SDBA eNews

March 22, 2018

SDBA, Banks Support SD Ag Foundation's $4 Million Challenge

On National Ag Day on Tuesday, the South Dakota Agricultural Foundation accepted a five-year challenge to raise $4 million for future support of South Dakota’s agriculture industry. Funds raised by the SD Ag Foundation will be matched by an additional $1 million in funds from the State of South Dakota and South Dakota Community Foundation.

“We take pride in agriculture here in South Dakota, and to see SD Agricultural Foundation’s commitment to invest in the future of agriculture is commendable. This challenge will ensure growth in the industry, while highlighting the need for philanthropy in agriculture,” said Gov. Dennis Daugaard. 

“We’ve seen a lot of excitement around the South Dakota Agricultural Foundation and its initiatives this last year,” said Stephanie Judson, president, South Dakota Community Foundation. “We hope our challenge grant encourages others to join us in supporting a very vital part of the state’s heritage and economy.”

In support of the SD Ag Foundation, POET announced its commitment of $250,000 towards the one-to-four matching challenge. Other commitments toward the challenge goal include $25,000 from First Interstate Bank, $5,000 from the South Dakota Bankers Association, $5,000 from Riverview Farms, and $1,000 from Nathan and Kristin Jensen. Founding donors who previously made donations include First Dakota National Bank, Dacotah Bank, BankWest and American Bank & Trust.

Since its inception in 2016, the SD Ag Foundation has raised close to half a million dollars. This year, the Foundation is supporting 23 organizations involved in youth ag education across South Dakota with grants totaling $34,165. 

The SD Ag Foundation is an independent, industry-led nonprofit composed of key leaders in the South Dakota ag industry. The Foundation is committed to cultivating a culture of philanthropy that serves all South Dakota ag organizations and investing in the future of South Dakota agriculture through financial support, human resources and capital. Learn more. Or contact the Foundation's Chris Maxwell.

Fed Hikes Rates, Signals Faster Pace of Increases

As expected by analysts, the Federal Open Market Committee announced a quarter-point rate hike at its meeting concluded yesterday. The Fed also signaled an increased pace of rate hikes this year and in 2019 as the economy heats up faster than previously expected and inflation nears the Fed's target.

The committee voted unanimously to raise the federal funds rate 25 basis points to a range of 1.5 to 1.75 percent. While remaining committed to a "gradual" pace of increases, the committee noted that it expects inflation to "move up in coming months and to stabilize around the committee's 2 percent objective over the medium term." The committee also expects the economy to grow at 2.7 percent in 2018 and 2.4 percent in 2019 before reverting a longer-run rate below 2 percent.

As a result, the economic projections released by the committee revealed a split among FOMC members on hiking interest rates twice more or three times more this year. They also projected three, rather than two, increases in 2019. Read the FOMC statementView the FOMC projections

FDIC Board Approves Appraisal Threshold Increase for CRE Transactions

The FDIC board of directors yesterday approved a final rule to raise the appraisal thresholds for commercial real estate transactions from $250,000 to $500,000--an increase from the original proposal, which called for the appraisal threshold to be raised to $400,000. The threshold for loans secured by one-to-four family residential properties will remain at $250,000; however, residential construction loans secured by multiple one-to-four residential properties would be considered CRE transactions. The final rule must now be approved by the Federal Reserve and the OCC; once approved by the agencies, it will be effective 30 days after publication in the Federal Register.  

ABA has long supported an increase to the CRE appraisal threshold, noting in previous comments that doing so would provide immediate relief to banks that are currently struggling with a shortage of certified appraisers--particularly in rural areas--and long appraisal turnaround times. Read more. For more information, contact ABA's Sharon Whitaker

SBA Seeks Comment on Borrower Eligibility for 7(a), 504 Programs

The Small Business Administration today issued an advance notice of proposed rulemaking to seek public input on establishing size standards for businesses eligible for its 7(a) and 504 loan programs. The agency invited suggestions on data sources and other information it should evaluate in developing a permanent alternative size standard under the Jobs Act and assessing its effects.

SBA has been relying on an interim rule setting a temporary alternative size standard at $15 million in tangible net worth and $5 million in average net income "because of the difficulty of obtaining relevant data," the agency said.

