SDBA eNews

February 8, 2018

Bankers Meet with Neel Kashkari in Pierre

Photo of Neel KashkariSouth Dakota bankers today in Pierre had the chance to share with Federal Reserve Bank of Minneapolis President Neel Kashkari what they are currently seeing in their local economies and how those conditions are impacting their banks and their clients. Kashkari met with bankers this morning prior to holding a Town Hall Forum open to the public at 8 a.m. at the Ramkota Hotel in Pierre. 

"The tax change was probably one of the biggest surprises of the year, and not in terms of the fact that they did it, but it seems like it has led to a lot of optimism and enthusiasm," Kashkari told bankers. "Now whether that enthusiasm then translates into more investment and more expansion, I am interested in hearing what you are all seeing."

Discussions at the meeting with bankers and the Town Hall Forum included workforce availability, attracting and retaining qualified workers especially in more rural areas of the state, the lack of new bank charters in the country since the recession, regulatory challenges for small banks and the current ag economy.

"I hear this a lot, almost everywhere I go around our district. I always ask people and they say, 'We can't find workers, we can't find skilled workers especially.' And I say, 'Well, first of all, are you raising wages?' Often times the answer is no. And then I say, 'Well you want more of something, well guess what, you are going to have to pay more for it. It is supply and demand in the market.'"

The two morning meetings which bankers attended were part of a broader itinerary that also included 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.

South Dakota Banks Make a Difference in Our Communities

South Dakota Banks Make a Difference ProjectThe SDBA unveiled the latest results of its Banks Make a Difference Project during its State Legislative Day yesterday in Pierre. Copies of the promotional handout were provided to all attendees and to all state legislators. Copies will also be mailed to all member banks and branches.

Each January, the SDBA surveys its member banks and collects data on the importance of banks to their local communities and to the state as a whole. The annual project is just a glimpse of how banks work every day to help South Dakotans grow and prosper.

The document is a great tool that banks can use to promote all of the things they do for their communities. Banks are encouraged to use the document in their promotional efforts, make copies as needed and link the document on their websites. Download a high resolution copy for printing.

If you have questions about the survey or if you need the handout in a different format, contact Alisa DeMers, SDBA, at 800.726.7322 or 605.224.1653.

SDBA Seeks Officer Candidates

Are you interested in becoming an officer of the South Dakota Bankers Association?

SDBA officers include the chairman, chairman-elect, vice chairman and immediate past chairman. The SDBA is currently seeking people who are interested in running for the vice chairman position, which will be elected at the SDBA Annual Convention on June 12, 2018, in Fargo. 

The current chairman-elect, Karl Adam (First Dakota National Bank, Pierre), will automatically assume the chairman position on June 12. The current vice chairman, Shawn Rost (First Interstate Bank, Rapid City), will be eligible to run for chairman-elect. The position of vice chairman will be up for election. Current Chairman Dave Rozenboom (First PREMIER Bank, Sioux Falls) will automatically become the immediate past chairman.

If you are an executive officer of any SDBA member bank, you are eligible to run for vice chairman. If you are interested in running for the position, contact a member of the nominating committee for more information and submit a letter of intent to SDBA President Curt Everson at [email protected] or by mail prior to the SDBA Annual Convention.

FASB Approves ABA-Supported Tax Reform Accounting Proposal

The Financial Accounting Standards Board yesterday approved a highly-anticipated proposal for adjusting regulatory capital balances that were affected by the new tax reform law, an issue that was first raised by ABA in a letter to FASB in December. Companies will be able to apply the final standard--which is expected to be issued publicly in the coming days--to their 2017 reporting results.

Under current tax accounting, the reductions of deferred tax assets and liabilities are recorded entirely within net income, including those applying to items in accumulated other comprehensive income such as unrealized gains and losses on available-for-sale securities. As a result, not only are net income and regulatory capital affected, but this treatment also creates onerous operational burdens to track the related amounts in the future.

While the new standard will not change the impact to net income, the proposed adjustment between AOCI and retained earnings will allow ending regulatory capital to be appropriately stated and also avoid onerous operational requirements to keep track of the amounts that would have been “stranded” within AOCI. ABA and all 52 state bankers associations previously supported the proposal, noting that it offers “a good operational solution.” For more information, contact ABA's Mike Gullette, Josh Stein or John Kinsella

Appraisal Qualifications Board Adopts Proposal to Address Appraiser Shortage

The Appraisal Qualifications Board announced last Thursday that it will adopt a proposal to change the qualification criteria for real property appraisers. ABA--which has long raised concerns about the shortage of appraisers, particularly in rural areas--supported the proposal, noting in previous comments that it “presents workable solutions that will keep the industry viable with improved residential licensing criteria, while maintaining high certification standards.” 

