committee advances more bills

Last week, the House Financial Services Committee approved three more bills dealing with regulatory reform. H.R. 4790 would designate the Federal Reserve as the primary rule-making agency for the Volcker Rule, and it would significantly simplify the Volcker-related policy-making process. The bill would also exempt banks with $10 billion in assets or less from the Volcker Rule, a provision included in S. 2155. The bill was passed on a strong bipartisan vote of 50-10,

H.R. 4861 repeals the FDIC’s guidance on deposit advance products. It directs federal banking agencies to create new guidance that does not limit consumers’ access to short-term small-dollar loans.

“This proposal will address the recent efforts of the (Consumer Financial Protection Bureau) under the last administration to basically outlaw small dollar loans,” OBA President and CEO Roger Beverage said. “That proposal was more evidence that the Bureau really doesn’t have a firm grasp on reality and how community banks work. Yes, I understand that its target is payday lenders, but this earlier proposal would include banks and would be anti-consumer.

“We support this legislation because it will allow banks of all sizes to take better care of their customers. These kinds of loans are not profitable for the lender, but they certainly help consumers when emergencies arise. It should be a no-brainer for Congress, but of course it won’t be.”

The bill advanced on a party-line vote 34-26.

In addition, the committee unanimously passed H.R. 5076, which would increase the asset threshold from $1 billion to $3 billion for insured depository institutions eligible for 18-month on-site examination cycles. This bill language is also included in S. 2155.

FDIC Board approves appraisal threshold increase for CRE transactions

Last week, the FDIC Board approved a final rule to raise the appraisal thresholds for commercial real estate transactions from $250,000 to $500,000. The threshold for loans secured by one-to-four family residential properties remains at $250,000.

The CRE appraisal threshold increase represents a $100,000 increase from the original proposal that was published. Residential construction loans secured by multiple one-to-four residential properties are to be considered CRE transactions.

The next stop is to gain support of the FDIC proposal by the other two federal banking agencies, the Fed and the OCC. When they take action to approve the final rule, it goes into effect 30 days following its publication in the Federal Register.

ABA and the OBA have been working for some time in an effort to provide some sort of immediate relief to banks, especially those located outside of MSAs. Rural areas in Oklahoma are particularly having difficulties because there is a significant shortage of certified appraisers in those areas.

Waiting on Chairman Hensarling

It looks as if it might be a few weeks before the House Financial Services Committee Chairman, Rep. Jeb Hensarling (R-Texas), decides to move forward with consideration of the Senate version of regulatory relief.

“The chairman is determined to leave his mark on the regulatory relief bill,” OBA President and CEO Roger Beverage said. “I think there is quite a bit of evidence in S. 2155 already that suggests he has made a significant contribution, but apparently he wants more. Maybe if they call it ‘Crapo-Hensarling’ he would be satisfied, but I don’t know that.”

Beverage noted the House version of regulatory reform is much broader, but there are several provisions in S. 2155 that are found in the House’s earlier version:

A bank that is less than $3 billion will be able to take advantage of the 18-month exam cycle, assuming the bank meets the qualifications of being well-managed and well-capitalized.
Portfolio lending –This concept is included in both the Senate and House versions of regulatory reform, but the Senate version limits it to banks less than $10 billion in assets. The House bill would have applied to any bank. It means that any mortgage loan originated and retained by a traditional community bank will automatically be considered a “qualified mortgage.”
An increase in the threshold for small bank holding companies to operate under the existing rule (the HC can hold higher levels of debt and consolidate its capital for compliance purposes, provided other qualifications are met). The difference is that the threshold is limited to $3 billion in S. 2155.
Under the Senate version, banks with less than $10 billion in assets would be flat-out exempt from the Volcker Rule. The House version simply repeals the rule, a provision that will not pass muster in the Senate.
The Senate and House version treat adjusting the SIFI designation differently. S. 2155 simply adjusts the threshold and phases it in over time to $250 Billion. The House version takes a different approach by creating what Chairman Hensarling calls an “off-ramp” that would enable larger banks to ‘opt out’ of the current enhanced prudential standards required by maintaining a minimum of 10 percent leverage capital ratio.

It remains to be seen whether the chairman will be able to reach a comfort level with these provisions in place rather than some of the other 25 amendments he has in mind. That approach will make certain the bill will die.

Nominations being taken for ’20 Under 40 Awards’

Banking Exchange magazine has introduced its inaugural “20 Under 40 Awards” in which 20 next-generation bankers under the age of 40 will be profiled. They are looking for those banking professionals who will help banks thrive in the next decade.

Entries will be judged by experienced industry professionals. The winners – representing the “best of the best” – will be featured in Banking Exchange’s June issue and on BankingExchange.com.

