TOPIC: Small Banks

FAIR LENDING: (HMDA)

With the adopted amendments to Regulation C, referred to by the Consumer Financial Protection Bureau (CFPB) as the “Final Rule.” It brings with it a potential set of new challenges. The Final Rule adds 25 new data elements to the existing LAR data set, modifies, and expands many other existing elements. The lack of certain loan-level information in the current LAR data set has resulted in regulatory and enforcement agencies’ allegations of disparate treatment redlining based primarily on a statistical analysis of a mortgage lender’s application or origination rate in comparison with that of other mortgage lenders that are deemed to be its peers. Do the new data elements in the Final Rule improve fair lending or do they just allow for other areas of fair lending analysis to emerge and therefore present new challenges for mortgage lenders? Let me know what you think!

    Small Loans and Ability to Repay

    CEO at a bank ($38MUSA)
    I'm in a micro bank in a town without payday lenders or finance companies and have always considered it the bank's responsibility to fund those small loans.  Sometimes as low as $50.00.  I just charge the maximum allowed and it may only be $2.00 as the APY can only be 21%.  

    If anyone has a policy that covers these type loans I'd like to see and the justification for Examiners.  Do you have ATR requirements?  I deduct 28% of income for Housing (even though  roommate pays 100%) and 14% for monthly payment expense. Total is 42% and rest is for living expense. So basically if their existing and new payment are more than 14% of income I would need to bend policy if loan is made. 

    My bend is justified by my thoughts that about anyone will repay a $2,000 unsecured loan. 

    Any of your thoughts or policy considerations will be appreciated.

      CECL, Portfolio Risk, Credit and Lending Conference | ThinkBIG | September 24 - 26, Orlando, Florida

      There are only four days left until registration ends for the biggest CECL, portfolio risk, and lending and credit conference of the year - ThinkBIG!

      When: September 24-26
      Where: Loews Sapphire Falls Resort at Universal Orlando | Orlando, FL
      Who: Anyone involved in CECL/ALLL, portfolio risk, or credit and lending. Common titles include CFO, Controller, VP of Finance, Credit Analyst, CCO, CRO, Credit Admin and Loan Admin.

      Are you managing risk and driving growth at your financial institution? Do you need ideas to think bigger about portfolio risk, CECL, or lending and credit? The ThinkBIG Conference presented by Abrigo was created to give you the educational tools and concrete ideas to Manage Risk. Drive Growth.  

      Hear from FASB's Hal Schroeder, FINCURA's Max Blumenthal, Q6 Cyber's Eli Dominitz, economist Tom Cunningham, PhD, and a full roster of Abrigo's industry experts at this year's conference. 

      Be prepared to Think Bigger with insights and information critical to your lending strategies, mitigating credit risk, and the transition to and implementation of the new allowance accounting standard over the course of three days of compelling educational content and networking.  

      If you have responsibilities related to CECL and the ALLL at your institution, or if you want to know more about how CECL will impact your institution or you want to grow your loan portfolio quicker and more efficiently while driving profitability, this is the one conference this year you cannot afford to miss.

      Earn up to 14 CPEs! 
      Register today and save! 

        Whitepaper | Hemp, The Farm Bill, and Their Impact on Ag Lending

        For growth-minded institutions, the recent legislation for cultivating hemp in the US may shed light on a new opportunity regarding the banking and servicing of hemp-related businesses. But the changes tied to the Farm Bill also bring increasing risks for banks and credit unions who take on these clients. In this paper, Abrigo experts outline some of the critical questions that institutions can use to begin evaluating the potential value – and risk – to the institution in taking on cannabis related businesses (CRBs) or marijuana related businesses (MRBs).

        Download to learn:
        • How to evaluate the opportunity
        • The impact of the Farm Bill
        • The differences between cannabis, marijuana, hemp, and cannabinoids (CBDs)
        • Potential risks of taking on these banking relationships
        Click here to download the whitepaper. 

          International Wire Issues

          Question for the community. Does your FI process a decent amount of outbound and inbound foreign wires? If so, I wanted to get a feel for how often you deal with failed payments in the process and if those failed payments are creating customer service issues with your customers and/or taking up a ton of time to resolve. We're hearing SWIFT GPI is trying to resolve this but want to get a feel for how much of a pain point this is today and if it's even worth investing in something like GPI. Thanks! 

            Free Webinar - Stress Testing and CECL: Connecting the Dots

            Register today! 

            Financial institutions have been conducting stress tests long before the regulatory mandates were put in place after the 2007-2008 financial crisis.  Larger financial institutions have principally adopted the top-down approach (aka CCAR) which focuses on macro-economic changes and the resulting “stress” on large portfolios or individual assets.  Smaller financial institutions ($25B or less) primarily perform the bottom-up “stress” that focuses on the loan transaction risk stemming from changes in micro-economic factors i.e. increasing interest rates or cash flows.  As the goal of both approaches is a test on the capital adequacy of the respective financial institution, with CECL having the same goals, CEIS and Abrigo will examine the “bottom-up” stress test approach and the pros and cons for your CECL program

            Join this webinar as we discuss:
            1. Data challenges
            2. The benefits of bottom-up stress testing
            3. Using stress testing data and outcomes in the CECL model development
            Wednesday, September 18, 2019
            2:00 PM ET / 1:00 PM CT

            Partnered with CEIS Review Inc.

