SDBA eNews

April 18, 2019

SDBA Ag Credit Conference Rescheduled to August 14-16

The SDBA's Agricultural Credit Conference originally set for April 10-12 but canceled due to weather has been rescheduled to Aug. 14-16 at the Ramkota Hotel & Conference Center in Pierre. Conference content will be the same as the April agenda with slight changes to the order of some sessions. 

Registrations for the original conference date will carry forward to the new date. If the new date does not work for any registrants, they may cancel with no penalty. If you were not able to attend the original conference dates but can now attend, there is still room to attend. See the revised Agricultural Credit Conference agenda.

Learn What's Coming, What Matters and What To Do Next at Annual Convention

Chatbots? Machine learning? Open banking? Faster payments? Should you replace your staff with chatbots or showcase your staff within digital channels? How will the arrival of real-time payments change existing bank products and services? Are bigtechs or digital challenger banks a bigger threat than megabanks? And how will you strategically differentiate your bank from the competition?

Join Lee Wetherington for a bottom-line review of what’s new and what matters for community banks during his session "Focusing Forward: What's Coming, What Matters & What To Do Next" at the SDBA/NDBA Annual Convention. The theme of this year's conference, set for June 2-4 at the Sioux Falls Convention Center & Sheraton Sioux Falls, is "FOCUS FORWARD."

Conference attendees can explore new pathways, seek innovative partners and motivate to embrace the future of banking at this year’s annual convention. Wetherington is just one of several keynote presenters who will speak on a wide variety of topics. The conference will also feature a social media panel, ignite sessions, golf tournament or afternoon tour of downtown Sioux Falls, an exhibit hall feature more than 60 business partners and evening events.

The early bird deadline to register and save money is May 8. See the full agenda and register to attend. There are also still opportunities to sponsor, exhibit or advertise

Registration Open for SDBA 2019 IRA School

IRAs continue to be an essential part of a person’s retirement planning. IRA rules are always changing, and more changes are expected in the near future. It is important to be informed and prepared.

The SDBA is offering its 2019 IRA School Sept. 4-6 at the Clubhouse Hotel & Suites in Sioux Falls. You can attend as many one-day IRA seminars as you want, but it will not equal what is covered in a three-day IRA school. 

This is the most comprehensive IRA course offered. Attendees will learn new rule changes and reinforce existing rules; learn what it means to be in or out of compliance; explore all topics in-depth; and ask questions, share with peers and hear real case problems. Learn more and register

ABA Voices Support for Cannabis Banking Legislation

In a letter to Senate members last Friday, ABA offered support for S. 1200, the Secure and Fair Enforcement Banking Act—a bipartisan Senate bill introduced by Sens. Jeff Merkley (D-Ore.) and Cory Gardner (R-Colo.) that would enable financial services for legitimate cannabis-related businesses. An identical bill was recently passed by the House Financial Services Committee on a bipartisan vote of 45 to 15.

ABA noted that the SAFE Banking Act—which specifies that proceeds from legitimate cannabis businesses would not be considered unlawful under anti-money laundering statutes—would help clarify many issues for the banking industry, regulators, businesses and consumers.

While the association does not take a position on cannabis legalization, it acknowledged that 33 states covering 68 percent of the nation’s population currently have legalized cannabis for medical or adult use. “Despite that, current federal law prevents banks from banking cannabis businesses, as well as the ancillary businesses that provide them with goods and services,” ABA said. “Without greater clarity, that entire portion of economic activity—estimated by some to be in the tens of billions of dollars—in legal cannabis states will continue to be marginalized from the banking system.” Read the letter.

CFPB's Kraninger Signals Next Steps on Clarifying 'Abusive' Standard in UDAAP

The Consumer Financial Protection Bureau will take the next step in its effort to clarify the meaning of “abusive acts or practices” under Section 1031 of the Dodd-Frank Act, CFPB Director Kathy Kraninger said yesterday in her first public remarks. Plans to provide clarity—long sought by ABA and other industry participants—have been signaled for months; Kraninger said the bureau would hold a public symposium in the coming months to solicit stakeholder feedback on the abusive standard, which is much less defined and understood than the unfair or deceptive acts or practices standard.

Kraninger broadly outlined her vision for the bureau under her leadership, emphasizing that “supervision is the heart of this agency.” She noted that she intends to focus the bureau’s work on the prevention of harm and ensuring the consistent applications of the CFPB’s supervisory tools.

With regard to the bureau’s rulemaking authority, Kraninger emphasized the need for transparency throughout the rulemaking process and added that she is also giving thought to the cost of regulation. “I take seriously our responsibility under the law to reduce unwarranted regulatory burden and to consider the impact of rulemaking on regulated entities and consumers,” she said. “The CFPB must acknowledge that the cost imposed on regulated entities absolutely affects access to and the availability of credit to consumers.”

