The FDIC estimates that the cost of resolving Silicon Valley Bank will likely be $20 billion, which will be recovered by a special assessment on banks. FDIC Chairman Martin Gruenberg has not said what form the assessment would take or which institutions will be required to pay.
The agency will put forward a proposal for comment in May, along with a report following a comprehensive review of the deposit insurance system. Meanwhile, Chairman Gruenberg estimates the cost for resolving Signature Bank at $2.5 billion. Both cost estimates are subject to change depending on the ultimate recoveries for each receivership.
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2023 Washington Summit Recap
Banker delegates from North Carolina were in D.C. learning and advocating on behalf of our industry last week as part of the ABA's Washington Summit.
The summit began with three important ABA events: the Mutual Community Bank Forum, the Women and Allies Forum, and the Emerging Leaders Forum, where our NC Emerging Leaders were well represented! Following these forums, delegates took part in a general session featuring updates from key regulatory and legislative figures, including a fireside chat featuring Rep. Patrick McHenry with an introduction from North Carolina's own Amanda Lloyd (North State Bank).
As always, the capstone of the event was our visit to Capitol Hill. Delegates had the opportunity to ask questions and make their voices heard as they met with the key policy-makers and their chiefs of staff. We thank everyone who participated in this important event! If you missed the excitement, we urge you to consider attending the ICBA's Capital Summit on May 14-17, 2023.
Federal Legislative & Regulatory Updates
Bank Term Funding Program
There will be “no stigma” for financial institutions that use the newly created Bank Term Funding Program (BTFP), and regulators will view use of the BTFP as “prudent planning” in the context of sound liquidity management, Federal Reserve officials said during a webcast on the program. Eligible borrowers for BTFP include all U.S. federally insured depository institutions as well as U.S. branches or agencies of foreign banks.
Advances can be requested until March 11, 2024, when the program is scheduled to end. Information on the names of the borrowers, amounts borrowed interest rates paid and collateral pledged will not be disclosed to the public until March 15, 2025. While the Fed will report on aggregate balances related to the BTFP weekly, no individual borrowers will be named. Any collateral eligible for purchase by the Federal Reserve Banks in open market operations, and owned by the borrower as of March 12, 2023, qualifies. There is no limit to the number or size of advances in the aggregate. Eligible depository institutions may borrow up to the value of eligible collateral they pledge. Borrowers may prepay advances at any time without penalty.
FedNow to Launch in July
The Federal Reserve’s FedNow instant payments service will begin operating in July. The Fed will begin the formal certification of participants in the first week of April for the launch. As part of that process, early adopters will complete a robust testing program to ensure operational readiness and network experience ahead of the go-live date.
OFCCP Sets Federal Contractor Certification Deadline
The Office of Federal Contract Compliance Programs will open its contractor portal on March 31 for federal contractors to certify compliance with affirmative action program (AAP) requirements for this year. The deadline for certification is June 29. OFCCP said previously in an FAQ on its website that banks are federal contractors by virtue of their accepting deposit insurance, but that conclusion is disputed by many. Federal contractors and subcontractors must use the contractor portal to certify, on an annual basis, whether they have developed and maintained an AAP for their headquarters and each branch or other establishment.
New Requirements for Large Banks
The Federal Reserve will propose a long-term debt rule for large banks that are not globally systemic important banks, which will require the banks to maintain a cushion of loss-absorbing resources to support stabilization and allow for resolution in a manner that does not pose a systemic risk to the overall financial system, according to Congressional testimony by Federal Reserve Vice Chairman for Supervision Michael Barr. A review of how regulators handled recent bank failures will be made public by May 1.
Beneficial Ownership Reporting Requirements
FinCEN has published its first set of guidance materials to aid the public and small businesses in understanding upcoming beneficial ownership information reporting requirements taking effect on January 1, 2024. The materials include an FAQ, one-page guides to key filing dates and key questions, and an introductory video, along with a more detailed informational video about the reporting requirement.
SEC Cybersecurity Rules
The SEC has released three proposed amendments to existing cybersecurity-related rules, including new customer notification requirements for data breaches. First, the SEC proposed to amend Regulation S-P to require brokers and dealers, investment companies and investment advisers registered with the agency, to adopt written policies and procedures for incident response programs. Second, the SEC proposed a new rule to require certain registrants under the Exchange Act to address cybersecurity risks through policies and procedures, notification and reporting to the commission, public disclosure and record retention. Third, the SEC proposed amendments to Regulation Systems Compliance and Integrity to expand the scope of entities subject to the regulation and to update certain provisions. The SEC has also reopened the comment period by an additional 60 days for last year’s proposal involving cybersecurity risk management, strategy, governance and incident notification by public companies.