            Save your seat! 

              5 Things to look for in an Overdraft Service Provider

              Your overdraft service provider can be one of the most important business partners your financial institution employs.

              This document presents critical factors to consider to select an overdraft service provider that can successfully help you:
              • Provide world-class service to your account holders
              • Maximize revenue
              • Manage risk
              • Remain compliant
              Get "5 Things to look for in an Overdraft Service Provider" today!

              http://bit.ly/2KZVsqK

                Upcoming CECL, Portfolio Risk, Credit, and Lending Conference | ThinkBIG - September 24-26

                There are only four days left until regular registration ends for the biggest CECL, portfolio risk, and lending and credit conference of the year - ThinkBIG!

                When: September 24-26
                Where: Loews Sapphire Falls Resort at Universal Orlando | Orlando, FL
                Who: Anyone involved in CECL/ALLL, portfolio risk, or credit and lending. Common titles include CFO, Controller, VP of Finance, Credit Analyst, CCO, CRO, Credit Admin and Loan Admin.

                Are you managing risk and driving growth at your financial institution? Do you need ideas to think bigger about portfolio risk, CECL, or lending and credit? The ThinkBIG Conference presented by Abrigo was created to give you the educational tools and concrete ideas to Manage Risk. Drive Growth.  

                The conference brings together industry thought leaders and experts, financial institution peers, CPAs, auditors and regulators for three days of compelling educational content and networking. Be prepared to Think Bigger with insights and information critical to your lending strategies, mitigating credit risk, and the transition to and implementation of the new allowance accounting standard.  

                If you have responsibilities related to CECL and the ALLL at your institution, or if you want to know more about how CECL will impact your institution or you want to grow your loan portfolio quicker and more efficiently while driving profitability, this is the one conference this year you cannot afford to miss. 

                Earn 14 CPEs! 
                Register today and save! 

                  Free Webinar - Money Laundering Detection with Hybrid Threat Finance | Earn 1 CAMS, CFCS credit and 1.25 CAFP, CFSSP, CRCM credits

                  Wednesday, August 28 | 2 p.m. EST/ 1 p.m. CST
                  Register today

                  Hybrid Threat Finance (HTF) is the study of financial movements and patterns of transnational criminal organizations. Typical detection scenarios do little to detect the real money laundering behavior. Instead they generate high levels of false positive ratios and miss some of the patterns that are indicative of real laundering activity. Precision detection can hone in on the real high-risk behavior within your financial institutions. Training your teams and creating precision detection logic can create a very targeted and effective program for detecting and identifying illicit finance.

                  Join to learn:
                  • An overview the hybrid threat methodology
                  • How to create precision detection scenarios and reduce false positives
                  • How to start the journey toward HTF detection
                  Earn 1 CAMS, CFCS credit and 1.25 CAFP, CFSSP, CRCM credits

                  Save your seat

                    Free Webinar Thursday: Loan Grading - A to Z

                    Thursday, August 15 - 2 p.m. EST/ 1 p.m. CST

                    Can your financial institution survive the next economic downturn? The recent financial crisis demonstrated how unexpected economic downturns and rapid deterioration in market conditions can significantly harm a bank’s financial condition and economic viability.

                    Join us for a free webinar to learn how to create a consistent and objective based risk scoring model that still allows for subjective adjustments. We will highlight the significance of leveraging a dual loan grading and underwriting system to monitor your loan portfolio. Our expert will provide practical advice on incorporating the 5 C’s into your loan grade and how to select an appropriate loan grading scale for your institution.

                    You Will Learn:
                    • Regulatory examiners expectations
                    • Loan grading scales & dual loan grading systems
                    • Financial statement analysis
                    Save your seat!

                      Is Your Overdraft Program a Black Box?

                      Do you really understand how your overdraft management program calculates overdraft limits? Can you explain the specific factors, trends and overrides that determine the overdraft limit?
                       
                      The answers to these, as well as other key questions, shouldn’t be a mystery. Data flows into your system, the data is processed and your system outputs an overdraft limit. But can you describe exactly what happened during that process to your examiners?
                       
                      If you can, you’ll be equipped to customize your overdraft program to provide superior service to your account holders! If you can’t, then your overdraft program is a black box. 

                      Download our free white paper today! 

                        Freddie Mac PRE closing quality control checklist

                        Director at a Company (USA)
                             Developed this form in response to Freddie Mac rules that require pre-closing loan reviews. We are a small community bank that does a lot of Freddie Mac loans. This works well for us, hope you find it useful.

                             Originally Posted by Douglas Omernik, Compliance Officer of Premiere Community Bank, on 19 Oct 2012 to CBANC FI Professionals Community.

                          Small Commercial Loans

                          Director at a Company (USA)
                               Would anyone be willing to share how "small" commercial loans are underwritten at their bank?  Do you have a streamlined presentation and approval process?  Do you use a scoring model, either purchased or developed in-house? Thanks! 

                               Originally Posted by Chris Olney, Senior Vice President / Chief Credit Officer of North Valley Bank, on 23 May 2019 to CBANC FI Professionals Community.