2019 Journal of Community Bank Case Studies

2019 COMMUNITY BANK CASE STUDY COMPETITION

the $1 billion asset mark, which it expects to do in the short to medium term. Lastly, Kish narrowly missed out on the relaxation of HMDA requirements. The rollback applied to banks that originated fewer than 500 closed- end mortgage loans in each of the preceding two years, however, as Kish originated 524 in the prior year, they were ineligible – another example of the bank ‘falling between the cracks’. Looking Forward As noted, the path to economic recovery following the 2008 financial crisis was hampered—not only by Dodd-Frank but by its translation into rules and regulations. This interaction is also something which Kish management feels is important with respect to EGRRCPA. While Kish welcomes the spirit of EGRRCPA, the way that this is transformed into rules and regulators may have significant implications for the bank, specifically with respect to the Simplified Capital Rules. Thus, the more open dialogue and communication that exists in the current climate between

regulators and banks is important. Mr. Greg Hayes feels that rule makers have heard the concerns of the smaller “banks and the issues we face” which has been advantageous, not just for the bank but for “our communities and the economic recovery, specifically within our local communities and our small businesses”. While it is evident from the foregoing section that the EGRRCPA provisions are unlikely to have a significant impact on Kish, as they do not serve to alleviate the pressures of regulation, this is mainly due to Kish’s size. Additionally, the provisions may also negatively impact Kish as they allow banks of a larger size to reduce their costs, effecting Kish’s competitiveness. Although the legislation does not classify Kish as a “big bank”, it also loses out in some areas, for example HMDA, due to the number of mortgages it originates relative to its size. Nonetheless, Kish’s concentration on home loans is a vital service the bank provides to its community, not just for potential homeowners but because of its contribution to a healthy and vibrant housing market, which has wider economic implications. In this respect, it is unlikely that Kish is alone as some other community banks may also lose out on the HMDA rollback if they too have a larger proportion of home loans relative to their overall loan portfolio. Not surprisingly, during our discussions with Kish’s management a common theme emerged which centered on the need for additional regulatory right-sizing and a more “fine-tuned” piece of legislation. The belief is that there needs to be more policy, which helps to identify

Kish’s concentration on home loans is a vital service the bank provides to its community

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