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October 14, 2020

The Meeting of the Advisory Committee of State Regulators

of the

Federal Deposit Insurance Corporation

Federal Deposit Insurance Corporation Building

Washington, D.C.

Open to Public Observation Via Webcast

October 14, 2020 – 1:00 P.M.

The meeting of the FDIC Advisory Committee of State 

Regulators (“Committee”) was called to order by Jelena 

McWilliams, Chairman, Federal Deposit Insurance Corporation 

(“FDIC”) Board of Directors.

The members of the Committee present at the meeting were: 

Bret Afdahl, Director, Division of Banking, State of South 

Dakota; Kevin R. Allard, Superintendent, Division of Financial 

Institutions, State of Ohio; Charles G. Cooper, Commissioner, 

Department of Banking, State of Texas; Thomas C. Fite, Director, 

Department of Financial Institutions, State of Indiana; Mary L. 

Gallagher, Commissioner of Banks, Commonwealth of Massachusetts; 

Greg Gonzales, Commissioner, Department of Financial 

Institutions, State of Tennessee; Kevin B. Hagler, Commissioner, 

Department of Banking and Finance, State of Georgia; Melanie G. 

Hall, Commissioner, Division of Banking and Financial 

Institutions, State of Montana; Dawn E. Holstein, Commissioner 

of Banking, Division of Financial Institutions, State of West 

Virginia; I. Lise Kruse, Commissioner, Department of Financial 

Institutions, State of North Dakota; G. Edward Leary, 

Commissioner, Department of Financial Institutions, State of 

Utah; John Ryan, President and Chief Executive Officer, 

Conference of State Bank Supervisors; Antonio P. Salazar, 

Commissioner, Office of the Commissioner of Financial 

Regulation, State of Maryland; and Mick Thompson, Commissioner, 

Banking Department, State of Oklahoma. 
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October 14, 2020

Ray Grace, Commissioner of Banks, State of North Carolina, was 

absent from the meeting.

Director Martin J. Gruenberg attended the meeting, and 

Corporation staff who also attended the meeting included: 

James L. Anderson, Bobby R. Bean, Shannon M. Beattie, Rebecca 

Bittle, Alys V. Brown, Kymberly K. Copa, Chad R. Davis, Doreen 

R. Eberley, Bret D. Edwards, Diane Ellis, George French, Jasa J. 

Gitomer, Patricia S. Gurneau, Emerson B. Hall, Leon Hartley, 

Martin D. Henning, Arleas Upton Kea, M. Anthony Lowe, 

Christopher Lucas, Brandon Milhorn, Rae-Ann Miller, Arthur J. 

Murton, Shayna Olesiuk, Elizabeth Ortiz, Mark E. Pearce, Harrel 

M. Pettway, Nicholas J. Podsiadly, Jon Pogach, John Rieger, Lisa 

K. Roy, Camille C. Schmidt, Mike Shaheen, James P. Sheesley, 

John F. Vogel, and Kenneth J. Weaver.

Chairman Jelena McWilliams opened and presided at the 

meeting. Chad R. Davis, Deputy to the Chairman for External 

Affairs and the Committee’s Designated Federal Officer, 

moderated the proceedings.

Introductory Remarks

Chairman McWilliams opened the meeting by welcoming the 

Committee members from across the country. She stated the FDIC 

is looking forward to a robust conversation and noted the last 

year has been unprecedented due to COVID-19 and its effects on 

the economy. She added that she welcomed any input and 

recommendations the Committee has for the FDIC as we move

forward in these challenging times.

Chairman McWilliams then introduced Mr. Davis who moderated 

the meeting. Mr. Davis invited opening comments from Director 

Martin Gruenberg, who responded by stating he views the 

Committee as an opportunity to share perspectives and that he 

was looking forward to hearing about how the different states 

and institutions were responding to the pandemic. 

Mr. Davis then welcomed the Committee members and noted 

that he looked forward to working with the Committee members.
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October 14, 2020

Discussion of State Banking Conditions

Mr. Davis introduced a roundtable discussion of state 

banking conditions. The Committee members discussed a range of 

issues, including the following:

COVID-19 Pandemic. Every Committee member described the 

COVID-19 pandemic’s impacts on their respective state economy, 

banking industry, and banking department operations. Though 

specific effects and responses are covered in the following 

paragraphs, the topic is mentioned first as it permeated the 

entire discussion. Members told of varied experiences with the 

arrival and current course of the pandemic in their states.

