West Virginia Bankers Association
2014 Annual Convention
Breakout Session:
Ask the Experts Panel
Panelists:
Paul Reynolds
David Thomas
Christian Gonzalez
Michael Dailey
Ask the Experts Panel
What Questions Are on the Minds of Bankers?
Board and Corporate Governance Mortgage Servicing Rules – Foreclosure Mergers and Acquisitions – What to Look Out For Social Media – Risk Management
Board and Corporate Governance
What will regulators expect from boards in the near future and how will director training and education change?
More Director education in topics important to the regulators (risk, compliance, financial)
Education should enhance the Directors’ ability to, and practice of, challenging management
Informed knowledge and decision making is an important goal of education programs
Board and Corporate Governance
What are the trends in management and director liability following the financial crisis?
Personal liability – FDIC actions Other enforcement and regulatory actions against
management and directors The interest and focus of shareholders and regulators
are not necessarily aligned when determining what is important
Insurance and indemnification
Board and Corporate Governance
What is the ideal composition for a board and how is board governance evolving?
Separation of titles and board independence are focus areas for regulators
Necessary skills – financial and risk expertise not necessarily required for community banks but advisable
Reports and information are keys to Director effectiveness
Board and Corporate Governance
What should directors and management focus on with respect to succession planning?
Board’s role in management decisions and succession Mandatory retirement and impact on building an effective
Board in today’s regulatory environment
Mortgage Servicing Rules – Foreclosure
In general, how do the new mortgage servicing rules implemented by the CFPB affect my ability to foreclosure upon a loan secured by a residential dwelling?
Mortgage Servicing Rules - Foreclosure
Depends upon whether you are a “small servicer” (service 5000 or less mortgages)
“120 day rule” applies to all banks More strict requirements for larger servicers
Special notices and timing requirements Live contact requirements Loss mitigation becomes more important
Need to review policies/processes
Mortgage Servicing Rule - Foreclosure
Do I have to wait until the mortgage loan is 120 days past due before sending a notice of right to cure default and when should right to cure be sent?
Mortgage Servicing Rules - Foreclosure
Cannot initiate “first notice or filing” until loan is more than 120 days past due
CFPB clarified it is document that establishes sale date WVCCPA requires at least 10 day right to cure
Also need to look at loan documents/deed of trust WVCCPA: Can’t threaten action prohibited by law May consider sending multiple notices Review policies/automated notices Carefully review/analyze before referring to foreclosure
Mortgage Servicing Rules - Foreclosures
Can I foreclose if the borrower is continually in default, but remains less than 120 days delinquent?
Mortgage Servicing Rules – Foreclosure
CFPB rule reads “more than 120 days delinquent” No guidance/commentary to define Two ways to interpret:
(1) Loan in default for 120 consecutive days
v/s (2) Loan is literally more than 120 days past due
May need to look at loan documents/state law What about non-monetary defaults? Stay tuned!
M & A: What to Look Out For
What issues should be on the minds of senior management and the board when considering a transaction?
M & A: What to Look Out For
Forming the team Internal External
Due diligence Financial plan and structure
Consideration mix Transaction structure
Integration
M & A: What to Look Out For
What are the critical areas to review and analyze during diligence?
Legal – governance, litigation, environmental, regulatory compliance, shareholders
Financial – statements/reports, ALLL, taxes, pricing
Operational – loans, employment issues, employee benefits, vendors
M & A: What to Look Out For
What issues are on the minds of the regulators when evaluating an application for a transaction?
M & A: What to Look Out For
CAMELS Rating Consumer compliance – CRA, BSA, Fair Lending Presentation of pro formas Impermissible investment activities Pre-application meeting
M & A: What to Look Out For
Generally, what are the significant negotiated issues or points in a definitive agreement?
M & A: What to Look Out For
Typical Elements of Agreement:
Price and adjustments Consideration mix Representations and warranties Covenants Termination/Break-up fees Survival of representations and warranties Closing mechanics
M & A: What to Look Out For
Negotiation Topics in Definitive Agreement
Price/fairness opinion Financial; reserves and allowances Disclosures Employee and benefit matters Taxes Pending litigation Contracts Environmental
M & A: What to Look Out For
How does the regulatory application process work?
Holding company applications and waivers Bank subsidiary application Timing
M & A: What to Look Out For
What are some other issues and pitfalls in bank M & A?
Data Conversion – costs, expenses and timing People Integration – culture Customers – retention and communication
Social Media
Is there one overarching regulatory concern/issue relating to social media in the banking industry?
Social Media
Yes! Risk management Risk Management Program
Governance structure – board/senior management Oversight and monitoring Audit function and compliance Third party vendor management Reporting and evaluation
Social Media
What consumer compliance laws and regulations are implicated by the use of social media?
Social Media
Truth in Savings/ Reg. DD Fair Lending – Equal Credit Opportunity/ Reg. B; FHA Truth in Lending/ Reg. Z UDAAP Fair Debt Collection Practices Act Deposit Insurance Rules CRA Privacy Laws – GLBA; CAN-SPAM
Social Media
In order to manage risk to the bank from negative postings on social media, do we have to widely monitor social media sites?
Social Media
No, But Must Monitor Own Sites Facebook page Twitter account Sponsored bulletin boards
Direct customer complaints via social media Risk based monitoring of other’s social media Analyze risk of not responding
Social Media
Is it necessary for our bank to have a policy to govern employee activity on social media? If so, what should be in the policy?
Social Media
YES, your bank needs a social media policy Clear, concise and tailored
Describe social media covered Indicate applies during and after work Specific actions/comments prohibited Confidential information; proprietary
Inform that bank may monitor social media activity Who permitted to post
Thank you for your participation!
West Virginia Bankers Association
2014 Annual Convention
Breakout Session:
Ask the Experts Panel
Paul [email protected]
David [email protected]
Christian [email protected]
Michael [email protected]