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Two Recent Card Payment Developments

August 18, 2017

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Our Bryan Cave-affiliated sister site, the BC Retail Law Blog, recently published two posts that may be of interest to our banking, fintech and payments clients.

In “Bans on Credit Card Surcharges Face First Amendment Challenges,” the Retail Law Blog looks at how state laws that prohibit retailers from charging customers a surcharge for using a credit card are being challenged on First Amendment grounds.

For more than four decades, California’s Song-Beverly Credit Card Act of 1971 prohibited retailers from charging credit card customers such a surcharge. In Italian Colors Restaurant, et al. v. Harris, 99 F.Supp.3d 1199 (E.D. Cal. 2015), a federal judge ruled that the law unconstitutionally limits retailers’ freedom of speech. The California attorney general appealed, and the case is set for oral argument before the Ninth Circuit Court of Appeals on August 17.

One consequence of these actions may be to make credit cards more expensive to the consumer, which, in turn, could encourage further development of alternative forms of payment.

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Dealing with an Unsolicited Offer

July 21, 2017

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On the latest episode of The Bank Account, in preparation #SharkWeek, Jonathan and I discuss unsolicited offers and some of the approaches for bank boards to deal with them.  Topics covered include:

  • Senator Warren’s declaration that OCC Acting Comptroller Keith Noreika is a “swamp thing;”
  • unsolicited versus hostile approaches;
  • approaches to sell a bank, including full auctions, limited auctions, and negotiated transactions;
  • the need to have a current strategic plan and an understanding of the financial impact of such plan;
  • the-bank-accountthe value of having a Policy for Corporate Change to ensure discussions about offers to acquire the bank find their way to the boardroom for discussion by the full board;
  • dealing with an unsolicited offer in the middle of a negotiated transaction; and
  • the value of having experienced advisors, like Bryan Cave LLP, at your side as you address these issues.

You can also always follow us on Twitter.

Jonathan is @HightowerBanks and I’m @RobertKlingler.  Our producer, Sam Katz, is @SamathaJill1.

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Midyear 2017 Banking Review

July 7, 2017

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Midyear 2017 Banking Review

July 7, 2017

Authored by: Robert Klingler

the-bank-accountOn the latest episode of The Bank Account, Jonathan and I discuss some of the key trends from the first six months of 2017 with regard to the banking industry.  Topics covered include:

  • stock market performance (banks down for the six months, but still way up over the last 12 months);
  • merger and acquisition activity (same number but larger than last year, plus a more in depth look at North Carolina);
  • de novo activity (or lack thereof);
  • regulatory relief (and definitely lack thereof); and
  • capital raise activity (going strong).

We also congratulate each other on finishing the Peachtree Road Race (Jonathan’s first, my fiftheenth) and Jonathan shares a story where he seems to have exchanged an unfortunate woman’s micro-humiliation related to a debit card denial to a larger humiliation due to poor interpersonal skills.  With this episode we are fully switching to our summer schedule, so the next episode will be in a couple weeks.

You can also always follow us on Twitter.  Jonathan is @HightowerBanks and I’m @RobertKlingler.  I promise to try to restrain Jonathan from humiliating you on Twitter in the event that you decide to follow us.

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Bank Website ADA Litigation

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Although the frequency of bank clients receiving demand letters related to violations of the Americans with Disabilities Act (“ADA”)  based on website (in)accessibility seems to be declining, Bryan Cave lawyers around the country continue to be actively involved in defending such claims in other industries.  In addition to working with the Georgia Bankers Association and the California Bankers Association, Bryan Cave has published updates through a number of blogs that may be of value to our banking clients.

In April, Start Up Bryan Cave, our blog focusing on start ups of all kinds, published “Best Practices for your Corporate Website: How to Avoid an ADA Claim.”

Making your company’s website ADA compliant now, before your company is a target of a lawsuit or a demand letter, makes good business sense.  It will open your company up to more potential customers, limit your liability, position you to deal effectively with the regulatory challenges of growth, improve your company’s reputation in the marketplace and is simply the right thing to do.  Also, being proactive in establishing compliance protocols for your growing company will cause you to stand out among your competitors, make you more attractive to potential investors and partners, and can greatly mitigate any regulatory actions if a regulatory agency decides to audit your business.

In June, BC Retail Law, our blog focusing on clients in the retail sector, published “Retailer Loses ADA Website Accessibility Trial” about the first ADA accessibility litigation to go to trial.  The Court held that Winn-Dixie violated Title III of the ADA because its website was inaccessible to the visually impaired plaintiff.

[D]espite the fact that Winn-Dixie does not conduct sales through its website, the Court found that the website was “heavily integrated” with the physical store locations because customers can use the website to access digital coupons, find store locations, and refill prescriptions through the website.

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Public Banks and Proxy Advisors

July 3, 2017

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the-bank-accountOn the latest episode of The Bank Account, Jonathan and I were joined by our colleague, Kevin Strachan, to discuss the role and importance of the various proxy advisory services.  Corporate governance continues to be a hot topic in the industry, and the proxy advisory services have a significant sway in determining what provisions are deemed “acceptable” by many institutional investors.

