EDITION 23-19 • MAY 7, 2023 | |
TD Bank, First Horizon Call Off Merger | |
Last Thursday, Toronto-based TD Bank and Memphis-based First Horizon Bank announced their decision to end their merger deal because there was no clarity on the timetable for necessary regulatory approvals, the two banks said in a statement. The deal, which would have been TD's biggest, was first announced in February 2022. | |
FOMC Raises Rates by 25 Basis Points | |
The FOMC last Wednesday announced it would raise the target range for the federal funds rate by 25 basis points from 5% to 5.25%. The decision marked the 10th consecutive increase. However, the FOMC did not indicate whether members believe further increases would be necessary, unlike in previous meetings where they suggested future rate hikes were possible. Read more. | |
Regulators’ Reports on Bank Failures Highlight Supervisory Missteps | |
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Federal Reserve supervisors did not fully appreciate the extent of the vulnerabilities as Silicon Valley Bank grew in size and complexity, and the bank experienced “a textbook case of mismanagement,” Federal Reserve Vice Chairman for Supervision Michael Barr said in his long-awaited report on the institution’s failure. He also pointed to previously adopted regulatory tailoring standards that he said impeded effective supervision, though the report itself acknowledged that in the case of SVB, “higher supervisory and regulatory requirements may not have prevented the firm’s failure.”
The FDIC has issued a report citing management failures and excessive exposure to the volatile crypto sector as reasons for the collapse of Signature Bank. The FDIC report identified matters for further study, including the need for more examiner guidance on supervising banks that are overly reliant on uninsured deposits.
While the Fed and FDIC reports placed much of the blame on mismanagement by the bank and the current regulatory framework, a report by the Government Accountability Office noted that supervisors failed to escalate their concerns about the banks’ management of risk related to deposits in the months preceding the failures.
Read the Fed report.
Read the FDIC report.
Read the GAO report.
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FDIC Suggests ‘Targeted’ Coverage Best Option for Deposit Insurance Reform | |
The FDIC said last Monday in its report reviewing the deposit insurance system that a “targeted” deposit insurance system in which additional coverage would be extended to business payment accounts would be the best option for balancing financial stability and depositor protection relative to its costs. The agency considered three options for reforming the Deposit Insurance Fund: the limited coverage option that exists now, an unlimited option that would cover all deposits, and a targeted system. Any modification to the coverage level must be approved by Congress. Read the report. Read FDIC Chairman Martin Gruenberg’s statement on the report. | |
FDIC Board to Consider Deposit Insurance Fund Special Assessment | |
The FDIC Board of Directors will meet Thursday, May 11, to discuss a proposed rulemaking on a special assessment to replenish the DIF following the systemic risk determination for Silicon Valley Bank and Signature Bank. The FDIC has not yet made public what form the assessment will take. Read more. | |
JPMorgan Chase to Assume Deposits, Acquire Assets of First Republic Bank | |
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First Republic Bank in San Francisco was closed last Monday morning by the California Department of Financial Protection and Innovation, which appointed the FDIC as receiver. To protect depositors, the FDIC entered into a purchase and assumption agreement with JPMorgan Chase Bank to assume all deposits and a substantial majority of the assets of First Republic.
The FDIC said the resolution was the result of a competitive auction and its preliminary estimate is a $13 billion loss to the Deposit Insurance Fund. Read the FDIC statement. Read the JPMC statement.
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Texas Bankers Association Sues to Block Section 1071 Rule; Grassroots Still Needed | |
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The Texas Bankers Association has sued to block the CFPB from implementing its final rule under Section 1071 of the Dodd-Frank Act that requires the collection and submission of data related to credit applications by women-owned, minority-owned and small businesses. Read more about the lawsuit.
All bankers are still encouraged to take grassroots action on H.J. Res. 50, a bill that would seek to use the Congressional Review Act to rescind the Section 1071 final rule. Take grassroots action now.
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Tennessee General Assembly Passes Tennessee Works Tax Act | |
One of Governor Lee’s legislative priorities this session—Tennessee Works Tax Act—makes significant changes with respect to Tennessee’s business tax, franchise and excise taxes, and sales and use taxes. The legislation, among other things, increases the level of nontaxable sales for businesses; creates a deduction from net earnings for small businesses from the excise tax; and creates a three-month holiday on sales tax on groceries. To read a detailed summary prepared by the Tennessee Chamber of Commerce and Industry of the full legislation, click here. | |
NFIB Small Business Survey Shows Confidence in Banking System | |
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The NFIB last Wednesday released a new survey that assesses the relationship between small business customers and banks that covered topics ranging from most important functions banks can provide to borrowing needs and concerns on the health of the banking system. Of all the functions banks provide, 87% of survey respondents reported customer service was the most important, and 62% reported that low fees are very important when choosing a bank. Almost a third (31%) of respondents said they were not all concerned about the health of the bank they use for their business; 19% were very concerned; 23% moderately concerned; and 28% slightly concerned.
In the Tennessee press release announcing the survey results, Jim Brown, NFIB’s Tennessee State Director, said, “During the pandemic, small business owners with relationships with small to mid-sized banks benefited because they could pick up the phone and get answers to their questions quickly. Entrepreneurs not only want access to capital but also the advice and expertise that our Tennessee bankers are giving.” Read the Tennessee Press Release. Read the Banking Survey.
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Total Dollars Raised in 2023
$154,964
To learn more, contact Penny Powlas.
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F&M Bank, Austin Peay, TBA Announce Partnership for The Southeastern School of Banking
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Left to right: John Peck, Ronnie Boling, Sammy Stuard, Dr. Michael Licari, Charlie Koon and Dr. Mickey Hepner | |
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F&M Bank and the Tennessee Bankers Association have announced the “Banking on Govs” program, a new partnership with Austin Peay State University. Qualified students from the College of Business will have the opportunity to attend the TBA's Southeastern School of Banking with all expenses paid while connecting with banking professionals throughout their enrollment. Click here for more information.
“At The Southeastern School of Banking, students will gain a comprehensive understanding of the banking sector and have the chance to apply that knowledge in real-world settings," said Ronnie Boling, director at TBA’s Southeastern School of Banking.As a result, graduates will have a competitive edge in starting their careers. We are excited to collaborate with F&M Bank and Austin Peay State University in delivering this program, and we can't wait to see the positive impact it will have on the future leaders of the banking industry."
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TBA Welcomes New Associates | |
This week TBA welcomes new associate member Superior Informatics - Home Stat in the category of appraisals and Bankstride in the category of electronic banking services. Please visit our online directory of associate members and thank these companies for their support of the Tennessee banking industry through membership. | |
- TBA hosts bankers in Nashville for The Southeastern School of Commercial Lending.
- TBA’s Stacey Langford is on the road visiting members in Middle and East Tennessee.
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