Kraninger also previewed the bureau’s upcoming proposal on the Fair Debt Collection Practices Act, which is expected to be released in the coming weeks. She noted that the proposal will provide clarity on how frequently collectors may call consumers, how they may communicate using newer technologies like email or text messages, and what disclosures collectors should make at the beginning of collection.

IRS Issues Second Round of Proposed Regulations on Opportunity Zones

The Internal Revenue Service yesterday issued a highly-anticipated package of proposed regulations on the Opportunity Zone tax incentive, which allows investors to take proceeds from capital gains and invest them in defined qualified opportunity funds. Assuming holding periods are satisfied, a portion of the initial deferred gain may be exempt from tax and post-investment appreciation may be totally exempt.

The 169-page proposal provides guidance on the “substantially all” requirements and for the holding period and use of the tangible business property. It also addresses calculations for gain inclusion transactions, treatment of leased property, use of qualified zone property and sourcing of income. In addition, it provides guidance on reasonable periods for qualified opportunity fund investments.

In many cases, investors, developers and other parties have been waiting for this additional guidance prior to making their investments. The incentive has attracted significant interest from investors, with estimates of pending investment dollars totaling more than $20 billion.

ABA is currently reviewing the regulations and soliciting banker feedback for a potential comment letter. Comments are due 60 days after publication in the Federal Register.

Podcast: The Challenges of Banking on the U.S.-Mexico Border

On the latest ABA Banking Journal Podcast, Ignacio Urrabazo talks about the unique challenges of banking on the U.S.-Mexico border. A nearly half-century veteran of banking, Urrabazo is president and CEO of Commerce Bank in Laredo, Texas, a subsidiary of IBC.

The requirements of the Bank Secrecy Act pose a significant challenge for his bank due in part to the interconnected nature of the border region economy and in part to a cash-intensive market where Mexicans shop on the Texas side with hard dollar currency. "Every officer in the bank is doing due diligence and talking to customers and making sure we are doing the right thing," says Urrabazo. "Our international officers go to Mexico and check to make sure they are legitimate businesses over there. Everyone is a BSA officer, even though we have one designated one."

Distinguishing between issues of immigration and trade, Urrabazo also expresses concern about the threat of closing border entrances. Noting that 14,000 trucks cross the border at Laredo each day--carrying $265 billion worth of merchandise last year, with much of the trade infrastructure financed by Commerce Bank--he says a border closure "wouldn't be a recession; it would be a depression for us. . . . It would be a catastrophe. It would affect our bank directly."

Urrabazo also discusses his efforts to increase diversity in banking, how excessive regulation has hindered bankers' ability to serve lower-income customers and how Commerce Bank meets the needs of Spanish-speaking clients in its 95 percent Hispanic market. Listen to the episode.

Bankers Observe Teach Children to Save Day

More than 9,800 bankers hosted financial education events across the country in celebration of Teach Children to Save Day last Friday. Bankers taught students the fundamentals of financial literacy, including the basics of saving, how to create a budget and how to distinguish needs from wants. Since 1997, ABA’s financial education initiatives have reached 10.5 million children with the help of more than 260,000 banker volunteers.

“Every April, in recognition of Teach Children to Save Day and Financial Literacy Month, our nation’s banks dedicate their time and resources to educating young people on money fundamentals and the value of saving,” said ABA President and CEO Rob Nichols. “By familiarizing students with these important concepts early, we help lay the foundation for a generation of savvy, confident money managers.”

For the first time ever, Nichols delivered an interactive, virtual presentation on financial literacy that reached children in classrooms across the country. He will present the same lesson later this month to a sixth grade class at a local school in Washington, D.C. A group of ABA employees also participated in a Teach Children to Save event earlier last week at Imagine Hope Community Charter School in Washington, D.C. In addition to delivering financial literacy lessons to 150 students, ABA volunteers also delivered backpacks stuffed with books and other school supplies. Learn more about Teach Children to Save. For more information, contact ABA’s Jeni Pastier.

Compliance Alliance

Question of the Week

Question:  We escrow for taxes and insurance. This is not an HPML loan nor is flood insurance required in this situation. The taxes, with respect to this loan, are subject to a continual homestead credit that exceeds the tax charge. So, year after year, the amount via escrow that is owed is $0. The bank would like to collect a small amount as a cushion in case the taxes increase over the established credit. We don’t necessarily anticipate the taxes to increase, though. Can we do this?

Answer: 12 CFR 1024.17(c)(ii):  - (1) A lender or servicer (hereafter servicer) shall not require a borrower to deposit into any escrow account, created in connection with a federally related mortgage loan, more than the following amounts:

(ii) Charges during the life of the escrow account. Throughout the life of an escrow account, the servicer may charge the borrower a monthly sum equal to one-twelfth (1/12) of the total annual escrow payments which the servicer reasonably anticipates paying from the account. In addition, the servicer may add an amount to maintain a cushion no greater than one-sixth (1/6) of the estimated total annual payments from the account.

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