Wednesday, July 20, 2016
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The Federal Reserve Bank of St. Louis just published a short summary of research by economists with the Federal Reserve Bank of Kansas City concluding that compliance costs weigh “quite a bit” more heavily on smaller banks than their larger counterparts in the community banking segment.  Looking specifically at banks under $10 billion in total assets (where additional Dodd-Frank-related burdens are triggered), the study found that the ratio of compliance costs as a percentage of total noninterest expenses were inversely correlated with the size of the bank.  While banks with total assets between $1 and $10 billion in total assets reported total compliance costs averaging 2.9% of their total noninterest expenses, banks between $100 million and $250 million reported total compliance costs averaging 5.9% and banks below $100 million reported average compliance costs of 8.7% of non-interest expenses.

While nominal compliance costs continued to increase as banks increased in size (from about $160 thousand in compliance expense annually for banks under $100 million to $1.8 million annually for banks between $1 and $10 billion), the banks were better able to absorb this expense in the larger banks.  Looked at another way, the marginal cost of maintaining a larger asset base, at least in the context of compliance costs, decreases as the asset base grows.

With over 1,663 commercial banks with total assets of less than $100 million in the United States as of March 31, 2016 (and 3,734 banks with between $100 million and $1 billion), barring significant regulatory relief for the smallest institutions, we believe we will continue to see a natural consolidation of banks.  While we continue to believe there is no minimum size that an institution must be, we also consistently hear from bankers in the industry that they could be more efficient if they are larger… and the research bears them out.

Monday, August 4, 2014
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With attorneys and staff worldwide, Bryan Cave attorneys are often quoted in the news.  Recent mentions of Financial Institutions group attorneys include:

Jerry Blanchard in the Atlanta Journal-Constitution

Atlanta Partner Jerry Blanchard was quoted July 18 by The Atlanta Journal-Constitution on reasons behind the shrinking number of banks in Georgia. The state, which led the nation in bank failures stemming from the real estate bust, has seen an increase in the number of banks being bought up at a rate of about one a month as healthy banks grow through the acquisition of other healthy banks. Blanchard said the question on many bankers’ minds is, “Can you survive the recovery? It’s hard to make money.” Click here to read the full article.

Rob Klingler in American Banker

Atlanta Partner Robert Klingler was quoted July 1 by American Banker concerning the trend among trust-preferred creditors of telling deadbeat banks that they must negotiate repayment or be forced into liquidation. Trapeza Capital Management filed legal documents recently to force FMB Bancshares in Lakeland, Ga., into involuntary bankruptcy. Trapeza, which manages a collateralized-debt obligation containing FMB’s trust-preferred securities, said in its filing that it is owed $13.6 million in unpaid debt and interest. FMB is the second lender to face involuntary bankruptcy over unpaid trust-preferred dividends. “Involuntary bankruptcies send a clear signal that doing nothing does not appear to be a good strategy,” Klingler said. “When you’re in default and tell your creditors you can’t do anything, you’re asking for an involuntary bankruptcy.”

Walt Moeling in SNL Financial

Atlanta attorney Walt Moeling was quoted July 10 by SNL Financial regarding the increase in bank M&A in Georgia this year. These recent transactions are simply logical, said Moeling, who noted that acquirers today have excess capital and outstanding commitments to put those funds to work, and they often are looking to rationalize fragmented franchises. Moeling agreed buyers are becoming more assertive and attributed some of the increased confidence to the fact that potential sellers are sitting on firmer ground. “They’re picking up a much smaller amount of problem assets and so there is a willingness to be a little more aggressive in doing acquisitions and again that’s only logical,” he said.


Friday, February 28, 2014
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With attorneys and staff worldwide, Bryan Cave attorneys are often quoted in the news.  Recent mentions of Financial Institutions group attorneys include: in Banking and Finance Law Daily

Three recent blog posts from were prominently featured Feb. 13 in Banking and Finance Law Daily. The publication’s “Blog Tracker” column, which highlights the week’s “most insightful, intriguing or entertaining blog posts from the banking and financial services community,” included our recent posts “Will 2014 be the year of UDAP and UDAAP?” by DC Partner John ReVeal and Associate Seyi Iwarere; “Should your bank do business with Bitcoin?” by DC Associate Courtney Stolz; and “Five practical tips to manage your vendor risk…,” by Atlanta Associate Karen Neely Louis  Click the post titles to read more.

Klingler in American Banker

Atlanta Partner Rob Klingler was quoted Jan. 28 by American Banker concerning Broadway Financial, which has struggled in recent years but managed to restructure its debt and recapitalize by bringing together the federal government, private equity, nonprofits and local banks. Today, the U.S. Treasury owns 52 percent of Broadway, or about $8.8 million in common stock. Broadway is one of five companies with common stock held by the Treasury as a result of a Tarp exchange, and is the only one majority owned by the government. Klingler said the Treasury typically moves quickly to cash out of such holdings. He said the stake is unlikely to scare off investors (the Treasury has vowed to be hands-off and vote along with the majority) but the government could have trouble finding investors to buy such a large block of shares.

