Latest Headlines Highlight ICBA Basel Push
Calls by ICBA for regulators to exempt community banks from proposed Basel III regulatory capital standards continued to make local and national headlines last week. In an American Banker BankThink column, Senior Vice President and Senior Regulatory Counsel Chris Cole argued that banks with under $50 billion in consolidated assets should be exempted from Basel III and recommended that Congress not only review the proposal but also urge the regulators to support a community bank exemption. In the response piece, Cole says, “while ICBA certainly supports further study and analysis of the proposal, we hope that Congress will come to the conclusion that Basel III is regulatory overkill for community banks, and that it should never have been proposed for financial institutions that have no international exposures or that are not of a certain size.” ICBA is the only national trade association calling for an outright exemption for community banks. 
Additionally, The Portland Business Journal, Proformative (finance and accounting community) and Bank Credit News highlighted ICBA’s Basel III petition, which was sent to regulators to further support ICBA’s call for a community bank exemption.  Community bankers across the nation also continue to press this message hard.  Last week a Washington state community banker said in a Herald Business Journal article: “Requiring banks to have higher levels of minimum capital on hand is a positive change,” said Mark Duffy, CEO and president of Mountain Pacific Bank in Everett, Wash. However, Duffy objected to the one-size-fits-all approach to calculating the risk of loans. The rules are needlessly complicated for small banks, which generally don’t offer complex investment and loan products such as collateralized debt obligations.

More Community Banks Offer Mobile Banking, Regulatory Compliance Top Concerns
Community banks are moving ahead with adopting mobile banking technology but remain concerned with regulatory impediments, according to the ICBA 2012 Community Bank Technology Survey. More than twice as many community banks offer mobile banking to their customers (37 percent) than two years ago, the survey found. Another 44 percent plan to offer the service in the next 24 months. A majority of community banks that offer mobile banking now offer a downloadable app (57 percent, up from 13 percent in 2010) for mobile devices. Customer adoption is just beginning, however, with an average of 8 percent of consumers and 5 percent of businesses using their bank’s mobile banking offering.

The top five technology concerns are complying with regulations, protecting data and infrastructure, systems availability and recovery, detecting and mitigating fraud, and managing the pace of technological change. Complying with regulations stands among the top five technology concerns for community banks and was cited by 82 percent, the exact same percentage as in 2010.

The 2012 ICBA Community Bank Technology Survey is conducted by ICBA and sponsored by Plante & Moran, PLLC, the nation’s 12th largest certified public accounting and business advisory firm which provides a variety of financial and technology services to community banks.  The biennial survey, designed to track community bank trends and strategies in technology, was sent to 7,000 community banks. A total of 530 community banks responded.
View the ICBA 2012 Community Bank Technology Survey.

CFPB Supervisory Report Highlights Problems
Last week, the Consumer Financial Protection Bureau released its first Supervisory Highlights report explaining problems CFPB examiners discovered through the agency’s supervision process. The bureau also released an appeals policy for supervised institutions as well as an updated version of the CFPB Supervision and Examination Manual, a field guide used by examiners.

“Through our supervision process, we are bringing heightened oversight to the consumer financial markets,” said CFPB Director Richard Cordray in a press release. “This report underscores our work to address practices that are risky to consumers, as well as our continued commitment to making sure that institutions are following the law.”

The report highlights problems such as credit card violations, insufficient training in complying with fair credit reporting requirements, and mortgage violations. Through its supervision program, the bureau can examine: banks with over $10 billion in assets, and their affiliates; nonbanks of all sizes that offer or provide mortgages and related services, private education loans and payday loans; larger participants in other markets, as defined by the bureau; and other nonbanks the bureau finds are engaged in conduct that poses a risk to consumers. The CFPB has already issued rules defining larger participants in the consumer reporting and debt collection markets.

Review the CFPB Supervisory Report.
View the Press Release.

Bank Closures
Two Banks Closed by Regulators
On Friday Nov. 2, Heritage Bank of Florida in Lutz, Fla. was closed by the Florida Office of Financial Regulation, and the Federal Deposit Insurance Corporation (FDIC) was named Receiver. All deposit accounts, including brokered deposits, have been transferred to Centennial Bank in Conway, Ark.

Citizens First National Bank in Princeton, Ill. was also closed on Friday by the Office of the Comptroller of the Currency, and the FDIC. All deposit accounts, including brokered deposits, have been transferred to Heartland Bank and Trust Co. in Bloomington, Ill.
View Bank Failures in Brief for 2012.

FDIC’s Advisory Committee on Community Banking Meets This Week
The FDIC will hold a meeting of its Advisory Committee on Community Banking on Thursday. The meeting will feature an update on the agency’s community banking initiatives, including a summary of the six community banker roundtables held across the country this year and updates on both the research agenda and supervisory process initiatives. The FDIC will release additional findings from its initiatives by the end of the year.
Read More.

FHFA and CFPB Partner on National Mortgage Database
The Federal Housing Finance Agency and the Consumer Financial Protection Bureau are creating a National Mortgage Database, the first comprehensive repository of detailed mortgage loan information. The database will primarily support the agencies’ policymaking and research efforts and help regulators better understand emerging mortgage and housing market trends. It will include information spanning the life of a mortgage loan from origination through servicing and include a variety of borrower characteristics.

Specifically, the database will include loan-level data about mortgages, including the borrower’s financial and credit profile; mortgage product and terms; properties purchased or refinanced; and ongoing payment histories of loans. The database, fulfilling an FHFA requirement under the Housing and Economic Recovery Act of 2008 to conduct a monthly mortgage market survey, will be updated monthly and track information as far back as 1998.
Read More.

Employment Up 171K in October
Nonfarm payrolls rose by 171,000 in October, according to the Labor Department. The unemployment rate was essentially unchanged at 7.9 percent as the labor force participation rate edged up to 63.8 percent. The employment-population ratio was essentially unchanged at 58.8 percent, following an increase of 0.4 percentage point in September. Employment rose in professional and business services, health care and retail trade.
View Labor Department Report.

Jobs Numbers Increase in October
ADP released its index of October private-sector employment on Thursday. According to its National Employment Report, employment in the private-sector increased by 158,000 from September to October, including an additional 50,000 small business jobs.
Read More.

Construction Spending Up in September
Construction spending was up a seasonally adjusted 0.6 percent in September, according to the Commerce Department. The September figure is 7.8 percent above a year ago. During the first nine months of this year, construction spending was up 8.9 percent from the same period in 2011. Spending on private construction was up 1.3 percent, and public construction spending was down 0.8 percent.
View Commerce Department Report.

Manufacturing Sector Expands in October
Economic activity in the manufacturing sector expanded in October for the second straight month following three months of slight contraction, according to the Institute for Supply Management’s manufacturing index. The index was up 0.2 percentage points to 51.7 percent, in contrast to September’s reading of 51.5 percent. The New Orders Index increased 1.9 percentage points to 54.2 percent, and the Prices Index decreased 3 percentage points, down to 55 percent.
View Manufacturing Index.

Take This Week’s Quick Poll
Take this week’s Quick Poll on the new format of ICBA NewsWatch Today, and view results from the previous poll on residential real estate lending. View the Archive.

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