Louisiana Bankers Notes Blog


End of 2017 Has Banking on Cusp of Great News

Read that headline again. You have waited a long time to see that. Good things out of D.C. are in sight. All those visits to D.C. by Louisiana bankers and your banking colleagues around the country are paying off. The Senate Banking Committee recently passed S. 2155, the Economic Growth, Regulatory Relief and Consumer Protection Act, which has many positive provisions that will help Louisiana banks. It is not all that we want but is a very good start. It has the support of enough democrats to assure final passage in the Senate. I watched part of the hearing and the democrats on the committee that support this bill made very strong emphatic statements that they understand changes need to be made in banking regulation to promote economic activity and consumer access. We are hopeful this is the first of many positive developments as we move into 2018. I understand the full Senate will vote on S. 2155 in January. The tax reform bill now being negotiated in Congress could be very welcome news for banks and their customers. While we continue to have specific concerns that we are communicating to our congressional delegation, we are hopeful. You also are seeing the change in federal regulatory leadership in D.C. at the Consumer Financial Protection Bureau, Office of the Comptroller of the Currency, Federal Reserve and soon the FDIC. Since Congress passes laws directing banking agencies to fill in the blanks of what they pass through writing rules, there is significant opportunity for rules to be rewritten or interpreted differently that we should see play out over the coming years. Keep engaged and be part of the LBA effort to push for positive changes in 2018. 

All of us here at LBA are thankful to work for Louisiana bankers. Each of us comes to work with the focus to serve your needs as best we can. Bankers are the single most important factor in directing our work. The better we all work together, the better the outcome. Help us, keep us focused and know that we are grateful to be here at LBA.




Tax Reform & Louisiana Banking

Tax legislation that can have a significant impact on your bank, employees and customers, both positive and negative, is moving through Congress. You have likely seen through media reports that tax reform is on the fast track, with the House passing their bill yesterday and the Senate Finance Committee, on which Sen. Bill Cassidy is a member, passing their version out of committee yesterday as well. The full Senate could tax up the bill the week after Thanksgiving. Both House and Senate bills have provisions that are concerning. Both House and Senate bills initially had very detrimental sections on non-qualified deferred compensation plans. Fortunately, the House removed that provision in committee last week. The Senate bill also initially had that provision, but it too was removed. Both Sen. Cassidy and Sen. John  Kennedy and their staffs were actively engaged in helping achieve the positive result. We here at LBA will remain diligent on this issue as long as the tax reform bills are being considered. Bankers did a very good job of getting the attention of our delegation this week when we sent out an alert to contact Sen. Cassidy’s staff. 

The LBA board met with Sen. Kennedy November 17 at LBA’s office and discussed tax concerns, such as the S corporation pass through tax rate, deferred compensation and credit unions not being taxed in the current bill. Also discussed was regulatory relief, which LBA Director of Government Relations Joe Gendron has written about in his article in this issue. Also discussed was flood insurance, that has not yet developed a consensus in Congress on a path forward for reauthorization. Other items were covered and we appreciate Sen. Kennedy’s positive and constructive approach. 

Continuing on tax reform, reducing corporate tax rates is the core of tax reform. C corporations are given a 20% rate in both bills, which we strongly support. The challenge is with the pass-through corporate entities and assuring they have rates equal in effect. About half of Louisiana banks are organized as S corporations. Some proponents of the pass-through provisions contained in the House bill assert they are achieving a 25% rate that is about equal to the C corporation 20% rate. However, the information we are receiving from our banking association partners in D. C. indicates the provisions impacting S corporation banks in both bills, as they are now, fall significantly short of that goal. In fact, it could be that the motive of some is to incent S corporations to move to C corporations. LBA is strongly communicating our concerns on the S corporation provisions. Sen. Cassidy, who is on the committee, and his staff, are hearing from us and others. Additionally, we are asking Congressman Steve Scalise and his staff to assist, as is Sen. Kennedy and others of the Louisiana delegation. We have heard this issue of pass through corporations and the rate of tax they will pay is one of the major issues that must be resolved by congress as they move toward enactment of tax reform. When the House and Senate bills go to conference committee to reconcile the two bills, Congressman Scalise can be an advocate for changes if the bills are still short of getting to the 25% rate goal. LBA is very appreciative of the staff of the Louisiana congressional delegation. We have been able to get our concerns heard and acted upon as best they can. As this and other issues develop we will keep you updated. 



Bank Consolidation Impact Wide

When a Louisiana community bank acquires another Louisiana community bank, one bank attains markets, deposits, loans, people and scale. The other bank, for many reasons, found a partner to achieve their goals. Let’s assume, for our purposes, these two are pleased with the outcome. For onlookers, they may see community banking taking another hit. Fewer bankers, less political muscle in contacts and PAC contributions. A smaller pool of bankers to serve as volunteers in local and state organizations like the LBA. The consolidation is seen as one consequence of extraordinary regulatory requirements that make no economic sense. In March of 2008, there were 162 banks domiciled in Louisiana. In June 2017, we have 128 domiciled here. Seventy-two of those 128 that have assets below $250 million. There are 118 of the 128 below $1 billion. More consolidation is in the future of Louisiana and the nation.

A couple of developments related to this. This month the LSU Graduate School of Banking held a strategic planning session that had a focus on the industry consolidation and its impact on the school. The sweet spot for GSB are banks $500 million and below. That is the challenge. The top three locations students come from to attend GSB are Louisiana, Tennessee and Mexico. About 10% of the student body comes from Mexico. There are six such schools nationwide and LSU GSB will work to continue its excellence in education and leadership.

Another development is with state banker associations around the country. We are meeting by conference calls and planning for an in-person meeting in November to confront how consolidation is impacting the ability of state banking association to deliver on their mission. We have divided ourselves into specific group topics to prepare, and I serve on the Political Engagement Steering Committee. I hope to come away from this exercise with a few items that can help us here at LBA. What we are confronting here is similar to the challenges you face at your bank, except what you face is much more difficult. I am grateful that LBA has a great staff and a supportive board of directors that will keep us on mission. 



LBA Launches New Resource & Peer Group for Women in Banking

LBA's newest resource and peer group is worth checking out. Below is a story that ran in LBA's newsletter explaining the vision for PWR – Professional Women Revitalized. 

PWR – Professional Women Revitalized

We are bankers. We are professionals. We are women. 

Some of us are new to the banking industry and we are trying to define success for ourselves.

Some of us are in mid-career and wondering where we go from here.

Some of us have years of banking experience and would love to lift up younger women bankers.

PWR’s webpage features resources helpful to bankers who happen to be women. Many of the resources will not be gender specific; however, some will. We will hear from professional women from inside and around the banking industry. The goal is to support women bankers from that initial step of defining success through the mid-career questioning into the seasoned opportunity to pass on wisdom and experiences. When one of us questions why we remain in the banking industry when the deck seems stacked against us, it affects all of us. We should all work to support each other to success. We understand the definition of success is different for each of us and that is perfectly okay. The thought is that fellow women bankers’ support can help you meet your success goals more productively.

PWR – professional women revitalized, a LBA webpage that is dedicated to Louisiana’s women bankers, is your resource! Click here to visit the webpage