Shumaker in Bank Safety & Soundness Advisor

Atlanta Associate Michael Shumaker was quoted at length in two front-page articles Feb. 17 in Bank Safety & Soundness Advisor concerning third-party vendor risk. Regulators are pushing for higher third-party due diligence standards, particularly the Office of the Comptroller of the Currency (OCC), which now requires banks to manage what it calls the full “life cycle” of a vendor relationship. “The regulators’ expectations are on a sliding scale,” Shumaker said. “The level and depth of risk management and vendor management for a $50 billion bank is not going to be expected necessarily for a $100 million bank.” A small community bank, he explained, may only have one or two material contracts that it needs to be on top of, such as for data processing and a credit or prepaid card program. Still, he said, having a “rational and structured” approach for entering those contracts not only keeps regulators happy but makes business sense.

Friday, January 31, 2014
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With attorneys and staff worldwide, Bryan Cave attorneys are often quoted in the news.  Recent mentions of Financial Institutions group attorneys include:

Rob Klingler in Bank Safety and Soundness Advisor

Atlanta Partner Robert Klingler was quoted Jan. 27 by Bank Safety and Soundness Advisor concerning an eagerly awaited amendment to the Volcker Rule, which will exempt most bank-issued Trust Preferred Securities (or TruPS). The interim final rule, however, does not exempt insurer or REIT-backed TruPS. Klingler said the exemption does not include insurer and REIT TruPS because the Collins Amendment didn’t either, and regulators modeled the Volcker exemption after the Collins Amendment. “They were looking to the Dodd-Frank Act itself for the statutory authority,” he said. “They used the Collins Amendment to form the basis for why they’re able to exempt [these TruPS]. They don’t have a statutory basis for excluding insurer-backed TruPS. They probably wanted to make sure the final rule wasn’t going to be challenged. The way to do that was to lock in the $15 billion bank asset threshold.”

Judith Rinearson in Multiple Outlets

New York Partner Judith Rinearson was quoted a number of times recently in connection with hearings in New York on the future of virtual currency, including the popular Bitcoin. She was quoted Jan. 28 by The Verge, Inc. magazine and IDG News Services (in an article that ran in IT World and CFO World) and Jan. 27 by Upstart Business Journal. Rinearson acted as an expert witness at the hearings, which could lead to the creation of “BitLicenses” to allow the introduction of Bitcoin ATMs and other Bitcoin-related startups in New York. “New York has always been one of the lead states when it comes to money transmitter licenses,” said Rinearson, who is also regulatory counsel for the Network Branded Prepaid Card Association and serves as chair for the association’s Government Relations Working Group. “But I think a lot of other states are going to be watching and a lot of states will be waiting to see what happens.”  Click here to read the full Upstart Business Journal article.

Dan Wheeler in Financial Services Publications

San Francisco Partner Daniel Wheeler authored an article for the January edition of Western Independent Bankers’ Lending & Credit Digest on common regulatory errors in making a commercial loan. Lenders often ignore or misunderstand several regulations and other laws that affect the origination of a commercial loan. Wheeler’s article discussed some surprising aspects of bank regulations and laws that can catch a commercial lender by surprise and result in a compliance violation.  Click here to read the Lending & Credit Digest article.  Dan authored an article for the January edition of Western Independent Bankers’ Directors Digest regarding current opportunities and regulatory issues related to common non-interest income opportunities, including overdraft protection.  Click here to read the Directors Digest article.  Dan also authored a lengthy article for the December edition of Banking & Financial Services Policy Report on basic interest rate swaps, which he said remain a viable and necessary tool for small community banks.  “Despite Congress’ and the regulators’ enactment of thousands of pages of burdensome and frequently counterproductive swap regulation, community banks still have compelling reasons to offer swap capability to their customers,” he wrote.  “Community bank management need not become experts in swap accounting or regulation; they merely need to understand the risks and strategy involved in the swaps they offer.”

Friday, October 4, 2013
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With attorneys and staff worldwide, Bryan Cave often makes the news.  Recent media mentions of Financial Institutions Group attorneys include:

Rob Klingler in Dow Jones Daily Bankruptcy Review

Atlanta Partner Robert Klingler was quoted Sept. 26 in the Dow Jones Daily Bankruptcy Review concerning what happens when TARP recipients file for bankruptcy. Congress authorized the U.S. Treasury Department to spend more than $200 billion nationwide as part of the Troubled Asset Relief Program five years ago. Overall, taxpayers profited from the program. But a review of the bankruptcies of TARP recipients shows that Treasury is likely to write off about $2.8 billion invested in banks now filing for bankruptcy. “Any time you make an investment, it’s a risk-reward exchange. The only way you get any reward is to take on risk,” Klingler said. “That means some of the investments aren’t going to work out, and some of the investments didn’t work out.”

