January 15, 2010 

Bankers Pack Economic Forum and 2010 Annual Legislative Reception

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Legislative Update: Mills Introduces GBA-Supported Legal Lending Limit Legislation

House Banking Committee chairman Rep. James Mills this week introduced legislation to amend state law relating to legal lending limits and it has already been reported out of committee and is eligible for floor action in the House. HB 926 would exempt renewals or restructuring of certain loans or lines of credit to customers in good standing from the legal lending limits to one borrower or business. We support this legislation and asked that it be introduced. The banks affected by this bill are those institutions whose capital has eroded to the point that current loans would exceed lending limits if they are renewed. Customers who are current with their loans and lines of credit will be spared the cost and inconvenience of seeking credit from other lenders in a difficult credit market. And, a bank will not be forced to sever a relationship with a customer who is in good standing and remove a performing asset from its portfolio. As a resource, we've developed an Issue Brief that explains the issue in more detail. In other news from the Legislature, the major business of the week was electing David Ralston from Blue Ridge as Speaker. Some change in House committee leadership is expected. In the Senate, most leadership will remain in place from last session. For more information, contact Elizabeth Chandler, 404.420.2027, or Joe Brannen, 404.420.2026. Also, check our State Issues web page frequently for updates about all pending legislation available for consideration in the 2010 legislative session.

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New Bank Fee Proposed to Recoup Taxpayer Funds
The Obama Administration Thursday announced a plan to levy a tax on bank holding companies, thrifts, insurance companies that own financial arms and broker dealers with at least $50 billion in assets that received assistance under TARP and other crisis efforts. The tax will pay the cost of bailout money that went to General Motors and Chrysler, which are exempt from the tax. "What's completely lost in the populist rhetoric is that the government is already seeing a huge return on its investment of taxpayer funds in banks. The investments in more than 700 banks of all sizes have returned an estimated $10.9 billion profit, a 14.9 percent return on investment, to the U.S. Treasury. The 26 Georgia banks receiving CPP investments have paid about $240 million in dividends to the government," said Joe Brannen, GBA President and CEO. As proposed, the only Georgia-based company to be subject to the tax would be SunTrust. The Obama administration defended making banks cover losses from the auto sector by saying U.S. auto makers collapsed in part because of a financial crisis of the banks' making, according to a Wall Street Journal article. Under the proposal, a 15 percent tax would be levied on liabilities and would go into effect on June 30, 2010. The proposed fee is expected to raise $117 billion over about 12 years, and $90 billion over the next 10 years. The 2008 law creating TARP required the White House to come up with a proposal to recoup any losses.

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FDIC Issues New Compensation Rule Proposal

The FDIC Board Tuesday voted to issue an advance notice of proposed rulemaking related to linking FDIC bank premium rates to the certain employee compensation practices. The FDIC does not seek to limit compensation amounts, “but rather is concerned with adjusting risk-based … assessment rates to adequately compensate the [Deposit Insurance Fund] for risks inherent in the design of certain compensation programs,” the preliminary proposal said. "Few, if any, traditional bankers were compensated for excessive risk taking, and we're concerned the FDIC is walking a very fine line between its mission of protecting the deposit insurance fund and dictating pay," said Joe Brannen, GBA President and CEO. The vote was split 3-2, indicating differing views about the FDIC's need and authority to regulate pay. Comptroller of the Currency John Dugan and John Bowman, acting director of the Office of Thrift Supervision, both voted against issuing the proposal, calling it “premature.” Dugan pointed out that Congress is addressing compensation as part of financial reform legislation, and the Federal Reserve recently proposed incentive compensation guidance. Bowman questioned the proposal’s assertion that 2009 material loss reviews after bank failures show it is needed. He noted that poor underwriting standards and asset concentrations -- in addition to compensation plans -- contributed to such failures, and that related pay plans involved certain loan officers, not the array of structures the proposal would affect. There will be a 30-day comment period following the proposal’s publication in the Federal Register. For more information, contact Elizabeth Chandler, 404.420.2027, or Joe Brannen, 404.420.2026.

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Inquiry Commission Kicks Off Investigation of Financial Crisis

The official congressional inquiry into the 2008 financial crisis began Wednesday. The Financial Crisis Inquiry Commission is headed by former California state Treasurer Phil Angelides, who vowed the commission would become "a proxy for the American people–their eyes, their ears, and possibly also their voice….If we ignore history, we're doomed to bail it out again." The heads of some of the nation's largest financial firms testified to the bi-partisan 10-member committee during the first meeting of what will be a year-long effort. Most bankers testifying struck a conciliatory tone and admitted mistakes were made throughout the system. Goldman Sachs Chairman and CEO Lloyd Blankfein acknowledged there was “a systemic lack of skepticism” in the industry during the boom years. One of the industry's biggest mistakes, he said, was rationalizing poor decisions made earlier in the decade. “While we recognized that credit standards were loosening, we rationalized the reasons with arguments such as the emerging markets were more powerful, the risk mitigants were better, there was more than enough liquidity in the system,” Blankfein said. Here's a link to official witness testimony.

