This page is intentionally left blank State of Georgia Department of Banking and Finance ANNUAL REPORT For Year Ending December 31, 2019 Brian P. Kemp Governor Kevin B. Hagler, CEM Commissioner Table of Contents Message from the Commissioner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Organizational Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Financial Institution Supervision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 State-Chartered Banking Statistics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 State-Chartered Bank Financial Summary . . . . . . . . . . . . . . . . . . . . . . . . . . 6 State-Chartered Credit Union Statistics . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 State-Chartered Credit Union Financial Summary . . . . . . . . . . . . . . . . . . . . . . 8 Examination Districts and Work Areas (Map) . . . . . . . . . . . . . . . . . . . . . . . . 9 Non-Depository Financial Institution Supervision . . . . . . . . . . . . . . . . . . . . . 10 Mortgage Licensee Statistics . . . . . . . . . . . . . . . . . . . . . . . . 10 Money Service Businesses Statistics . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Administration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Fiscal Year Receipts and Disbursements . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Summary of Activities for State-Chartered Financial Institutions and Other Entities . . . 13 Regulated by, Licensed by, or Registered with the Department of Banking and Finance During 2019 Benefits of the State Charter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Message from the Commissioner The Department proudly celebrated its 100th anniversary this year. On August 16, 1919, Governor Hugh M. Dorsey signed legislation creating the State Department of Banking, and on January 1, 1920, the Department opened its doors under the leadership of Superintendent of Banks T.R. Bennett. Prior to the creation of a stand-alone banking department, the Banking Bureau and its examiners operated under the State Treasurer. In 1972, a statutory reorganization renamed the State Department of Banking to the current Department of Banking and Finance, and the title of superintendent was replaced with commissioner. This reorganization, which recognized that the Department's purview had extended well beyond banking regulation, is why the Department's seal indicates that the Department was formed in 1972 as opposed to 1919. The Department's first Annual Report included the following quote from Superintendent Bennett "When the first Acts were passed (1890 and 1907), there were fifty-two banks operating in the State, having total assets of about $25MM, and adequate laws were not enacted until thirty years later, when the banking assets of State Banks and Trust Companies had reached over $350MM. Therefore, none could better realize the vital importance of a Department of Banking and proper supervision, than the bankers of the State; not only for the protection of bankers, but that the patrons of banks should have protection of the State in handling of their funds." It is important to note that the Department's mission has remained consistent over these one hundred years as we continue to work hard each day to support a safe and sound banking environment that benefits the citizens of Georgia and promotes economic development. Georgia's banks performed well in 2019 with strong asset growth and earnings, and we welcomed two de novo banks with the opening of Tandem Bank, Tucker, in September, and Loyal Trust Bank, Johns Creek, in November. The bank portfolio also saw a high level of merger activity highlighted by the acquisition of SunTrust Bank, Atlanta by BB&T, Winston-Salem, North Carolina, which garnered significant national attention as the largest banking merger since the Great Recession. This merger alone accounts for the significant shift in the bank summary financials contained in this report. Credit unions in the state continued to grow and now represent over $21 billion in total assets under the Department's supervision. In January we welcomed Go Energy Financial Credit Union (f/k/a GEMC Credit Union), Tucker, to the family of state-chartered credit unions. Growth in the non-depository portfolio remained strong in 2019 with a 5% increase year-over-year in the total number of licensees driven by demand for mortgage loan originator licenses. Mortgage lenders, brokers, loan originators, and registrants totaled 19,756 at the end of the year. The number of licensed money service businesses remained relatively stable on the whole with a slight decline Page 1 2019 Annual Report Message from the Commissioner in the number of check cashers and an uptick in the number of sellers of payment instruments, which is directly attributable to the growth in fintech companies. The Department's continued work with the credit union task force, a public/private partnership with the credit union industry, along with collaborative efforts with representatives of the banking industry and the non-depository industry resulted in the enactment of the Department's housekeeping bill (HB 185, Bruce Williamson of the 115th) for the 2019 legislative session. The bill revised statutory provisions related to the majority of entities regulated by the Department banks, credit unions, mortgage lenders and brokers, mortgage loan originators, and money service businesses as well as certain provisions addressing the Department's general powers. Generally