BankWise - March 7
“Typical ‘sky is falling’ article predicting the demise of community banks… Fallacy of composition: The error of assuming that what is true of a member of a group is true for the group as a whole.”
ICBA Chairman-Elect Preston ‘Pres’ Kennedy tweeting in reaction to a recent Wall Street Journal article “The Problem for Small-Town Banks: People Want High-Tech Services.“
Elder financial abuse is “widespread” and on the rise, according to a report from the Consumer Financial Protection Bureau. Suspicious Activity Report filings on elder financial exploitation quadrupled from 2013 to 2017.
Protecting Minnesota’s vulnerable adults is a legislative priority for ICBM in 2019. And, ICBM is exploring changes to statute that will allow community banks to safely intervene when they suspect elder financial abuse.
The San Francisco fintech giant has decided to try again for a banking charter. Square, which is perhaps best known for its white credit card readers, refiled to form an industrial loan company application in Utah after withdrawing an earlier application last fall for procedural reasons.
Square Financial Services Inc., would primarily offer loans, deposit accounts and prepaid cards to small businesses as well as taking deposits from individuals. Square argued that it would expand access to credit for businesses currently shut out of the market.
The move drew the ire of small bank advocates, including former ICBA president Cam Fine, who argued against the concept of ILCs entirely. “The ILC loophole allows for an unintended and potentially dangerous expansion of the deposit insurance safety net,” he said in an oped.
Given the amount of regulation banks put up with in order to get deposit insurance, it’s understandable that community banks “become concerned when non-bank financial firms and their non-bank commercial firms gain access to deposit insurance without having to pay the regulatory cost,” Fine wrote.
Now that the Deposit Insurance Fund’s ratio of reserves to insured deposits is approaching 1.38 percent, banks under $10 billion in assets will see a temporary reduction in assessment fees.
The Dodd-Frank Act mandated that once that number hit 1.15 percent, big banks would be largely responsible for increasing it to a statutory target of 1.35 percent. The fund hit 1.36 percent in the third quarter of last year, so that surcharge has now ended.
Small banks continued to pay premiums when the fund hit 1.15 percent but racked up credits for what they paid to get it to 1.35 percent. Once it reaches 1.38 percent, expected later this year, the FDIC will automatically apply those credits to reduce a small bank’s regular premium. Individual payouts will depend on asset size, but they’re expected to be worth three to four quarters’ worth for each bank.
Something else to keep an eye on: if ratio passes 2 percent, assessment rates will be lowered.
Keep an eye on your mailbox—the first issue of ICBM’s newly redesigned quarterly member magazine hits desks this week.
What is Impact magazine?
What makes it different from other association magazines?
If your bank has a great story to tell, contact Matt Doffing at email@example.com, we’d love to find a way to tell the state, lawmakers, and your customers about your bank’s unique contribution to your community.
Interested advertisers and subscribers also can contact Matt.
We’ve pulled together a must-read list of last-minute considerations to help farmers’ optimize their 2019 crop insurance.