Year in review

2019 to be remembered for healthy economy, university initiatives, successful legislative session

For Americans, 2019 will be remembered as a year of growing political divisions, impeachment proceedings and endless campaign promises from presidential contenders.

The year kicked off with a partial government shutdown that affected thousands of government employees, including many in Texas. The banking industry quickly stepped in to help affected employees by offering various forms of assistance, including no-interest loans and fee waivers.

The banking industry remained strong throughout the year and continued to support ongoing growth thanks to a healthy economy, which in its 11th year of expansion, was “operating close to maximum employment and price stability,” according to Federal Reserve Chair Jerome H. Powell.

The Texas banking industry also stayed healthy and strong in 2019. The year was characterized by the following milestones:  

• A strong Texas economy that meant community banks and thrifts were more profitable and boasted better credit quality than the nation as a whole, according to S&P Global.
• The opening of Gulf Capital Bank, Houston’s first de novo since 2008.
• A bump in M&A activity, with 25 transactions — the largest (to date) of the year was Prosperity Bancshares’ $2.08 billion deal to acquire Plano-based LegacyTexas Financial Group.
• A continuation of the trend toward consolidation with 429 Texas-based institutions so far in 2019 versus  438 in 2018.
• The development of the Texas Tech University Excellence in Banking Program. Former TBA Chairman Mike Mauldin was named director of the new program.

Congressional matters

When the 116th U.S. Congress convened in Washington, D.C., on Jan. 3, there was a new, albeit familiar, face chairing the House Committee on Financial Services. With the Democrats in control of the House, Maxine Waters, a congresswoman from a California district based in Los Angeles, became the new chair. In addition, the 2018 elections brought a number of new faces to Congress.

In late January, nine Texas bankers and TBA staff traveled to Washington, D.C., for the Freshman Fly-in, where they met with the 10 newly elected Texas representatives in Congress. In early April, 100-plus bankers and guests traveled to Washington, D.C., where they visited with 34 of the 36 Texas members of the U.S. House of Representatives and Sens. John Cornyn and Ted Cruz. Notably, the group represented 40 different banking institutions and included 27 first-time attendees and 13 bankers from Class XI of TBA’s Management Development Program.

While 2018 brought much-needed relief to community banks through The Economic Growth, Regulatory Relief and Consumer Protection Act (EGRRCPA), 2019 would not offer similar legislative relief. There were some glimmers of hope, however, as the Housed passed the Corporate Transparency Act (H.R. 2513) that would create a national database that banks could use to verify a business’s beneficial ownership information and also would modernize the existing anti-money laundering/Bank Secrecy Act framework. The SAFE Banking Act (H.R. 1595), which also passed in the House, would provide clarity about serving legitimate cannabis businesses.

Also, of importance to bankers, U.S. Rep. Vicente Gonzalez of Texas introduced the CECL “Stop and Study” Bill in the House and Sen. Thom Tillis of North Carolina introduced it in the Senate.

From the regulators

For the most part, however, any relief would come through the regulatory agencies, which have been implementing EGRRCPA by tailoring regulations to risk, finalizing sensible reforms to the Volcker Rule and reducing regulatory burden by simplifying several requirements in their regulatory capital rules.

The CFPB, under the leadership of Kathy Kraninger, took steps to increase innovation in the financial services sector by developing a sandbox that gives companies regulatory relief when testing new financial products and services. The CFPB is also reducing regulatory uncertainty by introducing proposals to raise the coverage thresholds for collecting and reporting data under the Home Mortgage Disclosure Act rule.

Kraninger discussed these initiatives and answered questions during her visit with TBA member bankers in Austin in June.

FDIC Chairman Jelena McWilliams also discussed her agency’s initiatives with TBA members during the 135th Annual Convention in Austin. These included the FDIC’s Office of Innovation that also promotes innovation in the industry and a simplified and better streamlined de novo application process.

State legislative victories

2019 was a state legislative year, and the Texas Legislature convened on Jan. 8 with 27 new state representatives and six new senators, creating an opportunity for TBA to tell its banking story to a new audience.

