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Frenemies: Gaining Efficiency Through Shared Services

the-bank-accountBryan Cave colleagues Ken Achenbach and Sean Christy join Jonathan and me on this episode of The Bank Account to examine the ability of banks to gain efficiency through shared services.  Throughout the business environment, business are looking to out source all non-core competencies.  Ken and Sean explore the opportunity for banks to similarly explore the opportunity for banks to join forces to purchase outsourced services and invest in technology platforms together. By working together, banks can leverage buying power and share the burden associated with evaluating their vendor options.

You can follow most of us on Twitter.  Jonathan is @HightowerBanks, I’m @RobertKlingler, and Sean is @SeanChristy.  Following Ken on Twitter is difficult, as he has, so far, refused to access that part of the internet.  Our producer, Sam Katz, is @SamathaJill1.

Note:  This episode was recorded before the University of Florida announced it was cancelling this weekend’s football game against Northern Colorado due to Hurricane Irma.  The Gators drought in offensive touchdowns will therefore continue at least another week.  We hope everyone stays safe.

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The Sanity of Bank Directors

The Sanity of Bank Directors

September 1, 2017

Authored by: Robert Klingler

the-bank-accountOn the latest episode of The Bank Account, Jonathan and I address two items of significant interest in our office: (a) a recent Wall Street Journal opinion piece on the sanity of bank directors, and (b) the start the of college football season (not necessarily in that order).

When starting the podcast, we expected the podcast would offer listeners an opportunity to hear the conversations we have around the office on a wide variety of topics.

Today, that includes a topic that represents a significant part of our fall conversations, college football, with a particular focus on the SEC.  As a Georgia Bulldog, Jonathan brings his bizarre view of the world, while as a Florida Gator, I correct him (or at least that’s how I see it, and I write the blog posts).  If you want to participate in the conversation, please do not hesitate to reach out to either of us (Jonathan.Hightower@bryancave.com and @HightowerBanks or Robert.Klingler@bryancave.com and @RobertKlingler).

Following the football discussion, we get down to the real business of the day, the insanity of a recent Wall Street Journal Opinion piece.  On August 28th, the Wall Street Journal published an opinion piece by Thomas Vartanian titled Why Would Anyone Sane be a Bank Director?  Jonathan’s response, Why Sane People Serve as Bank Directors, is available here.  Jonathan and I walk through aspects of Vartanian’s analysis that we agree with… as well as the many portions that we strongly disagree with.  We also address a few other items related to the analysis of what should be involved in director’s roles on bank boards and the FDIC’s approach in litigation.

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HVCRE Lending: An Area of Regulatory Examination Focus

HVCRE Lending: An Area of Regulatory Examination Focus

August 24, 2017

Authored by: Bank Bryan Cave

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Jonathan and I are joined by our colleague, Jerry Blanchard, to discuss High Volatility Commercial Real Estate (HVCRE) Loans on the latest episode of The Bank Account.

HVCRE Loans are one of the areas of focus on regulatory exams, and we’re seeing increased attention to not only ensuring that a bank’s reported HVCRE loans are correct, but also that the bank has sufficient internal controls in place to monitor and track HVCRE lending.

Formal regulatory guidance on HVCRE lending is still rare, as the various regulatory agencies struggle to find consensus in an area that is fraught with technicalities and details.  Our colleague, Jerry Blanchard, has assisted numerous banks in evaluating overall HVCRE programs as well the application of the HVCRE requirements to countless loans.  In addition, he’s written extensively on the topic, including:

You can always follow us on Twitter.  Jonathan is @HightowerBanks, I’m @RobertKlingler, and Jerry is @Blanchard_Jerry.  Our producer, Sam Katz, is @SamathaJill1, and is not responsible for my inability to read simple copy at the end of this episode.

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Regulators Tackle Board Effectiveness and Overdrafts

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On the latest episode of The Bank Account, Jonathan and Ken Achenbach discussed the Federal Reserve’s proposed supervisory expectations for boards of directors.

Before digging into the Federal Reserve’s proposed guidance, Jonathan and Ken first discussed the CFPB’s statistical analysis of frequent overdrafters.  As noted in the CFPB’s analysis, “very frequent overdrafters account for about five percent of all accounts at the study banks but paid over 63 percent of all overdraft and NSF fees.”  They also touched on the CFPB’s prototype model forms for overdrafts.   As might be expected from the CFPB, the sample forms do a good job of highlighting the economic consequences of utilizing overdrafts, but not mention the potentially significant benefits (tangible and psychological) that can be provided by allowing such payments to proceed.

As noted by Jonathan and Ken, the Federal Reserve’s proposed supervisory guidance identifying expectations for boards of directors of banking holding companies would only apply to institutions with consolidated assets of $50 billion or more.  However, we believe the guidance is appropriate for all bank directors to look at, particularly as it draws on the Federal Reserve’s experience with approaches that improve bank governance.

Per the Federal Reserve guidance, effective boards are those which:

  1. set clear, aligned, and consistent direction regarding the firm’s strategy and risk tolerance;
  2. actively manage information flow and board discussions;
  3. hold senior management accountable;
  4. support he independence and stature of independent risk management (including compliance) and internal audit; and
  5. maintain a capable board composition and governance structure.

We believe this Federal Reserve guidance is consistent with our advice that boards need to get out of the weeds and focus on the big picture, a topic we have addressed on earlier podcasts as well.

