SDBA eNews

December 14, 2017

SDBA 2018 State Legislative Day to Include Special Events for Emerging Leaders

The SDBA 2018 State Legislative Day on Feb. 7 in Pierre is your opportunity to stay up-to-date on both state and federal legislation which could affect the banking industry and to visit with state legislators.

The day will feature two special events specifically for emerging leaders in the banking industry. Gov. Dennis Daugaard will address all attendees regarding the importance of banks on Main Street at 2 p.m. This session will be directed toward emerging leaders in the audience and will reinforce the necessity for and importance of the banking industry in building local economies. At 4 p.m., a reception for emerging leaders only will provide an opportunity to network exclusively with other emerging leaders.

The day will also include a luncheon and banking legislation review, discussion on the U.S. economy (past, Trump and the coming decade), a chance to visit with legislators at the State Capitol, and an evening reception with state legislators and constitutional officers at 5 p.m. Featured afternoon presenter Dr. Stephen Happel speaks throughout the U.S. on Federal Reserve policy, current tax and spending proposals by White House and Congress, and demographic patterns to consider where the U.S. economy may go next.

Events will take place at the Ramkota Hotel & Conference Center. Learn more and register.

Lawmakers Reach Agreement on Key Tax Issues

Republican lawmakers negotiating the differences between the House and Senate tax reform bills have reportedly reached a tentative agreement on a package that would pin the C corporation tax rate at 21 percent, eliminate the corporate alternative minimum tax and provide a 20 percent deduction for pass-through businesses, with the new rates effective in 2018.

The bill also would lower the top individual tax rate to 37 percent and allow individuals to deduct up to $10,000 in either property taxes or state and local income taxes, according to reports. Issues that ABA has been advocating on but whose resolution is still unclear include provisions related to base erosion, income recognition for mortgage servicing rights and the elimination of net operating loss carrybacks.

Lawmakers are not expected to release the details of the package until later this week, but lead negotiators expressed confidence that it would be ready for votes in both the House and Senate early next week and could head to the President’s desk before Christmas.

ABA Urges Banks to Plan for Tax Reform Impact on 2017 Earnings, Capital

As lawmakers near final agreement on tax reform, ABA is urging banks to plan for and communicate the impact the tax rate changes will have on current earnings and capital, while at the same time appealing to the Financial Accounting Standards Board to mitigate the potential disruption that will be caused by current accounting standards.

As noted in a preliminary analysis ABA posted last week, enactment of tax reform this year has important, immediate accounting and capital implications for banks, particularly those with deferred tax assets and liabilities. Under generally accepted accounting principles, if the tax law is signed before Jan. 1, it will require the immediate reevaluation of DTAs and DTLs, with the difference recorded through net income. Since the new tax rates won’t be effective until later, this could impact banks’ current quarterly earnings statements and regulatory capital levels.

To help banks plan for and communicate these changes to their boards, management teams, auditors and others, ABA has posted a brief PowerPoint deck on the issues requiring attention. ABA also wrote to FASB Chairman Russ Golden recommending a change in current standards to allow companies to recognize the effects of lower tax rates on DTAs and DTLs relating to items within accumulated other comprehensive income.

“There is a high level of detail needed to track the timing of recognition of specific DTAs and DTLs (whether in AOCI or not) caused by the change in income tax rates. Such work should not then result in confusion for investors,” ABA wrote. “Therefore, we strongly urge you to make an immediate technical correction to mitigate this important issue.”

Burgess Letter to WSJ: It's Time to Tax Credit Unions

The tax code shouldn’t pick winners and losers, and businesses performing the same service should face the same rules, ABA Chairman Ken Burgess wrote in a letter to the Wall Street Journal posted yesterday. The letter was in response to a Dec. 5 article highlighting the fact that credit unions were left out of the tax reform bill.

“At a time when Congress is asking everyone from teachers to homeowners to give up tax breaks in the name of lowering rates, why is the trillion-dollar credit-union industry still getting a free ride?” wrote Burgess, chairman of FirstCapital Bank of Texas in Midland, Texas.

Burgess added that today’s credit unions look nothing like those of the 1930s, when Congress first exempted them from federal income tax and noted that there are now 282 credit unions with more than $1 billion in assets.

