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BankBryanCave Version 2.0

BankBryanCave Version 2.0

February 23, 2017

Authored by: Robert Klingler

Brickman Cleans Up!Over the last several weeks, we’ve updated the BankBryanCave.com site to a new design, new hosting service and new e-mail subscription service.  The updates have been long overdue, and should help us continue to provide interesting and useful content.  As expected, the site redesign also engendered lots of internal conversation and renewed interest in the platform.  Accordingly, I hope that the next weeks and months will continue to provide new voices and new perspectives on issues affecting community bankers.

As with the industry as a whole, we are eagerly awaiting upcoming regulatory relief and changes.  Although the changes will hopefully reduce the regulatory burden for many, change is never easy, and we intend to address what community banks will need to do to adjust to those changes.  We also expect that the market for de novo banks will continue to add steam.  With several clients looking at filing de novo applications, we hope to share successes (and tidbits to learn from mistakes) with others.

New Mailing Service

One of the items I’m most happy about (yes, I live a strange life) is a new service to handle our e-mail updates from BankBryanCave.  For those already subscribed, you should receive duplicate copies with this blog post, one from webmaster@bankbryancave.com that looks like the old alerts, and a new alert from communications@bankbryancave.com.  We’re then going to be turning off the old e-mail service, so you shouldn’t have to take any action.  I apologize in advance for the duplicate e-mails, but felt that was the best way to ensure that the new system is working before we turn off the old one!  If you run into any problems, please don’t hesitate to e-mail me at Robert.Klingler@bryancave.com.  For those interest in getting e-mail alerts whenever a new post is made, subscribe to the blog. You can select to receive alerts immediately, only once a day, or only once a week (or all three, if you just can’t get enough!).

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Impact of Proposed “Regulatory Off-Ramp” for Community Banks

A key component of the proposed roadmap for Republican efforts to provide regulatory relief is based on reduced regulatory burdens in exchange for holding higher capital levels.  Specifically, Title I of the proposed Financial Choice Act, as modified by Representative Hensarling’s “Choice Act 2.0 Changes” memo of February 7, 2017, proposes to provide significant regulatory relief for institutions that maintain an average leverage ratio of at least 10 percent.

The principal concepts of this “regulatory off-ramp” have, so far, remained relatively constant since first published by the House Financial Services Committee in June of 2016; any institution that elects to maintain elevated capital ratios (set at a 10% leverage ratio) would enjoy exemptions from the need to comply with certain other bank regulatory requirements.

Choice 2.0

In February 2017, Jeb Hensarling, Chairman of the Financial Services Committee, indicated that the “regulatory off-ramp” included in the proposed 2017 legislation would differ in two critical aspects from the 2016 proposed legislation.

First, the regulatory off-ramp would be based solely on the banking organization’s leverage ratio and would not consider the organization’s composite CAMELS rating.  Originally, the legislation limited eligible institutions to those that possessed a composite two CAMELS rating.  This change eliminates a subjective element to the regulatory off-ramp, but may also highlight that banking regulators would retain a wide array of tools to address institutions with substandard CAMELS ratings, regardless of their capital levels.

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Roundtable on the Future of Retail Banking

the-bank-accountOn Friday, February 10, 2017, Jonathan and I sat down with our partners, Jim McAlpin, head of Bryan Cave’s Financial Services practice, and Dan Wheeler, head of Bryan Cave’s Fintech practice, to discuss the impact of financial technology on retail banking.  Like branching strategies, there isn’t necessarily one universally correct strategy with how community banks should address financial technology, but ignoring fintech completely is unlikely to be a viable long-term strategy.

On this episode of The Bank Account, Jonathan, Jim, Dan and I explore some possible approaches for addressing fintech, and relay some of the reactions that we’ve heard from successful community banks.

