Tennessee Bankers

This Week Newsletter

May 02, 2016 - Issue No. 1618

CFPB to Reopen TRID Rulemaking

The Consumer Financial Protection Bureau announced Thursday that it has listened to industry concerns about the rules governing the TILA-RESPA Integrated Disclosures/Know Before You Owe mortgage disclosures and that it will reopen rulemaking this summer.
The announcement, sent in a letter from CFPB Director Richard Cordray to industry trade associations, said the bureau expects to have a notice of proposed rulemaking ready for publication this summer.

CFPB Adds Resources on QM, Rural Lending

The CFPB last Tuesday updated its website with new online resources to help bankers keep pace with regulatory changes. The new resources include a factsheet for small creditors operating in rural or underserved areas and a chart to help creditors determine whether they are eligible to make qualified mortgages. Click here to download the fact sheet. Click here to download the QM chart.

FASB Moves Forward with CECL, Delays Implementation

The Financial Accounting Standards Board voted last Wednesday, April 27, to move forward with its Current Expected Credit Loss standard, but agreed to push the implementation timeline back by one year. Banks that file with the SEC will now have until 2020 to implement CECL, while non-SEC filers will have until 2021. Early adoption will be permitted starting in 2019.

Prior to the vote, FASB members discussed the challenges banks will face during implementation. Although a FASB member believed that Excel spreadsheets could be used by community banks to cut costs, the board also acknowledged many difficulties banks will have in implementing CECL, such as estimating the effects of prepayments and credit migration in the context of future forecasts. Ultimately, however, the board members concluded the benefits of earlier loss recognition outweigh the costs. 

FDIC Issues Final Rule on Small Bank Deposit Insurance

The FDIC last Tuesday, April 26, approved a final rule for assessing deposit insurance premiums on banks with under $10 billion in assets. Under the rule, assessment rates are calculated using financial measures and supervisory ratings derived from a statistical model estimating the probability of failure over three years.

The final rule eliminates the risk categories currently used for banks that do not have a rating of CAMELS I or II, and instead bases assessment rates for all banks on a standardized formula. As a result, deterioration of a bank's capital or supervisory rating will not lead to a jump in its assessment rate, only to a somewhat higher rate. In addition, assets would now have to grow more than 10 percent over a one-year period to trigger higher assessments.
The rule does not alter the loan portfolio factor, but does cap assessment rates based on CAMELS ratings. This cap could limit the impact of the loan portfolio factor and the weighting for the tier 1 core capital ratio, which is given a much higher rating in the revised formula.

The FDIC estimates that 93 percent of small banks will see somewhat lower assessments as a result of the final rule, while the remaining 7 percent will see increases. The final rule will take effect beginning the quarter after the FDIC's insurance fund reaches 1.15 percent, which is expected to occur in the third quarter. 

Budget Summary for 109th General Assembly Released

The Tennessee Office of Legislative Budget Analysis last week released a Budget Summary Session Report for the FY 2016 legislative session. The report contains budget overview highlights, summaries of noted legislation and amendments, updated information for Capital Outlay, TennCare along with other subjects. Click here to view the budget summary.

Agencies Propose Long-Term Liquidity Measure

The FDIC board last Tuesday, April 26, voted to propose the U.S. version of the Net Stable Funding Ratio, a long-term liquidity measurement included in the Basel III liquidity standards. The NSFR measures structural funding and is designed to ensure that covered firms maintain a stable funding profile over time. It complements the Liquidity Coverage Ratio, a measure of cash flow over a 30-day stress period.

The U.S. NSFR, which is jointly proposed by the FDIC, OCC, and Federal Reserve, would apply to banks with more than $250 billion in total assets or $10 billion or more in on-balance sheet foreign exposures. The Fed will also apply a modified NSFR to certain bank holding companies with more than $50 billion in assets. Institutions subject to the rule would be required to publicly disclose their NSFRs quarterly using a standard template.

The proposed NSFR consists of the amount of available stable funding over a year divided by the institution's required stable funding, with the numerator required to equal or exceed the denominator. The proposed rule contains detailed descriptions of what counts toward ASF and RSF.

Comments on the NSFR proposal are due by Aug. 5. Click here to read the proposed standard.

TBA, Tennessee Bankers Attend ICBA Washington Policy Summit

TBA General Counsel Tim Amos and Tennessee community bankers from each of the three grand divisions joined bankers from across the country last week for ICBA's Washington Policy Summit. Attendees met with key federal regulators, including FDIC Chairman Martin Gruenberg, Comptroller of the Currency Thomas Curry and CFPB Director Richard Cordray. 
Amos and the Tennessee delegates also spent their time in DC visiting with their Congressmen and staff, including Sens. Alexander and Corker and Reps. Fincher and Roe. During those meetings, bankers advocated for regulatory relief and data security as well as reigning in the CFPB's overreach and changing its structure.

Leadership Convention Photo Recap

The 2016 Leadership Convention, hosted by the TBA Young Bankers Division, welcomed young banking leaders across the state for their annual event in Knoxville. Highlights included TDFI Commissioner Greg Gonzales speaking at the PEP Awards Ceremony, a keynote address on improving memory by Paul Mellor, and former UT football player Inky Johnson closing out the convention with his inspirational message of perseverance found through relentless determination. Click here to view the pictures.

Final Senior Bank Marketing Director Series Set for June 2

How does your bank view its future? Through the final Senior Bank Marketing Director Series, you will share in the opportunity to exchange ideas and learn best practices that will put your company ahead of the game when it comes to the most current strategies, tactics, and proven results for marketing your bank's business. The program, facilitated by Tom Black, takes place June 2 at TBA's Barrett Training Center. Click here to sign up.

Brochure Available for The Southeastern School of Banking, July 17-22

The brochure is now available for The Southeastern School of Banking (TSSB), a part of the highly respected group of Southeastern Schools sponsored by the Tennessee Bankers Association. TSSB has been serving bankers since its organization in 1939, with an 80-hour, intermediate-level curriculum focusing on critical banking functions, their interrelationships, and determinants of profitability. TSSB is an intensive general banking school, held at Belmont University, that consists of dual one-week resident sessions over two years. Registration is now open. Invest in your bank's future by enrolling qualified candidates in this year's session.

TBA On the Road

  • The Branch Management Series takes place in Nashville.

See where TBA goes while "on the road" by following

@TNBankers or  #TBAontheroad

In this Issue

Past Editions