Pennsylvania’s banking community has weathered the storm of the recession better than many other states, and now needs to turn its attention from “surviving” to “thriving.”
That was the message from Pa. Secretary of Banking and Securities Glenn E. Moyer during Thursday’s TriCounty Area Chamber of Commerce membership breakfast.
“If I were still an active banker or director of a financial services firm, I would be absolutely energized by the current business environment,” he told the group. “The overwhelming majority of our region’s depository institutions absorbed the worst of the recession and are still standing.”
He added that the state’s banking environment has not only stabilized, but has made “incremental” improvement in the past couple of years.
“As we examine the 75 percent of Pennsylvania’s banks that have chosen a state charter, we are seeing twice as many ratings upgrades as downgrades.”
Nationally the number of bank failures has dropped significantly since 2010 — down from 157 that year to 24 in 2013. The last bank failure in Pennsylvania was in October 2012.
Moyer talked to the chamber about the state of banking in Pennsylvania, the merger of the Department of Banking with the Department of Securities, cybersecurity and provided an update on legislative initiatives.
Moyer, appointed to his position by Gov. Tom Corbett in April 2011, and confirmed by the state senate one month later, is no stranger to TriCounty chamber members. An Oley resident, Moyer grew up in the Boyertown area and has held positions at American Bank and Trust Co. of PA, Reading, which later became Meridian Bank, Reading. He also served as president and CEO of The Elverson National Bank and National Penn Bank and its holding company, National Penn Bancshares Inc., Boyertown.
The Department of Banking and Securities oversees state-chartered financial institutions, the compliance with laws that impact financial service entities and the protection of consumers and investors in financial matters. The department works with financial services institutions and professionals including banks, credit unions, trust companies, securities agents, broker-dealers, investment advisers and mortgage lenders and brokers.
“We regulate more than 220 depository institutions with a clear safety and soundness mandate,” Moyer added. “We license more than 15,000 non-depository companies and professionals. And since the merger, we also register more than 200,000 securities agents, broker-dealers, investment advisors, notice filers and investment adviser representatives.”
In October 2012, the departments of banking and securities were merged into one unit. It was a merger, according to Moyer, of two agencies with reasonably compatible missions and functions — licensing, compliance and enforcement.
The result has been savings of more than $2 million, a reduction in staffing by 16 percent and outreach focused on investor education.
“At the new Department of Banking and Securities, we have either accomplished or are engaged in several initiatives to create new efficiencies, reduce or eliminate red tape and modernize our approaches to the 21st century financial services marketplace,” according to Moyer.
Moyer talked about the recent opening of the Bank of Bird-in-Hand in Lancaster County — the first new bank in the U.S. since 2010, and the first new bank in Pennsylvania since 2008.
“Our department leadership and our partners at the Federal Deposit Insurance Corporation worked together, not to stifle this new bank development, but to ensure that it has every opportunity to be successful,” Moyer said. “In this process, perseverance and patience were demanded and demonstrated by all parties, and the core principles of safety and soundness form the backbone of this first new bank charter in 3 years.”
Moyer said legislative efforts are currently underway to amend and update the Pennsylvania Securities Act of 1972 and the Credit Union Code. In addition, he said the General Assembly is debating the issue of financial abuse of senior citizens and the responsibility of banks and credit unions.
“I am not one who believes that our General Assembly needs to add an additional mandatory burden on Pennsylvania banks and credit unions,” he said. “However, we need to acknowledge that this unfortunate abuse does exist, and may be increasing.”
Moyer also warned chamber members to be vigilant about cybersecurity as banks and businesses face security breaches, like the one Target experienced last month that resulted in the theft of personal information of more than 100 million customers.
Moyer added that these breaches can damage a company’s reputation, and preventing them is an ongoing battle.
“We can never arrive at a final set of actions or pause, because in that moment of relaxation, you are already falling behind what may be coming next,” he added.
When it comes to technology in general, Moyer said his department is looking at what is coming and how best to prepare. Rules regulating crowdfunding are being developed — providing a new way for businesses to raise capital. He added that there is increasing interest in peer to peer lending, and while there are currently no peer to peer lenders approved in Pennsylvania, market demand and technology innovation seem to be pushing the idea forward.
And Bitcoin — the alternative currency Moyer said was considered a “passing fad” a year ago, is being used more widely.
“We are all still trying to figure out what Bitcoin is, how it is used, how to monitor it and how to possibly regulate it,” he added.
Moyer acknowledged that one of the biggest challenges is getting confidence back into the business community to invest again.
“Our region’s economy is absolutely dependent on consumer and business lending to fuel the recovery. Opportunities do exist,” he said. “And while I recognize the challenges of the new normal — including changing regulatory regimes, technology innovations and evolving customer demands — as a business person I believe the depository institutions and businesses that navigate these challenges will be successful for years to come.”
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