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Accounting Standards Governing Loan Participations and Sales have Changed
New rules took effect Jan. 1 related to new transfers of financial assets, including loan participations and SBA loan sales. The new rules are in response to perceived flaws in accounting governing financial asset transfers, which have been highlighted due to the recent economic downturn. The new rules will not allow sales treatment of financial assets when any participating interest in the transaction receives preferences in cash flow, subordination or recourse (which includes last in first out provisions). Loan sales that do not qualify for sales treatment will be treated as secured borrowings, will not be removed from the books and will require the institution to hold capital to support it. Additionally, the gain on the sale of the guaranteed portion of SBA loans may have to be delayed until the participating interest transfer can qualify for sale treatment. There are many other complicated provisions that could apply, as well as other financial statement disclosures. We encourage you to contact your accountants about any effect this will have on your bank. Thanks to Tim Keadle at Porter Keadle Moore, LLP, for providing this explanation for the benefit of all GBA members.
 

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IRS Says "No" to Accelerated Deductions for FDIC Premium Prepayments
Member banks will not be allowed by the IRS to deduct in 2009 the portion of their three-year FDIC premium prepayment that relates to 2010. The GBA and ABA had encouraged the FDIC, Treasury and the IRS to follow the Treasury’s “12-month rule,” which would permit banks to deduct in 2009 the portion of the prepayment that relates to 2010. But according to the IRS, the FDIC’s intent was to assess and bill for 13 quarters. Thus, the IRS believes the prepayment is outside the scope of the 12-month rule, even for the 2010 portion. Basically, the IRS has rejected the argument that the payments should be “broken up” as shown on FDIC payment invoices so that the amount allocable to each calendar year can be treated as a separate and distinct expense that creates a benefit that applies to the period for which the payment is made. Instead, the IRS is treating the payment as one lump sum that applies to a 13-quarter period. The IRS has indicated that it will not issue formal guidance on this position. But it plans to announce the position at tax conferences and meetings within the next few weeks. For more information, contact Elizabeth Chandler, 404.420.2027, or Joe Brannen, 404.420.2026.

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General Regional Economic Improvement Noted by Fed Report

The Federal Reserve's latest Beige Book economic report for the sixth district, which includes Georgia, suggested slight improvement in overall economic conditions throughout the region during late November and December. The report notes better than expected holiday retail sales, a pickup in auto sales and stable prices for businesses. And, while unemployment remains high, reports of layoffs continued to decelerate in November and December. Some sectors, such as housing, tourism and manufacturing remain sluggish. Some banks reported easing in credit standards, but that was the exception. Nationally, economic conditions continued to improve modestly, although over a broader geographical area, according to the report. “Ten districts reported some increased activity or improvement in conditions, while the remaining two -- Philadelphia and Richmond -- reported mixed conditions,” the report said.

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Federal Reserve Issues New Credit Card Rules
The Federal Reserve this week announced extensive new rules aimed at protecting consumers in accordance with the Credit Card Accountability, Responsibility, and Disclosure (CARD) Act of 2009. The Fed’s Board approved a final rule amending Regulation Z (Truth in Lending). Credit card issuers must comply with most aspects of the rule beginning Feb. 22. "This rule marks an important milestone in the Federal Reserve's efforts to ensure that consumers who rely on credit cards are treated fairly," said Federal Reserve Governor Elizabeth A. Duke. The new law changes billing practices, sets new guidelines for interest-rate adjustments, restricts over-limit and other service fees and provides new provisions intended to help young credit consumers such as prohibiting card marketing on college campuses. The final rule represents the second stage of the Federal Reserve's implementation of the Credit Card Act. The remaining provisions of the Credit Card Act go into effect Aug. 22 and will be implemented by the Federal Reserve at a later date. Consumers can learn more about the Credit Card Act changes in a new online publication. "What You Need to Know: New Credit Card Rules."

