October 11, 2017

House Lawmakers Seek Delay, Closer Look at CECL
ACB Bank Management & Directors Conference
Treasury Withdrawing Estate Tax Increase
Federal Reserve and CSBS Release Findings from 2017 National Survey of Community Banks
AR Banks Receive Record Levels of CDFI Funding
Cash and Debit Cards Grow Payment Share


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House Lawmakers Seek Delay, Closer Look at CECL                    
A group of House lawmakers wrote to the heads of the Securities and Exchange Commission and the Financial Accounting Standards board urging them to more closely examine the effects of FASB's Current Expected Credit Loss Standard on credit availability and calling for a delay to CECL's effective date until such a study can be carried out. The standard is set to take effect in 2020 for SEC registrants and 2021 for all other banks.
The lawmakers expressed concerns that CECL - which requires "life of loan" estimates of losses to be recorded for unimpaired loans at origination or purchase - could negatively affect the cost and availability of credit and contribute to greater volatility in banks' balance sheets. "By requiring financial institutions to immediately recognize the entire expected life-of-loan credit loss and forcing them to immediately post reserves for that expected loss, CECL could result in fewer options for consumers and more instability in the lending market," they wrote.
Any study conducted on the standard should not only assess CECL's effect on credit availability, but also how it will affect regulatory capital requirements, the lawmakers added. 
The Treasury Department announced plans to withdraw a proposal to effectively raise the estate tax.

The proposed amendment to Section 2704 of the tax code would have increased by more than 30 percent the estate tax on family-owned community banks and other small businesses.

The proposed rule would have effectively ended estate-planning techniques commonly used to transfer community banks and other family-owned businesses to subsequent generations.

study commissioned by banking and other business groups found that the proposed rule would have cost the U.S. economy nearly 106,000 jobs and reduced the gross domestic product by more than $150 billion over the next decade.
Federal Reserve and CSBS Release Findings from 2017 National Survey of Community Banks             
The findings from a national survey of community bankers conducted by CSBS and  
the Federal Reserve System were released at their fifth annual community banking research conference.
The survey report provides a comprehensive view of what community ba nkers are  thinking about the key issues facing their industry. It is augmented by excerpts of interviews conducted by state banking commissioners with community bankers.
Survey responses were obtained from 611 community banks in 37 states during the time period from April-July 2017. The questions covered lines of business, regulatory compliance, competition and consolidation. They focused specifically on small business lending.
The banker interviews, referenced as "Five Questions for Five Bankers," were conducted in 30 states. Each commissioner asked five community bankers detailed questions with respect to five key areas: economic trends, regulation, small business lending, management succession and technological innovation.
Interviewed bankers said that they struggle to compete with credit unions, which benefit from tax exemptions and other regulatory subsidies that they say create an uneven playing field. Although some of them also are wary of online lenders, others said that "fintech has extraordinary potential" for the banking industry. One noted that bankers "don't have to be on the leading edge but need to be aware that things are changing."
The US Department of Treasury's Community Development Financial Institutions (CDFI) Fund awarded $3.5 million to Arkansas banks this week for reinvestment in distressed communities to support small business lending and promote affordable housing, neighborhood revitalization, and expansion into new geographic markets.  
The recipients, all CDFI-certified, include 3 members of the Community Development Bankers Association: FNBC Bank, Bank of Lake Village, and Southern Bancorp.
Mississippi, Arkansas, and Louisiana banks received the largest proportion of the CDFI funds. The awards come at a time when more communities are falling further behind economically. The US Census Bureau recently released its annual benchmark data on income, poverty, and health insurance for 2016, which revealed that income inequality continues to rise. Arkansas is among the top ten states with the highest poverty rates.
"The CDFI banks recognized today by the Treasury Department are on the front line fighting poverty and creating economic opportunity in the places that have been left behind by growing income inequality," said Jeannine Jacokes, Chief Executive Officer of the Community Development Bankers Association. "Arkansas community development banks have been part of the solution to reduce the state's poverty rate, one of the highest in the nation. We need more mission-focused banks like these, and more resources to support the communities."
Cash, debit cards and prepaid cards all increased their share of payment instruments that households use in a typical month, according to results from the Federal Reserve Bank of Boston's 2015 Survey of Consumer Payment Choice. Cash ended a three-year decline and rose to 27.1 percent of all payments, while debit card use rebounded to 32.5 percent. Prepaid cards rose to a 1.6 percent share, up 60 percent from three years before. Paper checks continued a long-term decline, falling from a 10 percent share in 2012 to 6.5 percent in 2015. The share of credit card payments and online bill payments dipped as well.
The survey showed that the average consumer made 68.9 payments per month, holding to a consistent trend over the past seven years. For the average consumer, 34.3 percent of payments were for retail goods bought in person, 24.7 percent were for in-person services, 6.8 percent were for online goods and services, 4.3 percent were person-to-person payments and 29.9 percent were for bills.
Average cash holdings per person dipped 2.4 percent to $202, and a majority of consumers (52.7 percent) said they most often got cash from an ATM. The percentage getting cash from tellers declined 1.3 points to 19.9 percent, while the share getting cash at a retail outlet rose by nearly one point to 14.2 percent.

Wednesday, November 8, 2017


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