SDBA eNews

December 21, 2017

Friday Is Final Day to Apply for High School Scholarship Funding

The South Dakota Bankers Foundation has allocated $90,000 for the High School Scholarship Program for 2018. Matched by recipient banks, the program will result in a total of $180,000 in high school scholarships awarded to high school seniors throughout South Dakota in 2018. The deadline for SDBA banks to apply for high school scholarship funding is Friday, Dec. 22, 2017.

Scholarship are available in $500 increments to the first 180 banks/branches who agree to match an equal amount. Banks who participated in the High School Scholarship Capital Campaign are eligible to apply for funding. 

Students who receive the scholarships must be high school seniors who plan to attend an accredited South Dakota college, university, vocational technical school or community college on a full-time basis. Winners must agree to have their names released to the media. Other scholarship eligibility requirements may apply as determined by the sponsoring bank. Learn more and apply.

Landmark Tax Reform Bill Clears Final Vote; Enactment Now Likely in 2018

The tax reform bill cleared its final procedural hurdle yesterday as the House voted again to approve the measure, marking the first fundamental changes to the U.S. tax code in more than three decades. The bill now goes to President Trump for signing, which may not happen until the first week of January.

“The changes in this bill, particularly the reduction in business tax rates, will help grow the economy and create jobs, which will benefit all Americans,” said ABA President and CEO Rob Nichols, who applauded the bill’s passage. “Thanks to this legislation, America’s banks will get to expand their role as the lifeblood of the economy by increasing financial services, investing in new and more convenient technologies, and opening more doors of opportunity for their customers.”

For technical reasons related to the budget, the President may delay signing the bill into law until the new year. This would shift the immediate accounting implications for earnings and capital to the next quarter, giving bankers more time to handle the impacts of, for example, devalued deferred tax assets. The delay, however, won’t alter the effective dates or substance of the legislation. Read highlights of the tax bill.

Banks Announce Wage Hikes, Charitable Contributions after Tax Reform Bill Passes

As the tax bill successfully passed Congress yesterday, several companies--including banks of all sizes--announced plans to increase employee compensation and charitable contributions as a result of the significant tax cut corporations will receive under the new law.

Fifth Third Bancorp announced that it will raise the hourly minimum wage to $15 for all employee, and will also pay out a one-time bonus of $1,000 to approximately 13,500 of its employees, senior managers and executives excluded. Wells Fargo also pledged to hike minimum wages to $15 per hour and said it plans to target $400 million in philanthropic donations in 2018. And ABA Chairman Ken Burgess announced that his bank, FirstCapital Bank of Texas, a $1 billion institution headquartered in Midland, Texas, will pay a $500 bonus to 197 bank employees before the end of the year.

A handful of other corporations, including AT&T and Boeing, also announced similar compensation plans and planned charitable contributions as a result of tax reform. ABA will continue to highlight the ways in which banks are putting their tax savings to work to help their employees and local communities thrive. 

Agencies Update Rulemaking Schedules

The federal regulatory agencies last week updated their rulemaking agendas for the remainder of 2017 and into 2018. In introducing the agendas, the Office of Management and Budget’s Office of Information and Regulatory Affairs noted that all federal regulators have been directed to reevaluate and eliminate burdensome regulations and reiterated the Trump administration’s position that guidance, FAQs and other sub-regulatory actions should not be used to impose new or additional legal obligations or requirements.

According to the schedules, the CFPB will conduct a review of inherited regulations, with a particular focus on open-end credit, including credit cards. As part of that effort, the CFPB will consider rules to modernize its database of credit card agreements and make the database more useful to the industry and the public. The bureau will also be in the “pre-rule activities” stage on small business lending data and overdrafts throughout 2018.

Additionally, the bureau is targeting February 2018 for a proposed rule on third-party debt collection, May 2018 for a proposed rule on the supervision of larger market participants in markets for personal loans, and December 2018 for a proposed HMDA rule on making permanent the adjusted threshold for collecting and reporting data on open-end lines of credit.

Meanwhile, the Financial Crimes Enforcement Network expects to issue technical amendments to customer due diligence requirements. The Federal Reserve, FDIC and OCC are planning to issue a final rule expanding the current exemption for appraisals of commercial properties, and a final rule to implement the Basel net stable funding ratio standards. The OCC and FDIC also plan to issue a final rule that would shorten the standard settlement cycle for certain securities purchased or sold by national banks, federal savings associations and FDIC-supervised institutions.

