New twists and Turns on the Redistricting Saga
The 2012 redistricting saga took a wild turn on Wednesday, as a federal court threw cold water on the idea of prohibiting this election cycle from being conducted under the old, 2001 legislative districts. In fact, the court said there was really little other choice than to do exactly that. The options for the GOP legislators are basically moving the Primary Election date way down the line to June, July, August or follow the court’s ruling and use the 2001 lines.

This week was the filing deadline for candidates and forty-five GOP legislators have no opponents in the upcoming Primary Election. This means that those 45 incumbents will probably be less likely to vote to move the primary to a later date in the year. Delaying the primary could generate challengers, not to mention another round of petition signing and possibly campaigning during the hottest months of the year. Senate President Pro Tem Joe Scarnati, R-Jefferson, has said that first and foremost, he wants to focus on passing the budget. He also thinks moving the primary would be unpopular with voters, and perceived by them as “There goes the Legislature again, doing something for themselves, not us. We have to be very careful here.” All of this puts moving the April 24th Primary on life support. We’ll be watching for any new developments in the next couple of weeks.

Future of Community Banking
On Thursday, I had the opportunity to listen to the Future of Community Banking conference from Arlington Virginia with Ben Bernanke kicking off the morning session. He appears to be not onlylistening to community banks but taking steps to effectively address community banking issues through a constant dialogue with community banks via various channels. Most notably the disproportionate costs on community banks that new regulations and supervisory requirements impose, and coordinating with other regulatory agencies to increase the coordination and consistency of regulation across the banking industry.

It was great to listen to Fed Chair, but I found that listening to actual Community Bankers tell their stories to be very compelling. The amount of information was overwhelming, but I took two things away from the afternoon session. Each banker spoke about how the personal, one-on-one customer service that community banks provide is key to keeping and attracting customers since community banks can’t beat big banks on price. The second was several bankers urging other bankers who have not embraced technology to attract and retain customers particularly younger customers. You can listen to the conference at this website: http://www.vodium.com/MediapodLibrary/index.asp?library=pn100761

Who says there is no bipartisan cooperation?
Senators Bob Casey, a Democrat, and Pat Toomey, a Republican, are rallying support on Capitol Hill for three imperiled Philadelphia-area oil refineries. The two Senators came together to meet with refinery workers who are concerned that the closings of the refineries could cost jobs, push energy costs up and endanger national security. Both Senators pledged to fight to keep the refineries open and save jobs. They were joined by Representatives Pat Meehan (R-7th District), Chaka Fattah (D-2nd District), Allyson Schwartz (D-13th District), and John Carney (D-Del.). Senator Casey called for a Senate hearing on the impact refinery closures could have on energy prices. Representative Chaka Fattah, a Democrat, said he was exploring tax proposals that would make the refineries more attractive to prospective buyers without detailing the plan. Congressman Meehan said that the House Homeland Security Subcommittee on Counterterrorism and Intelligence that he chairs will examine nationwide refinery closures, including the three Philadelphia-area refineries, and how the closings could increase risks to the nation’s critical infrastructure and threaten supply shortages in the event of a global crisis.

Subprime Mortgage Bonds Back In Fashion
An article in the Wall Street Journal and subsequently the Huffington Post, that interest in subprime mortgage bondsis on an upswing left me scratching my head. We’re still dealing with the fallout from the last few years and caution has been the overriding factor. But according to the Wall Street Journal, prices are climbing for some bonds backed by subprime mortgage loans with one index rising 14 percent. If you would like to read the entire article click on this link: http://online.wsj.com/article/SB10001424052970204062704577223473258237102.html

Until next week,
Fran

Just some of the things that caught my attention this week…

Cuts, cuts everywhere, but no new taxes.
Keeping his campaign pledge of no new taxes, the Governor Tom Corbett unveiled his proposed 2012-13 budget of $27,138,970,000, down from the $27,261,435,000 budget enacted in June 2011.

Higher education was hit hard. 17 state universities will take 20% decrease to $330 million. The two-year reduction would amount to a cut of 34%. The appropriation for Penn State will be cut by 28% this year, totaling a two-year reduction of 51%. The University of Pittsburgh and Temple University are slated to receive a 30% cut this year, with the two-year cut totaling 44% and 43%, respectively. Basic education funding lost $840 million in the 2011-12 fiscal year and funding in this budget is down by $78 million from the current year.

