Week of April 17

April 17, 2018

In This Issue…

• Greetings from Guy
• Still no word from Hensarling
• House passes Volcker Rule bill
• 2018 OBA Convention coming in May
• Agencies propose phase-in for regulatory capital effects of CECL
• Kansas bank commissioner nominated to Fed board
• 2018 edition of OBA Directory of Banks now available
• OBA education corner …

Greetings from Guy

After eight years of hard work from community bankers from across the country, we are very close to seeing meaningful regulatory reform.

While awaiting the House to take action on S.2155, we would like all bankers to contact House members and urge them to take action on this bill. I truly believe our time is now. Let’s not let this opportunity pass without doing everything we can to facilitate success. Both the ABA and ICBA websites have links that make it quick and easy to show your support.

I would like to recognize Chris Jordan, president and CEO of Farmers State Bank in Stigler, who was recently elected as the secretary of the ICBA at the national convention. I have known Chris for several years and know he will do an outstanding job. Congratulations, Chris. We are all proud of you.

I look forward to seeing those of you attending the Government Relations Summit in Washington next week. It should be an exciting time to be in D.C.

Respectfully,

Guy

Still no word from Hensarling

We’re still waiting for some direction from Rep. Jeb Hensarling (R-Texas) as to the process of moving S. 2155 through his committee and on to consideration by the full House. Hensarling is chairman of the House Financial Services Committee.

“The ICBA fly-in was last week and it apparently went very well,” OBA President and CEO Roger Beverage said. “We’re going in next week to back up the ICBA’s effort and we’ll meet with every member of the Oklahoma delegation to make our case for swift passage of the bill.

“I’ve always believed that together we are stronger. In this case, on this specific bill, there is no doubt the two national trade groups (the American Bankers Association and the Independent Community Bankers of America) are on the same page. There is also no doubt that the local groups in various states have also adopted the same urgency in presenting the arguments in favor of moving the bill quickly. I find that especially reassuring, and it’s something I’d like to see more of.”

Beverage said the Oklahoma delegation is supportive of moving the bill quickly, and the prospects of doing so remain strong. Let’s hope they’re right.

House passes Volcker Rule bill

Late last week, the U.S. House of Representatives passed H.R. 4790, a bill that would exempt banks under $10 billion in assets from the Volcker Rule. The bill passed with strong, bipartisan support: 300-104.

“This is a welcome addition to the growing number of bills intended to help community banks,” OBA President and CEO Roger Beverage said. “The House of Representatives has done a great job of keeping the pressure on the Senate to consider many of these bipartisan votes, but I would really prefer that they just pass S. 2155 without any changes.”

The bill gives the Federal Reserve rule-making authority to create more efficiencies and is intended to streamline its regulatory authority under the Dodd-Frank Act.

Whether it moves in the Senate is anyone’s guess, but the good news is the concept of significantly changing the Volcker Rule is likely brewing in the federal banking agencies. According to the American Banker newspaper, several things are brewing, including:

A Treasury Department outline shows reforms they’d like to see in the Rule.
The OCC has circulated its own draft of potential changes in interpretations of the rule.
Federal Reserve Vice Chairman Randy Quarles has publicly stated he has plans to “target” some material changes, including definitions of “proprietary trading” and developing a better testing process to determine whether the rule permits the activity under review.

Click here to read the article.

2018 OBA Convention coming in May

The 2018 OBA Annual Convention & Trade Show is coming soon, set for May 21-23 at the Hard Rock Hotel & Casino in Catoosa.

This year’s convention theme is “Answer the C.A.L.L. (community/advocacy/leadership/legacy).
Lt. Col. Robert Darling, a retired member of the U.S. Marine Corps., who served in the first Gulf War and supported the president in the President’s Emergency Operations Center on 9/11, will give the keynote speech on May 22.

Darling is just one of many speakers presenting at this year’s convention, which will include author Will Bowen, representatives from The Baker Group, Hunton & Williams and Crowe & Dunlevy, among others.

For more information and to register, click here for the Convention brochure. Click here for the Convention Golf Tournament brochure. Questions? Contact the education department at the OBA at (405) 424-5252.

Agencies propose phase-in for regulatory capital effects of CECL

A new joint Notice of Proposed Rulemaking has been issued jointly by the Federal Reserve, FDIC and the OCC that’s intended to allow banks to “phase in” the regulatory capital effects of the Current Expected Credit Loss standard. The agencies will accept comments on the proposal for 60 days after publication in the Federal Register.

This NPR applies to all FDIC-insured institutions. The FDIC has set up a tool banks can use to help them evaluate how the CECL rule will impact the bank’s capital ratios and its way of doing business. You can access the tool by clicking here.