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Core Principles for Financial Regulation

On February 3, 2017, President Trump issued an executive order setting forth his administration’s core principles for the regulation of the U.S. financial system.  While generally touted as the administration’s first affirmative steps to dismantle the Dodd-Frank Act, the executive order actually does little to implement any immediate change but says a lot about the overall framework by which the Trump Administration intends to approach financial regulation.

In addition to standard executive order boilerplate, the executive order sets forth two specific actions.  First, it establishes the “principles of regulation” that the administration will look at in evaluating regulations.

Section 1. Policy. It shall be the policy of my Administration to regulate the United States financial system in a manner consistent with the following principles of regulation, which shall be known as the Core Principles:

(a) empower Americans to make independent financial decisions and informed choices in the marketplace, save for retirement, and build individual wealth;

(b) prevent taxpayer-funded bailouts;

(c) foster economic growth and vibrant financial markets through more rigorous regulatory impact analysis that addresses systemic risk and market failures, such as moral hazard and information asymmetry;

(d) enable American companies to be competitive with foreign firms in domestic and foreign markets;

(e) advance American interests in international financial regulatory negotiations and meetings;

(g) restore public accountability within Federal financial regulatory agencies and rationalize the Federal financial regulatory framework.

Notwithstanding partisanship biases, I think most of these principles express ideas that most Americans could support, even if some would say there are additional principles (such as protecting consumers) that might also be relevant.  Even with some “norms” going out the window, I think everyone should be able to get behind the concept that our financial regulations should seek to “prevent taxpayer-funded bailouts.”  If nothing else, the Core Principles reflect generally mainstream Republican views of the goals (and implied limitations) of federal regulations.

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Acquire or Be Acquired 2017 Takeaways

the-bank-accountJoining everyone else, we offer our takeaways from BankDirector’s 2017 Acquire or Be Acquired Conference, but we think we might be the first/only podcast recap of AOBA! Bryan Cave’s head of Financial Services, Jim McAlpin, joins Jonathan and me in a free ranging discussion of the conference in Episode 10 of The Bank Account.

Specific topics include some thoughts on KBW’s opening remarks, comments on the investor panel and keynote speech from US Bank’s Richard Davis, a discussion of the future of community banks and fintech, and a recap of the M&A simulation run in connection with FIG Partners at AOBA. We also get in a few Super Bowl LI predictions, in expectations that our hometown Atlanta Falcons will Rise Up!

Please click to subscribe to the feed on iTunes, Android, Email or MyCast. It is also now available in the iTunes and Google Play searchable podcast directories.

You can also follow-us on Twitter for updates between podcast episodes @RobertKlingler and @hightowerbanks.

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CFPB Customer Complaint Data: Seeing What the Plaintiffs’ Bar Sees

CFPB watchers know that since 2013 customer complaints have been solicited and complaint data has been made available on the CFPB website. January is ubiquitous with New Year’s resolutions (perhaps you’ve already broken all of yours, but hopefully not). It is a great time to review the 2016 customer complaint data and see what the Plaintiffs’ Bar sees about your customers and your institution.

Undoubtedly, in due course, the CFPB has contacted your compliance and legal teams directly about these consumer complaints on an individualized basis. And undoubtedly, you have investigated the issue and provided responsive information to the CFPB and the consumer. Hopefully, each individual customer complaint matter is resolved and closed.

As a class action litigator, however, it is important to highlight that there is more here than just each individual complaint. We are living in an age of big data. The CFPB knows it. Your institution knows it. And, guess what, the Plaintiffs’ Bar knows it. The individual complaints posted to the CFPB database may be only the tip of the iceberg, or the issues may not have been fully resolved.

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Pinnacle Financial’s Acquisition of BNC Bancorp

Our new podcast recording studio features fake palm trees and an oaken barrel (off camera), neither of which likely materially impacts Episode 9 of The Bank Account.  Nonetheless, Jonathan and I enjoyed the change in scenery as we discussed the just announced $1.9 billion merger of Pinnacle Financial Partners, headquartered in Nashville, Tennessee, and BNC Bancorp, headquartered in High Point, North Carolina.