FHFA Seeks Input on New Credit Score Models
With the FHFA working to replace the classic FICO credit score model with the FICO 10T and VantageScore 4.0 credit score models for use by Fannie Mae and Freddie Mac, the agency is seeking public feedback on its implementation plans. FHFA is planning to implement the new credit score models over two phases in 2024 and 2025. Once in place, lenders will be required to deliver both FICO 10T and VantageScore 4.0 credit scores with each loan sold to the GSEs. The new models capture additional payment histories for borrowers when available, such as rent, utilities and telecom payments.
CFPB Releases Bank-Level HMDA Data
The CFPB has published Home Mortgage Disclosure Act modified loan application registers for each financial institution that filed HMDA data collected in 2022. The data from the CFPB is modified to protect applicant and borrower privacy.
HUD to Reinstate 2013 Disparate Impact Rule
HUD will re-codify the 2013 disparate impact rule, saying the rule “is more consistent with how the Fair Housing Act has been applied in the courts and in front of the agency for more than 50 years.” HUD’s proposal would overturn a 2020 final rule that conformed the 2013 disparate impact rule with the U.S. Supreme Court’s 2015 decision in Texas Department of Housing and Community Affairs v. Inclusive Communities Project, which recognized disparate impact analysis to demonstrate discrimination claims under the FHA but added key limitations to ensure the burden of proof in disparate impact cases is with the plaintiffs.
The 2020 final rule never took effect because a Massachusetts federal district court judge stayed the rule pending consideration of consumer advocates’ challenge to the rule as arbitrary and capricious. In an accompanying fact sheet to the announcement, HUD argues the 2013 rule provides a more straightforward framework for determining discriminatory effects than the 2020 rule.
CFPB to Require Credit Card Issuers to Share More Data
The CFPB is requiring many credit card issuers to report more details about the types of credit card plans they offer on a CFPB survey, with the goal of creating a website for consumers to compare card offerings. The CFPB’s semiannual terms of credit card plans survey has been administered for decades, having been created by the Federal Reserve. The survey collects and publicizes product data on credit cards from the largest 25 issuers as well as a sample of at least 125 additional issuers.
FHFA to Delay New DTI Ratio-Based Fee Due to Operational Concerns
FHFA will delay the implementation of a new debt-to-income ratio-based fee until August 1 to allow additional time for lenders to prepare to deploy it. As part of its effort to overhaul the single-family guarantee fee pricing framework, the agency in January had announced the new upfront fee for certain borrowers with a debt-to-income ratio of above 40%, along with redesigned and recalibrated pricing grids for upfront fees.
Repercussions for Executives of Failed Banks
The Biden Administration is calling on Congress to expand the FDIC’s authority to claw back compensation from executives at failed banks, bar bank executives at failed banks from holding jobs in the banking industry and bring fines against executives of failed banks. Currently, the FDIC can bar executives who engage in “willful or continuing disregard for the safety and soundness” of their institutions.
State Legislative & Regulatory Updates
Commissioner Bosken Confirmed to a New Four-Year Term
The North Carolina House and Senate have unanimously confirmed Commissioner of Banks Katherine Bosken to a new four-year term. Given Commissioner Bosken’s impressive credentials and record of accomplishments and the full support of the NCBA, legislators wasted no time in moving the bill – S 54 – and ensuring that our state maintains its national reputation for strong and highly effective banking supervision.
General Assembly Activity
Bill filings at the North Carolina General Assembly have reached a frenetic pace. Over 900 bills have been filed since January and many hundreds more are expected within the next few weeks. Out of these bills, the NCBA is currently tracking or lobbying on 36 bills that affect banks. Included with this issue of the Bulletin is our current Bill Tracker. Of the tracked bills, H 410 (Credit Union Update), H 417 (Anti-Boycott Divestiture), and S 369 (Fair Access to Financial Services Act) are among the most notable currently. We are working to address numerous issues with these bills.
Also of note, the NC House is slated to release its version of the state budget. The proposal was expected to begin appearing this week. This would set up a timeline for the House to pass the budget the first week of April and send it to the Senate for consideration. The Senate plans to have its version passed in May. Both chambers hope to have an agreed upon version by June 30.
Recognize Your Employees' Achievements with a Service Certificate
If you would like to take advantage of the NCBA's Service Certificate recognition program for employees and directors, you must submit your list by May 19. Let us help you honor your employees who have made banking their career. Certificates cover all years of service to the banking industry, not just the financial institution where the recipient is currently employed. Certificates are presented in five-year increments, beginning with five years of service.
Last Call! Book Your Room for the 2023 AMC by April 3
Each year, the American Mortgage Conference brings together policymakers, investors, leading experts in the financial services industry and mortgage practitioners of every kind, providing a prime opportunity to discuss important industry issues and analyze the progress being made in Washington. We have reserved a block of rooms at the award-winning Wild Dunes Resort for a reduced rate of $284, but act quickly - this rate is only available through April 3 or until the block is full!