In March, more than 100 Texas bankers traveled to Austin for the biennial Texas Bankers Blitz.

For the banking industry, the 86th Session was labeled productive, with a number of legislative victories that will help ensure the strong and sustainable future of Texas community banks.

These victories included the passage of the financial regulatory agencies’ Sunset bill, which reauthored the Finance Commission, Texas Department of Banking and the Department of Savings and Mortgage Lending for an additional 12 years; the adoption of legislation requiring additional safeguards at gas pumps to protect consumers and mitigate the increasing costs of card skimming to banks; and the repeal of the section of the Tax Code that prohibited a Texan with a home equity loan on his residential homestead from adding an ag use designation to that homestead property.

TBA staff once again fought off the subcontractors in their quest to push for a complete rewrite of Chapter 53 of the Texas Property Code. Had their bill passed, bankers would have faced a major competitive risk because of the compliance costs associated with its implementation.

Building for tomorrow

TBA also experienced a successful year that will be remembered for a number of new initiatives and events, not the least of which is the new TBA headquarters building to be built on the grounds of the existing building in the Austin Capitol Corridor.

The project, overwhelmingly approved in 2018, reaffirmed the members’ optimism in the future of the banking industry and their association. At its September meeting, the TBA Board of Directors moved forward with the approval of a design concept and funding for the new building.

The building will feature eight full levels — 4.5 levels of office and lobby with 3.5 levels of parking and approximately 97,000 gross square feet.

In an effort to promote the good things banks do in their communities, TBA launched its “Texas banks are the heart of the community” campaign in the Texas Tribune and in social media. The initiative features video vignettes of Texas bankers discussing their roles in their communities, including fueling economic growth, giving back to their communities and making dreams come true for customers.

Other TBA milestones throughout the year included:

• Producing Banking Online Safely handouts (in cooperation with the Texas Department of Banking) that bankers can distribute in lobbies or as statement stuffers to its customers, particularly senior citizens.
• The development of recommendations from the Future of Banking Task Force that the association can take to help community banks meet challenges and needs over the next three to five years, including cyber risks, fintech partnerships, core provider issues and evolving customer needs.
• The participation of TBA Chairman Gary Claxton and President and CEO Chris Furlow in a Virtual Town Hall for Texas Community Banks in March where, together with ABA staff, they provided an update on important banking issues, such as BSA-AML, beneficial ownership, CECL and core processor issues.
• A successful 135th Annual Convention in Austin with nationally recognized speakers, including former White House Chief of Staff Reince Priebus, FDIC Chairman Jelena McWilliams and U.S. Sen. John Cornyn, and a performance by legendary Country-Western singer Mark Chesnutt.
• The 2019 Texas Tour, which was held in 17 cities throughout the state to focus on actions taken by the 86th Legislature and how the implementation of these new laws affects Texas banks and their customers. The tour drew record crowds at most of its stops.
• The launching of the first-of-its kind Cybersecurity Benchmarking Initiative that looked at the cyber posture of banks across the state. The data will help participating banks assess their cyber maturity compared to other Texas banks while helping TBA better focus programs to help banks improve their cybersecurity efforts.
• The commitment of $250,000 over the next five years to Texas Tech’s newly launched Excellence in Banking Program.
• Through the Texas Bankers Foundation’s TBA CARES program, donations of $10,000 to two El Paso victims’ organizations and $5,000 to an Odessa organization following the tragic shootings in these communities.
• The addition of an Instagram account to its mix of social media offerings.
• The Texas Bankers Global Forum in London, where bankers had the opportunity to hear from global experts on how to identify emerging cyber threats that may soon impact Texas community banks.
• The hiring of Brent Cox to serve as a liaison to the Texas banking schools and support their growth and wellbeing and create improved linkage with member banks to support these programs.

The association is already preparing for 2020, a presidential year, with new initiatives all focused on the future of the Texas banking community.