Annual report, 2020

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State of Georgia
Department of Banking and Finance
ANNUAL REPORT
For Year Ending December 31, 2020
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

Installment Lender Statistics . . . . . . . . . . . . . . . . . . . . . . . . . . . .

12

Administration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

13

Fiscal Year Receipts and Disbursements . . . . . . . . . . . . . . . . . . . . . . . . . .

13

Summary of Activities for State-Chartered Financial Institutions and Other Entities . . .

14

Regulated by, Licensed by, or Registered with the Department of Banking and Finance

During 2020

Benefits of the State Charter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

15

Message from the
Commissioner

As we entered 2020, concerns of an economic recession that originated in the prior year quickly escalated and by March a global pandemic driven by COVID-19 had disrupted everyone's daily life and caused severe impacts to many segments of our economy. Georgia's financial institutions entered the pandemic with strong capital levels, solid liquidity, and a diverse asset base allowing them to serve as a source of strength during these challenging times. The banks and credit unions of this state quickly engaged with the Small Business Administration to assist with distribution of federal CARES Act funds through the Payroll Protection Program (PPP). By year-end, 174,429 PPP loans totaling $14,688,047,519 had been distributed to businesses in the state. Georgia's financial institutions were also heavily involved in the distribution of Economic Injury Disaster Loans, they assisted businesses and consumers alike through loan deferments and modifications, and they were the conduits for the economic impact payments consumers relied upon.
While the effects of the pandemic continued to be felt at year's end, state-chartered banks and credit unions headquartered in Georgia remained in solid financial condition. While the number of state-chartered bank declined slightly to 124 due to merger activity, the overall asset level grew to nearly $133 billion. We welcomed two new banks in Georgia with the opening of Craft Bank, Atlanta, and Classic City Bank, Athens. Likewise, the credit union portfolio saw overall asset levels rise to nearly $26 billion, with a net increase in the number of charters to 49. We were also excited to welcome Marshland Credit Union, Brunswick, United 1st Credit Union, Kingsland, and Interstate Credit Union, Jesup to the family of state-chartered credit unions during the year.
Our non-depository portfolio continued its trend of strong growth in 2020 with nearly a 20% increase in the number of mortgage loan originator licenses year-over-year. This rapid growth is particularly notable as it comes on top of several recent years of strong growth. The growth in licenses reflects the high volume of mortgage refinance business in Georgia during a time of record low mortgage rates. Mortgage lenders, brokers, loan originators, and registrants totaled 23,625 at the end of the year. The number of licensed money service businesses remained relatively constant throughout the year, with a slight decline in the number of check cashers being offset by an increase in money transmitters and sellers of payment instruments. The increase in money transmitters and sellers of payment instruments reflects growth in the number of fintech companies seeking licensure.
As part of Governor Kemp's efforts to obtain efficiencies and cost savings in state government, the regulation of consumer installment loans of $3,000 or less ("installment loans") was transferred from the Office of Commissioner of Insurance to the Department (SB 462, Senator Kennedy of the 18th).

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2020 Annual Report

Message from the
Commissioner
Governor Kemp signed the bill into law on June 30, 2020, and it went into effect the very next day.
At a high-level, the bill does not seek to change the general operations of the industry such as the permissible interest rate and charges, the loan cap, or the taxation rate on interest. Instead, it changes the regulatory and administrative processes that apply to the industry. Generally speaking, the bill overlays the regulatory processes that apply to the other non-depository businesses licensed by the Department residential mortgage businesses and money service businesses and applies them to the installment lending business.
The Department appreciates the faith placed in it by the Governor and the General Assembly in transferring the regulation of these consumer loans to the Department. In the regulation of nondepository financial institutions, the Department is directed to ensure that licensees operate in compliance with state law, consumer interests are protected, and economic and technological progress takes place in the industry. It is the Department's view that all of these objectives can be achieved if industry, consumer advocates, and the Department are willing to work together to modernize the applicable regulations and the offering of these loans within the State. Everyone at the Department is excited about regulating a new industry and looks forward to partnering with the interested parties to meet the challenge of successfully transferring the program.
In addition to SB 462, the Department's collaborative efforts with representatives of the banking, credit union, and non-depository industry resulted in the enactment of the Department's housekeeping bill (HB 781, Bruce Williamson of the 115th) for the 2020 legislative session. The bill revises statutory provisions related to the majority of entities regulated by the Department banks, credit unions, trust companies, mortgage lenders and brokers, and money service businesses. Generally speaking, the revisions focus on modernizing the Code and eliminating antiquated requirements or provisions found in Title 7. Of particular interest, the bill revises the legal lending limit for credit unions. The bill ties a credit union's legal lending limit to the net worth of a credit union as opposed to an unusual formula tied to the total deposits of a credit union; a calculation that failed to reflect the true financial condition of the institution. This revision should reduce the number of inadvertent legal lending limit violations committed by credit unions as well as increase the safety and soundness of these institutions.

