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VOL. 127 | NO. 221 | Monday, November 12, 2012

Optimism Finds Way Into Local Banks, Financial Institutions

By Andy Meek

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Here’s a look at what’s going on in the world of finance, and the ways it’s all affecting Memphis.

First up, to quote the Bard, “But soft: what light through yonder window breaks?”

Is it a recovery? An improving economy?

The chief executive of one Memphis-based investment firm told The Daily News in recent days he’s crossing his fingers that a deal he’s got in the works is coming together in a month or two. Likewise, optimism abounded in a recent newsletter to clients at another investment firm.

The principals of Kelman-Lazarov Inc. headlined their letter “Getting Better all the Time.”

“I’ve made it a point to ask many of you,” they wrote, “as well as other friends and acquaintances, how your businesses are doing. It has been encouraging to hear the vast majority say that over the last three to four months, business has actually improved. Some have even told me that the past two years have been good to excellent!

“Of course, during 2009-10, the responses were quite the contrary, so it seems from my limited survey that the economy is improving, slowly but surely. Regardless, many of those same people remain wary of the financial markets, especially the stock market. But let’s take a closer look. As bad as the stock markets of 2008 and 2009 were, the S&P 500 since then has risen over 100% from the low point. The reality is that the markets have done very well since the decline a few years ago.”

Meanwhile, Tennessee banks receiving capital through the Small Business Lending Fund have increased their small-business lending by $275.1 million over their baselines, according to a new report from the U.S. Department of Treasury.

“It has been encouraging to hear the vast majority say ... business has actually improved.”

–Kelman-Lazarov Inc. newsletter to clients

The SBLF, established as part of the Small Business Jobs Act that President Barack Obama signed into law in 2010, encourages community banks to increase their lending to small businesses. Through the fund, the Treasury Department invested more than $4 billion in 332 institutions that operate in more than 3,000 locations across 48 states.

Not everyone, of course, is on the same page as to the way the recovery should be handled from a regulatory point of view. U.S. Sen. Bob Corker, R-Tenn., is a member of the Senate Banking Committee. He recently sent a letter to Federal Reserve Gov. Daniel Tarullo, who voted for the Fed’s latest effort to stimulate the economy.

Corker’s letter, according to his office, argued that “activism at the Federal Reserve and flawed mortgage rules being written in accordance with the Dodd-Frank Act are counterproductive.” He said a “more thoughtful” approach would be to fix regulations instead of “ballooning” the Fed’s balance sheet and risking inflation in the future.

Jim Bullard, president of the Federal Reserve Bank of St. Louis, was in Memphis a few weeks ago to make a presentation and got one big applause line: he made a joke that combined new capital standards for banks and a Mayan prophesy about the end of the world.

Those new capital standards are part of the international Basel III capital agreement. To be clear: Bullard doesn’t support them as they relate to smaller banks.

State banking regulators and some congressional lawmakers want to separate community banks from some of the requirements to hold more capital that they believe are better suited to larger institutions. To that end, in recent days the Independent Community Bankers of America announced that nearly 15,000 community bankers and their allies have signed a petition calling on banking regulators to exempt community banks from the proposed Basel III capital regulations.

In other local news, Shelby County Mayor Mark Luttrell’s executive assistant is the new director of communications for Evolve Bank & Trust.

Dan Springer was hired on with the county in September 2010. Before serving in Luttrell’s office, he worked in Corker’s office as a legislative correspondent.

As communications director for Evolve, Springer will oversee the company’s communications and marketing strategies as well as community and government relations.

First South Financial Credit Union has rolled out a new product called its Fresh Start Saver Loan. The way it works is someone borrows $2,000 and gradually pays it back – until it becomes a savings account stocked with $2,000 once the loan is repaid.

As explained by a credit union official, the loan gives the borrower the double benefit of both saving $2,000 while starting to build or reestablish a positive credit profile. Financial education tools also are available to the borrower.

If the borrower becomes delinquent, First South closes the loan, give the borrower his or her portion of the $2,000 and takes the rest to pay the unpaid balance. No negative payment history is reported to the bureaus. Only positive payment performance is reported.

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