SDBA eNews

September 20, 2018

New Deputy Director at South Dakota Division of Banking

Michael Dummer has been named the new deputy director at the South Dakota Division of Banking.

Dummer replaces Deputy Director John Crompton, who retired Aug. 1 after more than 30 years of dedicated service to the department.

Dummer, formerly the training director and a senior examiner, was appointed deputy director on Aug. 7. Dummer joined the department in May 2006 and is a certified senior bank examiner. He has a bachelor’s degree from South Dakota State University in Brookings.

“I am confident that Mike will provide strong leadership in his new role,” said Director of Banking Bret Afdahl in an email announcing the promotion. “Please join me in welcoming him to his new position and thanking John for his dedicated service.”

SDBA Seeks Feedback on SDBanker Magazine, Member Communications

The SDBA would like to learn your thoughts on the SDBanker Magazine and our member communications.

Published monthly by the SDBA, SDBanker Magazine is dedicated to enhancing the state's banking profession by providing useful and timely information on important events and trends in the banking industry. The SDBA wants to know what readers like and dislike about the monthly magazine, in what format they read the magazine, how often they would like to receive the magazine, and how they prefer to get their information from the Association.

The survey will take only a few minutes to complete. Those who complete the survey by Friday, Sept. 28, 2018, will be entered for a chance to win a $100 Visa gift card. Take the survey.

ABA Supports Proposed CECL Effective Date Change, Calls for Cost-Benefit Analysis

In a comment letter to the Financial Accounting Standards Board on Tuesday, ABA offered support for a proposal that would allow non-public business entities to implement CECL on Jan. 1, 2022. (Non-PBEs are currently required to implement the standard by Dec. 31, 2021.) ABA had previously identified challenges with the current effective date for non-PBEs in a recent white paper and welcomed the proposed extension, noting that the change in the implementation date for non-PBEs will effectively afford the qualifying entities an additional year to implement CECL, consistent with the original intent of the board. 

While ABA fully supported the proposal, this type of correction indicates that the CECL standard was issued without sufficient due diligence, and that CECL will have far-reaching implications for banks and consumers that were either unintended or not sufficiently understood when the standard was issued. ABA called on FASB to undertake and share a cost-benefit analysis of the CECL standard to address some of the confusion surrounding the cost and overall effect the standard will have on the industry.

The SDBA will offer the seminar “CECL From End to End: Discussion, Data Decisions” on Tuesday, Sept. 25, in Sioux Falls. This half-day CECL seminar will provide in-depth discussion of how to prepare for your bank’s CECL implementation.  Learn more and register to attend.

Regulators Issue Proposed Rule Regarding Treatment of HVCRE

As expected, the financial regulatory agencies on Tuesday issued a proposed rule implementing a provision of S. 2155, the new regulatory reform law, regarding the treatment of high volatility commercial real estate. The new law limits the exposures subject to a 150 percent risk weight to only those high-volatility commercial real estate loans that fall under the statutory “HVCRE ADC” definition. 

The proposal defines an HVCRE ADC loan as one that is secured by land or improved real property; has the purpose of providing financing to acquire, develop or improve the real property such that the property would become income producing; and is dependent upon future income or sales proceeds from, or refinancing of, the real property for repayment of the loan. In addition to updating the definition, the proposal also provides additional clarity on the risk-weighting of HVCRE loans. 

Comments on the proposal will be due 60 days after publication in the Federal Register. ABA intends to submit comments and is currently in the process of forming a working group of member bankers to collect feedback on the regulators' proposed questions that will be incorporated into the comment letter. Read the proposal. For more information or to join the working group, contact ABA's Hugh Carney or Sharon Whitaker

NACHA Greenlights Same-Day ACH Enhancements

NACHA has approved three new rules that will expand the capabilities of same-day ACH for banks and bank customers, including expanded hours and a higher per-transaction dollar limit. 

The first rule--which takes effect Sept. 18, 2020 -- will expand same-day ACH by two hours every business day through the creation of a new same-day ACH processing window by the two ACH network operators. The second rule will increase the same-day ACH per-transaction limit to $100,000 and takes effect March 20, 2020. 

Finally, the third rule NACHA approved will enable same-day ACH funds to be available faster; funds from same-day ACH credits processed in the existing first window will be made available by 1:30 p.m. local time. Funds from certain other ACH credits will be available by 9 a.m. local time by the receiving bank. This rule takes effect Sept. 20, 2019. Read more

FDIC Seeks Comment on the Treatment of Reciprocal Deposits

The FDIC last Thursday issued a proposed rule to implement Section 202 of S. 2155, the new regulatory reform law. Under the proposed rule, well-capitalized and well-rated institutions would not be required to treat reciprocal deposits as brokered deposits as long as they were less than 20 percent of a bank’s total liabilities or $5 billion. Institutions that are not both well capitalized and well rated may also exclude reciprocal deposits from their brokered deposits under certain circumstances. 

This rulemaking is the first of a two-part effort the FDIC plans to undertake to revisit the brokered deposit rules. For the second part, the FDIC plans to seek comments later this year on the agency’s overall brokered deposit and rate cap regulations. 

ABA has long called for modernizing these regulations, noting that they have become increasingly out of step with the ways banks now interact with their customers under new technology and bank business models. Comments on the proposed rule will be accepted for 30 days after publication in the Federal Register.

Registration Open for SD Trust Association Fall Forum

Registrations are currently being accepted for the South Dakota Trust Association Fall Forum, to be held Oct. 16-17 in Sioux Falls. Produced in cooperation with ABA, the event will examine a wide range of topics relating to South Dakota and the broader trust industry.

Sessions topics on this year’s program include creating income and preserving principle in a rising interest rate environment; bitcoin and cryptocurrency; challenges and opportunities of growing the trust industry in South Dakota; minimizing fiduciary risk and litigation; and IRAs. Register now

SDBA to Hold Annual Security Seminar

The SDBA will offer its annual Security Seminar on Oct. 30 in Sioux Falls at the Hilton Garden Inn--Sioux Falls Downtown.

This well-rounded seminar focuses on a range of issues of concern to security officers and directors, operations managers, auditors, HR directors, legal staff, loan officers, disaster recovery managers, collection staff and fraud investigators. 

Topics include: what you are responsible for, the dangers of social engineering, 15 errors to avoid when conducting internal investigations, and board reporting--the security perspective. 

The hotel room block for the seminar will be released Oct. 4. Learn more and register.

Compliance Alliance


Question of the Week

Question: My financial institution is looking at a participation to purchase. We haven’t done this in a long time, especially after the beneficial ownership rule has been effective. The borrowing entity is an LTD partnership. As only the participant, what do we need to collect for beneficial ownership?

Answer: Participation loans are technically exempt from the beneficial owner rule. The bank should obtain, however, some type of certification or assurance that the originating bank collected the beneficial owner information.

2. Are loan participations purchased from third parties and loans purchased from a car dealer or mortgage broker within the exclusion from the definition of “account” for loans acquired through an acquisition, merger, purchase of assets, or assumption of liabilities? Yes, this exclusion is intended to cover loan participations purchased from third parties and loans purchased from a car dealer or mortgage broker. If, however, the bank is extending credit to the borrower using a car dealer or mortgage broker as its agent, then it must ensure that the dealer or broker is performing the bank’s CIP. PAGE 2:

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