Proposed FDIC Assessment a Heavy Burden for Georgia Banks

The FDIC’s interim final rule that would levy a special emergency 20-basis-point assessment on all banks to recapitalize the Deposit Insurance Fund would be a big blow to Georgia’s banking industry. We’ve heard from a lot of you about how it would affect your banks. GBA estimates that Georgia-based banks in aggregate would pay an additional $405 million into the fund based on deposits at active banks. For comparison, that estimate exceeds total combined 2008 earnings for all Georgia-based banks. “We’ve heard loud and clear that this is a significant issue for our members. It is important that we protect the integrity of the fund and maintain depositor confidence, but we need to do so in a way that doesn’t create an even worse economic climate for our members and the customers you serve,” said Joe Brannen, GBA President and CEO. Brannen and GBA Chairman Steve Jordan, CEO, Bank of Monticello, participated in an conference call this week with FDIC Chairman Sheila Bair. She said several options had been considered instead of the one-time assessment including using FDIC's $30 billion credit line with the Treasury, assessing only the higher-risk institutions at a greater level, and charging larger banks a higher rate to reflect their systemic importance. For various reasons, she said, the FDIC board rejected all three options and instead decided to pursue the one-time assessment.

Senate Banking Committee Chairman Chris Dodd plans to introduce a bill that would increase the FDIC’s Treasury borrowing authority from the current $30 billion to $100 billion on a permanent basis. It also would increase the authority temporarily to $500 billion until December 31, 2010. The FDIC has requested this increase in borrowing because the $30 billion level was last set in 1991 and, since then, the amount of assets in the banking industry has tripled – from $4.5 trillion to $13.6 trillion – while the borrowing authority has been frozen at the 1991 level. The FDIC has stated that with the increased borrowing authority provided in this legislation, it believes it can reduce the size of the special assessment from 20 basis points to 10 basis points while still

Bankers are being creative and offering ideas for solutions to help ease capital constraints. At the request of one member, GBA has been discussing with a number of regulators and legislators the idea of modifying or eliminating the requirement that loan loss reserves above 1.25 percent cannot be included in calculations for meeting regulatory capital guidelines. As the banker pointed out, this is real capital that banks have on hand that is available to protect against losses, and the cap seems to be arbitrary. Removing the 1.25 percent cap could free up more than $850 million in additional regulatory capital cushion for Georgia’s banks. The idea is gaining traction on a number of fronts. Comptroller of the Currency John Dugan made note of this issue in a speech this week to the Institute of International Bankers.

The U.S. Treasury Wednesday announced guidelines for borrowers, lenders and services as part of the massive Making Home Affordable Program to prevent foreclosures. There are incentives included for all parties to mitigate foreclosures. Treasury estimates that the program could help as many as 9 million homeowners avoid foreclosures. Key details are available at www.financialstability.gov, which you can also link to from our GBA Federal Issues page. On Tuesday, Treasury and the Federal Reserve announced details about the Term Asset-Backed Securities Loan Facility (TALF), a component of the Consumer and Business Lending Initiative (CBLI).

Legislature Has Busy Week With Banking-related Bills/Now Expects to Adjourn in April

• A bill passed the Senate requiring a new foreclosure notice to renters, but no requirement was included to require the buyers to allow renters to stay following foreclosure.

• A comprehensive bill rewriting Georgia's Trust Code passed the Senate.

• The retraining tax credit bill has been revised to partially restore the credit currently available to banks.

• Two new uniform bills have been acted upon dealing with electronic deed recording and electronic signatures

Several new bills were introduced this week. 

• Sen. Ed Tarver introduced a bill that would raise the bankruptcy exemptions.

• Rep. Billy Mitchell dropped in a bill that requires banks to notify law enforcement when they suspect elderly financial exploitation.

• Rep. Margaret Kaiser introduced legislation requiring bonds representing 25% of the value of a property sold at foreclosure to ensure properties are maintained.

• Rep. David Lucas' bill would prohibit banks from being approved as state depositories if the banks charge a fee to cash "on us" checks.