Judging Criteria:

They are seeking nominees who display leadership; can demonstrate that they have made a difference to their organization, including to the community in which the organization operates or to the industry; have a vision for the future of their institution, for banking or for the particular department/unit within which they currently work; and generally could be viewed as “an up and comer” in the field.

Eligibility:

The nominee must be under 40 as of June 1, 2018.
The nominee must work in the United States for a U.S. state or federally chartered banking or savings institution, its holding company or any subsidiary of the bank.
There is no limit on the number of entries each firm or person can submit, and there is no entry fee.
Candidates may nominate themselves.

Headshots:

If the nominee is selected as a winner, the magazine will ask for a high-resolution (preferably 300 dpi or higher) headshot.

Deadline for Submission:

April 22, 2018 at 10:59 p.m. CST.

Here’s the link: https://20under40.strutta.me/home.

OBA education corner …

Remember to stay current with everything that’s coming up on the Events Calendar at OBA.com, but also take note of the following:

Right of Rescission Review and Update, April 3, webinar — This two-hour program explains all of the rescission rules. It provides easy to understand answers to questions. and it provides a system to assure compliance.
BSA/AML Compliance Management, April 3 – Tulsa; April 4 – Oklahoma City — This is our flagship BSA/AML training event. The program incorporates a review of all of your institution’s BSA’s technical compliance responsibilities; it is the annual review everyone needs to remember their critical duties. It also reviews the required elements of your AML program from CIP to enhanced due diligence.
Role of the Information Security Officer, April 4, webinar — This webinar will cover regulatory expectations, role of the ISO, typical job description, independence mitigation suggestions and vISO.
Letters of Credit, April 4, webinar — This webinar provides an essential understanding of letters of credit, including letter of credit terminology, structure and function.
Regulatory Pressure on Third Party Management, April 5, webinar — We will explore best practices for vendor management, third party risk management and customer risk management.
2018 OBA Rural Bankers/Ag Conference, April 5, Oklahoma City — Bankers in agricultural and rural markets should plan to attend this year’s conference.
Vital Check and Deposit Issues – Part II, April 5, webinar — In this webinar, we will continue to delve into common questions and answers that your frontline has about checks and deposits.
Commercial & Business Lending Basics for Support Personnel, April 9, webinar — This program takes the perspective of a non-lender, and what goes on during the process of analyzing and approving a loan, focusing on commercial and business loans.
Reg E Compliance — Five Best Practices for Handling Disputes, April 11, webinar — Our topic for the webinar will focus on several simple steps to handle Reg E customer disputes and inquiries. Understanding the rules will help you satisfy the regulators but can also SAVE YOUR FINANCIAL INSTITUTION MONEY by only paying the claims that you are required to reimburse for unauthorized transactions.
Marketing & Advertising Compliance, April 12, webinar — With everything happening in the financial services industry, now more than ever it’s important that your advertising and marketing efforts are effective.
Excel Explained: Creating Interactive Spreadsheets, April 13, webinar — Identify how to create spreadsheets that are interactive, accurate, and user friendly.
Basic New Accounts Seminar, April 24 – Tulsa; April 25 – Oklahoma City — The biggest change to hit the new accounts desk since 2003 arrives May 11 – the new BENEFICIAL OWNER AND CUSTOMER DUE DILIGENCE RULE! But wait! Before we can add on something new, we need to absolutely nail down the basics and solidify our understanding of the new account principles, definitions, concepts that are with us always. So, we’ll do both at this seminar!
Fair Lending Seminar, May 1, Oklahoma City — This information packed seminar explains recent fair lending problems, the corrective action required by the agencies, the penalties imposed on the bank, and steps your institution can take to avoid similar problems.
Flood Compliance Seminar, May 2, Oklahoma City — The program is designed for compliance officers, operations personnel, mortgage loan officers, loan originators and others involved in obtaining and maintaining flood insurance on mortgage loans.
HR Seminar, May 3, Oklahoma City — As we all know, human resource compliance is an ever-changing target. Knowing what to do in increasingly complicated HR situations can be difficult for even seasoned HR professionals.

Also, the OBA is proud to promote the recognition of bankers who have devoted 50 or more years of service to the banking industry. All eligible nominees will be honored at the 2018 OBA Convention on May 23 at the Hard Rock Hotel and Casino in Tulsa.

In additional news, now is the time to GET INVOLVED with your industry and your Association! The easiest and best way to do this is to join an OBA committee. There are several to choose from, ranging from school boards to agriculture and bank fraud. Click here to learn more about OBA committees and to download a Committee Interest Form!

Finally, it’s always a good idea to see what the graduate schools of banking across the country have on their schedule. Click here to see GSB-Madison online seminars for April and May, and click here for information on upcoming events from GSB-Colorado.