SDBA eNews

December 19, 2019

Registration Open for SDBA State Legislative Day

Picture of State CapitolThe SDBA 2020 State Legislative Day on Feb. 12 at the Ramkota Hotel & Conference Center in Pierre is your opportunity to stay up-to-date on both state and federal legislation which could affect the banking industry, visit with state legislators and constitutional officers, and make sure our industry is heard.

The day will include an SDBA Legislative Committee meeting, luncheon, featured speaker Bob Sellers, Gov. Kristi Noem (invited), the chance to visit with legislators at the State Capitol, and an evening reception with state legislators and constitutional officers. The day will also include special sessions specifically designed for emerging bank leaders, as well as an emerging leaders networking reception the evening of Feb. 11.

Former CNBC & Fox anchor Bob Sellers is an Emmy-winning journalist with 25 years of experience in television who takes a nonpartisan look at what’s going on in Washington. As a former financial professional, he also knows how to interpret changes in the financial landscape based upon historical patterns, and his connections inside the Beltway allow him to read the political trends and predict the direction of the economy, tax rates and other developments that could affect individuals and their businesses.

Learn more and register

OCC, FDIC Propose New Regulatory Framework for CRA

The OCC and the FDIC last week proposed major changes to the regulations implementing the Community Reinvestment Act. The proposal would clarify which activities count for CRA credit, update where CRA performance is assessed, revise how CRA performance is measured and make CRA data reporting more transparent. Banks with less than $500 million in assets would be able to choose to remain under the current CRA framework.

Specifically, the proposal would require regulators to publish a non-exhaustive list of pre-approved CRA activities—and to create a process by which stakeholders can recommend new items to include. The proposal would reflect present-day practices in mobile and online banking by expanding assessment areas. In addition to using geographies based on bank facilities, the agencies would also assess performance in areas where banks conduct a substantial volume of retail lending and deposit-taking.

The proposal would introduce two performance standards to evaluate banks’ CRA performance—measuring both the share of retail lending to low-to-moderate-income individuals and areas, as well as the impact of that activity. Together, this “presumptive rating” could be adjusted by examiners based on performance context and other factors. Banks would report CRA data annually, and the agencies said that the data-based evaluation method would reduce the lag time in preparing CRA exam reports. 

While ABA staff are still reviewing the details of the 239-page proposal, ABA President and CEO Rob Nichols welcomed the agencies’ action to move forward. “We believe that updating these rules to reflect the reality of financial services today can enhance banks’ ability to invest in their communities and achieve the laudable goals of CRA,” he said. “Working with our members, we’ll analyze these metrics closely to gauge their likely impact and effectiveness.”

Although the Federal Reserve did not join the proposal, Nichols said that ABA continues to support a final interagency rule that includes the Fed, “which would provide a consistent regulatory framework for all banks.”

‌Comments on the proposal will be due 60 days after it is published in the Federal Register. 

Crapo Raises 'Concerns' on SAFE Banking Act, Seeks Feedback on Cannabis

Senate Banking Committee Chairman Mike Crapo (R-Idaho) yesterday expressed reservations about the ABA-supported SAFE Banking Act, which was passed by a strong bipartisan vote in the House earlier this year. In a statement, Crapo said he had “significant concerns” about the bill, particularly related to public health and safety, legacy cash, money laundering and interstate commerce and banking, and asked for public feedback on how to best address these issues. 

“We respect Chairman Crapo’s request for additional public input on the SAFE Banking Act, and we look forward to providing the Senate Banking Committee with the information it needs,” said ABA EVP James Ballentine. “We continue to believe that the SAFE Banking Act responsibly addresses the current legal limbo over cannabis banking, and a strong bipartisan majority in the House shares that view.”

Crapo also asked for feedback on “Operation Choke Point,” an Obama-era policy that sought to curtail disfavored businesses by working through regulators to pressure banks into ending customer relationships. Those interested in submitting feedback should email [email protected]. ‌ 

House Passes 2020 Spending Bills; CECL Study Required

The House on Tuesday approved a spending package for the current fiscal year, funding the government through Sept. 30, 2020. The Senate is expected to vote on the spending bills later this week. Among many provisions in the package, one—advanced by a 280-to-138 vote—directs the Treasury Department to conduct a study on potential adverse effects of the current expected credit loss model for loan loss accounting on regulatory capital.

ABA, along with members of Congress and expert observers, have long expressed concern that CECL could amplify the effects of an economic recession, and the association has called for CECL implementation to be paused while a quantitative impact study is conducted.