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Positioning Your Balance Sheet for the Future a Hot Topic for Financial Risk Management Conference
In today's turbulent markets, community banks are facing constant pressure to strengthen their balance sheets. Join Kevin O’Keefe, Sandler O’Neill & Partners, as he discusses strategies to protect and enhance your bank's capital position. He'll also cover strategies to position your bank's balance sheet to take advantage of the historically low rate environment while mitigating the risks associated with future rate environments. The conference is scheduled for Jan. 20-21 at the Cobb Galleria Centre in Atlanta. For more information, contact GBA’s Marybeth Jones at 404.420.2032.

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Act Now: Early Banking School Registration Deadline Jan. 22
The deadline for the Georgia Banking School early registration discount for first-year students has been extended to Jan. 22. Take advantage of the $125 savings by enrolling one of your employees for the Class of 2012 now. The Georgia Banking School, a three-year resident and home study program, meets at the University of Georgia May 2-7. For more information about the importance of this school, please read the enclosed letter from the school’s Academic Director, Dr. Jim Verbrugge. Call GBA’s Marybeth Jones at 404.420.2032 for details and registration information.

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First Session Free!! Compliance Perspectives: A Monthly Update– Jan. 19
Keeping up with changes and deadlines in the compliance area gets more complex every year. Now, we can help you with that task. We are excited to be offering a brand new Webinar Series for 2010. It is called "Compliance Perspectives: A Monthly Update" to be conducted monthly by Carl Pry. Each month, Carl will be conducting a 1-hour webinar outlining the hot compliance topics, upcoming deadlines, and new regulations. This month’s agenda will include:

• New appraisal forms and Code of Conduct update

• New BSA guidance on cross-border transactions and electronic filing systems

• Proposed new information-sharing rules

• Regulatory emphasis on distressed loans: both mortgage and commercial RE, and new tenant foreclosure law

• New overdraft rule under Reg E for ATM and one-time debit transactions

• The risk-based pricing notice final rule that was finally issued

• Extension of FDIC deposit insurance

• Flood insurance Q&As and resulting examiner attention

• IRS reporting changes, including possibly a new form

• The new privacy notice - a formatting nightmare

• All things new RESPA - FAQs, new info booklet, and a compliance 'holiday?'

• The SAFE Mortgage Act - when to expect rules

• The many Reg Z actions - education loans, ownership transfers, Credit CARD Act, etc.

The series is priced at $159/month with a minimum 6-month subscription required. If you sign up for a 1-year commitment we will give you a free month. So, the cost would be $954 for six months or $1749 for 12 months. Just a reminder that the first session is FREE without having to sign up for the entire subscription. With questions or to register, please contact GBA’s Courtenay Pope at 404.420.2015.

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Learn How to Manage a Multi-Generational Workforce
Baby Boomers, Generation Xers and Generation Ys are employees of every company. Each group offers different management challenges. Internationally known management consultant Margaret Morford of The HR Edge, Inc. will give insight as to what motivates each group and how to tap into those values to enhance each employee’s productivity and job satisfaction. The HR Professionals Institute is March 17-19 at the Cobb Galleria Centre in Atlanta. The Renaissance Waverly Hotel is offering GBA members a special rate of $149. The rate is based on availability, so make your reservations early by calling the hotel directly at 770.953.4500. For more information or to register, contact Marybeth Jones at 404.420.2032.

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HMDA and CRA Workshop – Jan. 27
Led by Steve Moore with Bank Compliance Services, Avondale Estates, this one-day seminar is designed for compliance officers, loan officers and other bank personnel responsible for HMDA data collection and reporting. Topics to be covered include the new changes for 2010, types of loan applications that are HMDA reportable, the regulatory consequences for non-compliance, "community development" loans and much more. The HMDA and CRA Workshop is scheduled for Jan. 27 at Idle Hour Country Club in Macon. With questions or to register, please contact GBA’s Courtenay Pope at 404.420.2015.

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BSA/AML Compliance Seminar – Jan. 28
GBA will host its BSA/AML Compliance seminar Jan. 28 at Idle Hour Country Club in Macon. Attendees will learn about the Bank Secrecy Act, Anti-Money Laundering, the filing of SARs, OFAC, and much more. Ed Phillips – SunTrust Bank, AML Group; Steve Cross – SunTrust Bank, Bank Security; and Alvin Mitcham – SunTrust Bank, AML Group; will lead this workshop. Registration for each workshop is $225 per person. With questions or to register, please contact GBA’s Courtenay Pope at 404.420.2015.

