Community Banking News Roundup – Basel III, HELOC and Managing your M&A

HORNE believes in taking a windshield view of the future. That means continually gathering and reviewing information and intelligence about key regulation, compliance issues and economic trends that will have an impact on the direction that the banking industry takes going forward. 

From Mergers and Acquisitions (M&A) to the implications of Basel III, to the end of draw period for HELOC borrowers, here are a few of the topics we recommend you keep on your radar, and some of the questions we all should ask as we navigate change and risk.

M&A can be a great opportunity for accelerating growth. Do you know how to maximize the value?

Mergers and acquisitions (M&As) have long been a dominant strategy for adding fuel to your bank’s value and growth trajectories. Of course, there is risk involved. But that risk can be mitigated by focusing on a few key points, including paying careful attention to your bank’s identity and doing the due diligence to ensure you do not pay too much for the deal. Knowing what to do once you’ve made the acquisition is just as important. It’s vital to prepare for the year following your purchase, knowing how to handle the process of using material estimates to determine the fair value of assets and liabilities acquired. Check out the important steps to prepare for, structure and integrate your merger or acquisition successfully for the long term.

Increasing numbers of regulations are in play after the Great Recession. How are they impacting your bank’s tax structures?

The September AICPA National Conference on Banks & Savings provided a broad forum for discussing the profound volume and speed of regulatory and compliance changes. Looking at compliance and regulatory shifts requires addressing topics like the new Basel III capital rules, which set capital conservation thresholds for S corporation banks, enabling regulators to limit or prohibit future dividends or distributions.

Shifting focus from the FDIC to the Federal Reserve, the end of the HELOC period is upon us all. Is your bank prepared for the credit risk?

The end of 2014 marks the point at which the Federal Reserve is expected end its downward pressure on interest rates, and also the end-of-draw period for many HELOC borrowers. Combined, these factors pose crisis level credit risk for borrowers, which means risk for the banks holding the portfolios. As with your response to regulations like Basel III, you have to handle every component of managing end-of-draw risk with foresight, prudence and appropriate processes.

How well are you navigating risk?

Managing all of this change and risk can seem a little like playing that old game, Whack-a-Mole. As we’ve seen, you can address risk in one area (capital conservation, for example) and then are forced to turn to another (like customer credit risks or acquisition accounting). To close, take a moment to review the most common potholes in banking. Ask yourself. Are you taking a view of the road ahead and steering to navigate them with precision?

HORNE banking is focused entirely on community banks. We are here to help you meet your unique regulation, compliance and leadership needs, so you can focus on and solve for growth.

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Topics: Community Banking, M&A

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