SDBA eNews

January 18, 2018

Federal Reserve Bank of Minneapolis President to Meet with Bankers in Pierre

Photo of Neel KashkariSouth Dakota bankers are invited to a bankers-only meeting with Neel Kashkari, president of the Federal Reserve Bank of Minneapolis, on Thursday, Feb. 8, in Pierre to discuss local and regional business conditions. The meeting will be held at 7:30 to 8 a.m. at the Ramkota Hotel & Conference Center in Pierre and in conjunction with the SDBA's State Legislative Day on Feb. 7.

Kashkari is looking for bankers to provide a sense of business conditions in the region and state which, in turn, helps inform the Fed’s monetary policy given his presence on the Federal Open Market Committee, where the Federal Reserve sets monetary policy. Kashkari will also save some time at the end of the meeting to answer a few questions from bankers, and any remaining questions can get the conversation going at a Town Hall Forum that is open to the public at 8 to 9 a.m.

When the Minneapolis Fed visits a local community, it does so to learn about that community and its economy, but also to hear about statewide issues and activity. These two meetings are part of a broader itinerary that also includes listening sessions with other local business leaders, elected officials (including Gov. Daugaard) and tribal leaders from across the state. All of this is to help familiarize Kashkari with local communities that make up the Ninth District and give him a better understanding of what drives each unique local and state economy.

The Minneapolis Fed is charged with understanding current business conditions in the Ninth District, which includes South Dakota as well as Montana, North Dakota, Minnesota and portions of Wisconsin and Michigan. 

  • Those interested in attending the bankers-only meeting at 7:30 a.m. should contact the SDBA's Halley Lee, which will also automatically register you for the Town Hall Meeting at 8 a.m.
  • Those interested in attending only the Town Hall Meeting at 8 a.m. should register online
  • If you haven't yet registered for the SDBA's State Legislative Day on Feb. 7, click here.

ABA Supports Appraisal Qualifications Board Proposal to Address Appraiser Shortage

In a comment letter to the Appraisal Qualifications Board last week, the ABA offered its support for a proposal by AQB to change the qualification criteria for real property appraisers--a proposal that came after intense advocacy by ABA and bankers seeking solutions to the rural appraiser shortage. ABA noted that “the current proposal presents workable solutions that will keep the industry viable with improved residential licensing criteria, while maintaining high certification standards as the industry demands.”

ABA fully supported AQB’s plans to reduce the college-level education degree requirements for licensed residential and certified residential appraisers, create an alternative track for licensed residential appraisers to become certified without obtaining a bachelor’s degree and reduce the number of field hours needed to obtain certification. These proposed changes would be an important step toward encouraging new entrants into the profession and addressing the appraisal issues currently facing the industry, especially in rural areas, ABA said.

The association also recommended that the AQB modify the proposal to allow appraisal review work to count toward the training experience hours needed for certification (but recommended that they amount to no more than 25 percent of the required hours). Offering credit for appraisal review work would incentivize more banks to bring appraisers into the profession as employees, ABA added. Read ABA's comment letter. For more information, contact ABA's Sharon Whitaker

CFPB to 'Reconsider' Small-Dollar Lending Rule

The Consumer Financial Protection Bureau Tuesday said it would begin a rulemaking under which the CFPB “may reconsider” its rule regarding short-term, small-dollar loans. Tuesday was the rule’s effective date, although most provisions do not require compliance until Aug. 19, 2019.

Finalized in October 2017, the rule imposes an ability-to-pay test on 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. The rule also includes provisions limiting attempts to withdraw payment from borrowers’ accounts, but includes an exception for banks that hold the borrower’s account and attempt to withdraw payment without assessing an NSF or overdraft fee.

As ABA advocated, the bureau exempted entirely small-dollar loans from lenders that made fewer than 2,500 of these loans in each of the current and previous years and for which these loans account for less than 10 percent of revenues--a provision that protects banks’ flexibility to make small-dollar “accommodation loans” for their customers. In another win for the banking industry, the bureau exempted from the rule’s ability-to-repay test installment loans of more than 45 days, signaling the bureau’s interest in encouraging bank participation in this market. Read more. For more information, contact ABA’s Jonathan Thessin

Pennsylvania Banker Advocates for Stronger SBA Lending Programs

The Small Business Administration’s loan programs play a vital role in ensuring that the nation’s community banks are able to meet the credit needs of their small business customers, Pennsylvania banker Patricia Husic said yesterday, testifying on behalf of ABA at a House Small Business Committee hearing. Husic is president and CEO of Centric Bank in Harrisburg, Pa., and an ABA board member. 

“The SBA programs are an important part of business lending for many banks,” Husic said, citing several examples of Centric Bank customers who have benefited from the SBA’s 7(a) loan program, including an Army veteran who wanted to open a gun range that would provide off-duty police training, a restaurant manager who was able to purchase his own business and a minority-owned construction business seeking to expand. “They help fill a critical gap, particularly for early-stage businesses that need access to longer-term funds,” she said. “The guarantee helps reduce the risk and capital required for banks and facilitates loans that might never have been made without this important level of support.” 

Husic noted ABA’s support for H.R. 4743, a bipartisan bill introduced by Reps. Steve Chabot (R-Ohio) and Nydia Velazquez (D-N.Y.) that would strengthen the SBA’s oversight and allow the program’s maximum lending authority to be increased for general business loans up to 115 percent of the fiscal year’s limit. If enacted, this legislation would grant additional certainty to lenders that funds will be available and help ensure the continued safety and soundness of the SBA loan programs, she said. 