The spending package also includes several program extensions advocated by ABA. It authorizes the National Flood Insurance Program through Sept. 30, 2020, and provides long-term renewals for the U.S. Export-Import Bank (through 2026) and the Terrorism Risk Insurance Program (through 2027). The bill also establishes alternative procedures for Ex-Im to authorize financing in the event of a quorum lapse, ensuring that the agency’s board can remain fully functional.

Fed to Meet with Banks for Fintech Discussions

The Federal Reserve Board on Tuesday announced that it will conduct a series of “fintech innovation office hours” at locations across the country. The sessions will provide banks and fintech companies the opportunity to meet one-on-one with Federal Reserve staff to discuss fintech developments and ask questions. In related news, the Fed announced the launch of a new section of its website devoted to fintech innovation. Learn more and sign up.

Podcast: Bankers You'd Like to Spend a Third of Your Life With

You spend a third of your life at work, says Jeremy Callais. "You can teach someone how to do banking. We hire people who we want to spend a third of our lives with. We tend to think that the customers like to bank with those people too."

On the latest episode of the ABA Banking Journal Podcast—sponsored by OneTrust Vendorpedia—Callais, president of M C Bank in Morgan City, La, and a member of ABA's Community Bankers Council, talks about his bank's approach to hiring, leadership development and succession planning—including his own progression through the ranks and the bank's conscious recruitment of younger personnel, including a CFO and two board members in their 20s.

Callais also provides an update from his work on ABA's Core Platforms Committee and the principles for strong bank-core relationships, and he discusses how M C Bank is positioning itself for success in the competitive South Louisiana market. Listen to the episode.

Professional Appraisers Association of South Dakota to Sponsor Two Seminars

The Professional Appraisers Association of South Dakota (PAASD) will sponsor two seminars of interest to lenders and appraisers on Jan. 15 in Chamberlain at Arrowwood Cedar Shore Resort. The two seminars will total seven hours of continuing education.

The VA Home Loan Program for Real Estate Professionals will provide an all-new, four-hour seminar from 8 a.m. to noon. The seminar will provide a base knowledge of the Department of Veterans Affairs' guiding policies behind the Home Loan Guaranty Program for Veterans. The VA will have two presenters for the seminar--an underwriter and an individual from their appraisal team.

In addition, Douglas Potts will present a three-hour seminar “The Residential Marketplace--Expectations in Appraisals, Evaluations & Alternatives” from 1 to 4 p.m. Potts will explore the ever-changing residential appraisal marketplace and pose the question: Is the era of the traditional residential appraisal at an end? Will evaluations, hybrid appraisals and AVMs dominate the future and permanently constrain the residential appraisal profession as we know it? 

The seminars are part of the PAASD and South Dakota Chapter of ASFMRA Annual Meeting and Education Event held annually. When registering for the seminars, use coupon code “lender” for a $150 fee to be applied. Prices will increase after Jan. 6. Lunch will be provided. Learn more and register.

On Jan. 16, both organizations will jointly sponsor the newest USPAP update: “2020-2021 Seven-Hour National USPAP Update Course." This class is $195, and all materials will be provided (use coupon code “lender”). Prices increase after Jan. 6. Learn more and register.

Happy Holidays from the SDBA

Happy Holidays from everyone at the SDBA! During this season, we take time to reflect upon the good things we our relationships with our members and business partners. 

During the holiday season, we like to thank our members by making a donation to a worthy cause on their behalf. The SDBA has made donations to Pierre Area Referral Service and Paws Animal Rescue.

The SDBA Office will be closed on Tuesday and Wednesday, Dec. 24-25. We will reopen on Thursday, Dec. 26. We hope your holidays will be filled with joy and laughter and continued success into 2020.

Compliance Alliance

Question of the Week

Question: We send disclosures electronically and can be notified when the borrower has not accessed them by the loan estimate (LE) due date. Are we required to mail the disclosures on that day if the borrower hasn’t accessed the electronic docs? They are telling us they are having a problem once we are past the LE due date so we are mailing them then but it is past the due date. If our system logs that we sent it by the due date and the borrower had e-consented, are we okay?

Answer: The customer is considered to have received the LE three business days after the bank sends it, even if the customer has not opened it. There is not a regulatory requirement to then send the disclosures in paper form as well. However, doing so may be required under the bank's internal policy, or an investor's guidelines (if applicable). 

2. Electronic delivery. The three-business-day period provided in § 1026.19(e)(1)(iv) applies to methods of electronic delivery, such as email. For example, if a creditor sends the disclosures required under § 1026.19(e) via email on Monday, pursuant to § 1026.19(e)(1)(iv) the consumer is considered to have received the disclosures on Thursday, three business days later.

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.