Dan Wheeler in Directors Digest

San Francisco Partner Daniel Wheeler published an article in the October edition of Directors Digest regarding the heightened due diligence and oversight requirements regulators are enforcing on banks and their service providers. Wheeler’s article details specific steps banks should take in evaluating and entering into a new relationship as well as best practices in ongoing oversight and accountability. “Regulators have clear expectations about what a bank will do to oversee its existing and ongoing service providers,” he wrote. “Although a few types of providers have gotten the most regulatory attention recently, the guidelines apply across the board to all types of third-party service providers.”  Click here to read his full article.

Monday, April 1, 2013
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Although service to clients will always remain more important than peer reviews, we are proud to announce that partners Walt Moeling, Kathryn Knudson and Jim McAlpin were each selected for inclusion as bank regulatory attorneys in Georgia Super Lawyers 2013.  In addition, partner Rob Klingler was named to the Georgia “Rising Stars” list for 2012.

Super Lawyers lists the top 5 percent of attorneys in a state or region who have attained a high level of recognition and professional achievement. Honorees are identified through peer surveys, independent research and a blue-ribbon panel review.

“Rising Stars” are chosen by their peers as being among the top up-and-coming lawyers (40 years old or younger, or in practice 10 years or less). Only 2.5 percent of the lawyers in the state were selected.

In total, 27 Bryan Cave lawyers in the Atlanta office were named Georgia Super Lawyers and an additional seven were named “Rising Stars.”  A complete list of Bryan Cave’s Super Lawyers and Rising Stars is available here.

Friday, March 15, 2013
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With attorneys and staff worldwide, Bryan Cave attorneys are often quoted in the news.  Recent Media Mentions of Financial Institutions Group attorneys include:

Jonathan Hightower in Bank Safety & Soundness Advisor

Atlanta Associate Jonathan Hightower was quoted Feb. 18 in the Bank Safety & Soundness Advisor regarding the new push for bank regulators to focus on a more straight-forward leverage ratio to reduce financial system risk. Hightower said using the leverage ratio as a regulatory benchmark “is transparent and easy to figure out. You can compare apples to apples. If we are going to require 7 percent or 9 percent we can look at financial statements and understand that pretty quickly without peeling back the layers to go through your balance sheet or going through your business model.” On the other hand, he said, it seems hard to make a well-reasoned judgment about how much capital a particular bank should maintain without considering its risk profile. “Because bank balance sheets vary so widely…I’m not sure if a one-size-fits-all approach can be the end of the conversation.”

Rob Klingler in American Banker

Atlanta Partner Robert Klingler was quoted March 7 in American Banker concerning Old Second Bancorp in Aurora, Ill. Losses from bad real estate loans eroded Old Second’s tangible common equity, leaving it with negative tangible common equity for more than a year. But recently, the Treasury Department auctioned nearly all of its 73,000 preferred shares it had in Old Second through TARP for $24.7 million. There are questions about what happens next, including who purchased the preferred shares. Klingler said the Federal Reserve Board guards against undue influence by limiting an investor to no more than 33 percent of the total equity of an institution.

Walt Moeling in Bank Director

Atlanta Partner Walt Moeling was quoted in the first quarter issue of Bank Director concerning bank M&A in 2013. On the surface, the banking industry looks ready for a major consolidation boom with tight margins, weak loan demand, the loss of key sources of fee income and higher compliance costs. Still, Moeling said, even healthy banks worry about making a misstep. “Buyers are terrified of what they’re going to pick up,” he said. “They know if they do one lousy deal and pick up more problem assets than expected, it’s going to kill their prospects going forward.”  Click here to read the full article. 

Judith Rinearson in n>genuity

New York Partner Judith Rinearson authored an article for the spring edition of n>genuity Journal concerning why prepaid products should be regulated separately from credit and debit cards. “Prepaid is a flexible, lower-cost, payment product that provides critical financial access to thousands of consumers, in a secure and cost-effective manner,” she wrote. “Calls to regulate prepaid payments as if they are exactly the same as bank accounts are misguided. Such an approach risks stifling or even killing a popular and successful product, leaving many consumers without access to essential financial services and sending payment options back to the 1980s.”

