2019 South Dakota Legislature Now In Session

Photo of State Capitol The 2019 South Dakota Legislature opened Tuesday, Jan. 8, with Gov. Noem giving her State of the State Address.

Bankers can stay current on legislative issues of importance to the banking industry by reading the SDBA Legislative Update and Bill Watch. The Legislative Update is a recap of weekly key legislative action. The Legislative Bill Watch tracks the status of bills the SDBA is monitoring. Both publications are posted online on Fridays during session. To sign up for email notifications when the publications are posted, contact Alisa Bousa.

Don't forget to make plans to attend the SDBA State Legislative Day on Wednesday, Feb. 13, 2019, in Pierre. This year's event will include events specifically for emerging bank leaders. Learn more and register to attend.

Bank Midwest CEO Mary Kay Bates Named BankBeat's Banker of the Year

Photo of Mary Kay Bates Mary Kay Bates, CEO of Bank Midwest in Spirit Lake, Iowa, has been named 2019 Banker of the Year by BankBeat.

Bates grew up in the restaurant business, where she learned a work ethic that has served her well throughout her banking career. She’s been at Bank Midwest, which has nearly $1 billion in assets and operates 11 offices in three states including South Dakota, since the mid-1990s. She hasn’t just witnessed the bank’s many successes; she’s been integral to them.

Bates is the second female banker to be recognized as a Banker of the Year since the program began in 1989. With her selection, Bank Midwest becomes the first bank to have two Banker of the Year honorees selected in different years. Bank Midwest Board Chair Steve Goodenow was the magazine’s 2011 Banker of the Year.

BankBeat thanks Bell Bank for its sponsorship of this recognition program. Read BankBeat's story on Bates.

T. Denny Sanford Donates $55 Million to Children's Home Society

Children’s Home Society, South Dakota’s oldest human services, nonprofit organization, announced a $55 million donation from philanthropist T. Denny Sanford. The generous gift will transform CHS’s ability to assist children and adults in need and ensure the organization has adequate resources for decades to come.

“The services provided by Children’s Home Society are invaluable,” Sanford said. “The organization cares for those who require the most care of all--our young people and those who are in serious danger. I hope my gift will inspire others to do what they can to support Children’s Home as it heads into its next century of service.”

Sanford has a history of supporting Children’s Home Society. Over the last two decades, the philanthropist has made several donations and often attends the organization’s annual charity events to encourage others to give as well.

“T. Denny has been a longtime friend of Children’s Home and believes in our mission of supporting the safety and well-being of children and families,” said Children’s Home Executive Director Bill Colson. “It’s with that spirit of support, he approached me and asked, ‘What is Children’s Home Society’s greatest need?’”

This initial discussion became the basis for Sanford’s gift, which will address two significant needs: expanding Children's Inn Shelter and funding staff recruitment and development. The donation to Children’s Home Society is one of several generous gifts provided by Sanford. The philanthropist is the owner of First PREMIER Bank and PREMIER Bankcard, South Dakota companies that employ nearly 2,400 people. To date, he has donated nearly $1 billion to South Dakota organizations.

Fed Proposes Rule to Harmonize Company-Run Stress Testing Requirements with S. 2155

The Federal Reserve on Tuesday issued a proposed rule that would make changes to its framework for company-run stress tests to conform with Section 401 of the S. 2155 regulatory reform law. The OCC and FDIC released similar proposals for national banks and state nonmember banks, respectively, in December.

Consistent with the law, the rule would raise the minimum asset threshold for state member banks to conduct their own stress tests from $10 billion to $250 billion. It would also generally require firms above $250 billion to conduct company-run stress tests once every other year rather than annually. Finally, it would eliminate the hypothetical “adverse” scenario from the test. Banks would still be required to test themselves against the “severely adverse” scenario, and the “severely adverse” scenario will also remain a part of supervisory stress test, the Fed noted. Comments on the proposal are due Feb. 19. View the proposal.

