News
Regulators from the FDIC and the Oregon Division of Finance and Corporate Securities have terminated the consent order issued against Albina Community Bank. The regulators determined the bank has met all the conditions of the consent order by reducing problem loans and maintaining higher capital levels. A stock purchase transaction with One PacificCoast Bancorp allowed Albina to return its regulatory capital ratios to the level required by regulators. “Having our regulatory consent order lifted is a very positive and significant step for the bank... [We] are proud of the progress we have made to strengthen the bank and ensure our mission and commitment to our local communities can continue," said Cheryl Cebula, President and CEO of Albina.
Virginia Community Capital has deployed a new loan to Glade Green Grocer, a whole foods retailer and food cooperative located in Glade Spring, Virginia. The new store will provide retail shelf space, marketing and commercial canning for local growers throughout the year, responding to increased demand for fresh foods by consumers. This loan is the latest in Virginia Community Capital's comprehensive revitalization effort in Glade Spring, Virginia as well as the first loan deployed by their Virginia Fresh Food Loan Fund, a $10 million fund earmarked for addressing the unmet capital needs of healthy food enterprises throughout Virginia.
Sen. Sherrod Brown (D-Ohio) predicted the plan to revamp the U.S. housing finance system sponsored by Sens. Tim Johnson (D-S.D.) and Mike Crapo (R-Idaho) would not become law this year. The proposed legislation would phase out Fannie Mae and Freddie Mac in five years and replace them with a government re-insurer. The bill requires support from key Democrats on the banking panel, including Brown, before moving on to the Senate, where it will need to attract broad backing among Democrats to persuade Majority Leader Harry Reid (D-Nev.) to schedule a vote. Brown said the current bill is too complicated and doesn’t do enough to address too-big-to-fail concerns or to provide assistance for affordable housing, and he questioned whether eliminating Fannie and Freddie was necessary.
Warren Buffett has released his latest annual letter to Berkshire Hathaway shareholders. Since 2012, Berkshire has not repurchased shares at a price higher than 1.2 times book value. According to former investment banker Harvard Winters, this implies that banks and thrifts with ROE far below that of Berkshire buying shares at that book value multiple or higher are acting recklessly. Winters finds three takeaways for banks from the Buffett letter: care deeply about the price of an investment, don’t be overly-optimistic about the future and never assume the bank has an “edge” without empirical evidence.
Illinois Attorney General Lisa Madigan has filed a new lawsuit against MoneyMutual, a lead generator familiar to daytime television viewers from ads pitched by TV personality Montel Williams. MoneyMutual is one of dozens of lead generators that drum up business for payday lenders by taking customer information, such as bank-account numbers and email addresses, and selling that information to payday lenders. The suit alleges that the company is operating as an unlicensed lender, arranging loans that violate Illinois's law limiting the fees that can be charged to borrowers. MoneyMutual was also one of 16 lead generators subpoenaed for marketing illegal payday loans by Benjamin Lawsky, superintendent of the New York Department of Financial Services.
The Consumer Financial Protection Bureau is in the late stages of formulating the first nationwide rules for payday lending and industry observers have begun speculating on what changes will be made. The CFPB is barred by the Dodd-Frank Act from setting a nationwide interest-rate cap, but the bureau is likely to set a regulatory floor below which the states may not fall. The CFPB has not signaled whether the new rules will include ability-to-pay standards or whether they will include restrictions on requesting access to customers' bank accounts. The rulemaking process will continue for at least several months as the CFPB convenes panels to assess the rules' potential impact, proposes a rule and accepts public comment before issuing a finalized rule.
Angela Martin, a senior enforcement attorney at the Consumer Financial Protection Bureau, told lawmakers at the House Financial Services Committee that she was discriminated against by managers. When she complained, she said, she was punished by being isolated from the workforce and stripped of responsibility. Martin also claimed that she had heard from dozens of other CFPB employees who felt similarly mistreated. Committee Ranking Member Rep. Maxine Waters (D-Calif.) has called for a full committee hearing on issues at the CFPB with appearances from top management, including Director Cordray.
Teri Williams, President & COO of OneUnited Bank stopped by Orlando Florida's Captain and Company Morning Radio Show to discuss the new Unity Visa Card, a program designed to help people build healthy credit: "That’s something important for people to not get upset or in the mindset that, you know, 'I have bad credit. I’m a bad person.' Absolutely not. What has happened, usually, is that something has happened in your life that in some cases you don’t even have control over. And so you have been doing fine, but you hit a bump in the road... [The Unity Visa] is a credit card, but more than that, it’s also information to help you figure out credit – to really get the skinny on how it works, so that you can better measure your credit going forward."
A new study from the St. Louis Fed concludes that there is a strong future for community banks and that those most likely to prosper will be those most committed to maintaining risk control standards and whose business plans are well-tailored to their communities. The study uses balance sheet and income statement ratios to identify features that are most associated with thriving community banks. The banks most likely to thrive were small (less than $100 million in assets), rural (agricultural loans have been unusually strong lately), had lower total loan-to-total assets ratios, had more concentration in consumer loans, and had less concentration in construction, land development, commercial real estate, commercial and industrial loans.
Big bank executives are opening experimental branches which use technology to provide more services in less space than a traditional branch. The pilot programs engineered by Bank of America and Citigroup resemble Apple stores, with employees holding tablets and tending to customers. JPMorgan found its customers headed to branches for advice rather than to simply go to the tellers. So their experimental branches focus on new express banking kiosks – A.T.M.s, with additional functionality and large flat screens – rather than the teller line. JPMorgan is also testing new ways of replacing debit card swipes at A.T.M.s, including technology that authenticates identity by scanning irises and palms.