"A review of SBA’s internal data on its business loan programs shows that the temporary statutory alternative size standard may have enabled some small businesses that were not otherwise eligible under their industry based size standards to receive 7(a) or 504 loans," added SBA. "However, SBA’s internal data systems for its business loan programs lack the necessary detailed electronic data that would allow for an assessment of the exact impact of the interim rule on small business loan applicants." Read the ANPR

GAO: CRA Statute Could Be Expanded to Include Credit Unions

The Government Accountability Office last week released a report outlining recommendations to further incentivize financial institutions to provide banking services and small-dollar consumer loans in low- to moderate-income communities, including extending the Community Reinvestment Act framework to credit unions.

Under the current CRA framework, evaluations of small-dollar, non-mortgage consumer loans are not required for all banks, and are typically only conducted “if consumer lending is a substantial majority of the lending or a major product of the institution, which generally is not the case across all institution types,” GAO noted. As the Treasury Department undertakes a review of the CRA, GAO recommended that it consider modifying the tests conducted as part of the CRA exam to focus more on how institutions are offering these products and expanding the scope of entities examined to capture more types of institutions, including credit unions and other nonbank entities.

ABA has long called for credit unions to be required to demonstrate through measurable standards that they are meeting their service obligations. In a white paper last year on CRA modernization, ABA recommended that CRA-like requirements be applied to credit unions and other financial firms. Read the GAO reportRead ABA's white paper

Still Time to Register for SDBA's New Account Documentation & Compliance Seminar

Seats are still available for the SDBA's New Account Documentation and Compliance Seminar on April 4 in Sioux Falls at the Hilton Garden Inn South. The seminar will be taught by Suzette Jones, CFP®, managing member of Training Resources Consulting, L.L.C., Houston, Texas.

This full-day workshop teaches important new account opening procedures and compliance requirements focusing on vital information for every type of new account. The seminar manual is customized to South Dakota law and has become known as the "technical reference handbook" for new account departments across the country.

With more than 40 years of experience in the financial industry, Jones has focused her technical expertise on new accounts risk management and investment management. She served as an executive vice president at a $50 billion financial organization where she was an active member of the AML, BSA, personal/corporate risk and non-bank product risk committees. Jones brings technical information to life with her engaging training style and in-depth knowledge. 

Learn more and register to attend.

Bankers Invited to Participate in ABA's ADA Website Accessibility Survey

ABA has launched a survey to collect data on the Americans with Disabilities Act website accessibility demand letters that many banks have received over the past several years. The survey will help ABA in its cross-sector effort with other trade associations to highlight the extent of the problem to Congress and urge lawmakers to weigh in on the issue.

The survey consists of six short questions and should take no more than 10 minutes to complete. The survey closes on March 30, and all responses will be kept confidential. Electronic invitations to complete the survey were sent to more than 5,000 ABA member and non-member bank CEOs. If your institution did not receive an invitation, contact ABA’s Toni Cannady

"Working In Indian Country" Workshop To Be Held in Pierre

The professional development workshop "Working in Indian Country: Building Successful Business Relationships with American Indian Tribes" will be held May 17 in Pierre. The workshop is open to local, state and federal government officials and business leaders who have a desire or are required to work with American Indian tribes.

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. Workshop participants will acquire critical knowledge through interactive lecture, group discussion and video interviews of tribal representatives. The workshop is instructed by Larry Keown, author of "Working In Indian Country."

The workshop is sponsored by the Association on American Indian Affairs and LDK Associates, LLC (Working In Indian Country). The workshop will be held from 8:30 a.m. to 4:30 p.m. at the Pierre Area Chamber of Commerce. The cost is $325. Learn more and register. Question, email Larry Keown.

Compliance AllianceQuestion of the Week

Question: For purposes of MLA safe harbor check, does the bank have to determine the covered borrower status exactly at application or 30 days before?

Answer: No. The bank may qualify for the safe harbor if it timely checks the status either at the time the consumer either initiates the transaction or submits an application to establish an account, or anytime during a 30-day period of time prior to either of these. The check may not be done earlier than this 30-day window, however. See Question #20 from the amended interpretive rule, here:

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.