BCLP Banking Blog

Bank Bryan Cave

Commentary

Main Content

Conversations about Banking: An Interview with Greg Morse

This month we continue our “Conversations about Banking” series. The series will consist of video conversations with leaders and influencers in the banking industry about topics of current interest. We hope you will enjoy and find benefit in this new aspect of BankBCLP.

In this session of Conversations about Banking  Jim McAlpin speaks with Greg Morse, CEO of Worthington National Bank in Ft. Worth, Texas. Worthington National is a business oriented bank serving the Ft. Worth and Arlington, Texas communities. Greg is a native Texan who is as comfortable in a saddle as he is in a board room, and his observations about banking are both pragmatic and insightful. During the conversation Greg also describes the community outreach that is at the core of his bank’s culture, including financial literacy education for those in need. Please join us for this enjoyable 25 minute discussion.

Read More

Conversations about Banking: An Interview with Jon Winick

This month we continue our “Conversations about Banking” series. The series will consist of video conversations with leaders and influencers in the banking industry about topics of current interest. We hope you will enjoy and find benefit in this new aspect of BankBCLP.

In this session of Conversations about Banking, Jim McAlpin speaks with Jon Winick, CEO of Chicago based Clark Street Capital. Jon is also the editor and main contributor to the BAN Reports, a widely read banking industry newsletter. During our conversation, Jon shares his candid observations on a wide range of trends and developments impacting the financial services industry. This is a quick paced and entertaining 30 minute video discussion.

Read More

Conversations about Banking: An Interview with Bill Easterlin

This month we continue our “Conversations about Banking” series. The series will consist of video conversations with leaders and influencers in the banking industry about topics of current interest. We hope you will enjoy and find benefit in this new aspect of BankBCLP.

In this second installment of our new “Conversations about Banking” series Banking group partner Jim McAlpin speaks with Bill Easterlin, CEO and President of Queensborough National Bank & Trust Co. Bill is the fourth generation leader of a $1.5 billion family owned bank in eastern Georgia.

Read More

Conversations about Banking: An Interview with Bobby Nix

This month we begin a new series “Conversations about Banking.” The series will consist of video conversations with leaders and influencers in the banking industry about topics of current interest. We hope you will enjoy and find benefit in this new aspect of BankBCLP.

In the first installment of “Conversations about Banking” our partner and Banking practice group leader Jim McAlpin speaks with Philadelphia based entrepreneur Bobby Nix. Mr. Nix has served on the boards of several community banks over the past four decades. As an African American he has a perspective on diversity within banks and bank boards that is timely to hear within our industry. As a successful entrepreneur he is also a champion of the positive impact that community banks can have on small businesses. Mr. Nix currently serves as the chair of the Loan Committee and the ALCO Committee of Hyperion Bank, which has offices in Philadelphia and Atlanta.  

Read More

11+ Years of TARP

11+ Years of TARP

November 6, 2019

Authored by: Robert Klingler

As I have repeatedly written on this site, without regard to other benefits associated with the Troubled Asset Relief Program (such as avoiding a further collapse of the global financial system), the TARP program, and particularly the Capital Purchase Program, was profitable for the U.S. Taxpayer. As a banking lawyer and son and grandson of community bank presidents, I’ll concede that I’m biased. But the numbers speak for themselves.

Even ProPublica acknowledges that TARP was profitable.

Overall, the TARP remains in the black, though just barely.

What does ProPublica means by “barely” profitable? Apparently, “a narrow profit of about $1 billion.”

I hate it when I only have a billion dollars in profit. That’s $1,000,000,000.00 to put it in context.

Read More

Is the OCC on a Path to Greater Power?

bankthinkIn a recent American Banker BankThink article, Partner Dan Wheeler explores the possibility that the OCC could rise in stature, while the other banking regulatory agencies fall out of favor.  By largely staying out of Congress’ scrutiny and taking a lead on fintech regulation, Dan argues that the OCC is well positioned to obtain greater chartering and regulatory responsibility under a Trump administration.

Some regulatory agencies, such as the Consumer Financial Protection Bureau and Federal Reserve Board, appear ripe for more congressional criticism and even curbs to their authority under the incoming Trump administration. But one may be in relatively good position to have its authority expanded: the Office of the Comptroller of the Currency.

The OCC has stayed under the radar and avoided the political backlash aimed at other regulators while also emerging as a new leader in the fast-growing area of fintech regulation. The OCC’s focus on innovation and its largely pristine image among lawmakers could lead to greater chartering authority and — if the CFPB continues to lose favor — more responsibility to oversee consumer rules.

Continue Reading Dan’s position, OCC Could Gain Power as Other Agencies Fall Out of Favor, on AmericanBanker.com.

