Texas Bankers Hall of Fame and Bank Executives’ & Directors’ Seminar

On April 27 and 28, I had the privilege of attending the Texas Bankers Hall of Fame and Bank Executives’ & Directors’ Seminar hosted by Sam Houston State University. I would like to congratulate the five Hall of Fame honorees: B.A. Donelson, Jack Griggs, George Martinez, Milton McGee, Jr., and the late Milton Payne. I enjoyed hearing about all of their incredible accomplishments and contributions to community banking in Texas. Congratulations on the well-deserved recognition!

Just like last year, the Seminar provided valuable information to the community bankers in attendance. As an attorney representing community banks, I was most interested in the bank regulatory panel. The panel was again moderated by Sam Golden, formerly with the OCC and now a bank consultant with Alvarez & Marsal. The panelists were Bobby Davenport (Texas Department of Banking), Nathan Heizer (FDIC), Bernadette Hernandez (OCC), and Robert Triplett (Federal Reserve). For those who were not able to make it to the Seminar, I have recapped some of the most helpful information that the regulators shared:

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Comptroller discusses OCC’s supervisory priorities and risk management for community banks

On November 18, Comptroller of the Currency Thomas Curry spoke at the Annual Community Bankers Symposium. His speech covered the OCC’s supervisory priorities, risk management goals, and responsible innovation initiative for community banks. Among the issues he identified as regulatory priorities were strategic risk issues, loan underwriting, operational resiliency, and BSA/AML compliance. He also discussed FinTech and third-party vendor management issues.

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Recent developments in data security regulations

Cybersecurity remains a top concern for banks and regulators, as data breaches pose substantial regulatory risk and high costs. As I have written in recent posts, banks must develop comprehensive cybersecurity policies to protect against data breaches and avoid adverse action from the regulators. Recent guidance and statements from the regulators provide additional insight into best practices in data security.

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What does the Wells Fargo scandal mean for community banks?

Earlier this month, Wells Fargo entered into a consent order with the CFPB and OCC after regulators discovered that bank employees had opened more than 1.5 million fake deposit and credit card accounts. The scandal involved more than 5,000 employees who opened the fake accounts in order to pad sales numbers and meet quotas the bank used as part of an incentive compensation plan.  In the aftermath of the scandal, Congress and the regulators have begun to scrutinize what went wrong and what steps can be taken to prevent these problems going forward. Although big banks are the focus of this scrutiny, it is important for community banks to pay attention to possible regulatory changes that may impact banks of all sizes.

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Regulators identify oil and gas lending as area of risk

The Federal Reserve, FDIC, and OCC released their 2016 Shared National Credit Review and identified “growing credit risk in the oil and gas (O&G) portfolio” as an area of concern. Not surprisingly, the regulators pointed to the long-term decline in energy prices as the primary underlying cause of the heightened credit risk. This is consistent with the comments of Texas Department of Banking Commissioner Charles Cooper and the prudential regulators at the Sam Houston State Banking Seminar, identifying falling commodity prices as a risk to the financial stability of Texas banks.

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Recap: Sam Houston State Bank Executives’ & Directors’ Seminar

On Thursday and Friday, I had the privilege of attending the Texas Bankers Hall of Fame Gala and the 20th Annual Bank Executives’ & Directors’ Seminar hosted by the Smith-Hutson Endowed Chair of Banking at Sam Houston State. First, I’d like to thank Sam Houston State (including Pam Thaler and my grandfather, Dr. Jim Bexley) for hosting these great events. Second, I want to congratulate the new inductees into the Texas Bankers Hall of Fame: Charlie Cheever, Bookman Peters, Stretch Smith, and Terry Tuggle. I don’t know them personally, but their introductions made clear that they have had a tremendous impact on the banking industry and their communities. I also want to congratulate my grandfather, Dr. Bexley, on his receipt of the first ever Texas Bankers Association Lifetime Achievement Award in honor of his contributions to community banking and in particular to educating future bankers. Lastly, I want to recap some of the interesting and useful information that we learned from a panel of regulators who graciously took the time to come answer questions.

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Unsafe and unsound banking practices Part 2: Recent enforcement actions

Last week, I wrote a post about how bank regulators determine when a banking practice is “unsafe and unsound.” As I explained, the regulators exercise broad discretion in defining unsafe and unsound banking practices, sometimes without any prior guidance. To get a better understanding of how the regulators define unsafe and unsound practices, this post highlights some of the enforcement actions the OCC, FDIC, and Federal Reserve Board have pursued over the last year and a half.

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