September 9, 2020                                                                                                      No copyright infringement intended
 
 
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Conference Call with Senator John Boozman Today!
  
The Federal Home Loan Bank of Dallas is hosting a conference call with Senator John Boozman from 2:00 - 2:45p, today, September 9. 

This call will focus on affordable housing and community development initiatives across the state.  
 
Senator Boozman's staff has provided the following call-in number and passcode.
 
Toll Free 855-428-0808
Pass Code: 8404561
 
Congress Returns to Washington
 
The Senate was back in session yesterday, while the House is set to formally return to Washington next week.  
 
The House Financial Services Committee holds hearings on minority and women inclusion and financial aid for states and territories. The Senate Banking Committee is scheduled to meet today on the Federal Reserve's emergency lending facilities, while the House Small Business Committee has a hearing on transparency in small-business lending.

As Congress gets back to work this week, we can only hope their focus remains firmly on small businesses and their employees whose fates hang in the balance of the ongoing COVID-19 pandemic.  The overly complicated process that the SBA has outlined for PPP forgiveness has many small businesses wondering what to do next.  Members of both political parties have expressed support for simplifying PPP forgiveness for loans under $150,000 so borrowers can focus on the survival of their businesses.
 
The Arkansas Community Bankers Association stands united with the Independent Community Bankers of America and state community banking associations across the country in calling for Congress to take swift, meaningful and bi-partisan action to get small businesses back to work without the cloud of PPP forgiveness hanging over them.

 
Community Bank Net Income Rises in Q2 while Credit Unions' Fall Nearly 35% 
 
Community bank net income increased 3.2 percent in the second quarter from the same period last year, according to the FDIC's Quarterly Banking Profile. The increase contrasts with the overall banking industry's 70 percent decline in net income, due to the economic impact of the coronavirus pandemic.
 
More than half of community banks reported higher net income despite a 273.2 percent increase in provision expenses. The increase was driven by gains on the sale of loans (up 142.2 percent) and securities (up 130.7 percent).
 
Community banks reported year-over-year loan growth of 13.5 percent, driven by Paycheck Protection Program lending. The net interest margin for community banks decreased 17 basis points year-over-year to 3.51 percent, as the decline in average earning asset yields outpaced the decline in funding costs.
 
During the same period, Credit union net income declined 34.6 percent , according to the National Credit Union Administration. The net interest margin for federally insured credit unions was 2.88 percent of average assets, down from 3.18 percent a year ago. The return on average assets declined from 97 basis points to 57 basis points.
Source:    FDIC and NCUA 
 
AICPA: Forgiven PPP Loans are Interest-Bearing During Settlement Period
 
The American Institute of Certified Public Accountants issued a bulletin detailing how banks should treat the repayment or forgiveness of Paycheck Protection Program loans.
 
The guidance dictates that lenders should treat the forgivable loans as interest-bearing loans, including the amortization of loan origination fees, during the settlement process.
 
Since the Small Business Administration is considered one of the counterparties to the loan agreement, payments from the SBA should be treated similar to payments received from the borrower, the accounting group said. Payment from either the borrower or the SBA prior to the maturity date should be accounted as a prepayment, and unamortized loan origination fees should be accounted for under the agency's guidance for nonrefundable fees.
Source:   S&P Global Market Intelligence   
 
Fannie, Freddie to Delay New Refinance Fee
 
The Federal Housing Finance Agency ordered Fannie Mae and Freddie Mac to delay the imposition of a new 0.50% fee on most mortgage finance loans until Dec. 1.
 
The fee, called the Adverse Market Refinance Fee, is needed to cover projected COVID-19 losses of at least $6 billion at the government-sponsored enterprises, according to a press release from the FHFA.
 
Specifically, the actions taken by the GSEs during the pandemic to protect renters and borrowers are conservatively projected to cost them at least $6 billion, which is expected to include $4 billion in loan losses due to projected forbearance defaults, $1 billion in foreclosure moratorium losses and $1 billion in servicer compensation and other forbearance expenses.
 
The cost could be higher depending on the path of the economic recovery.  FHFA also announced that the GSEs will exempt refinance loans with loan balances below $125,000, almost half of which are comprised of lower income borrowers at or below 80% of area median income. Affordable refinance products, Home Ready and Home Possible, are also exempt.
Source:   Federal Housing Finance Agency  
 
OCC Charter for Payments Companies?
 
The OCC plans to issue its proposal for a narrowly focused payments charter, Politico reported.
 
According to the report, Acting Comptroller Brian Brooks said the agency believes it doesn't need a new regulation to begin processing applications for charters from payments companies, including fintechs such as PayPal.
 
Industry groups, including ICBA, have expressed opposition to discussions of the payments charter, urging the agency to undertake an open and transparent regulatory process, apply Bank Holding Company oversight as part of any new charter, and ensure protections that preserve the existing separation of banking and commerce.
 
The groups also cited legal uncertainty with the plan. A federal judge last fall sided with the New York Department of Financial Services in ruling that the OCC lacks the authority to grant bank charters to nonbanks that are ineligible for deposit insurance, which the OCC is appealing.
Source:  Politico