“These fast-growing and increasingly complex institutions are larger than 88 percent of the banks in this country, advertise that they are just like banks, take any customer who walks in the door (openly promoting that fact), devote significant resources to complex commercial lending and aggressively market to attract the affluent,” he said. “It’s time for Congress to end the uneven playing field and require the nation’s billion-dollar credit unions to pay their fair share.”

ABA Urges Bankers to Write to Senators to Keep Momentum on Reg Reform

Momentum is building in Congress for commonsense regulatory reform legislation, and we still need your help to turn that momentum into action.

S. 2155, the Economic Growth, Regulatory Relief and Consumer Protection Act, introduced by Senate Banking Committee Chairman Mike Crapo; Senators Jon Tester, Heidi Heitkamp, Mark Warner, Joe Donnelly; and 14 additional Senators recently passed the Senate Banking Committee with a strong bipartisan vote. The bill is designed to fix ill-fitting, counterproductive regulations that limit banks' ability to serve their customers, clients and communities.

ABA, along with the SDBA, is asking bankers to urge their Senators to support S. 2155, which is a solid step towards right-sizing regulations.

Contact your Senators by entering your contact information here. The system will automatically connect you with your Senators. Once you have contacted your Senators, please share this action alert with your colleagues in the bank. It is critical that everyone in the banking industry engage in this advocacy effort.

DOD Amends MLA Interpretive Rule

The Department of Defense yesterday released changes to its 2016 interpretive rule clarifying certain provisions of the Military Lending Act regulation. The amendments address a number of concerns ABA raised in previous comments to DOD.

Among the amendments is a clarification that the exemption for purchase money loans includes loans that are used not only to purchase the item securing the loan but also to purchase related items, such as extended warranties on a car. They also offer clarifications about loans secured by a deposit account, the use of remotely created checks to make loan payments, the ability of lenders to use the right of offset and the timing of checking military status to qualify for the MLA safe harbor.

While the amendments addressed many of ABA’s concerns, they did not address all. Still at issue are provisions related to oral disclosures; calculation of the Military Annual Percentage Rate for open-end loans; coverage of lot loans; and whether securities are personal property and subject to the exemption for purchase money loans secured by personal property. ABA will continue working with DOD to pursue further changes to the MLA regulations.

The association has published an initial staff analysis of the amendments. Bankers can also find additional MLA compliance resources on a dedicated resource page on

Registration Now Open for ABA Women's Leadership Forum

Registrations are now being accepted for the 2018 Women's Leadership Forum, to be held on Wednesday, April 25, in conjuction with ABA's Government Relations Summit in Washington, D.C. The forum provides an opportunity for women bank leaders to discuss top leadership issues, hear from thought-provoking speakers and gain valuable strategies for success.

Each year, ABA’s Government Relations Summit brings bankers across the country to the nation’s capital to meet with lawmakers, regulators and administration officials and to gain fresh insights and useful information they can take back to their institutions. Registration for the forum and all Summit-related programming is free. The SDBA offers a $500 stipend to help with the travel expenses of one indvidual from each member bank to attend the GR Summit. Register now.

Hacker Hour: Cybersecurity Lessons Learned in 2017

From the time the ball dropped to ring in the new year until you completed your final Cyber Monday purchase, cybersecurity breaches have been a staple on your newsfeed. What stands out with the cyber events of 2017 has been the sheer number of people affected. Millions of consumers had their personal information compromised and no industry was safe from experiencing a breach. What can you do to keep your organization out of the news and your customer data safe?

Join SBS on Wednesday, Dec. 20, 2 p.m. CT for Hacker Hour: Cybersecurity Lessons Learned in 2017. During this free webinar, SBS will review the top five cybersecurity events of 2017 and what we can learn from them. Register for the webinar.

Compliance AllianceQuestion of the Week

Question: Who is eligible for a NOW account?

Answer: Generally, the following are eligible for a NOW account: individuals, sole proprietors, an individual or sole proprietor with a DBA (not other entities with DBAs), accounts holding funds where the entire beneficial interest is held by an individual (e.g. pensions, escrow, etc.), nonprofit organizations (with some exceptions), governmental units including federal and state divisions, and funds held by a fiduciary if the beneficiary is otherwise eligible for a NOW account.

However; that being said, do not forget that it is permissible to have interest bearing commercial accounts, just do not classify them as NOW accounts.

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.