The CECL standard goes into effect in 2020 for SEC registrants and 2021 for other banks. This new standard requires every bank and thrift to come up with an estimate of expected credit losses over the life of a loan. It’s required for all loans in a bank’s the portfolio and must be developed at the time the loan is made.

Importantly, this proposal gives banks the option of phasing in the day-one regulatory capital effects of CECL over three years. Still not good, but better than a kick in the pants.

Since CECL was finalized in 2016, ABA has helped the OBA engage with regulators to explain how this standard will impact smaller community banks in particular. We’ve been particularly focused on what CECL is likely to mean for purposes of capital and regulatory supervision.

Kansas bank commissioner nominated to Fed board

President Trump has announced two more nominees for the Federal Reserve Board. One of his nominees is a clear champion for community banks and will be a refreshing change from what’s been done in the past. In fact, Kansas Bank Commissioner Michelle “Miki” Bowman will fill the position that’s dedicated to those persons with experience in community banking.

“Miki was a legal intern at the (Kansas Bankers Association),” said Chuck Stones, president of the KBA. “She has also been through our (KBA) Bank Leaders of Kansas Program.”

Bowman is a fifth-generation community banker with experience at state and federal agencies. She served as vice president of Farmers & Drovers Bank in Council Grove, Kansas, and is involved in her family’s cattle and farm operation. She has also worked for former Kansas senator and 1996 Republican presidential candidate, Bob Dole.

“Miki will be a passionate advocate for community banks,” said KBA’s Chief Lobbyist Doug Wareham. “I couldn’t be more excited about her nomination.”

President Trump also nominated Richard Clarida, a Columbia University Republican economist and monetary policy specialist, to serve as vice chairman to Fed Chairman Jerome Powell. Clarida has taught at Columbia for 30 years and, according to The Wall Street Journal, is seen as a pragmatist.

Clarida has taught at Columbia since 1988 and is a managing director at Pacific Investment Management Co. He is seen as a pragmatist rather than an idealist and is well regarded by both conservative and liberal economists, according to The Wall Street Journal.

Click here to read more about these two nominees, from The Hill.

2018 edition of OBA Directory of Banks now available

The Oklahoma Bankers Association Directory of Banks, 2018 edition, is now available for purchase. This annual booklet gives important information on all Oklahoma banks, savings and loans, savings banks and holding companies.

It’s available for purchase online by clicking here, or feel free to contact the OBA’s Thi Pham. Anyone wishing to order nine or more copies should contact Pham directly.

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:

Creating the Right ERM Program for Your Community Bank, April 25, webinar — Learn the fundamental pieces of the ERM puzzle, how they relate to each other and how to integrate your ERM program into the bank’s strategic plan.
Safe Deposit Danger Zones, April 26, webinar — Recent safe deposit vault burglaries, devastating fires, tropical storms, damaging tornadoes, raging floods and many other nationwide disasters have significantly impacted our safe deposit industry.
Opening Minor Accounts, April 26, webinar — During this webinar, you will learn how to answer your adult account holders’ questions on how to set up accounts for grandchildren, for college and many other reasons to set up minor accounts.
Beneficial Ownership for Frontline, May 1, webinar — New Bank Secrecy Act Rules go into effect May 11, 2018. These new regulations add rules on beneficial ownership of legal entities and new fifth pillar for BSA. During this webinar we will explain the new Customer Due Diligence rules line by line to your staff.
Loan Participations: What You Should Know, May 2, webinar — Learn the basic requirements for successful loan participations or syndications.
Understanding Commercial Loan Documents, May 2, webinar — Taught at a basic level (for bankers, not lawyers), the instructor will lead participants through all sections of the various required loan documents.
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.
Living Trust Documentation, May 3, webinar — This presentation will provide financial institution personnel with best practices to use when dealing with these complex legal documents
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.
10 Critical Issues in Handling Trust Accounts, May 3, webinar — This webinar will cover standard trust-opening procedures and many questions that arise as trusts and account holder situations change.
Lending 101, May 7, webinar — This is a great training tool for newer lenders and processors, and the webinar will help even experienced bankers understand the source of the various requirements.
2018 Compliance Roundtable, May 8, webinar — Join for lunch and open discussion with Mary Beth Guard and Pauli Loeffler.
Advanced Commercial Lending Series (register for all or separate days), May 9 – Advanced Financial Statements Analysis; May 10 – Advanced Tax Return Analysis; May 11 – C&I Real Estate Lending/Commercial Real Estate Lending — Commercial lenders, credit analysts, relationship managers and credit administrators would benefit from these programs.