speaking, the revisions focused on modernizing the Code and eliminating antiquated requirements or provisions found in Title 7. Of particular interest, in an effort to ensure that consumers' deposits maintain federal insurance when a credit union acquires a bank, the bill provides that if a bank is acquired by a credit union the bank's customers are deemed members of the credit union upon consummation of the transaction. Kevin B. Hagler, CEM Commissioner 2019 Annual Report Page 2 Organizational Structure The Department of Banking and Finance (Department) is the state agency that regulates and examines Georgia state-chartered banks, state-chartered credit unions, and state-chartered trust companies. The Department also has responsibility for the supervision, regulation, and examination of merchant acquirer limited purpose banks (MALPBs) chartered in Georgia. In addition, the Department has regulatory and/or licensing authority over mortgage lenders, brokers, processors, and loan originators, as well as check cashers, sellers of payment instruments, money transmitters, international banking organizations, and bank holding companies conducting business in Georgia. The Department is headed by a Commissioner who is appointed by the Governor to serve a fouryear term. Functionally, the Commissioner reports directly to the state's Chief Financial Officer, who reports to the Governor. Commissioner Kevin B. Hagler is assisted by Senior Deputy Commissioner Steve Pleger. The Department's operations are divided along functional lines: Financial Institution Supervision, Non-Depository Financial Institution Supervision, Legal Affairs, and Administration. Each of these divisions is headed by a Deputy Commissioner. DEPARTMENT OF BANKING AND FINANCE Kevin B. Hagler COMMISSIONER Steve Pleger Senior Deputy Commissioner FINANCIAL INSTITUTION SUPERVISION (Banks, MALPBs, Credit Unions, Trust Companies, Foreign Banking Organizations, Holding Companies; Financial Institutions Applications, Chartering) Melissa K. Sneed Deputy Commissioner for Supervision Page 3 LEGAL AFFAIRS (Legislative Drafting & Rulemaking/Legal Interpretation, Administrative Proceedings) NON-DEPOSITORY FINANCIAL INSTITUTION SUPERVISION (Mortgage Brokers, Lenders, Processors, Loan Originators, Money Service Businesses) ADMINISTRATION (Human Resources, Accounting, and Budget) Oscar B. Fears, III Deputy Commissioner for Legal Affairs Rod Carnes Deputy Commissioner for Non-Depository Financial Institutions Renee Martin Deputy Commissioner for Administration 2019 Annual Report Financial Institution Supervision STATE-CHARTERED BANKING STATISTICS At the end of 2019, the number of Georgia state-chartered banks totaled 128, representing a net decrease of 11 banks from the previous year. While two new state-chartered banks opened in 2019, the net decrease resulted from 12 state-chartered banks merging out of existence and one statechartered bank self-liquidating. A five-year financial performance summary for Georgia statechartered banks can be found on Page 5 of this Report. Georgia Banks by Type of Charter 200 175 159 150 125 149 145 139 128 100 75 50 24 25 12 22 12 20 12 20 10 22 10 0 2015 2016 State Charter 2017 National Charter 2018 Federal Thrift/Savings Bank Charter 2019 BANK HOLDING COMPANIES A total of 106 bank holding companies were supervised by, or registered with, the Department at the end of 2019, representing a decrease of eight from 114 in the previous year. This decline is attributed to the bank merger activity mentioned above. TRUST COMPANIES Trust activities continue to be conducted principally by bank trust departments. There is one statechartered non-depository trust company in Georgia that is an independent trust company (Reliance Trust Company, Atlanta). REPRESENTATIVE OFFICES OF BANKS AND BANK HOLDING COMPANIES A representative office is an office established by a bank, a bank holding company, or an agent or subsidiary of either for the purpose of conducting activities other than a banking business. A representative office is not considered to be a main office or a branch office. There were 50 representative offices registered in Georgia at the end of 2019, unchanged from the prior year. FOREIGN BANKING ORGANIZATIONS Four international representative offices were registered with the Department at the end of 2019. This number is unchanged from the prior year. 2019 Annual Report Page 4 Financial Institution Supervision STATE-CHARTERED BANKING STATISTICS As shown in the table below, Georgia state-chartered commercial bank assets under supervision decreased as a result of SunTrust's merger with BB&T (North Carolina) to twelfth in the country by the end of 2019 (savings banks not included in totals below). The table is sorted by total state charter assets and dollar figures are in millions. Page 5 2019 Annual Report Financial Institution Supervision State-Chartered Bank Financial Summary 2019 Annual Report Page 6 Financial Institution Supervision STATE-CHARTERED CREDIT UNION STATISTICS The number of Georgia state-chartered credit unions increased by one to a total of 48 and statechartered credit union assets grew by roughly $1 billion to a total just over $21 billion at the end of 2019. A five-year financial performance summary for Georgia state-chartered credit unions can be found on Page 7 of this Report. Page 7 2019 Annual Report Financial Institution Supervision State-Chartered Credit Union Financial Summary 2019 Annual Report Page 8 