Members expressed the view that the pandemic would remain a 

dominant factor for the foreseeable future, with special concern 

for recent spikes in rural areas and the onset of winter 

weather. The consensus was that the states’ banking institutions 

are managing the pandemic and its impacts well, taking prudent 

steps to protect and serve their communities, customers, and 

employees during this unprecedented threat to physical and 

financial health. Commissioner Gonzales noted that banks play 

the role of “economic first responders” in economic emergencies, 

with Commissioner Gallagher referencing Chairman McWilliams’s

recent comments that community banks had “punched above their 

weight” in this regard. Similarly, the members reported that, as 

regulators, they had adapted to meet the demands posed by the 

new conditions – noting the assistance from the FDIC and the 

Federal Reserve Board in coordinating regulators’ operational 

response.

Economic Conditions. Most Committee members expressed 

cautious optimism despite the considerable challenges presented 

by the pandemic, noting the sound economic conditions prevailing 

upon its arrival and the success of federal and state stimulus 

programs designed to combat its economic effects. Several 

members reported that state unemployment rates were at historic 

lows prior to the onset of the pandemic, with rates increasing 

significantly thereafter. These members described the 

unemployment situation as generally improving after that initial 

jobless spike, though none reported a full employment recovery. 

One member expressed that such a recovery is unlikely prior to 

2022. Nearly all members praised federal stimulus responses such 

as the Coronavirus Aid, Relief, and Economic Security Act

(“CARES Act”) and the Paycheck Protection Program (“PPP”) as 

having a positive effect on their state economies. Similarly, 
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October 14, 2020

four Committee members highlighted state stimulus programs, 

including those distributing federal CARES Act funds, as 

important parts of the pandemic response. 

Members advised that the impacts of the pandemic-induced

recession were not evenly distributed within their states, on 

both a sector and geographic basis. On the sector basis, members 

reported that housing remained strong and manufacturing had 

largely recovered, while hospitality was often severely 

impacted. Director Fite described the effects of widespread 

slowdowns in business travel. He noted the shutdown of the 

Indiana Convention Center and the impact on the hospitality 

industry in his state’s capital. However, Director Afdahl and 

Commissioners Hall and Leary commented on the sector’s support 

from increased domestic tourist travel in the summer –

especially to rural areas and national parks. Commissioner 

Salazar noted that the increased telework during the pandemic 

raised questions about long-term urban commercial real estate 

performance. Director Afdahl reported that the agriculture 

sector benefitted from an “unsustainable” level of direct 

federal support during the pandemic and that the next year could 

be one of the more challenging ones. Commissioner Kruse noted 

that the difficult agriculture conditions in the prior year had 

distressed some borrowers in her state, but that the banks 

themselves were managing well and that overall trends are 

positive. Similarly, other members noted that recent low oil and 

gas prices posed problems for that industry, but welldiversified banks did not suffer from excessive direct exposure. 

Finally, several members noted that different regions within 

their states had different experiences thus far in the pandemic, 

with rural areas benefitting from lower infection rates early in 

the crisis and increased domestic tourism in the summer.

Some members called attention to uneven, and sometimes 

insufficient, state government revenues. Commissioner Hagler

noted that the stimulus-driven recovery helped avoid an expected 

multibillion dollar shortfall in his state, while Commissioner 

Thompson said that a rebound in state revenues attributable to 

improving oil and gas prices and increased sales tax receipts is 

arriving too late to prevent a shortfall in this budget year.

Many members noted that stimulus spending, while effective in 

combatting the pandemic recession, complicates analysis and 

forecasting and creates uncertainty about future performance 

after stimulus funds are exhausted. Some members suggested that 

additional stimulus programs are in order. Further, a few 
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October 14, 2020

members said that implementing the loan forgiveness component of 

PPP was now an important part of that program.

Banking Conditions. Committee members were uniformly 

positive regarding banking conditions prevailing in their 

states. As with the general economic conditions, members 

attributed this to the health and “robust” capital positions of 

banks going into the crisis as well as the stimulus programs’ 

effectiveness. Members noted that PPP resulted in significant 

asset and deposit growth, with Superintendent Allard and 

Commissioner Gonzales noting significant asset growth beyond 

that attributable to the stimulus programs. Director Fite

expressed concerns regarding interest rate risk. Members 

commented positively on bank loan portfolio management in the 

pandemic, both in originating new loans under the PPP and 

working proactively with deferrals, modifications, 

restructurings, and fee waivers to assist customers. Members 

described bank management as “having a good handle on their loan 

books” though some are “frustrated and exhausted” in dealing 

with the pandemic’s effects.

As evidence of the overall health of the banking 

environment, two members described de novo activity in their 

states with one recent bank opening reported. Members also 

described merger and conversion activity within their states. No 

member reported a significant uptick in problem bank numbers, 

with several reporting either no problem banks or a record low 

number of problem banks within their states.