We are tracking an inordinate number of bills this legislative session and we constantly update our State Government Issues page on our website. We trust you are checking it often to stay abreast of this fast-moving session of the Georgia General Assembly. With questions, please contact GBA’s Elizabeth Chandler, 404.420,2027 or Joe Brannen, 404.420.2026.

GBA continues to serve as an important resource to our legislators and we are speaking regularly with members of our Georgia delegation in Washington. You may recall that we reported on some interesting ideas related to mark-to-market accounting and rules about how and when stock traders can short

Visit our GBA home page and you’ll notice an important tweak to the site. The idea is to give you fast access to the newest, most important resources we have available. So, we’ve added two new sections right at the top of the center information panel. “What’s New, What’s Hot” carries several links directly to breaking news from the GBA, regulatory agencies and official government web

Our annual golf outing is a great time to talk to your local legislators and directors about issues that are important to your bank. Leadership GBA’s eighth-annual Georgia BankPAC Classic will be Wednesday, April 29, at Kinderlou Forest Golf Club in Valdosta. Format is a two-person scramble.

Act now for a great $395 deal on early-bird registration for Leadership GBA’s Leadership Conference. Early-bird sign up ends April 15. Conference attendees will get great information, including economic and regulatory updates, ideas for to building and maintaining relationships with your customers during difficult times and up-to-date legislative news. The conference also provides excellent networking and idea-sharing opportunities. The conference will be July 12-15 at Amelia Island Plantation in

Just a reminder that GBA will offer the following webinars the week of March 9:

• Flood Insurance: Increased Scrutiny and Enforcement, including Construction and Condo Situations – March 10

• Training Secrets from the Pros – March 10

• Executive Briefing Teleseminar Series: Updates to the Financial Crisis - What’s Ahead?, Part 1 Replay – March 12

• Remote Deposit Capture: New FFIEC Guidance – March 12

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.

$99 GBA Hot Topic at HR Professionals Institute March 11:

Recovery Package Effect on COBRA Benefits

This is as up-to-date as it gets. Come find out how provisions in the recently announced economic recovery package affect COBRA costs for your employees and your bank. For example, separated employees are now only responsible for paying 35 percent of COBRA benefit premiums. So, what’s your bank’s responsibility and are there any offsetting tax benefits for your bank? Join us to learn from our experts what you need to know to make sure your bank manages this new process correctly to help

Special Offer - $99 GBA Hot Topic: Environmental, Storm Water Seminar – April 2

Learn about stringent environmental requirements affecting your financial institution’s liability. If you are responsible for foreclosed properties, this one day seminar will cover an overview on the new stringent environmental requirements and much more. O’Brien & Gere Engineers, Inc. and Womble Carlyle Sandridge & Rice will lead this seminar. Special guest, Dr. Bert Langley,

Significant changes have been made to the Truth in Lending and RESPA regulations that will greatly affect your institution’s lending compliance program and loan operations. Learn about these changes, prohibitions, new categories of closed-end mortgages and much more in this one-day seminar. Harriett P.

Interested in learning about all forms of external bank fraud? Learn about email-scams, check fraud, counterfeit checks and much more by attending GBA’s Fraud seminar scheduled for Thursday, March 12, at the Idle Hour Country Club in Macon. This seminar also qualifies as curriculum credit required for the Bank

Analyzing Personal Financial Statements Seminar - March 18

Designed for credit analysts, branch managers, consumer lenders and entry level commercial lenders, this one day seminar will cover step-by-step, the process of analyzing personal financial statements and tax returns. Mike Allen, President and CEO of Georgia Trust Bank in Buford, is the

Keep your records in compliance and your customers satisfied by keeping up to speed with the basics of loan documentation. Designed for loan officers, loan administrators and credit administrators at every level, this one-day seminar will cover the basic topics including how to document the condition of the collateral, the condition of the title and the condition of the 

Designed for entry-level commercial lending officers, credit trainees and analysts, this two-day workshop will introduce and use a comprehensive and consistent approach to analyzing commercial financial statements. Emphasis is placed on a practical methodology to help bankers evaluate a company’s creditworthiness. Topics to be discussed include cash-flow analysis, financial projections, case studies for practical 

The following instructor-led AIB online classes begin the week of March 30. These courses are instructor-facilitated with weekly assignments, and can be taken from the comfort of your home or the convenience of 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.