Within the podcast, we look at the two primary proxy advisory services, Institutional Shareholder Services (ISS, not to be confused with ISIS, although we have them pronounced identically by some frustrated boards) and Glass Lewis.  We look at the differences between the two services, where they’ve historically focused, and ways in which they sometimes have diminished power and sometimes enhanced power.

As with so many issues, obtaining the right corporate governance for any individual bank or holding company is not something that should simply be taken off a shelf (or off a podcast).  Instead, we encourage interested parties to engage experienced counsel, such as Bryan Cave LLP, to identify the best individualized approach for the specific situation.

You can also always follow us on Twitter.  Jonathan is @HightowerBanks, Kevin is @KevinStrachan, and I’m @RobertKlingler.

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Planning for Strategic Planning Session

June 27, 2017

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the-bank-accountWhile I continued on a family vacation (which was totally worthwhile), Jonathan and Jim McAlpin recorded an episode of The Bank Account looking at planning a strategic planning session for your bank.  Jonathan and Jim cover a wide array of topics based on their collective experience in assisting dozens of banks with their strategic planning.

Among the multitude of topics covered include:

  • thinking about shareholder interests in strategic planning;
  • what the “new normal” means for community banks;
  • how frequently strategic planning sessions should occur;
  • the importance of efficiency ratio analysis;
  • the length of a “good” strategic plan;
  • board composition; and
  • the need to address whether or not to pursue the sale of the bank with the board.

I’m biased, but if you haven’t listed to The Bank Account, I highly encourage this episode as an introduction.

Other items mentioned on the podcast include:

You can follow Jonathan on Twitter at @HightowerBanks.  Jim isn’t on Twitter, but has mastered the latest in carrier pigeon technology.

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Regulatory Supervision of Third Party Service Providers

June 26, 2017

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the-bank-accountWith Jonathan and I attending the Georgia Bankers Association’s 125th Annual Meeting, Bryan Cave colleagues Ken Achenbach and Sean Christy broke into our podcasting studio to record an episode of The Bank Account looking at vendor negotiations through a regulatory lens.

The FDIC’s Office of Inspector General’s Report on Technology Service Provider Contracts provides another source of regulatory guidance that needs to be considered while negotiating vendor contracts.  Ken and Sean look at the evolving state and federal framework of regulatory oversight of service providers, and how banks should adopt to this framework in contract negotiations.

You can follow Sean on Twitter at @SeanChristy.  Ken doesn’t need Twitter; he’s already following you.

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Convenience vs. Compliance: Behavior-Driven Marketing of Credit Products

June 9, 2017

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the-bank-account Bryan Cave colleague Ken Achenbach joined Jonathan and me on the latest episode of The Bank Account for a discussion of the potential compliance issues associated with a behavior-driven marketing focus within financial services.  To borrow the immortal words of Salt-N-Pepa, should banks “Push it?  Push it real good?”

While new app technologies are allowing banks to market in new ways, we analyze many of the ways in which behavior-driven marketing already permeates our culture, and why financial services-based behavior-driven marketing may be treated differently.  Some of the articles referenced on the podcast include:

You can also follow us on Twitter with Jonathan at @HightowerBanks and me at @RobertKlingler.  Ken cannot be followed on Twitter, as Ken’s thoughts cannot be limited to 140 characters.

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Preserving Deferred Tax Assets in a Capital Raise

June 7, 2017

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the-bank-accountOn the latest episode of The Bank Account, Jonathan and I discuss the ability of bank holding companies to raise capital while preserving valuable deferred tax assets.

Section 382 of the Internal Revenue Code triggers a limitation on the carry-forward of net operating losses and built-in losses in the event of an “ownership change” in the company.  However, Section 382’s definition of what constitutes an ownership change is very different than many interpretations of a change in control.  Various segregation and aggregation rules can result in an ownership change being triggered when one might not expect it, but can also permit, with advanced planning, significant capital raises without triggering an ownership change.  This podcast provides a high level overview of some of the intricacies involved in Section 382, and offers insight as to how some of the recent large recapitalizations have preserved valuable deferred tax assets.

I think Jonathan and I broke several rules of good podcasting on this episode in that we discuss (1) numbers, (2) math, and (3) the tax code.  However, we think and hope that we’ve done so in an informative manner.  Enjoy!

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The CFPB’s Small Business Lending Data Request

May 12, 2017

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the-bank-accountOn the latest episode of The Bank Account, Jonathan and I discuss the CFPB’s request for comments regarding information about the small business lending market.

Section 1071 of the Dodd-Frank Act amended the Equal Credit Opportunity Act to require financial institutions to compile, maintain and report information concerning credit applications made by women-owned, minority-owned and small businesses.  In connection with this obligation, the Consumer Financial Protection Bureau is now seeking comments to identify, among other things, how to define small business lending, what business lending data is currently easily available, and what kinds of institutions should be obligated to make such reports.

Jonathan and I discuss the need for the depository industry to provide comments in response to this request.

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