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ACB Members among Top Lenders of 2024

ICBA announced Independent Banker magazine’s recognition of 2024’s top community bank lenders—the leading loan producers based on 2023 FDIC data. 

Whether it’s navigating tumultuous markets or providing employees with remote work options, flexibility is a key component in the success of this year’s ICBA top lenders. These community banks have stepped up to thoughtfully support customers’ goals from application to completion.

Two ACB member banks were designated Top Agriculture Lenders in their asset categories:

Under $300 million assets: Bank of Cave City, Cave City, AR

Over $1 billion assets: First Financial Bank, El Dorado, AR

Congratulations on your successful efforts doing what community banks do in serving your market areas!

Source: ICBA

Drawbacks from seemingly helpful Supreme Court rulings

Several recent Supreme Court decisions give banks more power to push back against regulators, but could end up biting the industry.

Three Supreme Court decisions — overturning Chevron deference, extending statutes of limitations and eliminating SEC judges — bode well for the banking industry on first glance, providing banks more power to fight rules in court and giving new entrants time to challenge old rules.

"Banks might feel more emboldened to challenge regulatory interpretations they don't like," Ian Katz, managing director at Capital Alpha Partners, wrote in a July 1 note.

However, an uptick of legal challenges to rules could lead to more uncertainty for the industry, and regulators could resort to more regulation by enforcement to avoid legal woes, industry experts said.

"The first derivative of this is, 'Oh, it's good because it will keep the financial regulators in line,'" Isaac Boltansky, managing director and director of policy research at BTIG LLC, said in an interview. "But I think the second derivative of this is: Does it inject an uncertainty into the regulatory landscape, which in turn ... hinders banks' capacity to operate?"

Source: S&P Global Market Intelligence

Exempt community banks from cyber reporting

ICBA called on the Cybersecurity and Infrastructure Security Agency to exempt community banks from new cyber reporting rules.

The proposed rule would implement Cyber Incident Reporting for Critical Infrastructure Act (CIRCIA) reporting requirements for covered entities, with exemptions for smaller businesses. The law requires critical infrastructure owners to report substantial cyberattacks to CISA within 72 hours and ransomware payments within 24 hours.

In a comment letter to CISA, ICBA said:

• It generally supports the law and intent of CISA’s proposed rule, though community banks should be fully exempt.
• The proposed CIRCIA rule would introduce unnecessary complexities and burdens on community banks, which are already legally obligated to report incident information to numerous governmental agencies, departments, and private organizations.
• Given their size, limited share of financial sector assets, and low probability of causing national disruption, community banks should not be considered covered entities under the proposed rule.

CIRCIA directs CISA to rapidly share information on cyber threats, harmonize regulations to avoid duplicative reporting requirements, and include trade associations in its rulemaking outreach, among other ICBA priorities.

Source: ICBA

NIM relief on the horizon

Banks should soon feel some net interest margin relief, but growth is still a ways out.

In the first quarter, 251 US banks had net interest margins (NIMs) at or below 2%, comprising 5.2% of the industry — the highest percentage since the COVID-19 crisis, when stimulus weighed on bank margins, and higher than the peak percentage in 2009. The number of banks with NIMs lower than 2% increased by 176 banks between the third quarter of 2022 and the first quarter of 2024, marking the fastest increase since the financial crisis of 2007.

That uptick slowed in the first quarter in a potential sign that NIM pressure is subsiding and institutions' margins are troughing. However, with few catalysts to boost NIMs, substantial margin growth is still likely two years out, experts told S&P Global Market Intelligence. Some banks are opting to ride the wave and use tools such as security sales to bolster performance in the meantime, while others are looking for an exit.

 Source: S&P Global Market Intelligence

FinCEN underestimates suspicious activity reporting burden

The Financial Crimes Enforcement Network underestimates the amount of time and resources community banks dedicate to reporting suspicious activity.

In a comment letter and joint letter with other financial industry groups, ICBA said FinCEN’s estimate that each suspicious activity report, or SAR, takes roughly 1.98 hours to file is grossly undervalued.

In its comments, ICBA:

• Urged FinCEN to take a comprehensive approach to calculating all the factors that determine the amount of time it takes to process a SAR.
• Reiterated its support for increasing the SAR reporting threshold to $10,000.
• Noted that SAR filings are part of a cumbersome and overly burdensome regulatory environment that hampers community banks’ ability to serve their customers and communities.

Source: ICBA

ACB Compliance Event

September 11 & 12

Little Rock

See Agenda and Register

CFPB spotlights violations from recent exams

The Consumer Financial Protection Bureau said that its recent examinations revealed unfair, deceptive, or abusive acts at companies servicing auto loan and student loans; Fair Debt Collection Practices Act violations by debt collectors; and issues with medical payment products.

According to CFPB's latest Supervisory Highlights, the agency found:

• Auto loan servicers mishandled consumers’ final loan payments.
• Student loan servicers created excessive barriers to assistance, provided inaccurate information about benefit forms, and failed to notify consumers about funds transfers.
• Debt collectors violated disclosure requirements and misled borrowers.
• Consumer complaints about medical credit cards.
• Unfair practices in how some institutions communicated with consumers about account freezes.

The CFPB also assessed industry compliance with Section 1034(c) of the Consumer Financial Protection Act, which prohibits large banks and credit unions from creating unreasonable barriers, such as excessive fees, for customers seeking basic account information.

CFPB last month issued a proposed rule that would stop credit reporting companies from sharing medical debts with lenders and prohibit lenders from making lending decisions based on medical information. ICBA—which opposes efforts that limit the value of credit scores—last week requested a 30-day extension of the comment period.

Source: CFPB; ICBA

Enforcement actions plummet

The Financial Industry Regulatory Authority's enforcement actions declined to the lowest level in its history in 2023, even as the agency's headcount and budget expanded, Bloomberg News reported.

Further, total fines in 2023 are down by about half since a peak in 2016, the report said. Finra does not agree that it pulled back on enforcement, according to the report.



Source: S&P Global Market Intelligence; Bloomberg

Corporate bankruptcies reach highest monthly level since 2020

June marked a historic surge in US corporate bankruptcy filings, with the highest number recorded in a single month since at least the start of 2020 and surpassing half-year figures seen in over a decade.

S&P Global Market Intelligence recorded 75 new corporate bankruptcy filings in June. The pace accelerated from the first months of 2024 and is rivaled by only the busiest months in 2020, when the shock from COVID-19 pushed a relatively higher number of companies into bankruptcy. The 346 total filings so far in 2024 is also higher than any comparable figure in the prior 13 years.

Source: S&P Global Market Intelligence