Pub. 7 2019 Issue 2

Issue 2. 2019 23 relates to the easing of rules surrounding commercial real estate loans, followed by the provision that shortened call reports and then by the provision that provided qualified mortgage relief. The change in reciprocal deposits may seem like a peripheral issue, but it addresses a fundamental inequity in banking. It does so by helping to level the playing field between the handful of large, money center banks headquartered in places like New York City and the thousands of smaller banks spread across the country that serve as economic lifelines in their communities. Institutional investors have often favored big banks because of the belief they are “too big to fail.” And since they have more resources to invest in mobile and online banking technology, big banks have become magnets for deposits from the new genera- tion of digitally savvy consumers. These banks no longer need to rely as heavily on building branches in rural communities to compete with community banks for funding; they can now reach small-town customers through their smartphones. As such, many of the nation’s biggest banks are reporting organic increases in deposits. And the competition on the funding side of the balance sheet will only intensify as interest rates climb. The Federal Reserve’s Open Market Committee has raised the fed funds rate multiple times this year and is expected to continue doing so. To learn more about reciprocal deposits and the impact of the new law, contact Bryan Harper at bharper@ promnetwork.com. By making it easier for community banks to use reciprocal deposits, in turn, the new law strengthens their ability to grow relationships and deposits from a local customer base without losing either one to bigger banks with deeper pockets. “This is a step in the right direction,” says Bert Ely, a princi- pal of Ely & Company, where he monitors conditions in the banking industry. “It makes it easier for community banks to accommodate large depositors.” Given all this interest, it seems likely that the use of reciprocal deposits will increase in the coming months and years. Banks not currently familiar with them would thereby be wise to familiarize themselves with how reciprocal deposits work and their benefits. n FINANCING YOUR AMERICAN DREAM As a small business, you have your own vision for the American Dream. Mountain West Small Business Finance can help you achieve it through an SBA 504 Loan. SBA 504 Loans • Purchase land and equipment • Buy, build or remodel a building • Lower monthly payments • 10, 20, and 25-year fixed rates • As little as 10% down For operating capital needs, talk to us about SBA Community Advantage (7a) Loans. 801.474.3232 | mwsbf.com Utah’s Small Business Lender # 1 “Our new Sugarhouse location was financed with an SBA 504 loan from Mountain West Small Business Finance. They made the process run smoothly and we’ve already hired 12 new employees.” – Lavanya Mahate Owner, Saffron Valley