In addition, we recorded the episode with a new microphone.  Unfortunately, I’m not sure the new microphone makes us sound any smarter, but it definitely improves the sound quality!

In anticipation of our presentation of a bank merger simulation at Bank Director’s Acquire or Be Acquired Conference this coming weekend, Jonathan and I spend this episode walking through the details of the transaction and looking at what signals it may send to future transaction activity in the Southeast generally, and North Carolina specifically.

the-bank-accountPlease click to subscribe to the feed on iTunes, Android, Email or MyCast. It is also now available in the iTunes and Google Play searchable podcast directories.

You can also follow-us on Twitter for updates between podcast episodes @RobertKlingler and @hightowerbanks.

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What Will The Proposed New York Cybersecurity Requirements For Financial Institutions Really Make Companies Do?

In early September 2016, the New York Department of Financial Services (“DFS”) proposed a set of data security regulations (the “Proposal”) that would govern financial institutions, banks, and insurance companies subject to the jurisdiction of the agency (“covered entities”).  After receiving public comments, DFS revised and resubmitted the Proposal on December 28, 2016.  If the Proposal ultimately goes into effect it would require that covered entities have a written information security policy (“WISP”) and outline specific provisions (substantive and procedural) that must be contained in that document.  While the Proposal has garnered a great deal of public attention, the majority of the provisions in the latest version are not unique.

Prior to the Proposal at least four states already required that if a company collected financial information about consumers within their jurisdiction some, or all, of the company’s security program must be reduced to writing; three states required that an employee be specifically designated to maintain a security program.  More importantly, the Federal Gramm Leach Bliley Act (“GLBA”) contains broad requirements that mimic many of the Proposals provisions.  This includes, for example, the requirement that a financial institution conduct a risk assessment and maintain data breach response procedures.

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Lift-Outs: The Rules of the Game and Playing to Win

the-bank-accountStraight from the heart of the “crime infested” fifth Congressional District of Georgia, Jonathan and I managed to safely convene for a discussion on lift-outs of bank employees in Episode 8 of The Bank Account.

Lift-outs offer a potential M&A-lite approach to further growth, and when done correctly, can result in a win-win-win for the hiring bank, the affected employee, and the bank the employee is leaving. Among the topics discussed, we cover the practical and legal approaches to attracting lift-out opportunities, as well as defending recruiting by competitors.

Please click to subscribe to the feed on iTunes, Android, Email or MyCast. It is also now available in the iTunes and Google Play searchable podcast directories.

You can also follow-us on Twitter for updates between podcast episodes @RobertKlingler and @hightowerbanks.

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Walt Moeling Joins The Bank Account

Walt Moeling Joins The Bank Account

December 28, 2016

Authored by: Robert Klingler

the-bank-accountJonathan and I were joined by the godfather of banking law, our Senior Partner, Walt Moeling for Episode 7 of The Bank Account.

Enjoy Walt’s thoughts on where the banking industry is headed in 2017, what he sees as the biggest concerns today, what one regulatory change he would make if given carte blanche power to improve the system, and a prediction on the number of community banks in the future.

For nearly 50 years, Moeling has been with Bryan Cave and its predecessor firm in Atlanta, Powell Goldstein. Moeling has counseled financial institutions on corporate governance matters, operational and regulatory issues, capital and acquisition strategies, board disputes and dissident shareholders, as well as other strategic decisions.

Moeling has served on the board of the Georgia Bankers Association (GBA) for many years and occupied the role of GBA’s general counsel. He has also been appointed as a state deputy attorney general in Georgia and neighboring Alabama over the course of his career to deal with particularly complex banking matters.

Please click to subscribe to the feed on iTunes, Android, Email or MyCast. It is also now available in the iTunes and Google Play searchable podcast directories.

You can also follow-us on Twitter for updates between podcast episodes @RobertKlingler and @hightowerbanks.

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