Meanwhile, the legislative and regulatory challenges continue in Albany and Washington. From the Governor's update on the state budget and the shortfall facing New York, to the President's State of the Union address, there has already been a great deal of news to take in this week:

• Legislation has been introduced by the new State Senate Banks Committee Chairman that would essentially allow credit unions to gain much of the entree they have long sought into the business of municipal deposits.

Our 2019 Meeting dates and locations are now available! These educational conferences cover various subjects that are important within the community banking industry, spoken by the experts. T hey are also a great opportunity to network and earn CPE credits. Here is what we have planned for 2019:

Chairman Crapo Outlines U.S. Senate Banking 

Committee Agenda For 2019

	Chairman Mike Crapo

U.S. Senate  Banking Committee Chairman Mike Crapo (R-ID) outlined his committee agenda for the 116th Congress with an emphasis on housing-finance reform and data security. The agenda also included capital markets, credit bureaus, fintech, and access to credit among its top policy priorities. In addition, Chairman Crapo noted that the Committee will:

• Continue to identify and move bipartisan legislative solutions that promote economic growth; 

• Build a record for legislative action on the collection, use and protection of personally identifiable information by financial regulators and financial companies; 

• Advance presidentially-appointed nominees; 

• Ensure that federal agencies implement the Economic Growth, Regulatory Relief and Consumer Protection Act (EGRRCPA), Foreign Investment Risk Review Modernization Act (FIRRMA), and the Countering America's Adversaries Through Sanctions Act (CAATSA) and ensure they are consistent with congressional intent;

• On housing finance reform, Chairman Crapo's outline would privatize Fannie Mae and Freddie Mac; non-depository private companies would be guarantors of mortgages securitized through a platform operated by Ginnie Mae. The Federal Housing Finance Agency would be governed by a bipartisan board of directors instead of a single director. The current affordable housing and duty-to-serve requirements would be replaced by a Market Access Fund to provide grants and loans to underserved communities. The White House said last week that it will work with Congress to develop a plan for housing-finance reform and will issue a framework "shortly." ICBA will continue working with Congress and the administration to ensure housing-finance reform preserves community bank access to the secondary market, adequately capitalizes Fannie and Freddie, and minimizes disruptions to the housing-finance system.

• Other issues to be addressed will include establishing appropriate levels of taxpayer protection, preserving the 30-year fixed rate mortgage, increasing competition among mortgage guarantors and promoting access to affordable housing.  

Fed Chairman Powell Meets With President, Reiterates 

Reasons For Fed's Monetary Policies

President Trump & Chairman Powell

Federal Reserve Chairman Powell had a dinner meeting with President Trump at the White House this week, joined by Fed Vice Chair Clarida and Treasury Secretary Mnuchin. (Meetings between a president and a Fed Chair are rare, but not unprecedented.) 

Powell reportedly reiterated that monetary policy was aimed at supporting the Fed's mandate of maximum employment and stable prices, and that decisions were "based solely on careful, objective and non-political analysis."  The meeting followed  repeated public criticism of Powell by the President over Fed rate increases, and on the eve of Powell's first anniversary as Fed Chair. 

 

Meanwhile, according to the Federal Reserve's survey of senior loan officers, banks tightened standards for commercial real estate loans in January as demand for business loans generally weakened.  Banks reported weaker demand for loans to households and said standards were basically unchanged, except for tighter standards on credit cards. Banks also expect to tighten standards for all categories of business loans, credit card loans and jumbo mortgages in 2019.

House Hearing On Banks & Cannabis Businesses 

The House Financial Services Committee reportedly expected to hold a hearing next week to examine problems banks face when trying to serve marijuana businesses that are now permitted in a growing number of states. The hearing, the first of its kind at Financial Services, is tentatively set for February 13 and could be a step toward easing federal restrictions that have led to complications for lenders, and resolving legal conflicts that have left lenders uncertain about serving cannabis clients in parts of the country where recreational marijuana use is allowed. Current federal law bans the sale of marijuana. 

Committee action could be a precursor to the full House eventually taking up cannabis banking legislation such as the bill introduced by Reps.  Ed Perlmutter  (D-C).) and  Denny Heck  (D-WA.) to  shield banks and credit unions from federal penalties for serving marijuana-related businesses in states where cannabis is legal.