Kevin B. Hagler, CEM Commissioner
2020 Annual Report

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Organizational Structure
The Department of Banking and Finance (Department) is the state agency that regulates and examines Georgia state-chartered banks, holding companies, credit unions, and 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, mortgage brokers, mortgage processors, and mortgage loan originators, as well as installment lenders, check cashers, sellers of payment instruments, money transmitters, and international banking organizations 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.

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2020 Annual Report

Financial Institution Supervision
STATE-CHARTERED BANKING STATISTICS
At the end of 2020, the number of Georgia state-chartered banks totaled 124, representing a net decrease of four banks from the previous year. While two new state-chartered banks opened in 2020, the net decrease resulted from six state-chartered banks merging out of existence. A five-year financial performance summary for Georgia state-chartered banks can be found on Page 6 of this Report.

BANK HOLDING COMPANIES
A total of 102 bank holding companies were supervised by, or registered with, the Department at the end of 2020, representing a decrease of four from 106 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 51 representative offices registered in Georgia at the end of 2020, an increase of one from the prior year.
FOREIGN BANKING ORGANIZATIONS
Four international representative offices were registered with the Department at the end of 2020. This number is unchanged from the prior year.

2020 Annual Report

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Financial Institution Supervision
STATE-CHARTERED BANKING STATISTICS
As shown in the table below, Georgia state-chartered commercial bank assets under supervision remain twelfth in the country by the end of 2020 (savings banks not included in totals below). The table is sorted by total state charter assets and dollar figures are in millions.

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2020 Annual Report

Financial Institution Supervision
State-Chartered Bank Financial Summary

2020 Annual Report

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Financial Institution Supervision
STATE-CHARTERED CREDIT UNION STATISTICS
The number of Georgia state-chartered credit unions increased by one to a total of 49 and statechartered credit union assets grew by roughly $4.8 billion to a total just under $26 billion at the end of 2020. The number of state-chartered credit unions now exceeds the number of federal-chartered credit unions in Georgia. A five-year financial performance summary for Georgia state-chartered credit unions can be found on Page 8 of this Report.

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2020 Annual Report

Financial Institution Supervision
State-Chartered Credit Union Financial Summary

2020 Annual Report

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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.

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2020 Annual Report

Non-Depository Financial Institution Supervision
MORTGAGE LICENSEE AND REGISTRANT STATISTICS
Article 13 of Chapter 1 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 2020, active mortgage licensees and registrants totaled 23,625, representing a net increase of 3,869 or roughly 20 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.

2020 Annual Report

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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 Chapter 1 of Title 7 of the O.C.G.A. At the end of 2020, the number of money service businesses (MSB) licensed by the Department totaled 1,033, a net increase of two licensees from the previous year.

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2020 Annual Report

Non-Depository Financial Institution Supervision
INSTALLMENT LENDER STATISTICS
Governor Kemp signed Senate Bill 462 into law on June 30, 2020, and it went into effect on July 1, 2020. The bill transferred the regulation of consumer installment loans of $3,000 or less from the Office of the Insurance Commissioner to the Department. Generally speaking, the bill overlays the regulatory processes that apply to the other non-depository businesses licensed by the Department and applies them to the installment lending business. The primary motivation in transferring the regulation of installment loans to the Department was to obtain efficiencies in the regulation of the industry and, as a result, the bill makes numerous statutory changes. Installment lenders are licensed and subject to regulation by the Department under Chapter 3 of Title 7 of the O.C.G.A.
At the end of 2020, the number of installment lenders licensed by the Department totaled 154.

2020 Annual Report

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Administration
FISCAL YEAR 2020 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.

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2020 Annual Report

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 2020

2020 Annual Report

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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.

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2020 Annual Report

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

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