Read More

CFPB Denied

CFPB Denied

November 11, 2015

Authored by: Robert Klingler

Invoking memories of Apple’s famed 1984 Superbowl commercial, a group called the American Action Network aired an anti-CFPB spot during last night’s Republican presidential debate. If nothing else, the spot should encourage further discussion of the role and impact of the Consumer Financial Protection Bureau.

The spot certainly portrays the CFPB in an evil light that is sure to please many in the banking industry, but its broader impact is less certain. A well-written piece by the American Banker offers several reasons why the ad could backfire, not the least of which is the hyperbolic nature of (and shortcuts taken by) the spot.

And former FDIC Chair Sheila Bair seems to agree.

Read More

Extending Credit to a Bank Holding Company

Over the past several years reports of someone extending credit to a community bank holding company were similar to sightings of the Yeti in the Himalaya, you might hear about it but you never actually saw one. The number of bank failures and the consequent insolvency of many bank holding companies has led to a natural reluctance on the part of many lenders to provide such financing. The losses that many lenders suffered on such loans has raised some interesting questions about the loans were structured to begin with. The typical loan documentation for such a credit usually has traditionally had only a few financial covenants. The obligation to maintain well capitalized status for both the bank holding company and the subsidiary bank has been the primary focus on the assumption (not altogether incorrect) that maintaining a strong capital base cures many sins. Other covenants might address the ratio of non-performing loans to total capital, the ratio of the Allowance for Loan and Lease Losses to classified assets or simply the bank’s Texas ratio.

Historically, banks generally use financial covenants in loan documents as a signal to either cause the borrower to take immediate action to right the ship or to allow the lender to exit the relationship.  In theory, the “early signal” approach works in many types of businesses and industries. It has proven, however, to be problematic in the banking industry. The issue that lenders have run into is that a loan to a bank holding company is unlike any other type of loan they might make. In a nonbanking environment the lender might seek to take control of the assets and liquidate them.  At the end of the day the lender is free to liquidate assets and apply the proceeds toward the loan within a broad framework provides by general contract law and the UCC. A loan secured by a controlling interest in a bank presents a different situation.

When the subsidiary bank gets into financial distress the lender to the bank holding company can be presented with a difficult dilemma. During this past recession, it was not unusual to see banks downgraded from 2 to 5 on the CAMELS ratings in one examination cycle and to fall from being well capitalized very quickly. Thus, the early warning nature of the traditional financial covenants were of almost no assistance whatsoever to the lender. Once the subsidiary bank was considered “troubled” and prevented from making dividend payments to the holding companies, bank holding company loans quickly moved into default and in many cases had to be written off completely. Another particularly damaging element was the use by banks of  interest reserves for loans in the ADC portfolio. Interest reserves served to mask a decline in the quality of the underlying loans in that a loan may show as current on the bank’s books while in reality the real estate project has stalled.

Read More

Commentary: The End of Community Banking?

On June 29, 2010, Sarah Wallace,  chair of the board of directors of First Federal Savings and Loan Association in Newark, Ohio, authored a passionate opinion piece in the Wall Street Journal titled “The End of Community Banking.”  While I agree with many of Ms. Wallace’s points, I do NOT see the end of community banking in the foreseeable future.

I do think that we are going to see tighter regulations and tighter credit than we saw in the five years before the financial meltdown – 2002 through 2007.  Those five years were the culmination of a world wide expansion of credit and leverage that began in the US around 1980, so we really had a great run.  Nonetheless, by 2002, a good number of observers would argue that credit availability was running somewhat out of control.

As Mrs. Wallace suggests, we will have tighter rules, but they will by nowhere near as tight as those that prevailed until the late 1980’s or early 1990’s.  During my career beginning in the late 1960’s, we have done away with limits on interest paid on deposits, most commercial usury limits, limits on branching and cross state expansion, certain caps on real estate lending, and we have expanded the lending limit in many cases from 10% of capital to 25%.  Most of these changes will not be reversed, and credit will continue to be available for borrowers who can demonstrate an ability to repay the loan.  However, I do not see banks going to the credit excesses of the 2002-2007 period, and there will be  people who might have gotten loans then who will not be able to get loans in 2011… and that is probably not all bad.

Wallace is chair of the board of directors of First Federal Savings and Loan Association in Newark, Ohio.Wallace is chair of the board of directors of First Federal Savings and Loan Association in Newark, Ohio.
Read More
The attorneys of Bryan Cave Leighton Paisner make this site available to you only for the educational purposes of imparting general information and a general understanding of the law. This site does not offer specific legal advice. Your use of this site does not create an attorney-client relationship between you and Bryan Cave LLP or any of its attorneys. Do not use this site as a substitute for specific legal advice from a licensed attorney. Much of the information on this site is based upon preliminary discussions in the absence of definitive advice or policy statements and therefore may change as soon as more definitive advice is available. Please review our full disclaimer.