Cutting corporate tax rates helps banks

Since the November elections, many bank stocks have shot up 20%-30% in the "Trump Bump." Leaders at banks of all sizes are anticipating much needed regulatory reform, rolling back of the Dodd-Frank Act or at least its harshest provisions, and cuts in the corporate tax rate.

But if Congress's struggle to agree on big issues like how to deal with health care tells us anything, it is that dealing with the mammoth Dodd-Frank Act will also be challenging and may not come as quickly as the industry hopes.

However, there is momentum gaining for tax reform, and cutting corporate tax rates from 35% to 15%. "This would be the first win towards leveling the playing field with credit unions in years," noted FOTB Executive Committee member Guy Williams, who is also president and CEO of Gulf Coast Bank and Trust.

For community banks, a tax cut "amounts to savings that can get reinvested or used to immediately boost profits," said Sam Pappas, president and CEO of Mystic
Asset Management Inc.

"While nothing is easy," notes Christopher Probyn, chief economist at State Street Global Advisors, "simplifying corporate taxes appears to be where Congress, Trump and business align in priority. The necessary support is there."

Friends of Traditional Banking leadership and members will be watching Congress closely to see if they can help deliver.

Less than 500 banks in the US?

By Robert Mendez

The CEO of Prosperity Bank in Houston, David Zalman, stated in an SNL Daily Dose article that there may only be 500 banks within 25 years due to the increased burden smaller banks have in managing IT and compliance.

We strongly disagree with Mr. Zalman's prediction on the number of banks, but we do believe he is correct that IT and compliance are getting harder to manage and that these issues have a disproportionate impact on smaller banks. It is more challenging than ever before for banks to rely on only one or a handful of IT persons for the wide array of technical and IT regulatory issues that a bank has to deal with today. However, Mr. Zalman appears to make an incorrect assumption that any bank smaller than his ($22 billion) has to have all of these capabilities in-house.

They do not. Click here to read the full article

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