David Barksdale, President and CEO of Piedmont Federal Bank, has been leading the push nationally to provide mutual banks with options to issue capital instruments that would qualify as tier 1 common equity or as additional tier 1 equity.

Those efforts culminated this week as the Federal Reserve released an FAQ, a template for a Common Equity Tier 1 Term Sheet, and an Additional Tier 1 Term Sheet that mutual banks can use as they consider engaging in raising capital. The Fed has indicated that these approaches are just a start, and that the Fed remains open to further refinement and improvement once mutuals have an opportunity to review and work to implement this new approach.

“This represents a huge win for the mutual banks in our state and nation,” said Barksdale. “Mutual banks, which make up roughly 10% of the charters in the U.S. and about a third of North Carolina charters, have not had a consistent method to raise capital—something stock banks can do without regulatory approval or outsized legal fees. After several years of work, a group of 30 representatives from banks and associations met in Washington to make the case for a straightforward path for issuing mutual capital certificates. The coordinated efforts of bankers, state and national associations, and key regulators have brought us to this important milestone.”

Comptroller of the Currency Jonathan V. Gould also expressed support for the actions by the Federal Reserve, noting that the OCC recently authorized a federal mutual savings association to issue a mutual capital certificate that qualifies as regulatory capital – the first approval for a mutual capital certificate for a federal mutual savings association in decades.

Author: sdbrownlow

Student of Design