Pub. 5 2015-2016 Issue 1

O V E R A C E N T U R Y : B U I L D I N G B E T T E R B A N K S - H E L P I N G C O L O R A D A N S R E A L I Z E D R E A M S July • August 2015 19 there’s no single answer,” said Josh Siegel of StoneCastle Partners LLC, a capital management firm. The answer varies based on the successful size for each bank, he said, and the same holds true for capital management, he said. “Banks are better quality than people give them credit for,” he said. The Basel III capital ratios implementedwere far less onerous than the initial ratios proposed, because bankers spoke out in support and defense of their quality banks, said Hugh Carney, senior counsel at the American Bankers Association. More than 2,000 comment letters were filed by bankers, arguing against the increased capital levels saying they would decrease credit availability to consumers. Those letters resulted in amendments to the proposals. Noting that regulators have been “reasonably responsive,” Carney encouraged bankers to keep that line of communication open, making specific examples of customers negatively affected by new capital ratio requirements. “This isn’t a banking issue,” he said. “Your customers are going to be affected by this too.” Colorado bankers will continue to contend with challenges related to banking the marijuana industry as well as related to Operation Choke Point, but regulators and attorneys addressing them at the Summit said the answer to both is relatively simple: a well-executed risk/reward analysis. A limited number of banks is serving the marijuana industry in Colorado on a small basis and few are seeking entry into the market currently, said Robert Triano, an examiner with the Federal Reserve Bank of Kansas City. The decision to do so should be made using a risk-based approach, he said. “Interest in the market is growing, but it’s unclear howmany are actually jumping in,” he said, adding that growth in banking relationships is currently relegated to banks already serving the industry but looking to expand. He said there seems to be more comfort being demonstrated in client lending relationships, particularly related to indirect lending, such as loans made to purchase strip mall properties that then rent space to marijuana related businesses. “The question is how a bank manages to mitigate risk,” Triano said. That same approach should be taken by banks in relation to any business potentially targeted by Operation Choke Point, said a pair of attorneys fromHolland & Knight, a CBA associate member. “The choke point philosophy is metastasizing into other agencies,” said Shawn M. Turner. His law partner, Gabriel Caballero added, “There’s nothing in the law that says you can’t bank these relationships… the issue is ‘do you have controls in place to bank these relationships.” Other topics covered at the CBA annual summit included fed- eral level legislation and advocacy efforts, succession planning, cybersecurity and asset liability management.  To view the presentations from a number of summit speakers, go to: www.colora- dobankers.org/?page=64