Community bank making a stand over payday lending

PARIS, Texas – The $109 million People’s National Bank, a community bank in East Texas, has chosen to fight the Office of Comptroller of the Currency in what it called the agency’s campaign to force it to stop making payday loans, a branch of business it says is profitable, safe and a service to the people of Paris, Texas, where it is based. “Peoples National Bank shares the view of the OCC that payday lending should be conducted in a safe, sound and responsible manner,” said Ronald E. Abbott, chairman and CEO of People’s. “The bank remains committed to working with regulators to ensure that our agent-assisted loan program meets these requirements. However, the bank is unwilling to sign a Formal Agreement with the OCC that the bank believes would have detrimental consequences to the consumers who use our product and to our shareholders.” The OCC has been scrutinizing the bank’s use of payday lending as well as its relationship with payday lenders and check-cashers. Both payday lenders and check-cashers allege that the agency’s increased attention has led banks to sever relationships with their firms, a term the check-cashers call “bank discontinuance.” “While the offering of many financial products (such as credit cards, car loans and mortgages) through agent-assisted loan programs is common, such relationships between payday loan companies and banks are relatively new,” Abbot said. “We recognize there are questions and challenges associated with these partnerships and hope that the OCC will negotiate in good faith toward reasonable, balanced solutions. At the same time, we respectfully urge the OCC to draw distinctions between payday loan providers, like Peoples National Bank, who operate professionally and responsibly and those who do not.” The OCC has served the bank with a Notice of Charges that, Abbot said, could lead to a hearing before an Administrative Law court.