Monthly Archives:' May 2015

OCC Updates Historic Tax Credit Report

The Office of the Comptroller of the Currency (OCC) has released an updated edition of its 2008 Community Developments Insights report entitled Historic Tax Credits: Bringing New Life to Older Communities. This Insights report provides an overview of Historic Rehabilitation Tax Credits, why they might be of interest to other banks, and associated risks or regulatory considerations.

For more than 35 years, the federal Historic Tax Credit program has helped revitalize communities by encouraging the flow of $109 billion in private funds to facilitate the rehabilitation of historic buildings. These investments have facilitated the redevelopment of hundreds of thousands of residential and commercial properties, including a substantial number of low- and moderate-income housing rental units.

This updated Insights report:

  • discusses the methods used by banks and federal savings associations (FSA) to structure transactions and use the tax credits effectively;
  • highlights regulatory changes since the previous Historic Tax Credits Insights was published in 2008;
  • includes a discussion on IRS Revenue Procedure 2014-12;
  • discusses the public welfare investment authority, under which national banks and FSAs may make Historic Tax Credit investments;
  • outlines how the Historic Tax Credit activities of banks and FSAs are evaluated for Community Reinvestment Act purposes.


Strategic Capital Management Web Seminar

One of the top concerns for community banks today is access to capital. In order to thrive under New Basel III capital rules and regulatory pressures banks need capital to introduce new products and expand market share. Join Kennedy Sutherland LLP attorney, Patrick J. Kennedy, Jr. and Josh Siegel from StoneCastle Finance as they discuss factors driving M&A, three primary uses for a capital raise, and the opportunity to enhance shareholder value.

Please register for the Strategic Capital Management Web Seminar on June 5, 2015 at 11:30 am CDT at:

*After registering you will receive a confirmation email containing information about joining the web seminar.

Kennedy Sutherland to Present at Texas Rural Conference

The conference features engaging and accomplished leaders in business and government. The theme this year is “Rural Matters: Growing Our People, Resources, and Future.” The conference will highlight topics and best practices in business and economic development, community development, and rural statewide issues.

A large number of state and federal agencies, along with private sector partners, will host and participate in this event; the largest of its kind to focus on the challenges facing rural Texans. This is a statewide conference hosted by the Office of the Governor and UTSA’s Institute for Economic Development – SBDC Rural Business Program.

On Day 2 at 11:00 am come to hear Kennedy Sutherland attorney, Dub Sutherland, present on innovative financing with Nathan Roach from Mass Ventures, Scot Vidrine from Capital Farm Credit and Katherine Sims of the Council of Development Finance Agencies.

View the Agenda                   Register for the Conference

Third Annual Fair Lending Report Released

On April 28, the CFPB published its third annual report to Congress on its fair lending activities. The Bureau’s mission includes ensuring fair, equitable, and nondiscriminatory access to credit for all consumers, and that markets for consumer financial products and services are fair, transparent, and competitive. The Report provides an overview of the work performed by the CFPB and accomplishments made during the past year.

According to the  Report, mortgage lending remains a “key priority” for the Office of Fair Lending in terms of both supervision and enforcement, with the focus being largely on Home Mortgage Disclosure Act (HMDA) data integrity and potential fair lending risks in connection with redlining, underwriting, and pricing. In addition, the indirect auto lending industry is also another critical area of concern and focus identified in the Report and, more particularly, the use of discretionary pricing policies within this industry that have resulted in discrimination against certain minorities in violation of the Equal Credit Opportunity Act (ECOA).  For instance, during the past two years, multiple supervisory reviews by the CFPB have revealed discretionary dealer markup and compensation policies which may discriminate against certain minorities. The report also monitored the credit card market, including enforcement actions against a company for its alleged failure to provide certain consumers who had a Puerto Rico mailing address or preferred to communicate in Spanish with debt relief offers. Lastly, the report noted outlined the rights of a consumer whose income is derived, in part or in whole, from a public assistance program. According to the report, the Bureau’s efforts in 2014 to protect consumers from credit discrimination lead to financial institutions providing approximately $224 million in monetary relief to over 300,000 consumers.

In closing the CFPB noted that they look forward to maintaining a sharp focus on discrimination and ensuring that markets operate fairly and effectively for all market participants in 2015.


Remarks from EGRPRA Meeting in Boston

On May 4, OCC Comptroller Thomas J. Curry delivered remarks at the third outreach meeting held under the Economic Growth and Regulatory Paperwork Reduction Act (EGRPRA) in Boston. In his remarks the Comptroller acknowledged that smaller banks and thrifts don’t have the same kind of resources that large institutions can bring to bear on regulatory compliance, and noted that if they could eliminate unnecessary rules and streamline others, it would make it easier for these smaller institutions to serve the economic needs of their communities. With this in mind, it is expected that a fourth outreach meeting will be announced later this year focused solely on rural banks, which face their own unique challenges.

Curry noted that the agency continuing to work with Congress and the FFIEC to remove the outdated and onerous regulatory requirements currently imposed on these institutions: “If it is clear that a regulation is unduly burdensome, and if we have the authority to make changes to eliminate that burden, we will act.” Currently, the agency has presented lawmakers with three specific proposals to remove regulatory burden on smaller banks: (i) raise the asset threshold from $500 million to $750 million so that a greater number of community banks qualify for the 18-month examination cycle; (ii) provide a community bank exemption from the Volcker Rule; and (iii) provide greater flexibility to federal savings associations to change and expand their business strategies without changing their governance structure. Curry further stated, “I think these legislative proposals are meaningful steps which could help a great number of smaller institutions. But we shouldn’t stop there. We should be looking at every approach that might help community banks thrive in the modern financial world.”

In addition Curry noted the success of collaborative ventures between banks.”There are opportunities to save money by collaborating on accounting, clerical support, data processing, employee benefit planning, health insurance – and the list goes on.”

Final Rule Issued for Appraisal Management Companies

Six federal financial regulatory agencies issued a final rule on April 30th that implements minimum requirements for state registration and supervision of appraisal management companies (AMCs). An AMC is an entity that provides appraisal management services to lenders or underwriters or other principals in the secondary mortgage markets. These appraisal management services include contracting with licensed and certified appraisers to perform appraisal assignments.

Under the rule, states may elect to register and supervise AMCs. The AMC minimum requirements in the final rule apply to states that elect to register and supervise AMCs, as AMCs are defined in the rule. The final rule does not compel a state to establish an AMC registration and supervision program, and no penalty is imposed on a state that does not establish a regulatory structure for AMCs. However, in states that have not established a regulatory structure after 36 months from the effective date of this final rule, any non-federally regulated AMC is barred by section 1124 of Title XI from providing appraisal management services for federally related transactions. A state may adopt a regulatory structure for AMCs after this 36-month period, which would lift this restriction.

Under the final rule, participating states must apply certain minimum requirements in the registration and supervision of appraisal management companies. An AMC that is a subsidiary of an insured depository institution and is regulated by a federal financial institution regulatory agency (a federally regulated AMC) must meet the same minimum requirements as state-regulated AMCs except for the requirement to register with a state.

This final rule will become effective 60 days after publication in the Federal Register. The compliance date for federally regulated AMCs is no later than 12 months from the effective date of this rule. A participating state will specify the compliance deadline for state-regulated AMCs.