Charles G. Cooper Texas Banking Commissioner

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1 Charles G. Cooper Texas Banking Commissioner

2 Out-of-State Nationally Chartered Banks $342.5 Billion 38% Out-of-State State-Chartered Banks $49.7 Billion 5% Assets of Federally Insured Texas Financial Institutions $908.4 Billion As of September 30, 2014 Out-of-State Federally- Chartered Savings Institutions $ 1 Billion <1% Texas Federally-Chartered Credit Unions Texas Federally-Chartered $50.7 Billion Savings Institutions 6% $71.5 Billion 8% Texas State-Chartered Banks $229.6 Billion 25% Texas Nationally- Chartered Banks $123.2 Billion 14% Texas State-Chartered Savings Institutions $10.8 Billion 1% Texas State-Chartered Credit Unions $29.5 Billion 3% Source: FDIC 2

3 12/31/ /31/2008 9/30/ Illinois Texas Minnesota Iowa Missouri Source: FDIC 3

4 OCC Thrifts 8% OCC Banks 17% State 75% In 1985 there were more than 18,000 active bank charters in the United States. Since then, the US has seen a 62% decrease in the number of active bank charters. Despite this rapid consolidation, the state charter remains strong. Of the 6,821 banks in operation as of YR 2013, 5,168 (75%) hold a state charter. Source: FDIC and CSBS 4 4

5 Millions $16,000,000 Financial Crisis $14,000,000 $12,000,000 $10,000,000 $8,000,000 $6,000,000 Interstate Branching >$50B $10B-$50B $1B-$10B $100M-$1B <100M $4,000,000 $2,000,000 $0 Source: CSBS 5

6 Nationwide organization of state banking regulators Advancing quality and effectiveness of state regulation Promoting economic growth and consumer protection 6

7 Must be developed with better understanding of the role of community banks. Preserving community banks is critical to a strong, dynamic, and stable economy. Must have a frank dialogue between bankers, regulators, and policymakers. 7

8 Three focal points of research: New banks and emerging technologies; Effect of government policy on bank lending and risk taking; and Impact of federal policy on community bank viability. 8 8

9 Key Takeaways: Economic conditions alone do not explain why there have been almost no new bank charters since CRE guidance was impactful, but caused unintended consequences. Federal agencies appeals processes are inconsistent and seldom used by bankers. 9 9

10 Key Takeaways, Continued: Rising compliance costs have the potential to limit financial services available to communities. Washington s one-size-fits-all approach to regulation has a disproportionate impact on community banks

11 Town Hall and Survey Report Town hall meetings with bankers across the country: Held in 30 states, including Texas More than 1,300 bankers attended Survey of more than 1,000 bankers

12 Established in Focused on the viability of the community bank business model and impediments they face. Accomplishments: Regulatory Relief Proposals; Defining Community Banks; and White paper: An Incremental Approach to Financial Regulation. 12

13 Supervision should account for relationship-lending. Remove barriers to private capital investment. Grant QM status to all loans held in portfolio. Fair lending. Speed up application process. Eliminate brokered deposit designation for reciprocal deposits

14 Establish a petition process for rural loans. QM Status for loans held in portfolio. CLEAR Relief Act. Community Banking or Supervisory Experience on Fed and FDIC Boards

15 Enhancing legislation and regulation to better fit the relationship lending model. Improving research on community banks. Providing quantitative data for qualitative stories. Changing the conversation Your voice matters! 15 15

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