In addition to the hotel deadline, April 3 is the final day to sign up for this event and save on registration with the early bird discount! Join us for the American Mortgage Conferenceon May 1-3, 2023.
Join us for the NC School of Banking with an Alumni Update
Are you ready to dive deeper into the world of banking? Then submit your application for theNorth Carolina School of Banking. With top-notch training from some of the sharpest minds in the industry, there’s no other experience quite like it. This one-week program will run from July 31 - August 4 at the Sheraton Imperial RTP, so apply today and join us in the summer!
Have you already completed this program? Consider joining us for theAlumni Update to refresh your skills and catch up on the latest banking knowledge!
Last call! Join Us at the 2023 Bank Directors Assembly
Bank Directors must be well-informed and up-to-date with industry trends in order to adequately perform their jobs and contribute to the success of their bank. In order to become and remain an expert in the financial industry, bank directors should regularly participate in comprehensive training. Join us for the 2023 Bank Directors Assembly on April 3-4, 2023, at the Raleigh Marriott Crabtree Valley!
Bankers in Schools - Volunteer Sign-Ups Open on March 31!
We are excited to announce that the 2023 Bankers in Schools will be accepting volunteers starting on Friday, March 31! This year's program will be held April 24-28, and we will once again welcome all North Carolina bankers to serve as volunteers. Volunteers will teach a 45-minute lesson on budgeting using a specially tailored curriculum created by the NC Emerging Leaders, including a boardgame tailored for this initiative.
The purpose of the program is not only to teach students basic components of financial education, but also to initiate and foster relationships between bankers and their communities. We hope to see many of you taking part!
NCBA Partners with Banks and HBCUs on Future Bank Leaders Program
We are excited to announce our partnership with Historically Black Colleges & Universities and North Carolina banks to launch the Future Bank Leaders program. The goal of this custom-built initiative is to attract undergraduates to the dynamic, fast-changing world of modern banking, while supporting Tar Heel state banks by developing the next generation of high-quality talent.
The program offers vast resources to partnering HBCUs, including:
Introduction to the key concepts of banking and credit
Opportunity for students to earn the industry-recognized Risk Management Association (RMA) Credit Essentials Certificate (CEC)
Faculty support via bankers as guest instructors
Electronic materials including instructor guides, textbooks, workbooks, case studies
Mentoring from senior bank leaders
Networking with peers and banking professionals
One-on-one career guidance
Look out for more on this exciting program in future editions of the NCBankers Bulletin!
Coming Soon: 2023 Banks of the Carolinas Compensation Survey
The Banks of the Carolinas Compensation Survey, conducted in partnership with the North Carolina Bankers Association, provides the most detailed data on banking compensation and pay practices available today. This survey includes key benchmarking information that will help you assess the competitiveness of your salary and incentive plans. The survey provides compensation data for over 280 positions broken out by asset size and geographical region. The report also presents key policies and practices metrics covering salary administration, short-term and long-term incentive plan design, average turnover rates, mortgage originator compensation and plan design, and commercial loan officer compensation and plan design.
Data Effective Date: April 1, 2023
Submission Due Date: May 26, 2023
Publish Date: Week of August 14, 2023
Participant State Report Purchase Price: $595
Non-Participant State Report Purchase Price: $1,475
Participation emails will be sent the first week of April. Email Rhonda Snyder at firstname.lastname@example.org if you do not receive the email containing your participant information.
First Citizens BancShares Agrees to Purchase Commercial Banking Business of Silicon Valley Bank
First Citizens BancShares (FIZN) has agreed to purchase the commercial banking business of Silicon Valley Bank (SVB) following the recent collapse of the latter entity. SVB's 17 branches will reopen under the First Citizens brand on Monday, and all SVB depositors will become depositors of First Citizens, according to a Federal Deposit Insurance Corporation (FDIC) press release.
Providence Bank Ranked In S&P Global Market Intelligence’s 2022 Top 100 Community Banks Less Than $3 Billion In Assets
PB Financial Corporation (PBNC) President and CEO Ted E. Whitehurst announced that Providence Bank has been ranked in S&P Global Market Intelligence’s 2022 “Top 100 Community Banks with Less than $3 Billion in Assets,” out of 3,782 eligible banks in the analysis. The organization ranks institutions based on returns, growth, and efficiency, and places a premium on the strength and risk profile of balance sheets.
First Carolina Bank Announces Deposit Partnership with BMTX, Inc.
First Carolina Bank announced today a new partnership with BMTX, Inc. (BMT), a financial technology company and a subsidiary of BM Technologies, Inc. Both companies have entered into a Deposit Processing Services Agreement for a partnership in which the bank will be the exclusive provider of deposit accounts for customers of BMT’s BankMobile Higher Education Program, subject to regulatory approval.
On the Lighter Side
If I had a dime for every time I was wrong, I'd be broke.