Financial Institution Supervision Examination Districts and Work Areas The above map is primarily for the purpose of exhibiting geographical district boundaries based on current institution assignments. However, some districts may have institutions assigned in other areas of the state due to multibank holding companies and/or district workload and scheduling issues. Note: District 3 was merged into Districts 1 and 2 on December 31, 2010. Page 9 2019 Annual Report Non-Depository Financial Institution Supervision MORTGAGE LICENSEE AND REGISTRANT STATISTICS Article 13 of Title 7 of the Official Code of Georgia Annotated (O.C.G.A.) requires all persons who transact business as a residential mortgage lender, broker, processor or loan originator be licensed or registered with the Department, unless they are exempt. At the end of 2019, active mortgage licensees and registrants totaled 19,756, representing a net increase of 881 or roughly 5 percent from the previous year. The year-over-year increase is largely due to heightened demand for mortgage loan originator licenses, which reflects the continuation of a longer-term trend. 2019 Annual Report Page 10 Non-Depository Financial Institution Supervision MONEY SERVICE BUSINESSES STATISTICS Unless otherwise exempt, anyone that engages in the cashing of payment instruments for a fee must be licensed by the Department under Article 4A of Title 7 of the O.C.G.A. Unless otherwise exempt, anyone that engages in the sale of payment instruments or money transmission must be licensed by the Department under Article 4 of Title 7 of the O.C.G.A. At the end of 2019, the number of money service businesses (MSB) licensed by the Department totaled 1,031, a net decrease of nine licensees from the previous year. Page 11 2019 Annual Report Administration FISCAL YEAR 2019 RECEIPTS AND DISBURSEMENTS NOTE: Revenues of the Department are collected and remitted to the Office of the State Treasurer. The level of the Department's expenditures is subject to the state's budgetary process. 2019 Annual Report Page 12 SUMMARY OF ACTIVITIES FOR STATE-CHARTERED FINANCIAL INSTITUTIONS AND OTHER ENTITIES REGULATED BY, LICENSED BY, OR REGISTERED WITH THE DEPARTMENT OF BANKING AND FINANCE DURING 2019 Page 13 2019 Annual Report Benefits of the State Charter $ Local, Responsive, and Timely Decision Making State-chartered financial institutions have access to local decision makers in Georgia who are familiar with their unique marketplace and competitive environment. Decision makers in our Atlanta office and in field offices located around the state are easily reached for timely responses to questions and concerns from state-chartered institutions. $ Local Community and Market Knowledge Examination staff live in the districts where they work and are familiar with the local markets and communities. The Department's culture promotes decision-making by staff that have first-hand knowledge of your financial institution but with quick access for escalation to the Commissioner, when necessary, to ensure responsive and timely action on issues of concern to you. $ Effective Regulation and Supervision The Commissioner believes that all financial institutions deserve right-sized regulation and supervision scaled to their size, complexity, and risk profile. The Department is nationally accredited through the Conference of State Bank Supervisors (CSBS) and the National Association of State Chartered Credit Union Supervisors (NASCUS) to ensure that "best practice" regulation and supervision principles are implemented. Supervisory activities of the Department are conducted in coordination with federal and other state regulators, as applicable, through joint examinations and interstate cooperative agreements to deliver a seamless supervisory experience that minimizes duplication and regulatory burden. $ Efficient Regulation and Supervision Annual regulatory fees and assessments to cover costs of the Department's regulation and supervision activities are typically far less than those charged to comparable federally-chartered financial institutions. $ Powers Comparable or Superior to Federal Charters State-chartered financial institutions frequently enjoy powers that equal or exceed those available to federally-chartered financial institutions. To maintain competitiveness of the state charter, the Department routinely assesses laws and regulations, in coordination with the industry and our federal regulatory peers, to identify opportunities to expand powers or reduce unnecessary regulatory burden. O.C.G.A. 7-1-296 and 7-1-671 provide that a state-chartered bank or credit union may exercise any power available to a similar federally-chartered financial institution so long as the bank or credit union provides advance notice and the Department offers no objection to the exercise of such power. Firm, but fair, right-sized regulation and supervision are guiding principles for promoting safe, sound, competitive financial services in Georgia. 2019 Annual Report Page 14 Our Mission is to promote safe, sound, competitive financial services in Georgia through innovative, responsive regulation and supervision. Our Vision is to be a willing and able partner with our regulated entities in order to support vibrant economic growth and prosperity in Georgia. 2990 Brandywine Road, Suite 200 Atlanta, Georgia 30341-5565 Phone: (770) 986-1633 Toll-free: (888) 986-1633 DEPARTMENT OF BANKING AND FINANCE Visit us on the web at: dbf.georgia.gov