Additional changes to the SBA’s 7(a) lending program could further improve its overall effectiveness, Husic added. These changes include enabling consolidation or refinancing of SBA loans by the same lender; providing a carve-out for small portfolio lenders under $1 billion in assets that would allow them to obtain a guaranty to avoid regulatory loans-to-one-borrower limitations; improving the role of subcontractors in the liquidation process; facilitating liquidation of multiple loans to a borrower; and allowing a seller of a business to remain as an employee for up to two years when selling a business. Read Husic's testimony

Banker Op-Ed Salutes Bipartisan Reg Reform Effort

An op-ed by two North Dakota bankers on Monday welcomed S. 2155, the bipartisan regulatory reform bill in the Senate, and praised Sen. Heidi Heitkamp (D-N.D.) for her leadership role in moving it forward.

“Despite the political noise and partisan bickering from Washington, something very unusual just happened in the U.S. Senate. North Dakotans should know about it,” wrote ABA members Christine Obenauer and Gary Petersen in the daily Forum of Fargo-Moorhead. “Why should you care about this rare moment of bipartisan unity? Because the commonsense, targeted changes included in the bill will allow North Dakota banks to better serve our customers and communities.”

Obenauer is president and CEO of Union State Bank, Hazen, N.D., and Peterson is chairman of Cornerstone Bank in Fargo. They praised Heitkamp for forging a deal that would expand customer access to mortgages and business loans. “North Dakotans should join with people across the country to support this bipartisan approach to solving problems and Heitkamp and other lawmakers who chose to get some ordinary Congressional work done, rather than simply following a partisan pack,” they wrote. Read the op-edTake action on S. 2155

GSB Webinar to Provide Meltdown and Spectre 101

Meltdown and Spectre 101 vulnerabilities have taken a mainstage in the news as security experts share concerns around data security, performance impacts and missing patches. While there seems to be wide spread panic around these two vulnerabilities, their complexity to understand and exploit is relatively high. More of the concern likely comes from the style of vulnerability, an issue rooted deeply into the hardware behind most desktop, server, laptop and mobile phone.

Join the Graduate School of Banking at Wisconsin for the webinar "Meltdown and Spectre 101" to understand the basics of these vulnerabilities, next steps to mitigate risks and the latest news on the risks. The webinar will be held Monday, Jan. 29, at 10 a.m. CT. The presenter is Chad Knutson, co-founder and senior information security consultant for SBS CyberSecurity, a premier cybersecurity consulting and audit firm dedicated to making a positive impact on the banking and financial services industry. Knutson has also served as president of the SBS Institute since 2013.

This time-sensitive, hot topic seminar is offered at a discounted registration fee of $159. Learn more and register.

Webinar to Help Tribal Economies Plan for their Future

The Federal Reserve Bank of Minneapolis' Center for Indian Country Development and the University of Minnesota Extension will hold the webinar "Helping Tribal Economies Plan for their Future: Economic Development Resources for Indian Country on Wednesday, Jan. 24, at 2 p.m. CT. 

Participants will learn about resources and programs from the University of Minnesota Extension and Center for Indian Country Development (CICD) to help your community conduct strategic plans or decide how to invest in economic development. This webinar and discussion will share:

  • The recent CICD analysis of data on reservation-based businesses--the number of establishments and jobs.
  • On The Map--U.S. Census tool for tribes to understand reservation employment and commuting patterns.
  • UMN- Extension's Economic Impact Analysis Futures Program--model to understand how your tribe's different industries impact the local/regional economy.

Register for the webinar

Tribal Relations Workshop To Be Held on Working in Indian Country

A one-day workshop "Working In Indian Country: Building Successful Business Relationships with American Indian Tribes" will be held March 7 at Crazy Horse Memorial. The workshop is being offered in partnership with the Association on American Indian Affairs and LDK Associates, LLC (Working In Indian Country).  

This interactive professional development workshop is designed for federal, state and local government officials and business leaders who have a need, or are required, to develop working relationships with American Indian tribes and organizations. The process of developing effective working relationships with American Indian tribes and organizations requires knowledge and understanding of American Indian history, organizational protocol, trust and relationship building principles, communication and fostering a collaborative environment. The workshop will be instructed by Larry Keown, author of "Working In Indian Country."

The registration fee is $325 and includes a copy of Keown's book. Learn more. Register to attend.

Compliance AllianceQuestion of the Week

Question: For private flood insurance, is the bank required to accept a policy written by an insurance company not licensed with the state in which the property is located?

Answer: For residential properties, no. For nonresidential commercial properties, possibly if the insurance company meets the requirements of the second option. 

The Biggert-Waters Act requires banks to accept private flood insurance if the policy meets the elements in the definition, which includes that the insurance provider be "licensed, admitted, or otherwise approved to engage in the business of insurance in the State or jurisdiction in which the insured building is located, by the insurance regulator of that State or jurisdiction." Nonresidential commercial properties, however, may provide coverage by an insurance company that is "recognized, or not disapproved, as a surplus lines insurer by the insurance regulator of the State or jurisdiction where the property to be insured is located." This second option for nonresidential commercial properties applies to "policies of difference in conditions, multiple peril, all risk, or other blanket coverage."

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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.