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Learn About Proposed IRA Changes at IRA Basics Seminar
Take advantage of learning A to Z about IRAs by attending GBA’s annual IRA Basics seminar. Designed for new account representatives, certificate of deposit personnel and any officer/manager who oversees the IRA department, the seminar will be led by Patrice Konarik with Sunwest Training Corp. in Gilchrist, Texas. The comprehensive workshop will provide you with a complete understanding of the IRA as well as a review of significant proposed changes.  The seminar also includes the 225-page IRA Training and Reference Manual, otherwise known as the “IRA Survival Guide” or the “Red Book”. There are two dates for this one-day seminar: Feb. 10 at the Holiday Inn Lanier Centre in Gainesville and Feb. 11 at Idle Hour Country Club in Macon. With questions or to register, please contact GBA’s Courtenay Pope at 404.420.2015.

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Southeastern Bank Management and Directors' Conference Feb. 2 and Feb. 11
The economic recovery is on the horizon and now is the time for developing plans and loan strategies for the future. At the Southeastern Bank Management Conference, you will hear and discuss approaches for doing this in an environment in which expansion is likely to be slow and loan demand is likely to remain weak, the regulatory system will be challenging and bank capital markets will maintain a "show me some performance" perspective. The conference, sponsored by UGA’s Terry College of Business, is scheduled for Feb. 2 at the Mansion on Forsyth Park in Savannah and Feb. 11 at the Gwinnett Center in Duluth.

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Virtualization Panel Discussion at Operations and Technology Conference
Virtualization technology is poised to create the biggest impact on the IT industry since the advent of the Internet. Gartner analysts estimate that only 16 percent of enterprise workloads are running on virtual machines today. This number is expected to reach 50 percent by 2012. In this panel discussion, we’ll examine the key drivers for leveraging virtualization as part of a strategic IT plan and hear from industry experts with real-world experience implementing virtualization in a financial institution environment. The Operations and Technology Conference is March 2-3 at the Cobb Galleria Centre in Atlanta. The Renaissance Waverly Hotel is offering GBA members a special rate of $149. The rate is based on availability so make your reservations early by calling the hotel directly at 770.953.4500. For more information or to register, contact GBA’s Marybeth Jones at 404.420.2032.

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Effective Information Security Management Seminar – Feb. 18
If you are an Information Security Officer and want to make sure you have the best tools for your job, plan on attending GBA’s Effective Information Security Management seminar scheduled for Feb. 18 at the Idle Hour Country Club in Macon. The registration fee for this workshop is $130 and the instructors are Kimberly Tallant with Gladiator Technology Group, Alpharetta, and Jamie Davis with Safe Systems, Inc., Alpharetta. This one-day seminar will focus on the responsibilities of the ISO with a special emphasis on assessing risk and managing technical security controls. Some of the topics to be covered include:

• The best candidate for the role of ISO

• The required components of a comprehensive Information Security Program

• The case for a strong risk assessment methodology

• How to manage, monitor and test technical security controls

• Meeting examiner expectations.

This seminar also qualifies as curriculum credit required for the Bank Security Academy. With questions, please call GBA’s Courtenay Pope at 404.420.2015.

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AIB Online Instructor-Led Course Offerings, Sign Up Today!
Here are the instructor-led AIB online classes offered the week of Feb. 8. These courses are instructor-facilitated with weekly assignments and can be taken from your home or your office. All you need is a computer, printer and Internet access. (Classes with an asterisk * require Microsoft Excel Software.) Please register two weeks in advance to secure a seat in the class.

• Analyzing Financial Statements*, 16 weeks, $485

• Financial Accounting*, 16 weeks, $485

• Law & Banking:  Principles, 16 weeks, $455

• Principles of Banking, 16 weeks, $405

• Trust Basics, 16 weeks, $405

There is still availability in the following AIB Online classes beginning Feb. 1.  Please register as soon as possible to secure a seat in the class.

• ABA Online Review Course for the CTFA Exam,  8-12 weeks, $795

• Banking Today, 5 weeks, $315

• Economics for Bankers, 16 weeks, $405

• Today’s Teller:  Developing Basic Skills*, 8 weeks, $315

• Trust Operations, 15 weeks, $405

Please see the AIB Online Course Schedule for a complete listing or call GBA’s Alison Moreau at 404.420.2034 with questions.

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Register for GBA Webinars Today
GBA will offer the following webinars the week of Jan. 11:

• IRA Update – Jan. 12
• CIP: What is Fact? What is Myth? – Jan. 12
• Motivating & Managing the Teller Line – Jan. 13
• Safe Deposit the Fundamentals - 2010 Update – Jan. 14
• Dealing with Subpoenas, Summonses, Garnishments & Tax Levies – Jan. 14
• Loan Documentation 101, Part 1: The Basics: Obtaining Enforceable Liens Under UCC9 – Jan. 15

All webinars are live and allow time for questions and answers. The $250 registration fee gives you access to one web site "seat," one telephone site license and all handout materials. If you can’t attend the webinar, you may buy the audio CD, handout materials and a password to see the information online. With questions, please call GBA’s Courtenay Pope at 404.420.2015.