ABA Ads Highlight Vital Role of Banks in Communities Nationwide

With the 116th Congress now in session, ABA this week is sponsoring the Axios AM newsletter, which has an engaged audience of policy experts and influencers and is widely read in the nation’s capital. The ads highlight the positive contributions banks are making to both their local communities and the nation’s economy, which the association has documented on its newly refreshed America’s Banks website.

Starting Tuesday, ABA is also sponsoring a series spotlighting new members of Congress airing on WTOP, a top-rated local station, during drive time. The profiles will include an introduction from ABA President and CEO Rob Nichols. View and listen to the Axios ads.

Nichols to Outline 2019 Policy Goals on Free Webinar

ABA President and CEO Rob Nichols and senior members of the association’s policy team will host a free member webinar Thursday, Jan. 17, at 11 a.m. CST, giving an overview of the policy priorities, challenges and opportunities for banks in Washington this year.

Nichols will be joined by ABA Chief Policy Officer Naomi Camper and EVPs Wayne Abernathy, James Ballentine and Bob Davis to discuss the outlook for additional regulatory reform, Bank Secrecy Act/anti-money laundering reform, greater legal clarity on cannabis banking, Community Reinvestment Act modernization, FASB’s Current Expected Credit Loss standard and more. They will be prepared to answer bankers’ questions.

In addition to participating in the webinar, bankers can help shape the debate by registering now to attend ABA’s Washington Summit, April 1-3 in Washington, D.C. Register for the webinar. Register for the Summit.

In conjunction with the Summit, the ABA will hold the Emerging Leaders Forum on April 1. The ABA is offering $750 scholarships to two SDBA emerging leaders to help cover travel expenses. If you are an emerging leader interested in applying for a scholarship, contact the SDBA's Halley Lee or call 605.224.1653.

Register to Attend National School for Beginning Ag Bankers School

The SDBA will hold the 2019 National School for Beginning Ag Bankers on June 24-27 at Black Hills State University in Spearfish. The purpose of the school is to prepare ag bankers to make better loan decisions.

The school is designed to train in all facets of agricultural lending with emphasis on credit analysis, credit scoring, risk rating, problem loans and group case study. Attendees will receive personalized instruction and continual peer interaction fostered through a limited class size, case study and group exercises.

Ag bankers with zero to three years of experience should attend this school. A packet of information will be sent to each student. Included will be a pre-session assignment that needs to be completed and returned prior to the school.

The 2019 National School for Beginning Ag Bankers will be limited to the first 72 students, so register early. Learn more and register.

2019 South Dakota Bank Directory Now Available

The SDBA’s 2019 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 receive one complimentary directory. Associate members will receive a complimentary directory when they pay their 2019 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 with the SDBA's Alisa Bousa.

Question of the Week

Question: Our current practice on residential balloon mortgages is to extend the maturity date prior to the balloon period if the customer requests it prior to the balloon and the borrower meets certain conditions. This is completed with a change in terms document leaving the current amortization period the same. The examiners have reviewed the process and are OK with this. We have a customer that has approached the bank and would like to extend the maturity but would like to shorten the amortization. She currently has 13 years left, but wants the bank to shorten it to 12. I guess my concern is, do we now have to treat it as a new request because it is a change that is increasing the monthly burden, not decreasing it?

Answer: So the rules on whether a "modification" would be considered a "refinancing" for Reg. Z purposes can be found in 1026.20 here: https://www.consumerfinance.gov/eregulations/1026-20/2016-14782_20160627#1026-20

Generally speaking, if there's satisfaction and replacement, or if the bank changes the rate based on a new variable rate feature, it will be considered a refinance which would require new disclosures. And although the rule doesn't specifically say this, we also interpret that it's best practice to provide new disclosures for any increase in credit, or if the prior obligation has already matured. So if any of these are occurring, that's when a new set of disclosures should be provided--but from what you describe, it doesn't sound like any of these are happening here.

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