In the Department of Public Welfare, several human service programs administered by counties will be combined into a new, larger Human Services Development Fund. Many other line items were reduced and DPW proposes savings of $629 million.

What was noticeably missing from Governor Corbett’s budget was transportation infrastructure funding. He made a passing reference, saying that it was not a budget item and needed to be addressed by some means. We will keep a close eye on this topic for any developments. Don’t forget, this is just the Governor’s proposal and this is an election year. That means that lawmakers have an eye towards November which will influence their actions this spring during budget season.

$26 billion, a drop in the bucket!
On Thursday officials from the Obama administration, banking regulators and state Attorney Generals announced a settlement of $26 billion with five of the nation’s banks over flawed and fraudulent foreclosure practices that affected several million homeowners. 49 states have signed onto the agreement, with Oklahoma the lone holdout, federal officials said.

Help could come via partial loan forgiveness or principal reduction, refinancing or cash payments of up to $2,000 for those who have already lost their home. The program only applies to homeowners who have or had mortgages serviced by Bank of America, Citigroup, JPMorgan Chase, Wells Fargo and Ally Financial (formerly GMAC). Those with loans owned by housing giants Fannie Mae or Freddie Mac are not affected by settlement.

While this is a good first step, in reality the settlement helps only a fraction of homeowners and addresses only a very limited set of fraudulent activities. A number of homeowners will get some cash payments, but the amounts are negligible compared to what they have experienced. More than 14 million homeowners (one in five) have homes underwater, beneath a crushing total of $700 billion in negative equity. 4 million have already lost their homes.

A website for information on the settlement is at http://www.nationalmortgagesettlement.com/

The continuing saga of the 2011 Redistricting…
The Pennsylvania General Assembly’s GOP Senate and House leadership sued to have the 2001 boundaries overturned so that they could not be used for the April 2012 Primary. But on Wednesday, senior U.S. District Judge R. Barclay Surrick announced his decision that the 2001 legislative maps be used for this year’s election. He noted that this year’s election cycle is too far along to implement a revised plan. Delaying the April 24 primary could deprive Pennsylvanians of the right to vote in the presidential primary and send delegates to national conventions.

Republican leaders in both the House and Senate said they plan to issue revised maps this coming Wednesday, and vote on them at the Legislative Reapportionment Commission’s meeting February 22. Even if a new plan is drawn up quickly and approved, there are two 30 day periods for appeals and public comment, a process that could take months.

Republican leadership has been considering a special election in addition to the April 24 Primary, but that would cost the taxpayers $25 million. Not a good thing in a very important election year.

And last but certainly not least…
Former Pennsylvania U.S. Senator Rick Santorum claimed victory in Minnesota, Missouri, and Colorado primaries on Tuesday. Santorum is quietly becoming the conservative alternative to frontrunner Governor Mitt Romney. A recent poll has him statistically tied with Romney in Pennsylvania and national polls saw his numbers increase dramatically this week.

Until next week,
Fran

And the winning number is…8.3%!
The unemployment rate dropped last month from 8.5% to 8.3% a huge jump and the best in three years. Manufacturing grew in January at the fastest pace in seven months. Factory output rose in December by the most in a year. Residential construction rose 0.8 percent on the strength of single-family homes and nonresidential building jumped 3.3 percent, led by factory construction.The pace of growth in the U.S. services sector unexpectedly accelerated in January to its highest level in nearly a year. TheNASDAQ shot up 8% in January while the Dow and S&P 500 also surged in January, rising 3.4% and 4.4% respectively.All of these numbers seem to indicate the US economy is chugging along. However, the Fed warned this week that the outlook for employment and the economy in general remains shaky, and that while the economy has shown signs of improvement it continues to remain vulnerable to shocks.


The 2011 Pennsylvania redistricting drama continues. This week House Speaker Sam Smith sued the state elections bureau to try to rule out using the 2001 district lines for the 2012 elections. The Republicans don’t want to use the 2001 map because even though they created it 11 years ago, it now favors the Democrats. Senate Judiciary Committee Minority Chairman Daylin Leach said Senate Democrats may get a federal court to dismiss House Speaker Sam Smith’s redistricting lawsuit.