The Department of Labor is projecting October 2018 for issuing a proposed rule on the salary level for the executive, administrative and professional employee exemptions to the overtime and minimum wage requirements of the Fair Labor Standards Act. View the agendas. For more information, contact ABA's Virginia O’Neill or Jonathan Thessin.

Trade Associations Urge Congress to Pursue National Data Breach Standard

ABA and six other financial trade associations on Monday called on Congress to move forward with legislation to implement strong national data security and breach notification requirements that would replace the current inconsistent patchwork of state laws.

“Our existing payments system serves hundreds of millions of consumers, retailers, financial institutions and the economy well,” the groups wrote in a letter to House Energy and Commerce committee leaders, who had requested comments on data breach legislation. “Protecting this system is a shared responsibility of all parties involved, and we must work together to invest the necessary resources to combat never-ending threats to the payments system.”

The groups called specifically for legislation that would require all entities to protect consumers’ sensitive personal and financial data, notify consumers in a timely manner in the event of a breach and ensure compliance via appropriate federal and state oversight. They added that any national data breach legislation “must ensure that all entities that handle consumers’ sensitive financial data have in place a robust--yet flexible and scalable--process to protect data, which must be coupled with effective oversight and enforcement procedures to ensure accountability and compliance.” Read the letter.

Treasury Extends FCS' Line of Credit into 2018

Without providing public notice, the Treasury Department recently renewed the Farm Credit System’s $10 billion line-of-credit through its Federal Financing Bank through Sept. 30, 2018, Bert Ely reported in the latest edition of Farm Credit Watch yesterday.

“Technically, the parties to this line of credit are the FFB and the Farm Credit System Insurance Corporation, the FCS entity which insures the Systemwide Debt Securities issued by the Federal Farm Credit Banks Funding Corporation. Those securities fund the bulk of the FCS’ balance sheet,” totaling $257.9 billion as of Sept. 2017, Ely said. He added that “unlike a line of credit issued by a commercial bank, the FCSIC pays nothing for it--it is a freebie provided by taxpayers.”

Ely also noted that the line of credit was originally created as a result of the 2008 crisis, despite the fact that, “at least publicly, none of the FCS banks experienced any difficulty in paying maturity in debt obligations.” Read more.

FHLB Advances, Collateral Increase in 2016

Advances from Federal Home Loan Banks during 2016 increased from the year before by 11 percent to $705 billion, the Federal Housing Finance Agency said yesterday. The total book value of the FHLB’s eligible collateral rose to $2.8 trillion, an increase of 21 percent from a year prior.

Whole loans accounted for 61 percent of all eligible collateral pledged to the FHLBs, while other real estate-related collateral accounted for 29 percent, securities accounted for 8 percent and community financial institution collateral accounted for 2 percent. Read more.

SDBA to Offer IRA Update Seminar in February

The IRA Update Seminar builds on the attendees’ knowledge of IRA basics to address some of the more complex IRA issues their financial organizations may handle.The SDBA will offer the IRA Update Seminar on Feb. 21, 2018, at the Ramkota Hotel in Sioux Falls.

Instructor Mike Nelson uses real-world exercises to help participants apply information to job-related situations. This course will also include all changes that have occurred and discuss any pending legislation. This is a specialty session; some previous IRA knowledge is assumed.

Learn more and register.

Compliance AllianceQuestion of the Week


For flood insurance purposes, how should we determine the proper value of flood insurance when the insurer is unwilling to provide us with a replacement cost value (RCV)?

Answer: FDIC, in the Flood Disaster Protection section of the Compliance Examination Manual provides:

‘In calculating the amount of insurance to require, the lender and borrower (either by themselves or in consultation with the flood insurance provider or other appropriate professional) may choose from a variety of approaches or methods to establish the insurable value. They may use an appraisal based on a cost-value (not market-value) approach, a construction-cost calculation, the insurable value used in a hazard insurance policy (recognizing that the insurable value for flood insurance purposes may differ from the coverage provided by the hazard insurance and that adjustments may be necessary; for example, most hazard policies do not cover foundations), or any other reasonable approach, so long as it can be supported.’

p. V-6.18, Q/A #9:

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