Banking Quarterly Hot Topics

Employees can be swayed to stay with their present employer when that organization extends the right offer – whether that’s more money, more responsibility, a bigger title, or other perks. In this environment, rather than losing valued employees to a competitor’s offer, employers are now wise to consider issuing a counteroffer rather than absorb the cost of backfilling the key position. 

The Topics in the News column offers a quick look and access to trending topics appearing in online industry publications. This issue taps BankDirector.com and S&P Global’s Market Intelligence on cyber, ESG and cannabis.

Bankers and lenders are now facing the post-Payroll Protection Program (PPP) lending environment as the stimulus winds down for both consumers and small businesses. As the PPP has now ended, where does this leave the borrowers and lenders? 

Many organizations have recognized succession planning as a top strategic need without fully committing the degree of focus required to develop and implement a workable plan. This is true of the banking industry as a whole but especially for the community banking sector. Banks with aging senior leadership that have not yet planned for succession do have a few options available to them – but need to apply some urgency to their game plan. 

With costs projected to grow at 15% per year, cybercrime has become a highly successful and profitable industry. Indeed, over the last 18 to 24 months ransomware attacks have skyrocketed in both frequency and severity, driving significant changes in cybersecurity practices and cyber insurance. Multifactor authorization is one key piece to ensuring your organization’s protection. 

In this guest column, Nick Jellum (Anastasi Jellum, P.A.) discusses procedures outlined by the SBA regarding PPP loans and changes of ownership, including when SBA’s prior approval is and is not required and what language must be included in the purchase agreement. 

As a result of continued low interest rates and COVID-19 stimulus programs, many banks have seen a rapid increase in their total asset balance from 2020 to 2021. Too many banks wait until the year they achieve $1 billion in total assets to begin to address FDICIA requirements. A well-paced and planned-out approach to FDICIA readiness should give bank leadership time to adjust and offers additional internal control benefits. Our sample bite-sized approaches offer two alternatives - timelines tied to either total assets or calendar year. 

The Dodd-Frank Act prohibits conduct that constitutes an unfair, deceptive or abusive act or practice (UDAAP). On March 11, 2021, under the Biden administration, the Consumer Financial Protection Bureau (CFPB) redefined the interpretation of the “abusiveness” standard of UDAAP.

Millennials (or “Gen Y,” currently between 25 and 40 yearsold) are moving into key managerial and C-suite roles. They are not necessarilyinterested in developing a deep, personal relationship with their banker.Instead of the breakfast, lunch, dinner, golf continuum, these clients andprospects base decision making on internet research, online references and abank’s website for ease-of-use and meaningful information. A new paradigmrequires new skills.

Banks previously not subject to the Federal DepositInsurance Corporation Improvement Act of 1991 (FDICIA) may soon find themselveswith new reporting requirements. A culmination of factors have dramaticallyincreased the volume of assets held by banks. These assets may push banks overthe $1 billion threshold for internal control testing requirements underFDICIA.

Every six years, the IRS requires pre-approved qualified retirement plan documents to be restated. 

The headlines shout recognition of the power of diversity in the boardroom and C-suite. The banking industry has lately joined the chorus. The data certainly confirms that financial institutions can expect to realize significant financial benefits when women are present in leadership roles. 

With the increase of weather-related catastrophes and natural disasters, along with the impact of COVID-19, the commercial insurance market is seeing a significant rise in rates for the first time in decades. This hardening of the commercial insurance market is putting pressure on carriers and therefore businesses are seeing consistent increases in renewal premiums. 

COVID-19 has shaken up business as usual in all sectors, including banking and financial services. Finding ways to cut costs and increase cash on hand are top of mind for many banks and other businesses right now.