SDBA eNews

October 12, 2017

Sen. Thune to Host Cybersecurity Roundtable at Dakota State University

Sen. John Thune, chairman of the Senate Committee on Commerce, Science and Transportation, will host a roundtable with cybersecurity experts on Friday at 11:30 a.m. CDT in the Straatmeyer Auditorium of Dakota State University (DSU) in Madison.

The roundtable will serve as an opportunity to highlight the cybersecurity challenges facing U.S. companies, as well as relevant academic and research initiatives at DSU. DSU has a nationally-recognized cybersecurity education program and is in the midst of an effort to construct a state-of-the-art-facility designed to foster economic development and expertise in addition to classified cybersecurity research and cybersecurity operations.

Rick Nath, a member of the SDBA Board of Directors and site president of Citibank, N.A. in Sioux Falls, will be among the participants in the roundtable. Other participants include representatives from DSU, Amazon Web Services, the National Initiative for Cybersecurity Education, General Motors, Google, Symantec and Visa.

Sen. Rounds Introduces Bill to Raise Funding for FSA Programs

The ABA last week expressed support for legislation introduced by Sen. Mike Rounds that would increase the lending limit and overall funding for the Farm Service Agency’s guaranteed farm ownership and operating loan programs. The bill calls for the programs’ total funding to be increased to $8 billion and for the lending limit to be increased from $1.4 million to $3 million.

ABA noted that these programs are vital for providing credit to agricultural borrowers--particularly young, beginning and small farmers--and that the proposed increases would help reduce the likelihood of a funding lapse in the future.

“With this additional funding, lenders would be able to help many more borrowers through potentially tough times in the agricultural economy,” the Association said. Read the letter.

ABA Urges House Committee to Approve 10 Bills

In advance of the House Financial Services Committee’s plans to vote on several regulatory reform bills yesterday and Friday, the ABA sent a memo to committee members outlining the association’s support for 10 bills on the agenda.

Several of the bills have long been championed by ABA and the state bankers associations and are key planks in ABA’s Blueprint for Growth. ABA urged the committee to advance the Tailor Act (H.R. 1116), which would require regulators to tailor their actions to meet the diverse characteristics of different banks, as well as the Systemic Risk Designation Improvement Act (H.R. 3312), which would replace the automatic $50 billion asset threshold to be designated a systemically important financial institution with a more nuanced, customized measurement.

ABA also expressed support for bills that would address custody bank issues (H.R. 2121), ensure Operation Choke Point is never repeated (H.R. 2706), provide relief for smaller banks from new Home Mortgage Disclosure Act reporting (H.R. 2954), codify the “valid-when-made” doctrine that facilitates secondary markets for credit (H.R. 3299), repeal the Department of Labor’s fiduciary rule (H.R. 3857) and provide relief for smaller lenders with respect to escrow practices (H.R. 3791). Finally, ABA urged the committee to advance H.R. 2396, which would provide technical clarifications on privacy notices. Read the memo.

CFTC Chief Commits to Keeping 'De Minimis' Threshold Through 2019

The Commodity Futures Trading Commission will keep the swap dealer de minimis threshold at $8 billion at least through the end of 2019, Chairman Chris Giancarlo told the House Agriculture Committee yesterday. The threshold had been scheduled to drop to $3 billion at the end of 2018. He also pledged to bring the issue to his fellow CFTC commissioners for a permanent resolution in 2018.

ABA has strongly advocated--most recently to the Treasury Department--for maintaining or raising the de minimis threshold, noting that lowering it could limit the ability of many commercial end users to access the swaps market in order to manage risk responsibly. ABA will continue to engage with the CFTC as it deliberates over the proper threshold level. Read ABA's letter to Treasury. For more information, contact ABA's Ananda Radhakrishnan.

ABA Wins CFPB Exemption for 'Accommodations Loans'

ABA won a helpful exemption in the Consumer Financial Protection Bureau’s final small-dollar lending rule that protects banks’ ability to make small-dollar “accommodation loans” to customers. The bureau last week finalized its long-awaited rule to curtail short-term, small-dollar consumer loans. Under the final rule--as ABA advocated in its comment letter--small-dollar loans will be exempt entirely from the rule, provided they are made by a lender that has made fewer than 2,500 of these loans in each of the current and previous years and for whom these loans account for less than 10 percent of revenues.

The accommodation loan exemption applies regardless of the size of the lender offering it. In addition, for banks that exceed the threshold for the accommodation loan exemption, the final rule preserves the ability of these banks to offer installment loans of 46 days or more, which ABA believes will allow banks to innovate and increase their responsible small-dollar credit products.

“With today’s rule, the bureau has reiterated its earlier view that banks can play an important role in meeting the needs of small-dollar borrowers,” said ABA SVP Ginny O'Neill. “As we continue to analyze the final rule’s 1,690 pages, we hope that it will allow banks to expand programs to effectively meet the small-dollar credit needs of their customers.”