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Status of Important Banking Cases
Our thanks to the Office of the General Counsel of the American Bankers Association for making available the newest edition of the Status of Important Banking Cases to the members of our Bank Counsel Section. This monthly report provides up-to-date information about litigation involving banks across the country and is another member benefit for the attorneys in GBA's Bank Counsel Section. With questions about how your bank's attorney can participate in the Section, please call GBA's Kenyetta Parks at 404.420.2035.

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Get Employee and HR Compliance Toolkits
Keeping up with changing employment regulations and human resources best practices can be time consuming. Monitoring changes specific to the banking industry adds even more effort to the task. Employment Law Compliance, Inc. is a Strategic Partner of the Georgia Bankers Association and our primary resource to provide employee handbooks, toolkits, affirmative action plans and other compliance products specifically designed for community banks. Employment Law Compliance focuses on the needs of community banks that do not have the luxury of a large HR staff or in-house employment counsel. The company’s staff is committed to designing and maintaining solutions and services that can help your bank attract, hire, retain, and manage the best employees. For more information, please contact ELC’s Steven Greene at 770.206.3371 or GBA’s Levi Crabtree at 404.420.2022.

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Gain CRA Credit for Loans or Investments in the Senior Housing Crime Prevention Foundation
The Senior Housing Crime Prevention Foundation is a nonprofit organization based in Memphis that offers banks a measurable, no-risk, high-yielding avenue for gaining CRA credit. By making a loan or an investment with a guaranteed return, banks receive credit for Community Reinvestment Act (CRA) requirements. The Foundation uses the funds to set up the Senior Crimestoppers crime prevention program for nursing homes and senior HUD housing units in the bank’s direct CRA assessment areas. All dollars invested in or loaned to the Foundation are fully collateralized with investment-grade bonds, which are selected with the bank’s input depending on the degree of risk it wants to take. Banks are guaranteed a return on the coupon value of the bonds minus moderate basis-points spread to cover the cost of the Senior Crimestoppers program. For more information, please contact Terry Rooker at 877.232.0859 or Levi Crabtree at 404.420.2022.

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Find a Job, Post a Job with GBA Job Bank
The Georgia Bankers Association offers free job posting resources for our member banks. These listings can be viewed online or through our bi-weekly publication included in the GBA Bulletin. Resume postings are also available. For more information, please call Kenyetta Parks at 404.420.2035.

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Read All About It -- Send Us Your News
Please remember to include the Georgia Bankers Association on the list of recipients for announcements about promotions, new employees and special recognition your bank has received. We want to share your news with your colleagues across the state. Please forward your announcements and photos to GBA's Lydia Thomas.

Newsmakers

Albany - AB&T National Bank
W. David Campbell and Walker Davis have joined the Board of Directors of the bank and its holding company, Community Bancshares, Inc.

Atlanta - Georgia Commerce Bank
Seth Gray has been promoted to Vice President, Edwin Padgett to Assistant Vice President, and Jesse Erickson to Assistant Vice President.

Augusta - Georgia Bank & Trust
Michelle A. Redd has been promoted to Vice President, Electronic Banking; Phillip J. Cerrillo Jr. to Banking Officer and Office Manager; and Ricky O. Mays Jr. to Banking Officer.

Cartersville - Bartow County Bank
Congratulations to Diana Pittman and Anderea Williams on their 30 years of service.

Fayetteville - SouthCrest Financial Group, Inc.
Lauri Irvin has been promoted to Vice President of Marketing, Jaye Eubanks to Vice President of Operations, and Sandra Hernandez to Assistant Vice President and Human Resources Manager.

Marietta - Highland Commercial Bank
Loretta Pearson has joined the bank as Group Vice President, Administration.

Newnan - United Bank
Steve Stripling has joined the bank as President, Will Connoly as Vice President and Commercial Lender, and Anna Chambless as Assistant Vice President and Executive Assistant.

Social Circle - Pinnacle Bank
Congratulations to Rip Malcom on his upcoming retirement from Pinnacle Bank and his affiliation with GBA Associate Member Evaluation Management Group (EMG).

Campbell	Davis	Redd	Cerrillo	Mays	Pittman & Williams
Irvin	Eubanks	Hernandez	Stripling	Connoly	Chambless	Malcom