Late Friday afternoon (4:30pm), the Supreme Court revealed their 87 page ruling. In the decision, Justice Castille wrote that the commission plan split too many towns, wards and counties, and that too many districts were not compact. Castille wrote that alternative plans submitted by Senate Minority Leader Jay Costa and Amanda Holt, showed: “evidence that the Final Plan was contrary to law. … This plan shows that a redistricting map could readily be fashioned which maintained a roughly equivalent level of population deviation, while employing significantly fewer political subdivision splits with respect to both Chambers of the General Assembly.” I suspect that there will be additional fallout now that the Court has released its opinion. We’ll be keeping a close eye on this ongoing saga.


HB398 was signed into law this week by Governor Corbett. This measure, known as the Appraisal Management Company Registration Act, establishes registration of appraisal management companies in Pennsylvania as required by Dodd-Frank. It establishes the State Board of Certified Real Estate Appraisers (Board) and requires an appraisal management company (AMC) that is not exempt under federal law to register with that Board. The AMC must renew registration biennially and pay a fee of $1,000. Registration also requires the AMC to post a $20,000 surety bond or irrevocable letter of credit.


After a couple of weeks of Super Bowl hype (or torture depending on your perspective), the Big Game will finally be played on Sunday with the rematch of the New England Patriots vs. the New York Giants. Along with all of the over the top commercials and half time show, and gathering of friends and family, this day ranks behind only Thanksgiving for food intake, with an average of 1200 calories per viewer. Ah, American tradition!


Until next week,
Fran

People pose these questions every day.  Unfortunately, the answers to these questions aren’t always clear.  What is clear is that there is mass misconception about the definition of a community bank.  We’ve seen many articles this past year advising the public that the best community bank option for consumers is a credit union.  When you’re done gasping and writhing with anger, take a moment and consider the reason for the confusion.

Read the full article in January’s issue of Transactions Magazine.  Not a subscriber?  Call PACB at 717-231-7447 to start receiving the magazine.

Community bankers remained in the national spotlight this week, the key subject in both Monday night’s GOP Presidential debate and Tuesday night’s State of the Union Address.  These high profile events make it clear that our fight is not over.  Whether it is President Obama advocating for a financial service fraud investigation agency or his Republican challengers seeking changes to the Dodd-Frank Law, as an industry we must actively engage in the debate.  Over the next few weeks, I’ll be calling on you in the very near future to help PACB as we carry out our plan to meet with each of our states 21 members of congress.

Earlier this week I had the opportunity to get a briefing from several key staff members at ICBA.  We talked about several important policy initiatives, but the key bills were the Communities First Act (HR1697 & S1600 in the Senate) and the Small Business Lending Enhancement Act of 2011 (HR1418 & S509 in the Senate). The first bill presents great opportunity for community banks to get necessary regulatory relief.  The latter bill poses great risk to our industry.  It would expand credit unions’ business-lending powers by more than doubling the current cap on business loans from 12.25 percent of assets to 27.5 percent. This bill has broad bipartisan support and that of the administration and Treasury.  Over the next month our goal is to advocate for the Communities First Act within our PA Congressional delegation.

In Harrisburg things are heating up!  This week the state Supreme Court dropped the one of the biggest bombshells in many years… Chief Justice Ron Castille crossed party lines and voted with the three Democrats on the Court against his three fellow Republican justices and threw out the 2011 Redistricting Plan.  It was a shock to the political world in Pennsylvania.  Candidates are just gearing up to get petitions signed in the newly drawn districts, but it appears we may be using the old 2001 districts for now.  Unfortunately, the Court’s opinion which will specifically outline their objections will not be released until later this week.  Stay tuned!

HB2150 was introduced in the PA House on Wednesday.   The bill has bi-partisan support with 50+ sponsors who say we need to reform our business tax structure beginning with closing the tax-avoidance practice known as the Delaware Loophole.  It only affects businesses that take advantage of the loophole for the sole purpose of tax avoidance in Pennsylvania.  In addition to closing this loophole, the bill gradually reduces the corporate net income tax during the next six years, and phases out the cap on net operating losses during the next nine years.  The bill is now in the House Finance Committee.  PACB will be actively monitoring this legislation because of the impact it may have on some of our members, but also the impact it may have on many of the businesses we serve.

I’m pleased to be a part of the PACB team.  I’ll be monitoring legislation in the PA General Assembly and in Congress that could have an impact on you or the businesses you serve.  I look forward to working with you to strengthening the community banking industry in PA.

Until next week…
Fran

The wait is over… PACB is pleased to announce the theme for Community Banking Week 2012: “That’s My Bank!”  We will be celebrating Community Banking Week from April 2-7, 2012, as part of the national Community Banking Month.