Supervision and Regulation. Members’ discussion of 

supervisory activities focused on the transition to remote 

examination and telework for staff. A few members described 

pausing examination activities in March to allow bank management 

to focus on responding to the pandemic, with many members saying 

that exams are now conducted exclusively on a remote basis since 

the spring. Member Ryan observed that this transition to remote 

examination had occurred “seamlessly” and credited this success 

to the cooperative efforts of state and federal regulators. Many 

members echoed his comments regarding the FDIC and other federal 

regulators’ national and regional efforts to coordinate the 

transition to remote examination and the other supervisory 

responses to the crisis. A member expressed concerns about the 

ability to successfully train and transfer knowledge to new 

examiners without some onsite work experience.
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October 14, 2020

Many members expressed appreciation for the federal 

guidance on working with customers affected by the pandemic and 

on the regulatory impacts of the stimulus programs on bank 

capital and accounting. Commissioner Gonzales noted that banks 

have requested that PPP loans be excluded from regulatory asset 

threshold calculations to avoid burdening them with additional 

costs as a result of participation in these programs. Members 

encouraged the FDIC to continue its consistent, transparent 

efforts to provide guidance on responding to the pandemic.

The discussion covered other, longer-term regulatory 

matters. Commissioners Gallagher and Leary discussed the 

Community Reinvestment Act and noted their attention to 

potential changes to related regulations, with Commissioner 

Leary urging that the federal regulators maintain a consistent 

approach that does not result in disadvantage to state banks. 

Commissioner Leary also expressed support for the Bank Services 

Company Examination Coordination Act.

Other Topics. Commissioners Gallagher and Leary commented 

on the risks associated with climate change and suggested 

possible future discussion by the Committee, with Commissioner 

Leary noting that weather and natural disasters have affected 

“every day and banking life” in his state this year. Several 

members mentioned the diversity and inclusion activities of 

their banks and the beneficial effects on the communities they 

served, with Commissioner Gonzales highlighting his department’s

efforts to support two significant minority depository 

institutions in his state. Similarly, Commissioners Gallagher 

and Holstein outlined their state efforts to facilitate FinTech 

development in their states by providing sandboxes and 

ecosystems for collaboration among banks, vendors, and other 

entities. Lastly, Commissioner Holstein mentioned efforts to 

work with banks in response to new marijuana legislation in her 

state.

Following this discussion, Mr. Davis introduced Shayna 

Olesiuk, Associate Director, National & Regional Risk Analysis, 

Division of Insurance and Research (“DIR”) and Camille Schmidt, 

Chief, Emerging Issues Section, Policy Branch, Division of Risk 

Management Supervision (“RMS”). Ms. Olesiuk made a presentation 

on the national economy and banking trends. Ms. Schmidt made a 

presentation on trends in risk management practices.
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October 14, 2020

Following this discussion, Mr. Davis announced that the 

meeting would briefly recess. Accordingly, the meeting stood in 

recess at 2:38 pm.

Community Bank Consolidation

The Committee reconvened at 3:02 pm. Mr. Davis introduced 

George French, Senior Advisor, DIR, and Jonathan Pogach, Chief, 

Financial Modeling & Research Section, DIR. Mr. French and Mr. 

Pogach made a presentation on community bank consolidation. Mr. 

Pogach also discussed the FDIC Academic Challenge, a team 

competition for undergraduate students.

Director Afdahl asked whether a map referenced in Mr. 

French’s program is available on the FDIC website. Mr. French 

agreed to look into this further. Director Afdahl also suggested 

further research into the relationship between the rates of 

agricultural borrower growth and the growth of the lending 

limits of the institutions that serve them. Mr. Pogach noted 

that the paper being discussed didn’t cover this issue, but that 

it’s an interesting point. He also referred to a report of the 

Federal Reserve Bank of Kansas City on a similar topic.

Member Ryan expressed support for the FDIC Academic 

Challenge and asked about research on the community impacts of 

bank closings. Mr. Pogach provided responses regarding the 

existing work and data limitations.

Rapid Prototyping Competition and Request for Information on 

Proposed Voluntary Certification Program to Promote New 

Technologies

Next, at Mr. Davis’s invitation, Deputy to the Chairman and 

Chief of Staff Brandon Milhorn discussed two FDiTech 

initiatives: the solicitation of public input on the potential 

for a public/private standard-setting partnership and voluntary 

certification program to promote the efficient and effective 

adoption of innovative technologies at FDIC-supervised financial 

institutions; and the rapid prototyping competition to help 

develop a new and innovative approach to financial reporting.

