May 13, 2011 l Vol. 3, No. 4
Treasury Releases SBLF Term Sheets for Mutual Institutions, Without Tier 1 Treatment
Treasury yesterday posted long-awaited terms sheets enabling Subchapter S and mutual institutions to participate in the Small Business Lending Fund, but failed to offer terms that would permit Tier 1 capital treatment. ABA first emphasized the need for such materials and terms in a February 25 letter to Treasury, noting that mutual institutions and Sub S banks are extensively involved in small-business lending and warning that keeping them on the sidelines would likely inhibit the SBLF's effectiveness.
Treasury explained that qualifying mutual institutions may participate in the fund by issuing senior securities -- unsecured subordinated debentures eligible for inclusion in an institution’s Tier 2 capital -- to Treasury. The interest rate payable on the senior securities will be reduced as the participating institution increases its lending to small businesses.
The interest rates have been adjusted to reflect after-tax effective rates equivalent to the dividend rate paid by other classes of institutions participating in the SBLF through the issuance of preferred stock.
The application deadline for Subchapter S corporations and mutual institutions is June 6. The deadline for C corporation banks and savings associations is May 16.
Keating Reminds Congress of Mutuals’ Role in Economic Development
ABA President and CEO Frank Keating wrote members of the Senate and House this month to remind them that “during this time of unprecedented change in the regulation of the financial sector” they have a number of institutions in their state “which are uniquely equipped to promote economic development.”
“Known as mutual community banks, these institutions have a long history and continue to play an important role in promoting the economic life of their communities,” Keating said.
Mutual institutions are making important contributions to the nation’s economic recovery every single day, Keating declared. “American Bankers Association is proud that these institutions are a significant part of our membership, and we wanted to make sure that you are aware of the unique features and capabilities that they provide.
Keating gave members of Congress the link to the ABA fact sheet, Today’s Mutual Community Banks, which provides information on the history and role of mutuals, mutual holding companies and mutual governance. For a copy of the Fact Sheet, click here.
ABA encourages bankers to set up meetings with members of Congress and their staff, either at the Congressional in-district offices or at your bank, to tell about the unique contributions of mutual banking. Mutuals need to take up the megaphone and expand on Keating’s message in your local voices. Use the Fact Sheet. More importantly, tell your bank’s story, including its long-standing commitment to your community and its economic prosperity.
Tips on preparation for meetings with Members of Congress and their staff, and on hosting them at your bank, are available on the Grassroots Fundamentals page of the ABA website. For further advice on these meetings or to report on their successes, contact ABA’s Alex Maroulis-Cronmiller.
Wilbur Confirmed as New Hampshire Banking Commissioner
Ronald Wilbur, who retired last year as president and CEO of the $592 million Merrimack County Savings Bank in New Hampshire, was confirmed on Wednesday, May 11, 2011, by the state’s Executive Council as commissioner of that state’s Banking Department. The vote was 4-1.
He was nominated for the job last month by New Hampshire Governor John Lynch.
Wilbur is a former member of the ABA Board of Directors and ABA’s Government Relations Council and former chairman of ABA’s Mutual Institutions Council. Frank Keating, President and CEO of ABA, recognized Ron Wilbur for his leadership for banking in general and the mutual community banking industry in particular. “I congratulate Ron wholeheartedly upon his confirmation as the Banking Commissioner of New Hampshire. This is a great honor and a great responsibility. The people of New Hampshire will benefit from Ron’s integrity and his expertise. I learned long ago that governors are judged by the quality of their nominees. This was an excellent choice.”
Ron Wilbur “brings to the job a lifetime of professional experience, strong leadership and management skills, and a reputation for integrity. He has the right skill set and temperament to help ensure that the Banking Department is functioning as an effective regulatory agency, and working with other agencies to ensure the public interest is well-served,” the governor said in nominating Wilbur.
An editorial in the Concord, N.H. Monitor headlined “Confirm Ron Wilbur,” said he “is a perfect choice” for the job. “Wilbur knows the banking industry inside out,” the paper said. “He sets exceptionally high standards for himself, his employees and the institutions they serve. His bank’s record of community service, and his own as a citizen, would be hard to match. Those who have done business with him say his integrity is unquestioned, and his concern for the best interests of his bank’s customers genuine.”
“Wilbur is a nice guy, but not too nice to be a tough regulator precisely because his ethical standards are so high. He will look out for the well-being of New Hampshire banks but put their interests second to those of consumers,” the editorial noted.
According to its web site, the Banking Department is responsible for the general supervision of all state-chartered financial institutions, and licenses and registers non-depository first mortgage bankers, brokers, servicers and loan originators, money transmitters, retail sellers, sales finance companies, small loan, title loan, payday lenders and debt adjusters.
Wilbur is a former trustee of Concord Hospital, served on the boards of the Greater Concord Chamber of Commerce, the Capital Center for the Arts and the Society for the Protection of New Hampshire Forests. He was the Concord Chamber’s Citizen of the Year in 2010.
Salem Five Deepens Commitment to Mutuality
Salem Five Cents Savings Bank, which has been serving its customers and community since 1855, has taken steps to make sure that its “unwavering commitment” continues for at least another 150 years.
The mutual’s board recently changed the bank’s bylaws to deepen its commitment to its mutual bank status. Among other changes, the bylaws prohibit any director, officer, trustee or employee of Salem Five or its affiliates from profiting from a conversion proposal.
“As a mutual bank, Salem Five has an unwavering commitment to our customers, employees and community. This enhancement of our charter is our way of ensuring that Salem Five remains committed to its mission and will retain its mutuality for generations to come,” according to Joseph M. Gibbons, the bank’s president and CEO.
“Salem Five is an organization with a history of 156 years of serving our communities, and these communities have entrusted us with this legacy. We have an obligation to do our best to ensure that Salem Five continues this vital mission for another 150 years or longer,” Gibbons said.
The bank is a $2.7 billion institution headquartered in Salem, Massachusetts.
Har-Co FCU Seeks Mutual Charter to Gain Additional Business Flexibility
Har-Co, a $188 million federal credit union in Bel Air, Maryland, has told the Office of Thrift Supervision that it wants to become a mutual savings association, and it asked the FDIC for deposit insurance.
The credit union’s board believes that a mutual savings association charter would give Har-Co additional business flexibility to meet the current and future needs of its members. In addition, the board believes the tax impact of converting from a credit union to a mutual institution should be more than offset by its enhanced earnings capacity.
Har-Co is the first credit union to seek a charter change this year. There were none in 2010.
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