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Dealing with an Unsolicited Offer

On the latest episode of The Bank Account, in preparation #SharkWeek, Jonathan and I discuss unsolicited offers and some of the approaches for bank boards to deal with them.  Topics covered include:

  • Senator Warren’s declaration that OCC Acting Comptroller Keith Noreika is a “swamp thing;”
  • unsolicited versus hostile approaches;
  • approaches to sell a bank, including full auctions, limited auctions, and negotiated transactions;
  • the need to have a current strategic plan and an understanding of the financial impact of such plan;
  • the-bank-accountthe value of having a Policy for Corporate Change to ensure discussions about offers to acquire the bank find their way to the boardroom for discussion by the full board;
  • dealing with an unsolicited offer in the middle of a negotiated transaction; and
  • the value of having experienced advisors, like Bryan Cave LLP, at your side as you address these issues.

You can also always follow us on Twitter.

Jonathan is @HightowerBanks and I’m @RobertKlingler.  Our producer, Sam Katz, is @SamathaJill1.

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Midyear 2017 Banking Review

Midyear 2017 Banking Review

July 7, 2017

Authored by: Robert Klingler

the-bank-accountOn the latest episode of The Bank Account, Jonathan and I discuss some of the key trends from the first six months of 2017 with regard to the banking industry.  Topics covered include:

  • stock market performance (banks down for the six months, but still way up over the last 12 months);
  • merger and acquisition activity (same number but larger than last year, plus a more in depth look at North Carolina);
  • de novo activity (or lack thereof);
  • regulatory relief (and definitely lack thereof); and
  • capital raise activity (going strong).

We also congratulate each other on finishing the Peachtree Road Race (Jonathan’s first, my fiftheenth) and Jonathan shares a story where he seems to have exchanged an unfortunate woman’s micro-humiliation related to a debit card denial to a larger humiliation due to poor interpersonal skills.  With this episode we are fully switching to our summer schedule, so the next episode will be in a couple weeks.

You can also always follow us on Twitter.  Jonathan is @HightowerBanks and I’m @RobertKlingler.  I promise to try to restrain Jonathan from humiliating you on Twitter in the event that you decide to follow us.

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Public Banks and Proxy Advisors

the-bank-accountOn the latest episode of The Bank Account, Jonathan and I were joined by our colleague, Kevin Strachan, to discuss the role and importance of the various proxy advisory services.  Corporate governance continues to be a hot topic in the industry, and the proxy advisory services have a significant sway in determining what provisions are deemed “acceptable” by many institutional investors.

Within the podcast, we look at the two primary proxy advisory services, Institutional Shareholder Services (ISS, not to be confused with ISIS, although we have them pronounced identically by some frustrated boards) and Glass Lewis.  We look at the differences between the two services, where they’ve historically focused, and ways in which they sometimes have diminished power and sometimes enhanced power.

As with so many issues, obtaining the right corporate governance for any individual bank or holding company is not something that should simply be taken off a shelf (or off a podcast).  Instead, we encourage interested parties to engage experienced counsel, such as Bryan Cave LLP, to identify the best individualized approach for the specific situation.

You can also always follow us on Twitter.  Jonathan is @HightowerBanks, Kevin is @KevinStrachan, and I’m @RobertKlingler.

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Planning for Strategic Planning Session

the-bank-accountWhile I continued on a family vacation (which was totally worthwhile), Jonathan and Jim McAlpin recorded an episode of The Bank Account looking at planning a strategic planning session for your bank.  Jonathan and Jim cover a wide array of topics based on their collective experience in assisting dozens of banks with their strategic planning.

Among the multitude of topics covered include:

  • thinking about shareholder interests in strategic planning;
  • what the “new normal” means for community banks;
  • how frequently strategic planning sessions should occur;
  • the importance of efficiency ratio analysis;
  • the length of a “good” strategic plan;
  • board composition; and
  • the need to address whether or not to pursue the sale of the bank with the board.

I’m biased, but if you haven’t listed to The Bank Account, I highly encourage this episode as an introduction.

Other items mentioned on the podcast include:

You can follow Jonathan on Twitter at @HightowerBanks.  Jim isn’t on Twitter, but has mastered the latest in carrier pigeon technology.

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Regulatory Supervision of Third Party Service Providers

the-bank-accountWith Jonathan and I attending the Georgia Bankers Association’s 125th Annual Meeting, Bryan Cave colleagues Ken Achenbach and Sean Christy broke into our podcasting studio to record an episode of The Bank Account looking at vendor negotiations through a regulatory lens.

The FDIC’s Office of Inspector General’s Report on Technology Service Provider Contracts provides another source of regulatory guidance that needs to be considered while negotiating vendor contracts.  Ken and Sean look at the evolving state and federal framework of regulatory oversight of service providers, and how banks should adopt to this framework in contract negotiations.

You can follow Sean on Twitter at @SeanChristy.  Ken doesn’t need Twitter; he’s already following you.

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Convenience vs. Compliance: Behavior-Driven Marketing of Credit Products

the-bank-account Bryan Cave colleague Ken Achenbach joined Jonathan and me on the latest episode of The Bank Account for a discussion of the potential compliance issues associated with a behavior-driven marketing focus within financial services.  To borrow the immortal words of Salt-N-Pepa, should banks “Push it?  Push it real good?”

While new app technologies are allowing banks to market in new ways, we analyze many of the ways in which behavior-driven marketing already permeates our culture, and why financial services-based behavior-driven marketing may be treated differently.  Some of the articles referenced on the podcast include:

You can also follow us on Twitter with Jonathan at @HightowerBanks and me at @RobertKlingler.  Ken cannot be followed on Twitter, as Ken’s thoughts cannot be limited to 140 characters.

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