In This Issue

• 2016 NDBA/SDBA Annual Convention Registration Now Open
• Latest Issue of FDIC Publication Covers Corporate Governance
• Largest ACH Originators on Track for Same-Day ACH in 2016
• Farm Credit Regulator Issues 'Similar Entity' Loan Guidance
• CFPB Updates Compliance Guides to Reflect Rural/Underserved Rule
• CFPB Resumes Card Agreement Submissions; Next Deadline May 2

2016 NDBA/SDBA Annual Convention Registration Now Open

 
Let’s celebrate “Winning Together” at the NDBA/SDBA Annual Convention June 12-14, 2016, at the Best Western Ramkota Hotel in Bismarck, N.D.

With nationally-acclaimed speakers, great networking opportunities, fantastic special events and visits to local destinations, the NDBA and SDBA are confident you will not want to miss our largest event of the year.

After reviewing the Snapshot Agenda and Special Programs, click on the REGISTRATION tab to reserve your spot at this year's event. Be watching for the complete agenda and registration form in the mail soon. 

Latest Issue of FDIC Publication Covers Corporate Governance

The FDIC on Tuesday released a special edition of its Supervisory Insights publication that focuses on corporate governance for community banks. The issue includes a summary of responsibilities for bank boards and senior management, commentary on the FDIC’s Pocket Guide for Directors and an overview of regulatory expectations when evaluating board effectiveness.

The publication discusses the board’s role in building a strong risk management culture, understanding the bank’s risk profile and assessing risk appetite and ensuring that appropriate policies, procedures and objectives are in place to appropriately manage risk and meet strategic goals. Boards must evaluate the organization’s strengths, opportunities, weaknesses and threats and develop measurable objectives to guide the direction of the organization as part of the strategic planning process, the FDIC said.

The FDIC also noted that board members should play an active role in the examination process, engaging with their regulators and thoroughly reviewing examination results and recommendations. The agency said it expects a higher level of board oversight when banks have lower regulatory ratings, enforcement actions, elevated concentrations, complex products, high growth rates, low liquidity or capital levels, business model changes, poor operating results and deterioration in local economies, among other concerns. Read Supervisory Insights.

Largest ACH Originators on Track for Same-Day ACH in 2016

With same-day ACH transfers phasing in this fall, 95 percent of the nation’s largest ACH originating institutions are on track to offer the service in 2016, according to a survey by NACHA, the electronic payments association. While all financial institutions will be required to receive same-day ACH payments, and will receive a per-transaction fee for doing so, originating these payments is optional.

Sending same-day ACH payments will be broadly available, with 86 percent of institutions offering the service to every client, versus 14 percent who will offer it only to selected customers. Initial uses will include payroll, which every surveyed institution said they would offer, and business-to-business payments, which 95 percent said they would offer. The survey, which covered the 25 largest-volume ACH originators, said they are also developing offerings for bill payment and person-to-person payments.

NACHA research indicates that most smaller ACH originators are also on track. The association highlighted figures from a Virginia-based regional payments association that found 64 percent of all respondents will originate same-day ACH. ABA has strongly supported the development of same-day ACH, which is an industry-led effort to move toward a faster payments system.

In a recent ABA Banking Journal column, NACHA President and CEO Janet Estep discussed 10 possible use cases of same-day ACH for financial institutions and their customers. View the NACHA survey results. Read Estep's column.

Farm Credit Regulator Issues 'Similar Entity' Loan Guidance

Following a hearing in December at which lawmakers asked pointed questions about the Farm Credit System’s use of “similar entity” lending authority to finance deals for major companies like Verizon, AT&T and Cracker Barrel, the Farm Credit Administration has issued regulatory guidance on such loans.

“The FCS’s similar-entity lending authority has enabled the FCS to make loans to borrowers not otherwise eligible to borrow from the FCS, thereby increasing FCS’s taxpayer risk by untold billions of dollars,” wrote Bert Ely in ABA’s Farm Credit Watch e-bulletin on Tuesday. “That additional credit risk resides in those sectors and regions of the economy where the FCS already has a substantial risk concentration, further exacerbating the FCS’s already extremely concentrated risk in large borrowers… For that reason alone, Congress needs to reexamine the rationale for the FCS’s similar-entity lending authorization.”

Similar-entity loans are subject to certain limitations: the aggregate amount lent by FCS institutions cannot exceed 50 percent of the principal amount; the total amount lent by an FCS institution cannot exceed 10 percent of the institution’s total capital unless approved by shareholders; and the aggregate dollar value of similar entity participations held by any one FCS institution cannot exceed 15 percent of its total assets. If each FCS lender had reached its 15 percent limit at the end of 2015, similar-entity loans could have accounted for as much as 28.5 percent of all Farm Credit System loans made that year, Ely wrote, though he pointed out that FCS financial statements do not provide data on small-entity loans. Read Farm Credit Watch.

CFPB Updates Compliance Guides to Reflect Rural/Underserved Rule

 
The Consumer Financial Protection Bureau has updated certain compliance guides related to Regulation Z to reflect the recent rule broadening the availability of certain special provisions for small creditors operating in rural or underserved areas.

The bureau made updates to the compliance guides for the Ability to Repay/Qualified Mortgage, Home Ownership and Equity Protection Act and the TILA Higher-Priced Mortgage Loans Escrow rules, as well as the transaction coverage and exemption chart, the small creditor QM flowchart and the ATR/QM comparison chart. View the updated guides.

CFPB Resumes Card Agreement Submissions; Next Deadline May 2

After a yearlong suspension while it updated its submission system, the Consumer Financial Protection Bureau will resume accepting the card agreements that issuers are required to submit to the bureau. The next due date is May 2 for all agreements offered to the public as of the end of March.

Since card issuers are also required to post all active agreements on a public website, the CFPB said that issuers can meet the submission requirement by emailing links to these agreements to [email protected]. Emailing the links, along with the issuer’s name, address and unique identifying number is sufficient to meet all submission requirements, the bureau said.

After the May 2 deadline, the remaining submission dates for the year will be Aug. 1 and Oct. 31. The CFPB guidance includes answers to frequently asked questions. View the guidance.