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Community banks seek statutory clean-up to align capital definitions and keep public deposits
Summary
On March 27 community-bank representatives told the House Committee on Commerce and Consumer Protection that House Bill 2,971 would modernize Oregon banking law by aligning statutory capital language with federal supervisory terms and clarifying that community banks using the Community Bank Leverage Ratio can continue to accept public deposits.
Representatives of Oregon community banks told the House Committee on Commerce and Consumer Protection March 27 that House Bill 2,971 is a technical modernization of state banking law intended to align statutory capital definitions and public-deposit rules with federal supervisory practice.
Kevin Christiansen, government affairs director for the Oregon Bankers Association, said the measure would change references from "shareholder equity" to "Tier 1 capital" to match regulator usage, lift a 20 percent ceiling on investments in bonds from other states or public bodies (subject to rating and other safeguards), and clarify that banks that opt into the federal Community Bank Leverage Ratio (CBLR) remain eligible to hold public deposits.
"This concerns small banks," Christiansen said. "It allows for a little more diversified portfolio" and is meant to be a cleanup rather than a policy shift. He said DCBS and the state Treasury had been consulted and had no objection to the dash-1 amendments.
Ron Green, chief executive officer of Oregon Pacific Bank, testified that the change would allow community banks to better diversify investments while maintaining regulator oversight. "Our primary responsibility as a community bank is to take in local deposits... We have a fiduciary responsibility to protect those depositors," Green said. He described alignment with federal examiner practices and noted regular examination by regulators.
The committee heard no opponents during the hearing; representatives said Treasury and bank regulators reviewed the draft amendments. No formal committee vote occurred on HB 2,971 during the March 27 hearing.
