Notes, news and views on community banking

Agency shuffle in Illinois

The Illinois Office of Banks and Real Estate was consolidated July 1 along with four other state units into the new Department of Financial and Professional Regulation, under the direction of Secretary Fernando Grille.

Scott Clarke, assistant commissioner in what is now the Division of Banks and Real Estate, said the move will not change the way banks interact with the state regulator. "The change is purely administrative," Clarke said. "Banks and trust companies should not see any difference. They will continue to receive the same quality of regulation."

D. Lorenzo Padron, who was commissioner of the Office of Banks and Real Estate, is now the acting director of the division, pending legislative approval.

By streamlining administrative and operational functions, the state expects to save $14 million annually. Other merged entities are the Department of Financial Institutions, Department of Insurance, Department of Professional Regulation and the administration of the state's comprehensive health insurance plan.

When it was a stand-alone agency, the Office of Banks and Real Estate had 280 employees. Clarke said none of the 150 employees with direct supervisory responsibilities will be affected by the consolidation.

Across the five combined units, the state already has announced it hopes to reduce staffing by 121 positions; 60 positions currently are open and will not be filled, leaving 61 to be eliminated through other means which have yet to be determined.

Wisconsin bank changes name

Wisconsin Business Bank, Sheboygan, recently changed its name to Heartland Business Bank. The name change follows the five-year-old bank's recent expansion into Minnesota where it opened a loan production office. The bank also operates two full-service offices in Wisconsin and said it has expansion plans for the Northeast.

"As we undertook this very important step for our organization, it was critical that our new name not only represent the expanding scope of our business, but also reflect our primary focus - that is, to partner with our business clients," said Kevin Tenpas, president.

The name change became effective July 1. Ownership structure of Heartland Business Bank remains unchanged; the bank is a branch of Wisconsin Community Bank, Madison. Wisconsin Community Bank is held by the $2.4 billion Heartland Financial USA based in Dubuque, Iowa.

Bankers testify before Senate committee on regulatory overkill

Senate Banking Committee members got an earful from bankers tired of increasing regulatory burden. Dale Leighty, chairman of the Independent Community Bankers of America, and Mark Macomber, who serves on the board of America's Community Bankers, told the committee that banks would be better able to serve their customers if the weight of regulation was lighter.

"We have had to devote so much of our resources to compliance that our ability to attract capital and support the credit needs of our customers is diminished," said Leighty, president and chairman of First National Bank of Las Animas, Colo.

Macomber urged the committee to consider increasing the limit for banks to qualify for the small bank CRA examination to $1 billion from its current $250 million. He cited a Congressional Research Service report that estimates the streamlined CRA saves a bank 40 percent in compliance costs.

Flood insurance gets reform

On June 30, President Bush signed the Bunning-Bereuter-Blumenauer Flood Insurance Reform Act of 2004; the measure became effective immediately and will remain in force for five years.

Reforms in the law address the problem of repetitive loss properties through flood mitigation while also authorizing a pilot program that will require people to either accept mitigation assistance or face significantly higher premiums. Owners who refuse assistance will no longer be eligible for subsidized flood insurance. The bill, co-sponsored by Rep. Doug Bereuter (R-Neb.), includes a provision designed to protect lenders by requiring notification when mitigation assistance is offered or refused.

The National Flood Insurance Program is administered by the Federal Emergency Management Agency.

Wells Fargo makes volunteer service awards

Wells Fargo doled out its yearly Volunteer Service Awards recently with $29,000 in contributions distributed to nonprofit organizations in Minnesota. The bulk of the awards were in the amount of $1,000 and Minnesota agencies to receive money include: Orphan Advocates International, Camp New Hope, China Outreach Ministries, Congdon Park Foundation, Make-a-Wish Foundation, Second Harvest Heartland, Minnesota National Guard Youth Camp, and the Center for Youth of African Descent.

Elaine Morrow, a database analyst for Wells Fargo who lives in Delano, Minn., nabbed one of only five $10,000 awards the bank distributes; her award goes to The Ninety-Nines, an organization for women pilots Morrow has been active with for 18 years. Morrow, a licensed pilot, flies blood and supplies for the American Red Cross among other things.

Every year, Wells Fargo offers employees the opportunity to secure Volunteer Service Awards for nonprofit groups in which they actively volunteer. Winners are chosen based on their dedication to the organization, effectiveness of their work, amount of personal time volunteered and the value of their work to their community.

"We are all extremely proud of our team members' volunteer commitments and are delighted to make these contributions on their behalf," said Marilyn Dahl, regional president for Wells Fargo in the Twin Cities.

Nationwide, the bank distributed 163 awards totaling $320,000, including a single award of $50,000.

New rules for mortgage lenders in Illinois and Montana

Beginning July 1, mortgage loan originators have to be licensed to operate in Illinois. The new requirement does not apply to lenders employed by banks, savings and loans, or credit unions. The Illinois legislature passed the measure 18 months ago as part of an omnibus bill dealing with predatory lending. Lenders working for mortgage companies will be required to pass a written test and be subject to a criminal background check. In addition, they will have to carry identification cards issued by the state's Division of Banking and Real Estate.

In Montana, a similar law requires mortgage brokers to obtain a license by September 1. The new requirement does not apply to mortgage bankers or employees of banks.

Jack Henry opens center

Jack Henry & Associates opened a new remote item processing center on July 1. Tony Wormington, chief operating officer, said banks can use Jack Henry's remote processing centers to accommodate imaging and capitalize on opportunities presented by Check 21. "With the advent of Check 21, there is a major effort underway among banks to convert to imaging. While banks will not be immediately required to exchange image cash letters, we believe this is inevitable. Whether regulators or the market will drive the exchange of images between financial institutions, banks want to be ready." Jack Henry plans to open another center on Nov. 1, this one in Philadelphia. The company, based in Monett, Mo., said it will open at least one other center in the current fiscal year. The company opened three centers during the previous fiscal year.

Campaign or Crusade?

With just days remaining before Congress adjourns for the campaign trail, David Hayes, ICBA chairmanelect, cautioned bankers attending the CBA annual meeting in Wichita, Kan., not to expect movement on any banking-related issues. Things should heat uquickly in 2005, though, right about the time Hayes takes the ICBA chairmanship from Dale Leighty. With issues such as GSE reform, expanding Subchapter S, industrial loan company expansion, FDIC insurance and the ongoing battle against unfair credit union competition, Hayes told Kansans he expects to make quite a few trips to Washington next year. When he does, Hayes will be wearing ICBA's new "Enough is Enough" campaign button that encourages lawmakers to strike out unfair credit union expansion.

Impact of PAC money

Hayes said bankers are often outmaneuvered by the credit union industry on legislation because the banking industry's efforts are underfunded. During the 2003-2004 election cycle, the Credit Union National Association collected $2.2 million in PAC funds, a contrast to the $800,000 raised by ICBA in the same period. Hayes said it takes $1,000 to send one ICBA staffer to one event.

And now, for something completely different

David Peterson, executive vice president of Goldleaf Technologies, caught a group of bankers completely by surprise when he turned his presentation on banking news into a Saturday Night Live-style parody complete with phony multi-media clips and doctored slides. After the sidesplitting presentation, Peterson, cofounder of Goldleaf, commented that he originally went into IT to support his dream of doing standup comedy.

Copyright NFR Communications Inc Aug 1-Aug 14, 2004
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