This is the perfect opportunity to show what your bank and employees do best – serve the community!  Reach out to as many local individuals and organizations as you can; inform everyone about all the great things community banks do for the community.

PACB will create marketing materials (i.e. posters, table tents, stickers and more) to support your bank.  In addition, we’ll provide sample letters and press releases so that you can notify the media about your activities.

And speaking of activities, here are some ideas to help make Community Banking Week a success in your area:
1. Show you care by sponsoring a blood, clothing, or even
food drive.
2. Host a seminar on retirement planning or smart investing.
3. Invite local schools or scout troops to tour your bank.
4. Host a charity event like a race or an auction.
5. Create a lobby display highlighting your small
business customers.
6. Speak to civic groups or senior centers to reach new
audiences and convey the importance of community banking.
7. Host an open house complete with tours, refreshments,
contests and giveaways.

These are just a few of the endless possibilities to make your bank shine. We hope you will take advantage of this wonderful opportunity to share your love of community banking.  Be sure to include your entire organization in your festivities, invite the media to participate, and take lots of pictures! If you need anything to ensure a successful Community Banking Month, the PACB staff is happy to oblige.  We are here to help you in all your efforts.  Good luck and have fun!

Beginning at the start of the new year, PACB added a few new faces to it’s staff. Meet the new additions below!

Eric Kovac

“I remember as a kid, my total fascination with the creativity and cleverness found in highway billboards and magazine advertisements. The power of a photograph and the greatness of designs created graphically have since become my life and my passion. My designs and photographs are snapshots…windows into my passion, from inception to completion.

My goal as one of the new Publications Manager for the Pennsylvania Association of Community Bankers is to open a window of creativity for this company…to help tell your stories!”

Natalie Bombatch

“Hi, I’m one of two new Publications Managers in the communications department at PACB. I wanted to take moment to share a little bit about me so that we can get to know each other in the coming weeks. In December I obtained an MS in Communication Studies from Shippensburg University. It was a lot of work, but very worth it! I also have a BA in Communication/Journalism with an emphasis in Public Relations and a minor in Art.

I have experience working and interning for a publishing company and several non-profit organizations where I developed my design, event planning, fundraising, and writing skills. I hope to bring a well-rounded set of skills to PACB in order to help you!”

Fran Harris

“Hello everyone! My name is Frances Harris (but you can call me Fran!), and I want to take this opportunity to tell you a little about myself. I was in the banking industry in Washington DC for a number of years and later worked at FannieMae and FreddieMac before moving to Pennsylvania.  After working in the Department of Community and Economic Development as the Women’s Business Advocate providing entrepreneurial assistance to s businesses (and potential business owners), I spent several years with the American Institute of Architects of Pennsylvania as their Government Affairs Manager. I’m excited to have the opportunity to work with the PACB staff and its members and looking forward to meeting all of you!”

Online Excerpt:

For community banks, involvement in civil lawsuits is becoming a regular cost of doing business these days. Legal actions are initiated for any number of reasons, but all lawsuits share common elements and pitfalls that require close attention and quick response. Failure to take the right action within the required timeframe could mean that important rights are lost or squandered.

Some of the best defenses to a lawsuit are developed before the lawsuit is filed. For   example, if a customer sues a financial institution and alleges that his or her money was handled negligently or a payment processed improperly, certain documents will naturally be relevant to vindicating the bank, including account records and the bank’s operations manual. Therefore, all banks must ensure that these documents are regularly updated with the assistance of counsel to ensure that they are thorough and accurately reflect the bank’s policies regarding accounts and payments. It is important to ensure that your employees are made aware of every procedure and expectation that exists so that they act consistently with these policies and procedures.

Although this ounce of prevention is key, legal problems arise even for the most  responsible community bank. The first and most obvious step you should take is to call your attorney as soon as you receive the Complaint. It is usually unwise to contact the plaintiff or the plaintiff’s attorney until contacting the bank’s counsel. After being served with the Complaint, very strict timelines for responding are already in place and, if missed, can cause your adversary to win the case before the merits are heard by a judge. In addition to helping you understand deadlines (and possibly negotiating an extension of deadlines), the bank’s attorney will initiate important discussions to determine what defenses exist to the plaintiff’s allegations. Too often, companies delay discussing matters with counsel until deadlines are imminent or have already passed. Seeking legal advice immediately allows the bank’s attorney to provide necessary perspective from an early stage in the lawsuit.

