ICBA News, sponsored by CNA—ICBA Meets with FDIC on Fair Lending

Advocacy
ICBA Meets with FDIC on Fair Lending Concerns
ICBA last week met with FDIC Chairman Martin Gruenberg and FDIC Director of Depositor and Consumer Protection Mark Pearce to discuss community bank fair lending examination concerns.

At the meeting, ICBA expressed concerns with the number of false positive results that the agency’s statistical screening models yield, which require banks to spend significant amounts of time and money defending themselves and disproving that fair lending violations exist. The association also shared specific fair lending examination experiences that negatively affected community banks, gleaned from a survey of ICBA members.

Additionally, ICBA asked that the FDIC review its statistical models and be more transparent in its methodologies and fair lending exam expectations. ICBA also suggested that the FDIC draft prescriptive guidance with specific examples of the fair lending standards, such as pricing tolerances, that the agency applies so community bankers are informed of what it considers compliant and noncompliant. The association urged the agency to apply those standards prospectively rather than retroactively.

Advocacy
ICBA Plan for Prosperity Making News
ICBA’s new Plan for Prosperity regulatory-relief agenda for the 113th Congress is already making headlines following last week’s launch. The association’s flexible set of legislative priorities has been featured in The Hill, Bloomberg, BusinessFinance and the St. Louis Business Journal, which noted the platform is designed to help community banks and thrifts lend more in their communities.

ICBA’s Plan for Prosperity is not a single bill, but a flexible, living document that can be quickly adopted as legislation. The plan includes high-priority provisions to exempt community banks from mortgage-lending reforms, improve bank exam accountability, and offer relief from auditing expenses.

Provisions of the plan already introduced in the 113th Congress would exempt community banks from proposed municipal advisor regulations, offer relief from redundant privacy notice requirements, reform the Consumer Financial Protection Bureau’s structure and apply new Securities and Exchange Commission deregistration thresholds to thrifts. Read ICBA Fact Sheet. Read ICBA FAQs.

Payments
Survey: Community Banks Focused on Reducing Payments Fraud
While payments fraud continues to rise, community banks are using technological solutions and staff training to reduce fraud losses, according to survey results released by ICBA. The study found that half of community banks said fraud increased in 2011 compared to the year before. While most community banks that have experienced reductions in fraud losses focused on debit card transactions (95 percent) and deployed enhanced fraud-monitoring systems (70 percent), many improved staff training and education (63 percent) as well.

The survey also found that:

Payments fraud is a challenge for virtually all community banks.
Signature debit cards are most vulnerable to fraud and are a key target for fraudsters.
Potential losses from account takeover are a serious concern for community banks.
There is no magic bullet in the fight against fraud.
Community banks’ internal controls are focused on access and limits.
Community banks offer tools to help their business customers mitigate payments risk. Read ICBA Release.

ICBA NewsWatch Today is sponsored by CNA:
ICBA Member Milestones, brought to you by CNA, recognizes community bank anniversaries and milestones in the March issue of Independent Banker magazine. CNA understands it takes more than a strong balance sheet to run a successful bank. It takes commitment to the community, dedication to service and flexibility to meet the needs of clients. For more than 100 years, CNA's professionals have worked to build strong relationships and solid business insurance solutions that meet the needs of their clients. For more information on CNA’s programs, visit www.cna.com/communitybanks.

Regulation
FHA Planning Separate Qualified Mortgage Rule
The Federal Housing Administration will propose its own ability-to-repay rule, Bloomberg reported. The report noted that the Dodd-Frank Act allows the FHA to propose its own version of the “qualified mortgage” rule.

ICBA recently launched an educational webpage to provide details of the Consumer Financial Protection Bureau’s rules on mortgage lending, including its QM rule. The webpage includes summaries of the final rules and links to the rules and to ICBA’s QM comment letter. It also links to a proposal to amend the final QM rule to add an additional category for community bank portfolio loans.

Credit Unions
Credit Union Industry Earnings Up Sharply in 2012
The credit union industry reported a 36.1 percent increase in earnings to a record-high $8.5 billion in 2012, according to the National Credit Union Administration. The NCUA said industry assets crossed the $1 trillion mark and membership grew by 2.2 percent to 93.8 million. The industry's net-worth ratio rose to 10.44 percent, and credit union lending grew by 4.6 percent. The number of federally insured credit unions fell by 275 in 2012 to 6,819 institutions.

