22
Wisconsin Community Banker
July/August 2014
Teeing Up for Member Appreciation Days
Mary Lou Santovec
Even
the weather cooperated
to make CBW’s Member
Appreciation Day in Madison on July
9, a memorable event. The day opened
with timely presentations at CBW
headquarters, continued with a sunny
afternoon of golf at University Ridge
Golf Course, and culminated in a
dinner and golf awards. Madison was
one of three cities hosting the annual
event; the other two Member Appre-
ciation Days were held at Whistling
Straits, a signature Kohler golf course
in Sheboygan, and at Eau Claire Golf
and Country Club, Altoona.
Compliance Top Concerns
Compliance changes, property
valuations, equipment leasing, and
mergers and acquisitions, as well as
the results of a quarterly community
banking survey were all discussed in
Madison.
John Moniak, senior manager with
Wipfli LLP, listed the compliance
changes scheduled throughout 2014
and 2015. Compliance changes will hit
ability to repay, qualified mortgages,
mortgage loan officer compensation,
and appraisal rules for one- to four-
family dwellings just to name a few.
But at the top of Moniak’s list of
concerns is the Aug. 1, 2015 deadline
of the combined RESPA and TiLA dis-
closures. “It’s going to be ugly, folks.”
Disclosures won’t be the problem,
Moniak noted. Implemen-
tation is all but guaranteed
to be the chief headache.
Community banks will
have to “unwind” 100 years
of doing things and start
over again. New lenders
shouldn’t have problems
but those with decades of
experience will. He advised,
“Plan early and devote
resources to it.”
Develop a benchmark
schedule for changes. For
software upgrades, you may
need to contact multiple
vendors. Revise your poli-
cies and procedures to accommodate
the new regulations. Since regula-
tors judge compliance by whether
or not you’ve tested the results, test
before and after implementation to
make sure you’re getting the desired
information. “The RESPA stuff will be
interesting,” Moniak said, “and a little
scary.”
Golden Age of Home Equity Lending
Gary Kasper, president of New
Vista Solutions for Community Bank-
ers Financial Services spoke on the use
of interagency compliant evaluations.
New Vista, which works with 250
financial institutions across the coun-
try, calls itself an “agnostic aggregator
of mortgage products and services.”
Kasper gave an overview of recent
mortgage market trends.
Refinancings are down 61 percent
this year.
Home purchases are up 13 percent.
Commercial real estate saw its first
year of growth in 2012 after four years
of decline.
After bottoming out in early 2012,
home equity is at its highest level since
2009.
“After the market crashed, home
equity was on life support,” Kasper
said. But we’ve seen a bounce back
since 2009.
Mortgage rates have been at such a
low rate for such a long period of time,
once they rise, consumers will hesitate
to touch their first mortgage and will
be interested in lien products. Kasper
calls this “the beginning of the golden
age of home equity lending.”
New appraisal rules that took place
in January require an appraisal with
an interior inspection, especially for a
higher-priced mortgage. Automated
valuation models (AVM) can’t assume
that the collateral is in good condition.
For AVMs, a lender must have proce-
dures for independent and ongoing
monitoring and market validation.
Equipment Leasing: The Middle Path
Michael LaSalle, first vice presi-
dent and managing director, Bankers’
Bank, reported that the equipment
leasing market, which has returned to
pre-recession levels, is “very robust,”
LaSalle said. The market totaled $800
billion in leases in 2014. “Eighty per-
cent of all [business] customers lease.”
Equipment leasing (in other words,
100 percent financing) has been
historically evaluated on customer
cash flow. Equipment leasing falls into
three categories: large ticket, middle
ticket, and small ticket. Large ticket
leasing of over $2 million includes
aircraft, railcar and shipping contain-
ers, and it offers high yield with a low
credit risk. Middle ticket leasing of
$50,000 to $2 million generally cov-
ers agricultural equipment, as well as
industrial, medical, and information
technology. Middle ticket leasing
offers little yield with low credit
risk. Small ticket leasing, $5,000 to
$50,000, focuses on copiers
and information technology.
Small ticket leases result in
moderate yield and moderate
credit risk.
LaSalle recommended
that community banks look
at middle market leasing
since transactions are highly
influenced by customer rela-
tionships, which community
banks excel in. Opportuni-
ties in this category are in
agriculture, municipalities,
and general industrial with
an emphasis on small and
medium businesses.
CBW guests enjoy the reception at the 2014 Member Appreciation
Day held in June at Whistling Straits, Kohler