Commissioner Hall inquired about feedback on the rapid 

prototyping competition and described her experience with data 

obtained in supervision of non-bank mortgage companies. She also 

asked about the size of the banks involved in the competition. 
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October 14, 2020

In response, Mr. Milhorn reported that experience with vendors 

had been positive and he was confident that the efforts were 

proceeding in the desired direction. He also stressed the 

distinctions between the “early warning” focus of the 

competition, versus the accounting-based, GAAP compliant Call 

Report. He noted, though, that the prototyping competition could 

teach lessons that might allow innovation in Call Report 

requirements, and could provide for a reduction in burden that 

would justify bank involvement in the new approach. Mr. Milhorn 

indicated that the initiative focuses on community banks of all

sizes.

State-Federal Coordination

Mr. Davis then introduced Doreen Eberley, Director, RMS;

Rae-Ann Miller , Associate Director, Risk Management Policy 

Branch, RMS; and John Vogel, Deputy Director, Operations Branch, 

RMS. Ms. Eberley made a presentation on changes to FDIC 

supervision programs in response to the pandemic. Ms. Miller 

described examination policy changes in response to the 

pandemic. Mr. Vogel covered FDIC training in the mandatory 

telework environment.

Commissioner Leary asked Mr. Vogel to identify practices 

used to replicate the apprenticeship aspect of examiner 

training. Mr. Vogel responded that training days and using 

scanned documents in a collaborative environment to train 

examiners remotely has been successful.

Commissioner Thompson asked whether the FDIC has a schedule 

for resuming onsite examinations and whether there has been more 

dialogue regarding sending contractors into institutions to scan 

files. Ms. Eberley responded that there is no current schedule 

to return to onsite examinations, but the FDIC is planning for 

an eventual resumption. In response to the second question, she 

stated the FDIC is considering various options of how to scan 

documents so we can conduct examinations. 

Director Afdahl shared that there appears to be a 

difference across regions in how FDIC examiners are treating 

classified assets and exclusions to classification in particular 

relating to agricultural assets and noted that this should be an 

area for future discussion. Ms. Eberley responded that the FDIC 

is working on addressing where additional guidance and 

instructions are needed for examinations with the Federal 
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October 14, 2020

Financial Institutions Examination Council Task Force on 

Supervision. 

Commissioner Hagler asked whether the FDIC is hiring entrylevel examiners or current and retired examiners and how that 

affects the onboarding and training process. Ms. Eberley shared 

that the FDIC primarily hires entry-level examiners, and that 

the FDIC is attempting to use available tools to try to

facilitate camaraderie building among the examiners. 

Update on Financial Inclusion Efforts

Mr. Davis then introduced Elizabeth Ortiz, Deputy Director, 

Consumer and Community Affairs, Division of Depositor and 

Consumer Protection (“DCP”) and Emerson Hall, Associate 

Director, Community Affairs, DCP. Mr. Hall delivered a 

presentation on the FDIC’s efforts to improve financial and 

economic inclusion. Then Ms. Ortiz made a presentation on the 

FDIC’s consumer outreach efforts.

Closing Remarks

Following the presentations, Mr. Davis invited Director 

Gruenberg to make closing remarks. Director Gruenberg shared 

that he appreciated the participation of the Commissioners and 

that he valued the comments they shared. He stated that there 

seems to be a high level of uncertainty going into 2021, so the 

relationships between the federal government and the states will 

be critical. 

Chairman McWilliams thanked the Committee members and the 

FDIC staff for their participation. She stated that the FDIC 

could not do its work without the States’ efforts on the ground

and that the States are a valuable tool to help the FDIC serve 

communities and think about the system holistically. Chairman 

McWilliams shared that she missed meeting with the state 

commissioners in person during her state visits and that she 

looks forward to working with them in the future. 
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October 14, 2020

Having no further business to discuss the meeting was 

adjourned at 4:53pm. 

_____________________________

Debra A. Decker

Federal Deposit Insurance Corporation

Deputy Executive Secretary

and Committee Management Officer

FDIC Advisory Committee of State Regulators
Minutes

of the

Meeting of the Advisory Committee of State Regulators

of the

Federal Deposit Insurance Corporation

Federal Deposit Insurance Corporation Building

Washington, D.C.

Open to Public Observation Via Webcast

October 14, 2020 – 1:00 P.M.

I hereby certify that, to the best of my knowledge, the attached minutes are accurate and 

complete.

________________________________

Jelena McWilliams

Chairman

Board of Directors

Federal Deposit Insurance Corporation