Effective May 1, the AQB will 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 from 2,000 to 1,000 for licensed appraisers and 2,500 to 1,500 for certified appraisers. ABA believes that these changes are an important step toward encouraging new entrants into the profession and addressing the appraisal issues currently facing the industry. View the proposal. For more information, contact ABA's Sharon Whitaker

Bankers, ABA Staff Meet with OCC on CRA Modernization

A delegation of 15 ABA member bankers met with senior OCC staffers on Tuesday to present ideas for modernizing the regulations that implement the four-decade-old Community Reinvestment Act. The ideas reflected recommendations previously made in the white paper on CRA reform that ABA issued in December--with a focus on recognizing the full spectrum of community investment work by banks and ensuring that CRA rules do not impose inadvertent burdens on such work. The participating banks represented a wide variety of asset sizes and business models. 

In recent months, the OCC has taken the lead on updating the decades-old regulatory and supervisory framework for CRA. As part of this initiative, the agency expects to issue a formal request for public input soon. Read ABA's white paper. For more information, contact ABA's Krista Shonk

ABA Seeks Stories, Visual Content for America's Banks Campaign

ABA is revising the website for its America’s Banks campaign, which communicates a positive image about banks and the important role they play in economic growth and job creation. For the new website, the association hopes to include real-life stories of what banks are doing for their customers and in their communities.

Examples of material that helps communicate this message may include thank-you notes, customer testimonials, video footage, photos and anecdotes about the difference that banks and their employees make for both business and retail customers. Banks that wish to participate are asked to submit content by Feb. 16. Submit content (click on the "Upload via FileDrop" button and type "Amy Wertlieb - America's Banks" in the message box). For more information, or to submit materials separately, contact ABA's Amy Wertlieb

Scholarship Available for GSB Human Resource Management School

One scholarship to attend the Graduate School of Banking-Wisconsin's Human Resource Management School will be awarded to a South Dakota banker. The recipient will receive a $1,050 discount on registration. The school, which will be held April 15-20, 2018, is designed specifically for HR professionals in the financial industry and addresses today’s most critical HR issues.

The deadline to apply for the Human Resource Management School scholarship is Feb. 26, and the deadline to apply for the school is March 15. Both the scholarship and school applications are available online. Questions, contact the SDBA's Halley Lee at 800.726.7322 or via email.

Compliance AllianceQuestion of the Week

Question: On a business loan application, do we need to make a decision or send out a denial within 30 days to be in compliance with regulations?

Answer: In regards to the timeline on making a credit decision, it depends on the size of the business. If the business had less than $1m in gross revenues, then you would need to follow the time constraints in (a)(1)--30 days and 90 days. If the gross revenues were more than $1m, then you would only need to notify the applicant in a "reasonable" time.

Additionally for businesses with gross revenues of more than $1m, the statement of reasons for adverse action is required only if the business applicant makes a written request within 60 days of notification of the creditor. This is also in contrast with the consumer applicant where a statement of reasons must be given with the notification of adverse action.

Finally, many banks have chosen to follow the consumer applicant guidelines for the sake of uniformity. This is absolutely acceptable. 

 For reference, see: 
12 CFR § 1002.9(a)(3):

(i) With regard to a business that had gross revenues of $1 million or less in its preceding fiscal year (other than an extension of trade credit, credit incident to a factoring agreement, or other similar types of business credit), a creditor shall comply with paragraphs (a)(1) and (2) of this section, except that:

(A) The statement of the action taken may be given orally or in writing, when adverse action is taken;

(B) Disclosure of an applicant's right to a statement of reasons may be given at the time of application, instead of when adverse action is taken, provided the disclosure contains the information required by paragraph (a)(2)(ii) of this section and the ECOA notice specified in paragraph (b)(1) of this section; 

(C) For an application made entirely by telephone, a creditor satisfies the requirements of paragraph (a)(3)(i) of this section by an oral statement of the action taken and of the applicant's right to a statement of reasons for adverse action.

(ii) With regard to a business that had gross revenues in excess of $1 million in its preceding fiscal year or an extension of trade credit, credit incident to a factoring agreement, or other similar types of business credit, a creditor shall:

(A) Notify the applicant, within a reasonable time, orally or in writing, of the action taken;

(B) Provide a written statement of the reasons for adverse action and the ECOA notice specified in paragraph (b)(1) of this section if the applicant makes a written request for the reasons within 60 days of the creditor’s notification.”

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

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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.