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Helping Community Banks Weather the Storm
March 31, 2011

by Alison Weaver, as published in Valley Business FRONT magazine, April 2011

As the banking industry regroups after the mortgage lending crisis, community banks are facing daunting challenges.

In response, Spilman Thomas & Battle, a West Virginia-based law firm with a good-sized branch in Roanoke, has developed the Community Banking Group.

“Banks in general over the last two to three years have seen tough and stressful times,” says Roanoke attorney Webster Day. “We saw common needs and felt we could put together a specialized group to address those needs.”

The Community Banking Group encompasses more than 20 lawyers with experience in a broad range of specializations including employment law, bankruptcy, construction and estate law.

The CBG launched at the end of 2010 and is headed by Timothy Moore, an attorney with Spilman’s Winston-Salem, N.C., office.

During a meeting with the co-chairmen of a banking and finance department, Moore says, “We realized that economic reforms, regulatory reforms and the economy itself” were taking a toll on smaller banks. “They’d had to retrench and re-examine where they are and where they are going. They needed help to address those needs.”

The CBG is specifically designed for banks with assets under $2 billion that are locally owned and operated and generally don’t cross state lines. “Banks larger than that typically have in-house counsel,” Moore notes. “The $100 million range is the sweet spot for this group.”

Moore points to the S.A.F.E. Act as an example of new legislation that has smaller banks scrambling to interpret and comply with its guidelines. The Secure and Fair Enforcement for Mortgage Licensing Act of 2008 requires banks that originate residential mortgage loans to register all employees in a federal database. Registration began on Jan. 31, and, “It’s not a cheap process to go through the registration,” Moore says.

After launching the CBG, the firm began sending a newsletter to banking clients with updates on regulations, compliance and legislation pending in general assemblies.

A newsletter interview with John Kilby, president of Bank of Fincastle, captures the mood of some community bankers. He is quoted as saying, “I fear that the increased regulation and other forces may make community banks a rarity in 10 years. These added regulations are making it expensive to do business.”

Since being founded in 1864, Spilman Thomas & Battle has expanded to Virginia, Pennsylvania and North Carolina, selecting cities in the Mid-Atlantic Inland Basin that have similar economies. “We’re not in Richmond; we’re in Roanoke. We’re not in Charlotte; we’re in Winston-Salem,” Moore says. “Part of our model is that we do a lot of our background work [such as accounting and billing] in West Virginia. The cost of living is lower, so our rates are lower.”

Community banking groups are not a phenomena sweeping the nation. Day and Moore say they’ve heard of only one or two other law firms with community banking groups in the country. “Maybe we’re innovative,” Moore says.

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