SDBA eNews

April 25, 2019

Deadline Nearing to Request Appointment to SDBA Standing Committees

The SDBA will appoint standing committee members for the upcoming year in May. SDBA committees are: Agricultural Credit Committee, Credit Card Committee, Legislative Committee and Trust Committee. Terms are one year beginning May 1, 2019, and ending April 30, 2020, except for the Legislative Committee which is a three-year term. Legislative committee members can serve two, consecutive three-year terms.

As a volunteer for your Association, you will be contributing to a stronger banking industry. We respect the time commitment that each committee member has made and work hard to ensure the meetings are well run and productive. Committees meet once or twice a year to initiate activities and recommend policy.

If you or someone at your bank is interested in serving on an SDBA committee, please complete and return the committee request form by Tuesday, April 30, to [email protected] or fax to 605.224.7835. Questions, contact Alisa Bousa at 605.224.1653.

CFPB Pledges More Transparency in Civil Investigative Demands

The Consumer Financial Protection Bureau on Tuesday announced that it will change its policy on civil investigative demands to improve transparency. The changes align with recent court decisions and are consistent with feedback received during its 2018 review of regulations and enforcement practices, including from ABA.

“Consistent with the updated policy, CIDs will provide more information about the potentially applicable provisions of law that may have been violated,” the CFPB said. “CIDs will also typically specify the business activities subject to the bureau’s authority. In investigations where determining the extent of the bureau’s authority over the relevant activity is one of the significant purposes of the investigation, staff may specifically include that issue in the CID in the interests of further transparency.”

In its 2018 comment letter, ABA pointed out that while CIDs can be important investigatory tools if carefully used, they can be and have been employed abusively in ways that violate reasonable due process and frustrate the pursuit of justice. The association specifically urged the bureau to provide CID recipients more information about the underlying purpose of the CID. Read more. Read ABA's comment letter. For more information, contact ABA's Virginia O’Neill.

ABA Report: Ag Lending Growth Tops 5 Percent in 2018

The nation’s farm banks increased agricultural lending by 5.3 percent, or $5.5 billion, to $108 billion in 2018, according to the ABA’s annual Farm Bank Performance Report released Tuesday. With non-performing loans remaining at a pre-recession level of .52 percent of total loans, asset quality was also healthy among the nation’s 1,772 farm banks.

“Even in the face of a slowing ag economy and harsh weather, farm banks continue to perform strongly while meeting the credit needs of farmers, ranchers and their communities,” said ABA Chief Economist James Chessen. “They play a critical role in the success of farms large and small, and their civic engagement and the jobs they provide make them the lifeblood of many rural communities across the country.”

More than 94 percent of farm banks were profitable in 2018, with more than 63 percent reporting an increase in earnings, according to the report. Farm banks also served as job creators, adding more than 1,500 jobs in 2018, a 1.8 percent increase, and employing more than 86,000 rural Americans. Since 2008, employment at farm banks has risen 24.4 percent.

Farm banks—defined by ABA as banks with ratios of domestic farm loans to total domestic loans greater than or equal to the industry average—also continued to build high-quality capital throughout 2018. Equity capital increased 6.1 percent to $48.7 billion, while Tier 1 capital increased by $3.3 billion to $46.7 billion. Read the report.

ABA Issues Staff Analysis on DOL 'Regular Rate of Pay' Proposal

ABA has published a staff analysis on the Department of Labor’s proposed rule that would clarify which types of compensation must be included in determining an employee’s “regular rate” of pay. Comments on the proposal are due by May 28, 2019.

The calculation of an employee’s regular rate of pay is important because, under the Fair Labor Standards Act, banks and other employers must pay an employee 1.5 times the employee’s regular rate of pay for any hours in excess of 40 hours that the employee works in a workweek, unless that employee is exempt from overtime requirements. An employee’s regular rate of pay will frequently differ from the employee’s hourly rate of pay because the regular rate includes certain “perks” provided to the employee and other forms of compensation.

DOL’s proposed rule clarifies that sick leave; accident, unemployment, and legal services benefits; wellness programs; gym memberships; retail discounts; and tuition programs are excluded from the employee’s regular rate of pay. The proposal also provides examples of discretionary bonuses that are excluded from the regular rate. Read the staff analysisRead DOL’s proposed rule.

ABA is inviting interested bankers to participate in a conference call to provide feedback on the proposed rule. For more information, or to provide feedback, contact ABA's Jonathan Thessin.

