SDBA eNews

May 16, 2019

Don't Miss Out on SDBA's Largest Event of the Year

Evolving digital technologies, shifting consumer preferences and increasing competition are creating new challenges for banks. As the banking industry is being transformed, there is uncertainty around what the future of the industry will look like over the next decade. Are you ready to re-imagine the future of banking?

The SDBA invites you to FOCUS FORWARD at the 2019 SDBA/NDBA Annual Convention on June 2-4 at the Sioux Falls Convention Center in Sioux Falls. Explore new pathways, seek innovative partners and motivate to embrace the future of banking. You will return to work with a refreshed perspective and renewed vision after attending this year's event.

Don't miss on on the SDBA's biggest event of the year. View the full convention agenda and register to attend

ABA Banker Committee Shares Concerns with Four Core Providers

The ABA Core Platforms Committee—a group of 20 bank leaders representing community and midsize banks—on Tuesday met with top executives from four of the nation’s largest core processing firms. During the meeting, the bankers shared their concerns on three key issues—data access, API deployment and contract fairness—with FIS, Fiserv, Jack Henry and Finastra. The representatives of each participating core agreed to provide written responses by July 15 to explain how they will address those issues and were invited to meet with the committee again in August.

“The tone of today’s meeting was positive and cooperative, even as we acknowledged that there is still work to do to address these challenges,” ABA President and CEO Rob Nichols said in an email to ABA member bank CEOs on Wednesday. “We look forward to seeing that spirit of cooperation in the form of meaningful commitments when the companies respond in writing and when we meet again later this summer.” Nichols convened the Core Platforms Committee earlier this year to evaluate how community and midsize banks’ current relationships with their core processors may be inhibiting innovation and provide recommendations that can help banks and cores move forward together.

Committee Chairman Julieann Thurlow discusses the committee meeting and next steps in a bonus episode of the ABA Banking Journal Podcast.

Citing Economic Risk, Senators Call for CECL Delay, Study

Led by Sens. Thom Tillis (R-N.C.) and Doug Jones (D-Ala.), a bipartisan group of 15 senators, including South Dakota's Sen. Mike Rounds, wrote to the Federal Reserve and FDIC on Friday urging a delay in the implementation of the Current Expected Credit Loss model for loan loss accounting until after the agencies can study CECL’s economic effects. The senators highlighted concerns raised by ABA and banks that CECL may reduce credit availability and exacerbate economic cycles, arguing that the “potential economic disruptions of the new standard mandate careful study before it goes into effect for any bank.”

“Bankers with deep knowledge of the local communities they serve should make lending decisions based on their judgments and supported by sound risk management practices,” the group of seven Republicans and eight Democrats wrote. “They should not be artificially constrained by sophisticated, yet imprecise, forward-looking models that cannot accurately predict the future.”

The letter follows a similar bipartisan letter to the Securities and Exchange Commission from House members last week. Read the letter.

CFPB Seeks Feedback on Regulatory Review, Overdraft Rule

The Consumer Financial Protection Bureau on Monday issued a notice detailing how it will periodically review regulations as required by the Regulatory Flexibility Act, which requires agencies to conduct decennial reviews of certain rules and consider their effects on small businesses.

The CFPB said that in conducting RFA reviews, it would consider several factors, including: the continued need for the rule; the nature of public complaints or comments on the rule; the rule’s complexity; the extent to which the rule overlaps, duplicates or conflicts with existing federal, state or other rules; and how the market has changed since the rule was issued. Comments on the bureau’s notice will be accepted for 60 days after publication in the Federal Register.

In addition, the CFPB announced the launch of its first RFA review, which will focus on its the 2009 overdraft rule. That rule requires that a consumer affirmatively consent—or “opt in”—to overdraft services before a bank may impose a fee for an overdraft resulting from a point-of-sale debit card or ATM transaction. After five years of studying data and other information on overdraft services provided by ABA and others, the CFPB last spring indicated it would not pursue additional regulation of overdrafts.

Comments on the overdraft rule are due 45 days after publication in the Federal Register.

Op-Ed Highlights Consequences of NCUA Appraisal Threshold Proposal

A move by the National Credit Union Administration to quadruple the appraisal threshold for nonresidential real estate loans could have broad-reaching consequences for the financial system, according to an op-ed by Appraisal Institute President Stephen Wagner published in American Banker last week. The op-ed came ahead of NCUA’s May 23 meeting, where the board is expected to consider the proposal increasing the threshold from $250,000 to $1 million.

