Ness Named Banker of the Year by NorthWestern Financial Review Magazine

Larry Ness, chairman and CEO of First Dakota National Bank, Yankton, has been named 2018 Banker of the Year by NorthWestern Financial Review magazine. Bell Bank partners with NorthWestern Financial Review as program sponsor to honor the 72-year-old banker. Ness started working at First Dakota National Bank when it was on the verge of failing and turned it into one of the nation’s leading agricultural lenders and one of South Dakota’s leading financial institutions.

"As chairman and CEO, Ness is reaping the rewards of a lifetime of work," says NorthWestern Financial Review publisher Tom Bengtson. "Ness shares many leadership traits with previous Banker of the Year selections, including having a knack for innovation, aggressively recruiting talent, recognizing opportunities in tough times, being engaged in helping the community, and gratitude.

"In nearly 35 years at First Dakota, he has hired the right people, strung together a series of savvy acquisitions, built a culture of decisiveness and fun by leading and delegating, brought his three sons into the bank, built the nation’s 38th largest ag loan portfolio, won the respect of his community by giving back time and treasure, and encouraged employees, customers and students to make the most of what they have."

Robert Stephenson, who joined First Dakota National Bank in 1996 and became its president in 2010, said Ness, “regularly provides the inspiration needed for things to happen in the Yankton community.” Stephenson cited the Yankton United Way and Yankton Area Progressive Growth fund drives as examples.

Ness is the magazine's 30th Banker of the Year selection. His is only the third selection from the state of South Dakota. Read NorthWestern Financial Review's story on Ness. 

Registration Open for SDBA/NDBA Dakota School of Lending Principles

The Dakota School of Lending Principles, hosted by the SDBA and co-sponsored by the NDBA on April 24- 27, 2018, in Aberdeen, S.D., is a learning event with one foot grounded in the classroom and one foot in the bank. This school allows students to learn the theory and process of basic lending and then put this knowledge to work in actual nuts and bolts sessions. 

This school provides basic instruction appropriate for loan officer trainees, loan support personnel and personal bankers. To ensure exposure to bank structure and terminology, it is recommended that applicants have a minimum of six months lending experience or one year of loan department experience. Applicants not meeting the suggested prerequisites will be contacted to discuss admission qualifications.

The school will focus on four loan modules: consumer lending, real estate lending, analyzing small business loans and loan documentation, and agricultural lending. In the four loan modules, learn the lending process by studying elements applicable to each loan type: terminology, the application process, interviewing, investigation, credit analysis, loan structure, decision communication and selling. Case studies and exercises provide a hands-on learning experience.

Learn more and register. 

ABA Urges Agencies to Consider Effects of Tax Reform on Accounting, Capital

With the tax reform law now in effect, ABA on Tuesday wrote to the heads of the federal banking agencies and the Securities and Exchange Commission urging regulators to carefully consider the short- and long-term effects tax reform will have on banks’ net income, regulatory capital and financial reporting. The association encouraged regulators to exercise flexibility when conducting upcoming examinations of bank management and asset quality. 

Under GAAP, banks must immediately reevaluate deferred tax assets and liabilities, with the difference recorded through net income. ABA estimates that as a result of these reevaluations, some banks could see net operating losses, and a very few could be in danger of “prompt corrective action.” The association pointed out, however, that these downward revisions should not affect the safety and soundness of individual banks or the financial system as a whole, and added that the long-term effects of increased economic growth could more than offset these short-term negative adjustments. 

With these year-end adjustments expected to affect banks’ dividend distributions, ABA called for guidance to help bankers determine how to proceed with their dividend and capital management plans. ABA also called on regulators to engage with the Financial Accounting Standards Board to pursue changes to current standards that would allow companies to recognize the effects of lower tax rates on DTAs and DTLs related to items within accumulated other comprehensive income--which the association previously advocated for in a comment letter to FASB. 

Finally, ABA called for the agencies to issue additional guidance on year-end reporting and documentation expectations, to help banks maintain strong internal controls as the tax reform accounting changes take place. Read the letter. For more information, contact ABA's Mike Gullette or Josh Stein. 

Banks Continue Post-Tax Reform Wage Increases, Community Investments

As the new year begins and a historic tax reform law takes effect, banks continue to unveil wage increases, bonuses and increases in charitable contributions.

• Minneapolis-based U.S. Bancorp on Tuesday announced a $1,000 bonus for nearly 60,000 employees, a new minimum wage of $15 per hour for all hourly employees and a $150 million contribution to the U.S. Bank Foundation. The company also said it would enhance employee health insurance offerings and pour more money into improving customers' mobile and digital experiences.
• Dallas-based Comerica also provided a $1,000 bonus for its non-officer employees and boosted its bank-wide minimum wage to $15 per hour.
• First Financial Northwest, headquartered in Renton, Wash., said it would pay a $1,000 bonus to all of its non-executive employees.
• Bank of the James, Lynchburg, Va., raised its minimum wage to $15 per hour for employees with more than one year of service, added vacation days and substantially increased its charitable giving plans for 2018.
• First Farmers Bank and Trust in Converse, Ind., said that it would raise its minimum hourly wage by $2.50, provide a 2017 year-end bonus of $750 for all full-time employees, invest at least $250,000 annually in community development activities and spend at least $150,000 per year on employee professional development.
• Regions Financial, headquartered in Birmingham, Ala., said it would raise its minimum wage to $15 per hour by year’s end, affecting 25 percent of its workforce. It said it would increase its capital expenditures by $100 million, or 50 percent, over 2017 levels to enhance the customer experience and contribute $40 million to the company’s charitable foundation to support financial education, job training, economic development and affordable housing.
• Salt Lake City-based Zions Bancorporation said it would increase wages for more than 40 percent of its approximately 10,000 employees and provide $1,000 bonuses to nearly 80 percent of them. The company is contributing $12 million to its charitable foundation, which makes educational and human services grants in its markets.
• Kansas City, Mo.-based Commerce Bancshares said it would pay $1,000 bonuses to non-bonus-eligible full-time employees and $250 to part-time employees. In 2017, the company contributed $32 million to its charitable foundation, including a $25 million gift in the fourth quarter when the tax bill was signed.