ABA will continue to review the final rule, which covers a wide swath of small-dollar loans of 45 days or less, including payday loans, auto title loans, deposit advances and longer-term loans with balloon payments--all of which are subject to an ability-to-pay test unless exempt. The rule also includes provisions limiting attempts to withdraw payment from borrowers’ accounts. However, there is an exemption available to banks that hold the consumer’s account from which the debit is attempted, if the bank does not charge the borrower an NSF or overdraft fee.

New Article Examines How Fixed-Rate Products Meet Farm Needs

In the latest free article from the forthcoming November/December issue of the ABA Banking Journal, Brian Nixon explores how banks are using fixed-rate credit solutions to meet farmers’ needs during a volatile and unpredictable time for interest rates. Providing an option to structure longer-term credit at fixed rates can help put producers in a better position to weather these challenging conditions in the ag economy, Jeff Plagge of Iowa-based Northwest Financial Corporation told Nixon.

For example, bankers use Farmer Mac to make fixed-rate options available to their agricultural customers. “Probably for the last 10 or 12 years, we’ve utilized it not so much from a funding standpoint, but more from the standpoint to provide long-term, fixed interest rates to our borrowers,” Ed Coates of New York’s NBT Bank told the Banking Journal--a shift that has become more common in recent years.

Having fixed-rate options at the ready helps ag bankers serve as “true relationship managers” with their producer clients, said Coates. “That’s one of the ways we try to differentiate ourselves from some of our competitors.” Read the article.

GSBC Announces New Community Bank Investments School

The Graduate School of Banking at Colorado (GSBC) announced the addition of its newest program aimed at preparing the next generation of community bank leaders for success--the Community Bank Investments School.

The school is a newly re-designed extension of the Graduate School of Bank Investments and Financial Management (GBIFM) formerly hosted at the University of South Carolina for nearly 40 years. Its new curriculum will provide financial managers of community banks an independent critique of opportunities and risks in better managing an investment portfolio.

Expert faculty will use live information from Bloomberg to explain key concepts and examine specific investment instruments. Participants will bring information related to their institutions' actual portfolios and work with investment specialists on strategies.

GSBC President Tim Koch said, “GBIFM filled an important void in banking education for many years, as it offered an independent educational lens for industry professionals to increase their knowledge and skillsets in a very complex area of banking. It is an excellent fit for GSBC’s umbrella of programs which are designed to ensure the long-term success of our nation’s community banks.”

GSBC will host the Community Bank Investments School at the University of Colorado Denver Business School in Denver, Colo., May 20-24, 2018. Enrollment for this program, as well as the 68th Annual School Session and the Executive Development Institute for Community Banks®, is now open. Learn more.

Eide Bailly to Hold Annual Bankers Seminar

With each passing year, it seems that technology is pushing the boundaries of what we think is possible. Artificial intelligence is beginning to blur the line between what is human and what is digital. Banking is and always will be a
relationship business, but disruption is inevitable given this pace of change. But this also sets the stage for revolutionary leadership and the opportunity for new ways to think about banking that will benefit your bank, your community and your stakeholders.

Eide Bailly will hold its annual Bankers Seminar Nov. 1 in Fargo, Nov. 2 in Mankato and Nov. 8 in Sioux Falls, where the company will discuss opportunities and best practices for financial institutions in 2018 and beyond. Anyone involved in the banking industry is invited to attend. The half-day seminars are designed primarily for bank executives, lenders, operations managers, bank directors and bank professionals.

The keynote speaker in Fargo and Mankato will be David Kohl, and the keynote speaker in Sioux Falls will be Toby Madden. Following each session, Eide Bailly will host a reception with hors d’oeuvres and beverages. Stay a while and mingle with your friends and colleagues. Learn more.

Compliance AllianceQuestion of the Week

Question: Is an environmental questionnaire required to be completed on residential real estate taken as collateral for commercial loan purposes?

Answer: There's not a federal regulatory requirement for residential properties that relates to commercial property. Typically environmental questionnaires or surveys are only needed for commercial real estate. There may be a rare case in which the title company is requesting an environmental questionnaire to be completed, but I would consider that out of the ordinary. 

Use of an environmental questionnaire isn't required under the federal consumer compliance regulations. That being said, you may want to consider obtaining such information to ensure that you're properly managing any environmental concerns from a safety and soundness standpoint. Since environmental liability is governed by state law, you'll want to consult with local counsel should you decide to use such a questionnaire.

As stated in the FDIC's environmental Guidelines, "loans collaterized by 1- to 4-family residences normally have less exposure to environmental liability than loans to finance industrial properties."

A copy of the FDIC policy for Environmental Standards can be found on the FDIC's website, here:

CA also does offer our Environmental Risk Procedures here which may prove helpful:

Not a Compliance Alliance member? Learn more about membership with Compliance Alliance by attending one of our live demos:

Compliance rules and regulations change quickly. For timely compliance updates, subscribe to Compliance Alliance’s email newsletters.

Compliance Alliance offers a comprehensive suite of compliance management solutions. To learn how to put them to work for your bank, call 888.353.3933 or email.

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Contact Alisa DeMers, SDBA, at 800.726.7322 or via email.