2019 Journal of Community Bank Case Studies

the financial statement impact projections for relevant EGRRCPA provisions. It is difficult to quantify the projected financial statement impact of the simplified capital and small bank company threshold provisions because Kentucky Bank does not plan to utilize them in the near term. The most significant projected benefit results from the qualified mortgage provision. The HMDA provision will result in additional expense instead of savings because Kentucky Bank exceeds the 500-mortgage threshold. Future reform considerations suggested by Kentucky Bank include: re-evaluation of CRA Peer Grouping, re-consideration of BSA thresholds and review of Reg E and PCI liability for financial institutions versus merchants and card processors. Kentucky Bank executives explained that regulation since Dodd Frank has not enhanced the customer experience as the bank strives to support its mission of providing premier customer service.

Community banks realized significant quantifiable benefit from the Tax Cuts and Jobs Act of 2017, which Kentucky Bank utilized to increase community donations by 177% and increase non- executive salaries for 35% of employees. Our economic impact analysis indicates that additional tax benefit through wage increases could increase GDP by over $5 Billion. In an era of rapid emergence of fintechs, non- banks and challenger banks, reform that promotes innovation while maintaining consumer protection will be essential for community banks to continue their mission of providing the best experience for local customers. Initiatives including CSBS Vision 2020, the FDIC Office of Innovation and Alloy Labs have been formed to set a strong foundation for the future of community banking.

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