Should the proposal be approved, two-thirds of commercial loans by credit unions would be exempt from the appraisal requirement, Wagner noted. He added that such an increase would put pressure on other financial regulatory agencies to reconsider their thresholds. “At that point, the NCUA—the agency with the least direct experience in overseeing business and commercial real estate lending—effectively would be driving the appraisal policies for the financial regulatory system.”

ABA has long raised concerns about NCUA’s proposal, highlighting that it would create an unlevel playing field between credit unions and banks, which are currently subject to an appraisal threshold of $500,000 for nonresidential real estate transactions. Read the op-ed

Podcast: How One Bank Proactively Stops Senior Fraud

First Financial Bank takes elder fraud seriously. The $7.8 billion bank with locations across Texas won the ABA Foundation's 2015 Community Commitment Award for protecting older Americans for its elder financial exploitation education program, which partners with local law enforcement, adult protective services and community organizations. Over the past five years, according to First Financial Chairman and CEO Scott Dueser, the program has stopped $7.5 million in elder fraud, including $2.3 million in 2018 alone.

To mark National Senior Fraud Awareness Day on May 15, Dueser speaks on the ABA Banking Journal Podcast about the growing scourge of frauds and scams targeting seniors, how his bank partners successfully to intercept fraud before it happens and what red flags bank staff need to look for in a potential fraud scenario--especially when the senior might be victimized by a caregiver or family member.

Fighting senior fraud is more than just a good thing to do, notes Dueser, who says that First Financial has received huge volumes of new deposits as a result of its community presentations and its leadership on the issue. "It's just good business," he says. Learn more about the ABA Foundation's resources on elder fraud at Listen to this episode.

FinPro to Offer CECL Webinar

Tired of reading uninformed CECL articles? Tired of listening to “scare tactics” by consultants? Tired of vendors “hawking” their expensive CECL models? Tired of trying to absorb complex regulatory CECL literature?

During its CECL webinar on June 13, FinPro will take a “back to basics” approach in distilling what financial institutions have to accomplish to be compliant for this new accounting standard. Migrating from the “incurred loss” to the “expected credit loss” approach does not have to be overly complex for most U.S. institutions. Board members will benefit from the high-level overview, while senior staff will take away key “action items” for CECL implementation.

The complimentary webinar will begin at 10 a.m. CDT. Register for the webinar.

GSB Wisconsin to Offer FDIC Vendor Contract Warning Webinar

Vendor management is the most time-consuming component of a bank's information security program. Reviewing the documents collected from vendors can take hours, but sometimes collecting the resources you need to conduct a review consumes even more of your time. With existing relationships, when you can’t get what you ask for, you might turn to the contract.

The FDIC is warning institutions that they have observed in recent exams that contracts do not give institutions the right to request certain documentation nor do they clearly state that vendors will have certain critical controls in place. The major areas of concern they reference include incident response and business continuity.

The Graduate School of Banking in Wisconsin is offering the FDIC Vendor Contract Warning Webinar on June 6 at 2 p.m. CDT. During this hot topic webinar, Chad Knutson with SBS CyberSecurity will review the vendor management process, FDIC FIL 19-2019 requirements and needed contract statements.

Learn more and register

Compliance Alliance

Question of the Week

Question: By what day do we have to file the continuing activity SAR? Is it day 90 or day 120?

Answer: The guidance provides that "Financial institutions with SAR requirements may file SARs for continuing activity after a 90 day review with the filing deadline being 120 days after the date of the previously related SAR filing. Financial institutions may also file SARs on continuing activity earlier than the 120 day deadline if the institution believes the activity warrants earlier review by law enforcement." (p. 53).

So the review period itself is 90 days, but the filing deadline is 120 days from the last one filed, to include the additional 30 days allowed for filing. It does also say that the bank has the option of filing earlier than the 120 days if it believes that law enforcement should review earlier.

Financial institutions with SAR requirements may file SARs for continuing activity after a 90-day review with the filing deadline being 120 days after the date of the previously related SAR filing. So, for filings where a subject has been identified, the timeline is as follows:

  • Identification of suspicious activity and subject: Day 0.
  • Deadline for initial SAR filing: Day 30.
  • End of 90 day review: Day 120.
  • Deadline for continuing activity SAR with subject information: Day 150 (120 days from the date of the initial filing on Day 30).
  • If the activity continues, this timeframe will result in three SARs filed over a 12-month period.

 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.