News
The CFPB backed off some of its initial plans in its final rule requiring lenders to collect more data from mortgage borrowers, but industry representatives warned the agency had not gone far enough. Though the agency dropped some datasets it initially proposed to collect last year, some lenders said the final rule was still going to be overly burdensome, particularly for smaller institutions. There also remain privacy concerns from both industry and consumer groups. Lenders must now report the address of the home, which could pose additional risks. "The CFPB's final rule [adds] to the excessive regulatory burdens for many community banks, which will further restrict access to credit in local communities," said Camden R. Fine, president and chief executive of the Independent Community Bankers of America.
United Bank of Atmore, Ala. is helping local students receive free books by working with literacy nonprofit First Book. First Book provides access to free new books for children in need. United Bank will pay shipping and handling to send the books to Pre-K and kindergarten students at Perdido Elementary School. In addition to delivering the books, United Bank Executive Assistant Tonya Lambert took time to read a story in each of the classrooms. "The best part about the initiative is that students can bring the books home and don’t have to return them," said Lambert. “They said, ‘you mean I don’t have to bring this book back? This is my own book?’”
CDBA is following up on the energetic discussion we had in last week's webinar on the FHA Small Building Risk Sharing (SBRS) program with a second webinar (October 20, 2015) that will delve into the fine detail of the application process. The SBRS program promotes multifamily housing project financing by providing lenders a 50% risk sharing arrangement with HUD. The presentation will be led by SBRS Initiative expert Diana Talios of the FHA. The webinar is free to employees of CDBA member banks and $75.00 for registrants from non-member banks. Please note that registration for this webinar is separate from the previous webinar, so please register now even if you attended the previous webinar.
Financial education website NerdWallet is now featuring CDFI banks and credit unions as a socially responsible alternative to big banks. NerdWallet is a resource that enables users to search a database of hundreds of financial products to find the best products. To have your institution's products listed on NerdWallet -- a great way to make them visible to a young, tech-savvy audience -- sign up for free here. In its writeup of CDFI depository institutions, NerdWallet highlighted New York based Spring Bank. Before Spring Bank opened, many low-income residents relied on check cashers and other high-cost alternative lenders. Someone lacking a strong conventional credit history might successfully apply for a loan at an 18 percent interest rate at Spring Bank, while a similar loan from a payday lender might charge up to 400 percent.
Virginia Community Capital has opened a new office in downtown Norfolk, Va. to enhance its lending capability throughout Virginia. The first loan made through the office will be to Conte Acquisitions, LLC, which will receive the innovative capital they need for a multi-tenant retail building. Thresa Joyce, senior vice president and senior loan officer, will lead the opening of the office. Ms. Joyce has over 20 years of experience in the financial and commercial real estate industries. Jane Henderson, VCC’s President and CEO stated, “VCC is very pleased to announce the opening of our new office in Hampton Roads. We are looking forward to expanding our presence in this region, helping more people and more communities.”
Community bankers provide relationships to small business clients that the big banks can't match, writes Mission Valley Bank President and CEO Tamara Gurney. "Any street corner bank – big or small – can handle the transactional side of banking, but it takes a team of trusted advisors who understand a client’s business to develop programs to meet their exact needs," Gurney writes. "It is that aspect that gives community banks a distinct advantage over the larger institutional banks that often gain new customers with teaser rates and short-lived promotions but don’t deliver long term results... Even with the changing physical landscape and technological advances within the banking industry, it still comes down to having a banker who is willing to partner to help a business achieve success."
Merchant cash advance wholesaler Pearl has been sold to private equity firm Capital Z Partners after a courting period by buyers including blue chip firms such as Goldman Sachs. Merchant cash advance is a legal, unregulated way to lend money to small businesses at interest rates as high as 250 percent. To get around state interest limits, the companies argue they aren’t charging interest—they’re buying the money businesses will make in the future at a discount. Pearl’s innovation is to preempt clients’ existing debt by offering a second advance to borrowers who had already received an advance from another broker. Pearl's advance, due in two or three months, must be paid off before their original debt. Pearl reached loan volume of $100 million in 2013. Last year, merchant cash advance surpassed the SBA as a source of loans for less than $150,000.
A new CFPB plan unveiled last week would eliminate arbitration clauses in financial product agreements that prevent consumers from filing class action lawsuits. The proposal would require arbitration clauses to explicitly say that they do not apply in class action cases. Meanwhile, firms still using such clauses for individuals would have to provide the CFPB with information about those claims and the amount of resulting awards given to consumers. CFPB Director Richard Cordray said the arbitration clauses — which, consumers are rarely aware of beforehand — amount to a "free pass" to avoid class actions. The new restrictions would apply to a host of consumer financial products including credit cards, automobile leases and debt collection.
Grant Bancshares Inc., the bank holding company for Louisiana-based Bank of Montgomery, will acquire the $64 million Bank of Ringgold. Bank of Montgomery, which currently operates from six locations, will expand its footprint to include the Bank of Ringgold's three locations. Following the merger, Bank of Montgomery will have approximately $280 million in total assets and $250 million in deposits. “We have a strong commitment to our local communities, and we take pride in knowing all of our customers by name. That will never change,” says Bank of Montgomery President and CEO Ken Hale. “We welcome the Bank of Ringgold’s customers to our community banking platform with exceptional products and services.”
The CFPB has named Sunrise Banks CEO David Reiling vice chair of its Community Bank Advisory Council (CBAC). CBAC was created to ensure the perspectives of community depository institutions with less than $10 billion in assets are shared with the CFBP. Reiling hopes to further the council's mission of representing the needs of community bankers. “The experience of this past year on the Community Bank Advisory Council has been more than rewarding,” said Reiling. “I am honored to be asked to serve as the CBAC Vice Chair and look forward to engaging with the Bureau to communicate the impact of regulations on community banks as well as the customers and communities they serve.”