Read the full article in December’s issue of Transactions Magazine.  Aren’t a subscriber?  Call PACB at 717-231-7447 to start receiving the magazine.

Nick DiFrancesco : I want to talk about your decision within the Department of Banking, and to thank you for Glenn Moyer because he has just been terrific. I know he’s got some initiatives going on, and we’ve been thrilled to work with him. You made a good choice. He’s a good community banker and he really has his heart set in the right place, and he’s providing the industry with an alternative to a national climate that is a bit challenging. Other regulators are not so accommodating in terms of their vision to make sure that community banking continues to exist.

Governor Corbett: I think it’s so important, especially when you have a regulatory role, that you’ve  participated directly in the industry, rather than always been a regulator. Because I have found that, when you’re talking about regulators, and the same goes for prosecutors, but when you’re talking about a regulator, if they haven’t had to be regulated, and understand what it means to be regulated, there’s no way that they can comprehend how they affect the growth of a business by their regulations in and of itself. If you’re looking at the Federal government under the current administration,
I think that’s a classic example. You look at the president and the people that sit around him, they have not been in the business sector.

By bringing Glenn in as my secretary of banking, he’d been there. He knew it. He knows what his role is as a regulator, and he can enforce the rules, but he can also sit down with his staff and say, ‘This is what’s going to happen if we do it this way, but if we do it this way, we’ll get the same effect, and we don’t hurt the business.’ We don’t want to hurt business. We don’t want business to hurt us, but we don’t want to hurt business either.

Read the full interview in December’s issue of Transactions Magazine.  Aren’t a subscriber?  Call PACB at 717-231-7447 to start receiving the magazine.

Despite ongoing economic challenges and an increasingly complex regulatory environment, Pennsylvania’s community banks have reason for optimism, says Secretary of Banking Glenn E. Moyer. PACB recently sat down with Secretary Moyer to discuss the health of Pennsylvania’s community banks and the long-term viability of the dual banking system.

Moyer, who became Pennsylvania Secretary of Banking in April, acknowledges the difficulty facing banks but said he believes that the banking industry in Pennsylvania is in better condition than in many other regions of the country.
“I’m optimistic. Yes, we have to address problems, but there is a good base for us to grow forward. The banking industry can become a real contributor to the kind of job creation and private sector growth the Corbett Administration favors.”

Among the more pressing concerns of community banks remains the effectiveness of the dual banking system—the backbone of the community banking industry.  According to Moyer, a robust dual banking system is critical to Pennsylvania’s economic progress, and ensuring its long-term success is one the primary reasons he agreed to become the Secretary of Banking.

“Now, more than ever, we can see major differences between state and federal regulatory environments,” said Moyer, who has 33 years of community banking experience, including stints in both state and federal charter systems.  Among other things, Moyer believes it is imperative that each bank has the choice to pursue the charter most in line with its goals, whether state or federal.
In recent months, three Pennsylvania banks—Univest, Riverview, and Crescent—have transitioned from a federal charter to a state charter. As many as seven more banks are in the process of doing the same—a sign that a growing number of banks are looking to the state system to help them better differentiate their products and services.

Moyer called the renewed interest in state charters “a real opportunity for the commonwealth,” and that his department will work with banks interested in converting—so long as the bank is well managed, well capitalized and committed to progress and growth for the people of Pennsylvania.

However, he cautions banks to consider a conversion for the right reasons. Banks should only convert to a state charter if they believe state regulators will do a better job than the Office of the Comptroller of the Currency (OCC) in helping them to succeed in their local communities.

For its part, the Department of Banking is engaged in a long-term, comprehensive assessment of the state regulatory environment that includes industry feed-back. In the near term, Moyer believes there are small legislative changes that could have a significant impact on many banks.

One of those changes includes revising the Banking Code of 1965 to make it easier for some federally chartered banks to transition to a state charter. The current code bars banks whose names include the full words “federal” or “national” or “any abbreviation thereof” from state charter. Consequently, banks seeking a state charter often must rename and rebrand at significant cost. Simply eliminating from the code, “any abbreviation thereof,” would enable banks to become state chartered without a costly rebranding campaign.  Moyer estimates that a significant number of Pennsylvania’s federally chartered banks could more easily become state chartered under this modest revision.

Read the rest of the article in October’s issue of Transactions Magazine