• ABA Online Review Course for the CTFA Exam (open enrollment), 12 weeks, $795

• Banking Today, 5 weeks, $315

• Today's Teller: Developing Basic Skills* (open enrollment), 8 weeks, $315

• Understanding Bank Performance, 5 weeks, $315

There is still availability in the following AIB Online classes beginning March 23. Please register as soon as possible to secure a seat in the class.

• Economics for Bankers, 16 weeks, $405

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

• Principles of Banking, 16 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.

The GBA Retirement Services Board of Directors recently held its quarterly meeting to review investment returns for fourth quarter and annual results for 2008 for both the GBA Master 401(k) and Pension Trusts. We would like to share with you the reports presented by Reliance Trust Company and Atlanta Capital Management. One of the benefits of being part of the Master Trust is having a Board of Directors made up of bank presidents who have their own plans in the Trust and review the information on a quarterly basis to ensure the best options available for their

There is no denying that community banks are facing challenging times. However, there are products and services available that can help you and your customers. One of the most effective services you can offer at your bank is Strunk and Associates’ Overdraft Privilege Program. The Georgia Bankers Association has endorsed Strunk and Associates for more than two years to help energize a bank’s non-interest revenue stream and provide a great service to all customers. This program affects your bottom line immediately. It is currently helping dozens of Georgia banks and more than 1,600 banks nationally. As you will hear from any one of the Strunk clients, “It really does work”. So why wouldn’t you offer such a product? There are common concerns about issues such as reputation risk, the perception of encouraging overdrafts, concern about regulatory oversight and the fact that

some banks already pay a majority of non-sufficient funds each morning. The Strunk program is designed to mitigate those concerns. Most community banks today already pay the majority of non-sufficient-funds (NSF) items on a discretionary basis; however, the consumers that really need their NSFs paid are the ones that typically get returned due to risk. Unfortunately these customers end up going somewhere else, such as a pawn shop. Strunk’s program allows you to offer customers a responsible alternative. For more information with keeping your customer in the “driver seat” and helping your bank’s reputation in not encouraging overdrafts, contact Bob Shifflett at 540.828.3314.

Affinion Group, a Strategic Partner of the Georgia Bankers Association, offers banks $1,000 of complimentary accidental death and dismemberment insurance through its Customer Appreciation Program at no cost to DDA, credit card, and mortgage customers. Additionally, at the time of the offering, the customer has the option to purchase additional amounts of insurance at a low monthly charge. Currently more than 4,600 financial institutions have decided to implement the Customer Appreciation Program.

Make Money, Save Money With GBA Services, Inc. Offerings

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. 

Atlanta - Fidelity Bank
Tiffany Clark has joined the bank as Branch Manager of the Peachtree Center location and Patty Voelz has been promoted to Branch Manager at Sandy Springs.

Atlanta - Midtown Bank
Sand Patel and Dany Lee have joined the bank as Vice Presidents to facilitate the development of the bank’s new SBA business line. Paul Raufman has joined the bank as Business Development Officer.

Atlanta - Regions Financial Corp.
Bill Linginfelter, who currently spearheads Georgia operations, will also lead the bank’s South Carolina efforts.

Cuthbert - First State Bank of Randolph County
Vice President William Scott Curry II has been elected as a Director on the bank’s Board of Directors.

Memphis, TN - Senior Housing Crime Prevention Foundation
John Reich, former Director of the Office of Thrift Supervision, has been named to the Board of Directors effective March 1.

Raleigh, NC - Sageworks
Former FDIC Chairman Bill Seidman has joined the Board of Advisors.

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Georgia Bankers Association • 50 Hurt Plaza, Suite 1050, Atlanta, GA 30303 • Phone 404.522.1501 • Fax 404.522.9848 • www.gabankers.com