Pub. 15 2018 Issue 2

Issue 2 • 2018 9 O V E R A C E N T U R Y : B U I L D I N G B E T T E R B A N K S - H E L P I N G N E W M E X I C O R E A L I Z E D R E A M S William Schoch, President and CEO of WePay, gave a terrific presentation en - titled, “Preparing Banks for Faster Pay- ments”. He noted that dynamic changes are underway in the U.S. to modernize the payments infrastructure as financial institutions look to improve end-to-end electronic processes, provide new prod- ucts and services to clients, and improve overall payments quality. To remain competitive, financial institutions must understand the advantages and limita- tions, as well as the risks, that each of these new payment networks provide. We must explore real-time payment models and the potential opportunities to your financial institution. Our final speaker, Ryan Flynn, Ex - ecutive Director of the NM Oil and Gas Association, discussed the current state of the most important economic driver in New Mexico: oil. Interesting facts: • $13 billion was invested in New Mexico in 2017 by the oil and gas industry; • New Mexico is the third-largest oil producer in the U.S. and sev- enth in gas; • the state’s oil production is rising to record levels; • oil and natural gas fund one- third of the state’s budget; • the industry is responsible for 100,000 New Mexico jobs. During the final dinner and business session, the NMBA presented Rick Wadley with NMBA 50 Years in Banking Award. Rick served as NMBA President in 2007-2008. A little-known fact is that, early in his career, Rick worked for his wife, Leslie. She claims that Rick learned everything he knows about banking from her. A special thanks to Mike Lowrimore, outgoing NMBA President, for a job well-done as our 2016-2017 President. In spite of a busy travel schedule, Mike made himself available for all NMBA events without complaint. Under Mike’s leadership, we have launched the first annual NMBA Bank Internship Program as well as an FBI/NMBA Bank Robbery Advisory Committee. We also enjoyed a very successful 2018 legislative session, largely due to our annual legislative road trip. The road trip gives us a chance to travel to communities around the state to meet with legislator and bankers to address the important banking and economic issues of the day. Congress Believe it or not, on May 24, the President signed S. 2155, the Economic Growth, Regulatory Relief and Con- sumer Protection Act, which had been passed earlier into law by a bipartisan vote in the Senate and House. The law in part: • Provides Qualified Mortgage designation for certain mortgag- es held in portfolio by banks with less than $10 billion in assets. To qualify for the special QM designation, the loan must: (1) be originated by and retained by the institution, (2) comply with current requirements regarding prepayment penalties and points and fees, and (3) not have nega- tive amortization or interest-only terms. Banks must still consid- er and verify the debt, income, and financial resources of the consumer. • Provides regulatory relief from the new Home Mortgage Disclo - sure Act requirements. The law provides that depository insti- tutions that have originated less than 500 closed-end or open- end lines of credit in each of the two preceding calendar years are exempt from disclosure require- ments recently added pursuant to the Dodd-Frank Act. The ex- emption would not be available to depository institutions that receive a Community Reinvest- ment Act rating of “needs to improve” during each of its two most recent examinations, or a rating of “substantial noncom- pliance in meeting community credit needs” on the most recent examination. • Provides relief from apprais- al requirements for federally related real-estate transactions valued below $400,000. The law sets forth certain conditions: the covered property must be located in a rural area; the bank must retain the loan in portfolio; within three days of delivery of closing disclosure, the originator must contact three state-licensed or state-certified appraisers from their approved appraiser list and document that no appraiser is available within five business days beyond customary and rea- sonable fee and timeliness stan- dards for comparable appraisal assignments. • Provides an exception to TILA escrow requirements for banks with less than $10 billion in as- sets, and have originated 1000 or fewer loans secured by a first lien on a principal dwelling during the preceding calendar year; • Removes the 3-day waiting period requirement in TILA/RE - SPA mortgage disclosures if the consumer receives a second offer of credit from the same lender with a lower rate. • Simplifies capital calculations for community banks with less than $10 billion in assets. Federal banking agencies are required to establish a community bank leverage ratio of tangible equity to average consolidated assets of not less than 8 percent and not more than 10 percent. Banks with less than $10 billion in total consolidated assets who maintain tangible equity in an amount that exceeds the com- munity bank leverage ratio will be deemed to be well capital- ized and in compliance with risk-based capital and leverage requirements. • Assists community banks in rais- ing stable funding by providing an exception for reciprocal de- posits from FDIC restrictions on acceptance of brokered deposits; • Exempts banks with less than $10 billion in assets from Vol- cker Rule requirements, and eliminates the Volcker naming rights restrictions for all asset managers and funds affiliated with banks; • Raises eligibility for Short Form Call Reports from $1 billion to banks with $5 billion in assets; • Raises eligibility for the 18-month exam cycle from $1 billion to banks with $3 billion in assets; • Raises the threshold for designa- tion as a systemically important financial institution from $50 billion to $250 billion in assets; • Ends stress tests for banks with under $250 billion in assets and change the frequency of supervi- sory stress tests to “periodic” for banks from $100 to $250 billion in assets. n