Regulation
FDIC Clarifies Proposed Rule on Foreign Deposits
The FDIC issued an alert on a proposed rule to clarify that deposits in foreign branches of U.S. banks are not eligible for deposit insurance, though they may qualify as deposits for the purpose of national depositor preference. The proposed rule would provide an exception for overseas military banking facilities operated under Department of Defense regulations or similar facilities authorized under federal statute. Comments on the proposed rule are due by April 22.

Regulation
FDIC Issues Consumer Newsletter’s Greatest Hits
As part of National Consumer Protection Week, which runs through Saturday, the FDIC released a list of some of the most popular articles from its FDIC Consumer News newsletter. The articles feature tips on how to shop for an auto loan, borrow money to pay for college, keep financial documents and manage a mortgage. National Consumer Protection Week is a campaign encouraging consumers to take full advantage of their consumer rights and make better-informed decisions.

Economy
Personal Income Down, Spending Up in January
Personal income decreased 3.6 percent in January while spending increased 0.2 percent, the Commerce Department reported. In December, personal income increased 2.6 percent and spending rose or 0.1 percent, based on revised estimates.

Economy
Manufacturing Activity Up in February
Economic activity in the manufacturing sector expanded in February for the third consecutive month, according to the Institute for Supply Management. The ISM manufacturing index registered 54.2, an increase of 1.1 percentage points from January. As was the case in January, all five of the PMI’s component indexes—new orders, production, employment, supplier deliveries and inventories—registered in positive territory in February.

ICBA News
ICBA Bancard Reaches Agreement with FIS Inc.
ICBA Bancard entered into a referral agreement with FIS, the world’s largest provider of banking and payments technology, for merchant services. New FIS merchant services offerings will include point-of-sale equipment and terminal support, electronic draft capture and batch processing, and ACH settlement. The new arrangement will also include a gift card and loyalty program. Read ICBA Release.

Poll
This Week’s Quick Poll
Take this week’s Quick Poll on community bank advocacy, and view results from the previous poll on K-12 in-school bank branches. View the Archive.

Magazine
March Issue of ICBA Independent Banker Is Out

A profile of ICBA’s incoming chairman, Bill Loving of West Virginia, is the cover story for this month’s issue of ICBA Independent Banker. The ICBA National Convention issue, along with convention highlights, interviews community bankers in Las Vegas still steadily recovering from the Wall Street crisis and recession.

Other stories include lessons from community banks that reorganized their staffs to ensure their long-term competitiveness; an FDIC study on long-term lending patterns by community banks; a data center cooperative jointly operated by three Michigan community banks; and a profile of top Small Business Administration lender in Texas, Bank of the West.

Exclusive online coverage on IBmag.org this month includes a story on the family ICBA legacy of Pat DuBois as well as perspectives on smart cards and a “startup” management mindset.

Print subscriptions are in the mail, and free digital subscriptions are available by email to any employee of an ICBA member bank. To receive a digital subscription, send an email to magazine@icba.org with your name(s), your bank’s name and address, and your email address.

Education
ICBA Webinar on Accelerating Growth, Avoiding “Reg Strangulation”
The potentially crippling impact of regulation is top of mind for every community banking executive. So how do community banking leaders develop responsible innovation in today’s risk-averse, highly regulated environment? “Accelerate Growth and Avoid ‘Reg Strangulation,’” scheduled for 11 a.m. (Eastern time) tomorrow, will cover how to avoid defensive reactions to regulatory demands, convert intangible assets into measurable value and harness leadership talent to fuel innovation and trust. Register Online.

Products and Services
Webinar Covers Challenges, Solutions in a Difficult Capital Environment
It's no secret that raising capital in today’s markets is a challenge for community banks. Understanding the different options available—and the different market attributes and investor behavior associated with each option—is critical for any community bank faced with having to raise (or replace) capital in the next few years. Get prepared by joining an upcoming webinar hosted by QwickRate, an ICBA Preferred Service Provider, at 11 a.m. (Eastern time) Tuesday, March 19, and again at 2 p.m. Tuesday, March 26, as experts present a broad review of capital-raising alternatives and market conditions. CPE credits are available. Register Online.

Products and Services
Fannie Mae Posts Loan Quality Resources
Fannie Mae posted a variety of resources to its website to help lenders with strong loan quality practices throughout the mortgage loan life cycle. The Loan Quality resource center includes upcoming webinars detailing Fannie’s post-purchase review process.