SDBA eNews

February 7, 2019

SDBA State Legislative Day To Be Held Next Week

Photo of State CapitolThere is still time to register for the SDBA's State Legislative Day next Wednesday, Feb. 13, at the Ramkota Hotel & Conference Center in Pierre.

The State Legislative Day is your opportunity to stay up-to-date on both state and federal legislation which could affect the banking industry and to visit with state legislators. The day will include a luncheon, session with Gov. Kristi Noem, featured speaker Naomi Camper, chance to visit with legislators at the State Capitol and an evening reception. In addition, a special reception and sessions will be held for emerging leaders.

Camper, who is the American Bankers Association's chief policy officer, will speak about the ABA’s plan for public policy advocacy in what could be a hyper-partisan, divided Congress and how the ABA is positioned to work with leadership on both sides of the aisle to find middle ground on industry priorities.

Learn more and register

SDBA Seeking Candidates for Vice Chairman

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 4, 2019, in Sioux Falls.

The current chairman-elect, Shawn Rost (First Interstate Bank, Rapid City), will automatically assume the chairman position on June 4. The current vice chairman, Steve Bumann (BankWest, Pierre), will be eligible to run for chairman-elect. The position of vice chairman will be up for election. Current Chairman Karl Adam (First Dakota National Bank, Pierre) 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.

ABA Supports Proposed Residential Real Estate Appraisal Threshold Increase

ABA on Tuesday offered support for a recent proposal by the financial regulatory agencies to raise the appraisal threshold for residential real estate transactions from $250,000 to $400,000. Under the proposal, transactions that qualify for the exemption would still need to obtain an evaluation consistent with safe and sound banking practices. The evaluation would provide an estimate of the market value of the property, but would not be required to be prepared by a state licensed or certified appraiser, and would be less detailed and costly than an appraisal.

ABA--which has long raised concerns about the time and cost of appraisals--noted that “this proposed change will help smaller community banks keep pace with the strong competitive pressure posed by growing secondary market appraisal waivers.” The association added that banks “have the risk management controls in place to manage these changes responsibly.” Read more. For more information, contact ABA's Sharon Whitaker

Latest Feature Explores How Ag Bankers Can Stay Relevant Amid Change

Technology is fundamentally reshaping the agricultural sector, but producers’ financial needs remain largely the same. A new article on the ABA Banking Journal website--a preview from the forthcoming March/April issue--explores how bankers can successfully maintain their roles as trusted advisers for the nation’s farmers and ranchers.

For example, as technological advances like GPS-guided tractors and rainfall sensors have revolutionized ag production and enabled transactions to move in almost real-time, ag lenders must also adapt take advantage of digital technologies to speed up credit decisions and deliver advice to their clients. Read the article

CFPB Proposes to Eliminate Small-Dollar Lending Rule's Ability-to-Repay Test

The Consumer Financial Protection Bureau yesterday proposed to remove the prescriptive underwriting provisions from the small-dollar lending rule it issued 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 and bank-provided loans with balloon payments.

The CFPB’s proposal maintains the complete exemption in the rule for banks and other depository institutions that made 2,500 or fewer small-dollar loans in each of the current and previous years and for which these loans account for less than 10 percent of revenues. ABA advocated for this provision to protect banks’ flexibility to serve their customers.

“Many consumers rely on small-dollar loans, and regulators and others widely agree that banks are an important source of fair and convenient small-dollar credit,” said ABA SVP Virginia O’Neill. “We are encouraged that the proposal eliminates burdensome and prescriptive underwriting requirements, and that it maintains the exemption for depository institutions that make small-dollar ‘accommodation loans’ to meet the short-term credit needs of their customers.”

The CFPB also proposed to extend the compliance date for the rule’s underwriting provisions by 15 months to Nov. 19, 2020. This extension is intended to help lenders avoid expending unnecessary resources to comply with provisions that the CFPB has proposed to rescind. Read the proposal. For more information, contact ABA's Jonathan Thessin

Consumers Should Beware of Unlicensed Money Lenders

The South Dakota Department of Labor and Regulation on Wednesday cautioned consumers about unlicensed money lenders, both online and in-person.

All lenders providing payday loans, short-term consumer loans, title loans or installment loans to South Dakota residents must be licensed by the South Dakota Division of Banking per SDCL 54-4-52, unless specifically exempt in SDCL 54-4-37.

“Consumer inquiries and complaints about money lenders have recently spiked,” said state Labor and Regulation Secretary Marcia Hultman. “Unlicensed lenders are operating in South Dakota.”

Consumers should confirm a lender is licensed by viewing the current list of licensees on the Division of Banking’s website. Any unlicensed lenders offering loans should be reported in writing using the online consumer complaint form.

“Consumers who borrow from unlicensed lenders may have limited recourse if issues arise,” said Banking Director Bret Afdahl. “I encourage consumers to contact our office first and exercise good judgment.”

The Division of Banking is charged with the regulation and supervision of state-chartered and licensed financial institutions, to maintain stability and public confidence in state-chartered institutions and to protect public interests.

FinCEN Alerts Banks to Suspected 314(b) Phishing Attempts

FinCEN is currently investigating reports of phishing attempts using its 314(b) information sharing system. While it does not appear that FinCEN’s system has been compromised or hacked, banks that participate in the 314(b) information sharing program are encouraged to check FinCEN’s Secure Information Sharing System (SISS) for additional information. Read more. For more information, contact ABA's Rob Rowe

SDBA Offering 2020 Scenes of South Dakota Calendar

The SDBA is taking order for the 2020 Scenes of South Dakota Calendar. This calendar will feature photos of South Dakota submitted by South Dakota bankers, their family members and customers.

These calendars are a great opportunity to thank your customers for their business and promote your bank or business. Your bank, branch or business' logo and name can be printed on each calendar to display in homes and businesses all year long. 

The SDBA logo is also included to emphasize the strength and security of South Dakota’s banking industry. The Scenes of South Dakota Calendar is exclusive to SDBA member banks and associate members.

Calendar orders are due by Sept. 1, to get the low price of $1.29 per calendar. After Sept. 1, the price is $1.60 per calendar. Orders cannot be accepted after Sept. 15. Calendar order form

The SDBA is also accepting photo submissions for the 2020 calendar. All photos submitted will be judged and the top photos will be featured throughout the 2020 calendar. The deadline to submit a photo is July 29. Photo submission form

Compliance Alliance

Question of the Week

Question: If we collect personal income from a guarantor of a small business loan, should we include this loan on our CRA report and indicate it as a small business loans with gross revenue of less than $1 million if the personal income is under that threshold?

Answer: No--the guarantor's personal income should not factor into whether the loan qualifies as a small business loan. The guarantor's income does not affect the gross revenues of the business.

SECTION __.42(a)(4) – 1: When indicating whether a small business borrower had gross annual revenues of $1 million or less, upon what revenues should an institution rely?

A1. Generally, an institution should rely on the revenues that it considered in making its credit decision. For example, in the case of affiliated businesses, such as a parent corporation and its subsidiary, if the institution considered the revenues of the entity’s parent or a subsidiary corporation of the parent as well, then the institution would aggregate the revenues of both corporations to determine whether the revenues are $1 million or less. Alternatively, if the institution considered the revenues of only the entity to which the loan is actually extended, the institution should rely solely upon whether gross annual revenues are above or below $1 million for that entity. However, if the institution considered and relied on revenues or income of a cosigner or guarantor that is not an affiliate of the borrower, such as a sole proprietor, the institution should not adjust the borrower’s revenues for reporting purposes.

Not a 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 Bousa, SDBA, at 800.726.7322 or via email.