Pub. 12 2022-2023 Issue 3

The pandemic created a unique confluence of events that affected the lending market. As recently explored by the Federal Reserve, bank deposit growth soared during the pandemic,
with total deposits increasing more than double the pre-pandemic growth rate.

Making more money will not solve your problems if cash flow management is your problem,” said Robert Kiyosaki, author of Rich Dad Poor Dad. As your company grows and cash outflows exceed cash inflows, implementing cash management strategies starts with asking why you have a cash deficit.

Despite a number of headwinds facing banks this year, including high inflation and an uncertain economic environment, one of the top concerns for community banks is retaining talent. Around 70% of banking leaders said retention was a challenge, as was maintaining “a large enough workforce to do work,” according to a recent survey from Arizent, the publisher of American Banker.

On Sept. 8, 2022, the Consumer Financial Protection Bureau (CFPB) issued a consent order requiring one financial institution to pay a $50 million penalty and to refund at least $141 million to consumers allegedly harmed by the bank’s overdraft practices.1 The bank’s overdraft fees, referred to by the CFPB as “authorized-positive” fees, were charged on transactions that were authorized with a positive balance in the account but settled without sufficient funds to cover the transaction, resulting in an overdraft. The CFPB’s action follows the market trend of increased regulatory scrutiny of overdraft and non-sufficient fund (NSF) fees charged by financial institutions to their deposit customers.

Since the effective date for the incident notification rule for banks, we have received several questions asking about whether an incident would be classified as a “notification incident” or not.

An “equity cure” is a type of legal provision often found in credit agreements governing loans that finance acquisitions by private equity sponsors. In an alignment of interests between lenders, private equity sponsors, and their portfolio company borrowers, these provisions allow sponsors to retroactively cure their portfolio companies’ financial covenant defaults by making a cash equity contribution typically treated as a dollar-for-dollar increase to the company’s adjusted EBITDA in the amount necessary to cause compliance with the company’s financial covenants for the applicable measurement period. Equity cure provisions benefit all parties involved by providing a clear protocol for navigating economic downturns or other periods of financial difficulty in a manner that prioritizes de-risking the lender’s credit exposure while protecting the company’s viability and sustaining the sponsor’s commitment to the success of the business.

For more than a decade, large financial institutions nationwide, joined by Fortune 500 giants like Apple and Google, have been the dominant players in solar investment tax credits (ITCs). Driven by federal incentives, these companies have provided funding for the largest solar projects in the country, collecting healthy returns while raising their corporate profiles as environmental/social/governance (ESG) leaders.

As summer comes to a close, employers are in the midst of selecting next year’s benefit options for both themselves and their employees. They’re deciding whether to offer retirement plans, health insurance plans, and other benefits, such as flexible savings accounts and health savings accounts (HSAs).

The Biden Administration’s March executive order seeking information on digital asset usage and security set a flurry of activity into motion. This included a mandate for the Treasury Department to deliver a report on the future of money and payments systems. The agency issued a public request for comment in July, and SRM quickly responded, drawing from our detailed and ongoing coverage of cryptocurrency and other digital assets.