Ohio Treasurer of State Praises CBAO for Leadership

In a CBAO-hosted webinar held February sixth, and attended by over fifty community bankers, Ohio Treasurer of State Josh Mandel praised the Community Bankers Association of Ohio for its leadership and advocacy in developing the Star Plus program. Through this program cash balances, including tax funds collected in Ohio and held by local government entities, are placed with community banks, with a priority to have funds placed in Ohio banks. These funds thereby become available as loans to Ohio businesses and consumers, benefiting the communities where they were collected. Two hundred and fifty-three government entities disbursed throughout the state, and thirty-five banks headquartered in Ohio currently participate in the Star Plus program with new banks and entities joining each week.

Community banks can benefit from the program by using it as a stable and low-cost source of deposits, and as a tool to manage liquidity by moving funds both ways through the account. For a bank, participation is simple and routine. There is no initial cost or extraordinary paperwork involved in getting started or maintaining an account, it is just a matter of opening and servicing a business deposit account as the bank would for any other new customer.

State Treasurer Mandel has endorsed the principal of keeping funds collected within local communities working in those communities by supporting and promoting this program. It is important that all Ohio community banks respond and support this principal (a definitive principal of community banking!) by participating in the program. To open an account, request additional information, or obtain a copy of the presentation, you may contact Kyle Moseman at CBAO (kmoseman@cbao.com 614-846-2238) or Lindsay Stavola at StoneCastle Partners (lstavola@scpny.com 866-343-5516).

CBAO needs your comments for upcoming OCC Meeting!

CBAO has been invited to attend an OCC Central District Meeting, with District Deputy Comptroller Bert Otto; Senior Deputy Comptroller, Jennifer Kelly, Ombudsman Larry Hattix and other senior officials, in Chicago, IL on Thursday, April 4, 2013.


The meeting will cover the OCC/OTS integration, the appeals process, lessons learned from bank failures, legal update on pending regulatory matters, Dodd-Frank, examination process, and other supervisory and regulatory items of interest. CBAO has requested that those in attendance also discuss the following.


- Strategic Risk

- Credit Risk

- Credit Risk Management Systems

- Trends in CAMELS Ratings

- Increase focus on Information Technology Ratings

- Improved Problem Bank Trends

- Compliance

- Accounting

- Investment Grade Standards

- Credit Concentrations


We ask that you please let us know if you have other areas that you would like to have discussed or you can offer any comments that would strengthen the value of our conversation.

Factoring: What is it and how can it help banks and their customers?

Factoring the sale of invoices is one of the oldest forms of “lending”, dating back until at least the time of the Romans. It’s also one of the simplest and straight forward ways of converting assets to cash, yet it is often misunderstood.

Terms like “hold back,” “reserves,” “advance rate,” and “points” can put people on edge. Add to the fact that just about everyone tries to compare “factoring vs. bank loans” and it is no wonder many people leave the table confused. We all like to begin discussions about financing with terms, but discussing factoring costs in the same way we discuss loan terms is not the best way to help a customer understand factoring.

 Factoring is not a loan! It is a sale of assets. Therefore the customer is not incurring debt (or paying interest on that debt). The customer also has the flexibility to sell as many (or as few) invoices as they want. They are free to spend the money however they see fit, rather than in a manner approved as a part of a loan application.

Because the invoices are the source of repayment to the factor, they are evaluated more carefully that the client’s financials. Many companies that would not be able to obtain a loan can factor to raise cash, and do so quickly! Factoring could also be used in a “work-out” situation for an existing customer.

Why over-complicate the issue? If as banker we are asked to help a customer get cash, let examine the possibilities and let the customer decide what will work for them. Sale of invoices, which is all that factoring is, might be just the solution. It is routine in some industries: transportation, temp agencies, construction contracting, and others where there is a typical long lead time between incurring expense and receiving payment.

Other variables come in to play – especially when it comes to due diligence, but the factor will handle that. CBAO has identified numerous sources for factoring, some of which specialize in certain industries. If you have a customer who might benefit, let’s begin a discussion!

Governor Kasich Signs Financial Institutions Tax Bill!

Today Governor Kasich signed into law the Financial Institutions Tax Bill (aka HB 510 & FIT). The bill, which replaces the Dealers in Intangibles and Corporate Franchise Tax, benefits our industry in many ways.

First it brings an immediate bottom line impact to Ohio’s 220 community banks that is estimated at $30 million annually. This will allow for increased capital for community banks to meet regulatory requirements and increase lending to small businesses and consumers.

Secondly it brings some fairness to Ohio’s Tax System for community banks by “balancing” the liability and removing loopholes that many larger financial institutions have taken advantage of.

During the signing Governor Kasich reiterated the value of community banks to their local economies and how they are the economic engine that will continue to move Ohio forward.

CBAO was engaged in this legislation from its introduction and recognizes the efforts of all who made today a reality, especially Chairman of the House Ways and Means Committee Ron Amstutz, (R-Wooster) and Chairman Tim Schaffer, (R-Lancaster) of the Senate Ways and Means and Economic Development Committee.

 

 

Announcing The Community Banker Bulletin!

The Community Banker Bulletin is your source for up-to-date information regarding the community banking industry. Published by the Community Bankers Association of Ohio (CBAO), The Community Banker Bulletin provides current news about commercial and business loans and lending, bank regulation, mortgage lending, deposit services, credit lines, regulatory issues, insurance, and other issues affecting community banking.

Stay tuned for our next update!

Subscribe to The Community Banker Bulletin by entering your email in the field to the right and press submit.