Tennessee Bankers

This Week Newsletter



July 25, 2016 - Issue No. 1630


TBA Issues 2016 Legislative Report

TBA's government relations team last week issued the association's annual Legislative Report covering all legislation affecting the banking industry in 2016. The report includes summaries, effective dates and links to the full text of each piece of banking-related legislation. Click here to view the 2016 TBA Legislative Report.
 
As TBA begins identifying preliminary issues for state legislation in 2017, members are encouraged to make suggestions and offer feedback on issues their banks face and state legislation they would like considered.  Please contact Amy Heaslet to submit ideas or comments.

Senators Urge Tailored Regulations for Banks, Basel III Review

A bipartisan group of 70 senators, including Bob Corker (R-TN), wrote to the CFPB last Monday, July 18, calling on the agency to exempt community banks and credit unions from certain regulations. Led by Senate Banking Committee members Joe Donnelly (D-IN) and Ben Sasse (R-NE), the letter cited a provision of the Dodd-Frank Act allowing the bureau to adapt regulations by exempting "any class" of entity from its rulemakings.

"[T]he CFPB must...consider its impact on community-based depository lenders, who are essential to spurring economic growth and prosperity at a local level, and not disrupt the good work of community lenders," the letter said.

Meanwhile, four Democratic senators—Mark Warner (VA), Gary Peters (MI), Bob Casey (PA) and Tim Kaine (VA)—wrote to the federal banking agencies urging them to revisit Basel III liquidity and capital requirements for regional banks. While they noted that Basel III does differentiate supervision for large banks, "this distinction is applied unevenly across different institutions despite similar risk profiles, simply by virtue of an asset threshold."

The senators urged the agencies to review the reporting period for the Liquidity Coverage Ratio for regional banks and to revisit the advanced approaches risk-based capital regime, which has not been fully reviewed since the implementation of post-crisis reforms in the U.S. Click here to read the letter on tailored regs for community banks.

Agencies Issue New Guidance on PACE Loans

As the Obama administration last Tuesday, July 19, announced the Clean Energy Savings for All Initiative—a cross-government partnership aimed at promoting energy efficiency and increasing access to solar energy, particularly for low- and moderate-income families—several agencies released new guidance on Property-Assessed Clean Energy loans. PACE loans provide homeowners a way to have their homes undergo energy-efficient retrofitting financed through property tax assessments.

The Federal Housing Finance Agency has previously raised concerns about PACE programs, which are currently operated in 30 states, where the PACE lien is allowed priority over the first mortgage lien. FHFA has prohibited Fannie Mae and Freddie Mac from purchasing loans with PACE liens which take precedence over the first mortgage, citing concerns about taxpayer risk.
 
During the 2015 and 2016 state legislative sessions, TBA successfully defeated efforts to pass legislation allowing local governments to authorize PACE programs in their jurisdictions. Similar efforts are expected again in 2017.

The guidance issued by the Federal Housing Administration last week allows for the approval of mortgage and refinance applications for properties with PACE obligations, provided they meet certain requirements. The Department of Veterans Affairs also published guidance to clarify the circumstances under which veterans can take advantage of PACE programs in conjunction with its VA Home Loan Guaranty, and the Department of Energy released updated best practices for residential PACE financing. Among the requirements in the new guidance is the stipulation that the PACE assessment does not take first lien position ahead of the mortgage. However, the guidance does provide that for delinquent or foreclosed loans, PACE loans will retain a first-lien position.
 
TBA has initial concerns of allowing PACE loans to retain a first-lien position in any circumstance, and will review the proposals in greater detail before taking a position on potential legislation in 2017.

Agencies Issue Final Updates on Community Reinvestment

The federal banking agencies issued revised questions and answers on CRA compliance, clarifying nine of the 10 proposed Q&As. The agencies revised six existing Q&As and adopted three new ones. The changes focus on alternative delivery of retail banking services, innovative or flexible lending practices, qualified investments, and community development.

Comptroller of the Currency Thomas Curry said earlier this year that the Q&As would provide guidance on CRA compliance in light of the growth in alternative delivery mechanisms for financial services. The revised Q&As now clarify that alternative credit histories and small-dollar loan programs that serve low-to-moderate-income individuals are considered innovation. However, the agencies withdrew a proposed Q&A emphasizing one aspect of alternative delivery mechanisms due to concerns that the language could be read to undermine the importance of physical branches.

Other key revisions include new Q&As designed to explain what "innovativeness" and "responsiveness" mean and how they will be considered by examiners, as well as a Q&A intended to clarify the distinction between retail services and community development services. The revisions also have new illustrations and examples related to community development activities. Click here to read the revised Q&As.

Citizens Bank, American Trust Bank of East Tennessee Announce Merger

The respective boards of directors of Citizens Bank (Tri-Cities area) and American Trust Bank of East Tennessee (Knoxville area) have unanimously approved an agreement and plan of merger for the two East Tennessee banks. Based on the terms of the merger agreement, Citizens Bank, an independent community bank wholly-owned by Citco Community Bancshares, will acquire American Trust Bank of East Tennessee for $19.8 million in cash. The transaction to complete the merger is expected to close in the fourth quarter of 2016, subject to regulatory and American Trust Bank shareholder approval.

ECD Releases Report on Broadband in Tennessee

In a report issued July 19, Economic and Community Development Commissioner Randy Boyd outlines the current state of broadband in Tennessee and outlines potential solutions to close the accessibility gap.  The study was commissioned after leaders from all nine TN ECD regions had identified broadband as a crucial factor in the economic success of their communities. Read the report.

WEBCAST: Commercial Real Estate Lending Issues in Today's Economy

On August 8, view this full day webcast to review the basics of commercial real estate lending including types of properties and demand/supply in the current market. The session will cover the entire loan process and show how a commercial real estate loan is marketed, underwritten, approved, documented, closed, and monitored. The process will include examples of commercial real estate underwriting techniques and loan documentation issues. The presenter will address strategies for handling problem commercial real estate loans. The registration deadline is July 29. Click here to sign up.

WEBCAST: How to Craft an Effective Commercial Loan Write-Up and Loan Committee Presentation Skill Building Techniques

TBA's webcast on How to Craft an Effective Commercial Loan Write-Up and Loan Committee Presentation Skill Building Techniques will take place August 9. The morning portion of the webcast will focus on the basics of how to craft an effective commercial loan write-up, while the afternoon session will review loan committee presentation skill-building techniques. The registration deadline is August 1. Click here to register or for more information.

TBA Membership Meetings Kick off August 15

A highlight of the year for the newly elected TBA Chairman and the TBA team is the opportunity to travel across the state to meet with the majority of our members during Membership Meetings. Held this year August 15–19; 24 and 25; we hope that you will make plans to join your chairman, Gordon Majors, for one or more of the meetings that is most convenient for you. In addition to an opportunity to gather with friends and industry partners, the TBA team will review the initiatives that are the present focus of your association. View the dates, locations, and register today.

TBA On the Road

  • Stacey Langford travels in East Tennessee visiting members.