ICBA Advocacy Survey Due This Friday

Advocacy is everyone's responsibility. Whether you're a community bank president, employee, or director, you have a direct stake in making sure lawmakers in Congress hear your voice.  To more effectively advance our collective mission to create and promote an environment where community banks flourish, ICBA and IBANYS need your help. The following survey seeks to refine the tools and resources ICBA can offer you to better enable the important conversations and relationships required to drive positive policy outcomes for the community banking sector. Additionally, ICBA is seeking to build greater visibility of the existing personal or professional relationships that you as a community banker or director may already have with returning or new lawmakers. The deadline for completing and returning your survey is this Friday, February 8.

 

This survey should take less than 10 minutes to complete. Please contact Ryan Hadley at ryan.hadley@icba.org with any questions regarding this survey. 

Take The Survey

As an independent loan review provider to approximately 150 foreign and domestic lending institutions, CEIS Review has the benefit of being able to gain insights towards the emerging and prevalent developments within the banking arena regarding commercial lending activities. One such is the entrance or expanded interest of some banks to engage in hybrid asset-based lending operations with varying levels of success and effectiveness. While portfolio and income fee diversification is important, the increased activity should be fully vetted before the additional risk is added to the portfolio.  

Hybrid asset-based loans involve a unique credit structure designed to solve certain specific credit needs of customers by combining cash flow and asset-based lending in one credit facility. While the portion of the loan approved on a cash flow coverage basis is often managed with financial covenants, the asset-based loan portion is supported by collateral coverage that is monitored with a monthly borrowing base. Read the full article.

Vining Sparks & ICBA Securities Balance Sheet Academy

Registration is now open for Vining Sparks and ICBA Securities' Balance Sheet Academy seminar in Memphis, Tennessee from Monday, April 29 to Tuesday, April 30 2019. This  advanced seminar is designed to expose seasoned community bank portfolio and balance sheet managers to advanced products and concepts.  The objective is to enable the attendees to consistently outperform their peers. The dynamics of a community bank balance sheet require an investment professional to be versed in a wide range of topics.  Balance Sheet Academy  provides discussion and practical classroom exercises to equip the attendees for these demands. Examples of these topics include: 

• Advanced interest rate risk management strategies;

• Low cost funding strategies; and

• Strategies for serving bank customers while managing interest rate risk.  

Attendees will learn how the changing economic data impacts market interest rates from Vining Sparks' Chief Economist. The Balance Sheet Academy is structured for more experienced investment managers, particularly those who have attended Bond Academy.  

It incorporates balance sheet strategies into the day-to-day management of an institution's investment portfolio, wholesale funding and interest rate risk management. Bank personnel with an intermediate level of understanding of investments who are integral to the investment and balance sheet management process will benefit the most from this advanced course. New directors serving on the investment or asset-liability committee will also find this course beneficial. 

Learn More Details or How To Register

Contact:  Kert Johnson,  SVP/Marketing at (901) 762-5340 or kjohnson@viningsparks.com.

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New Residential Sales Up

According to the United States Census Bureau, new-home sales rose 16.9 percent in November to an eight-month high - although they remained down 7.7 percent from a year ago.  Sales of new single - family houses in November 2018 were at a seasonally adjusted annual rate of 657,000.  The median sales price of $302,400 was down 12 percent from a year ago, which likely helped boost sales as the housing sector remains plagued by high prices and low inventories.

• New Houses Sold: 657,000

• New Houses For Sale: 330,000

• Median Sales Price: $302,400

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Home Prices Enjoy Smallest Annual Gain Since 2012

Home prices rose 4.7 percent in December, according to CoreLogic. That is the smallest annual gain since August 2012. Analysts believe that prices are still rising because of the shortage of homes for sale, especially on the lower end of the market. 

Of the nation's top 50 markets based on housing stock, 40 percent were overvalued, 18 percent undervalued and 42 percent were at value. A year ago, more than half of the nation's largest markets were overvalued. A market is considered overvalued when home prices are at least 10 percent above the long-term, sustainable level.

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Mortgage Applications Are Down

According to the Mortgage Bankers Association's seasonally adjusted index, overall mortgage application volume fell 2.5 percent last week compared with the previous week. Volume was nearly 10 percent lower than a year ago.  Purchase volume pulled back the most; those applications fell 5 percent for the week and 2 percent annually. Applications to refinance a home loan increased 0.3 from the previous week but were still 19 percent lower than a year ago. 

Many borrowers already refinanced to rates in the 3 percent range a few years ago. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($484,350 or less) decreased to 4.69 percent from 4.76 percent last week, with points decreasing to 0.45 from 0.47 (including the origination fee) for loans with a 20 percent down payment. That was the lowest rate since April, and just 19 basis points higher than one year ago.