Friday, September 28, 2012
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With attorneys and staff worldwide, Bryan Cave attorneys are often quoted in the news.  Recent Media Mentions of Financial Institutions Group attorneys include:

Andreassen in Paybefore Update

DC Attorney Kristine Andreassen was noted as contributing to an article in the July edition of Paybefore Update concerning the Consumer Financial Protection Bureau’s proposed policy statement for disclosing consumer complaint information about financial products and services other than credit cards.  The bureau’s handling of a consumer complaint database for non-credit card products would closely mirror how it currently discloses credit card complaint data, a process that has drawn criticism. Among objections, the current credit card complaint database publishes “unverified claims” that name the banks, but not any specifics regarding the complaints.  Andreassen is a contributing editor to Paybefore.

Atkinson in American Banker

Charlotte partner B.T. Atkinson was quoted August 15 by American Banker regarding election year uncertainty, and how it is affecting M&A work.  “The election is more likely to come up in the more red states.  They are looking at the election with hope that things will get better, because they believe that it can’t get any worse,” Atkinson said.  “The current administration isn’t looking to do much about regulatory relief, and they hope that the new administration will.”  Atkinson noted that the Obama administration’s Jumpstart Our Business Startups Act, signed into law in April, has been a boon for many smaller banking companies that will no longer have to report to the Securities and Exchange Commission.  “The JOBS Act is tremendous because deregistering saves real money,” he said.  “That is one thing that has happened.”

Klingler in The Deal, Law360

Atlanta Partner Robert Klingler was quoted at length July 13 in The Deal and July 23 by Law360 concerning banks holding TARP funds and recent auctions by the U.S. Treasury of its stakes in these banks.  The Treasury on July 23 started an auction process involving the sale of preferred stock and subordinated debt positions it acquired in 12 banks as part of the Troubled Asset Relief Program, under which it invested $245.1 billion in 707 financial institutions.  The auction will be the fourth of its kind this year.  After the current sale, the Treasury still will hold positions in 325 banks.  Klingler told The Deal the preferred and sub-debt sale involving the 12 banks is happening now both because market conditions are right and because of the overarching idea that the government was never in the business of investing in private companies.  Political motives could be in play, too, he added.  “From a Washington outsider’s point of view, I think everything is political,” Klingler said.  “The fact that an election is rapidly approaching helps play into that.  The fact that the government has received a profit on the portfolio creates additional flexibility for them to say, ‘OK, let’s get out as soon as possible.'”  Click here to read the Law360 article.


Monday, August 20, 2012
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On Wednesday, August 22, 2012, the SEC is meeting to consider rules to implement a critical component of the Jumpstart Our Business Startups Act (the JOBS Act).  Specifically, the Commission will be considering rules to eliminate the prohibition against general solicitation and general advertising in securities offerings conducted pursuant to Rule 506 of Regulation D under the Securities Act and Rule 144A under the Securities Act, as mandated by Section 201(a) of the JOBS Act.

On Thursday, August 23, 2012 at 2:00pm Pacific time, Partners Robert Klingler and Dan Wheeler will be presenting a webinar for the Western Independent Bankers on the impact of the JOBS Act on community banks. The title of the webinar is “Capital Relief and New Opportunities: The Impact of the JOBS Act on Community Banks.”

In a time of ever increasing regulation, Congress passed the JOBS Act in April 2012, a significant piece of deregulation of the federal securities laws.  Public and private offerings are both impacted, and likely to be permanently changed.  New flexibility has been introduced relaxing reporting requirements and allowing community banks to raise capital more easily.


Tuesday, July 24, 2012
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With attorneys and staff worldwide, Bryan Cave attorneys are often quoted in the news.  Recent Media Mentions of Financial Institutions Group attorneys include:

Achenbach in American Banker

Ken Achenbach was quoted in a July 2 article in American Banker regarding the decline in FDIC Loss-Sharing Deals for failed-bank buyers as the economy improves. Achenbach said “If the FDIC loss share backstop is there, it certainly mitigates the risks involved in taking the portfolio . . . Given the limited amount of diligence you’re able to do in these deals, and particularly earlier in the economic cycle where there was much more price uncertainty in the real estate markets, people actively wanted that safety net. Over time, however, bidders may be becoming more comfortable with asset pricing and may be assigning less value to the protections of loss-sharing. In addition, the FDIC is now encouraging banks that are comfortable doing so to make non-loss share bids.”

Hightower in Bank Safety & Soundness Advisor

Jonathan Hightower was quoted July 2 by the Bank Safety & Soundness Advisor concerning new Basel III capital rules, and how community bankers might need to prepare for the changes sooner rather than later.  Hightower said the new rules probably won’t change acquisition, development and construction (ADC) lending behavior now, when so few banks are making ADC loans.  But he said it will impact future lending plans.  “Where you’ll really see a difference is when the market  comes back and banks get more comfortable thinking about reentering this market,” he said.  “there are lenders out there who know the business and have done this kind of lending for a long time.  But now, unless those loans meet some focused requirements, they’ll be subject to those higher risk weights.”