ABA Partners with Alloy Labs to Foster Innovation

As part of its efforts to help banks of all sizes accelerate technological innovation, ABA yesterday announced a strategic partnership with Alloy Labs Alliance. The alliance—led by fintech experts from FinTech Forge—is a shared financial innovation lab and consortium comprising 32 community and midsize banks that come together to identify, evaluate and implement new technology and launch innovative products.

Banks joining Alloy Labs can choose from three different levels of participation, each separately priced: custom in-house sessions, peer working groups and access to Alloy Labs’ blueprint and implementation kit. Through ABA’s partnership, ABA member banks that join Alloy Labs will receive a discount on pricing.

“Alloy Labs has provided us with the knowledge to lead our team in innovative ways and align our customer priorities, helping us assess and implement the best technologies for our bank,” said Howard Jaffe, president and COO, Inland Bancorp, Oak Brook, Ill., and a member of the ABA Endorsed Solutions Banker Advisory Council. “The key advantage is that the alliance gives you the benefit of a peer group facing similar challenges and developing similar strategies. Alloy Labs has allowed Inland to innovate faster than we ever could on our own.”

ABA will host an informational webinar on Tuesday, May 14, at 12:30 p.m. CDT to highlight the benefits of joining the alliance and how it can help banks identify their innovation priorities. Learn moreRegister for the webinar.

Podcast: M&A Tips From a Fast-Growing Bank

In its 180 years, United Bank has grown from an office in Parkersburg, W.Va., to a powerhouse financial institution with more than $19 billion in assets throughout the mid-Atlantic and Appalachian regions. The company has more than doubled in size in just the last five years. Ten of the company’s last 11 acquisitions have been in the Washington, D.C., metropolitan area, which now accounts for more than half of United’s assets.

On the latest episode of the ABA Banking Journal Podcast, United Bankshares President Rick Adams talks about United Bank’s experience with M&A and offers tips on providing quick and candid communication in the merger process. “The non-financial piece is the more difficult piece,” he says. He emphasizes the need to understand people and processes and “take the best of both institutions” to help transactions achieve their stated goals.

Adams also discusses how United Bankshares’ wealth management business gives it advantage over nonbanks with its ability to refer clients from the bank side, how it has built a successful indirect auto lending business and how it invests strategically in leadership development at all levels of the bank. Listen to the episode.

HSA Webinars Available in May

JM Consultants is offering two health savings account (HSA) webinars in May. 

An Introduction to HSAs Webinar will be held on May 7. This webinar will provide a solid foundation of operational and compliance issues associated with providing HSAs to customers, including opening, maintaining and distributing procedures.

HSAs: Beyond the Basics Webinar will be held on May 14. This webinar will explore the areas of employee eligibility, handling excess and mistaken distributions, investment diversification and product expansion, including how HSAs are being touted as a retirement savings vehicle in addition to a health care coverage option.  

Both webinars begin at 9:30 a.m. CDT and are scheduled to last 70 minutes. The cost for each webinar is $185, and additional bank branch connections are $60 per connection. 

Agencies to Host Joint Webinar on Private Flood Insurance Rule

The financial regulatory agencies will host a webinar on Tuesday, May 14, at 10 a.m. CDT on the flood insurance rule issued in February. The rule, which will be effective on July 1, 2019, is the long-awaited implementation of the 2012 Biggert-Waters Act provision that requires federally-regulated lending institutions to accept private flood insurance policies that meet certain statutory criteria.

The webinar will cover mandatory acceptance of private flood insurance; the mandatory acceptance compliance aid; discretionary acceptance of private flood insurance; flood coverage provided by mutual aid societies; and preparations to comply with the rule. Register for the webinar.

Compliance Alliance

Question of the Week

Question: When is the deadline to provide a PMI notice of cancellation/termination?

Answer: Assuming this is subject to the Homeowners Protection Act, the bank has 30 days after the PMI relating to a residential mortgage transaction is canceled or terminated to send out a notice to the borrower, as set out here:

"Notification upon Cancellation or Termination of PMI Relating to Residential Mortgage Transactions General Requirements Not later than thirty days after PMI relating to a residential mortgage transaction is canceled or terminated, the servicer must notify the borrower in writing that

  • PMI has terminated and the borrower no longer has PMI and
  • No further premiums, payments, or other fees are due or payable by the borrower in connection with PMI."

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.