To help the public and policymakers see the real-world effects of tax reform on bank employees, customers and local communities, ABA has launched a site documenting banks’ post-tax reform efforts. The site can be viewed at aba.com/BanksAndTaxReform. 

Agencies to Move Forward with Call Report Changes

The federal regulatory agencies yesterday announced that they will move forward with several proposed revisions to the Call Report for which ABA has long advocated. The changes would simplify the Call Report for many banks by removing or consolidating a number of existing data items, reducing the reporting frequency for other data items and increasing certain reporting thresholds. Implementation of the revised Call Report will also be delayed from March 31 to June 30, the agencies said. 

In addition to these revisions, the agencies announced other changes that will provide greater transparency on the effect of unrealized gains and losses on certain equity investments, maintaining consistency with changes to accounting standards. These changes will be effective March 31. 

Following concerns raised by the industry, the agencies are also reconsidering a proposal to align the method for determining the past-due status of certain loans and other assets with an accepted industry standard. ABA noted in previous comments that doing so would “impose significant costs on the industry with little regulatory or supervisory benefit.” 

Finally, the agencies announced that they will move forward with moving banks with more than $100 billion in assets to the FFIEC 031--effectively creating three Call Reports--a proposal which ABA previously opposed. View the Call Report changes. For more information, contact ABA's Alison Touhey. 

ABA Foundation Provides Banker Resources for Military Retirement Planning

The ABA Foundation and the Association of Military Banks of America have teamed up to help the Department of Defense spread the word about changes in the military's retirement system. The new Blended Retirement System, or BRS, took effect on Jan. 1. Active-duty service members with less than 12 years of service as of Dec. 31, 2017, and Reserve or National Guard members with fewer than 4,320 retirement points are eligible to opt in.

The BRS includes an automatic contribution and a matching contribution from the government into the Thrift Savings Plan, a 401(k)-like retirement product for federal government employees. The BRS also includes a defined benefit, much like the legacy plan, after 20 years of service at a reduced rate.

The ABA Foundation and AMBA have prepared variety of communication and marketing resources--including digital ads, key messages and sample social media posts--to help banks help military customers and their families understand the changes and how to opt in online. Access the resources. 

Deadline Nearing to Reserve Hotel Room for SDBA State Legislative Day

If you haven't yet reserved your room at the Ramkota Hotel for the SDBA State Legislative Day, the final day to make a reservation is Sunday, Jan. 7.

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 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. A special reception will also be held for emerging leaders in the banking industry, and the Governor is scheduled to speak regarding the importance of banks on Main Street. 

To reserve a hotel room, contact the Ramkota Hotel at 605.224.687. See the complete agenda and register to attend the State Legislative Day. 

2018 South Dakota Bank Directory Now Available

The SDBA’s 2018 South Dakota Bank Directory is now available. The South Dakota Bank Directory provides detailed information on all South Dakota banks, including addresses, telephone and fax numbers, important contact names and additional pertinent information. The directory also contains information on the SDBA, banking associations, regulatory agencies, endorsed vendors, associate members and South Dakota officials.

All SDBA member banks and branches will receive one complimentary directory. Associate members will receive a complimentary directory when they pay their 2018 membership dues.

Additional copies are available for purchase. The member cost is $30 plus tax for a single copy, or $25 each plus tax for multiple copies. The non-member cost is $45 plus tax for a single copy, or $40 each plus tax for multiple copies. Orders can be placed online or contact the SDBA at 800.726.7322.

Question of the Week

Question: Do risk-based pricing notices have to be provided to applicants who are denied?

Answer: No—if an application is denied and an adverse action notice is provided, a risk-based pricing notice or exception notice is not required. See Regulation V, section 1022.74(b):

(b) Adverse action notice. A person is not required to provide a risk-based pricing notice to the consumer under §1022.72(a), (c), or (d) if the person provides an adverse action notice to the consumer under section 615(a) of the FCRA. https://www.ecfr.gov/cgi-bin/text-idx?SID=ae9bcefcc4371b9c2792cf27349a0175&mc=true&node=se12.8.1022_174&rgn=div8

Section 1022.72(a) of the regulation specifies when the bank generally must provide a risk-based pricing notice to a consumer applying for credit, which is subject to the exceptions set out in section 1022.74.7.

• Tuesday, Jan. 9, 2018, 10-11 a.m. CT
• Thursday, Jan. 11, 2018, 1-2 p.m. CT

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.