SDBA eNews

January 2, 2020

Fed Finalizes Extended Hours to Facilitate Same-Day ACH

In a move supported by ABA, the Federal Reserve last week finalized new operating hours and procedures for the National Settlement Service and Fedwire Funds Service to facilitate adoption of a third same-day ACH processing and settlement window.

The Fed will extend NSS operating hours by one hour to 6:30 p.m. ET, extending the time for initiating Fedwire transfers on behalf of third parties by 45 minutes to 6:45 p.m. ET and closing Fedwire a half-hour after the NSS at 7 p.m. ET. To minimize late openings of Fedwire, the reserve banks will raise the threshold for granting extensions to the Fedwire closing time from $1 billion to $3 billion and maintain a minimum 90-minute window, down from two hours, between Fedwire closing and re-opening.

The changes are effective in March 2021, aligning with Nacha’s effective date of March 19, 2021, for implementing the later same-day ACH window. The Fed approved corresponding changes to its Policy on Payment System Risk. Read more. For more information, contact ABA’s Steve Kenneally.

ABA to SEC: 'Guide 3' Update Should Leave Out CECL-Specific Disclosures

While generally welcoming the Securities and Exchange Commission’s proposed updates to “Guide 3,” ABA last week urged the SEC to allow more time before adding disclosures specific to the Current Expected Credit Loss model. ABA has long called on the SEC to update Guide 3—the three-decade-old disclosures that financial institution registrants are required to provide to investors—but said that required disclosures of credit metrics should be delayed until banks’ CECL accounting practice is fully developed.

“CECL is intended to provide flexibility to the preparer to develop the best estimate of expected losses,” ABA said. “The industry needs time to develop new disclosures in order to communicate most appropriately to their investors, including how best to explain period-to-period changes in expected credit losses, considering loan mix and volume, credit performance related to expectation, changes in key inputs and assumptions or other factors.”

ABA also identified other technical areas for improvement in the proposal, including flexibility on disaggregation levels in average balance reporting and the definition of uninsured deposits. Read the comment letter. For more information, contact ABA’s Josh Stein.

Webinar on SECURE Act Retirement Plan Changes To Be Offered

The SECURE Act was passed on Dec. 19, 2019, containing the most changes to retirement plans since the Pension Protection Act of 2006. JM Consultants will hold a webinar on the retirement plan changes in the SECURE Act on Jan. 16 and Jan. 22. The webinar will provide an overview or a snapshot of the changes to both IRAs and QRPs, in addition to other changes affecting IRA procedures.

Although additional guidance on the SECURE Act should be issued in the near future, it is important for IRA personnel to be aware of the changes as a majority took affect on Jan. 1, 2020. More detailed information will be provided in future training programs provided by the SDBA or by scheduling in-house customized training programs for you financial organization.

Both webinars will be held at 9:30 a.m. to 10:45 a.m. CST. The cost is $195, with additional bank branch connections only $60 per connection. Lean more and register for the webinar

NDBA/SDBA Bank Management Conference Set for February 14-15

Now is the perfect time to make plans to attend the NDBA/SDBA Bank Management Conference on Feb. 14-15 in Scottsdale, Ariz. Six keynote speakers will provide executive-level officers, bank directors and senior-level bankers with timely insights on the economic landscape, M&A trends, balance sheet management, talent acquisition, FinTech opportunities and top strategies for 2020.

Bankers value strategic information and networking with colleagues, and the Bank Management Conference offers plenty of both, in addition to some of the best hospitality Arizona has to offer. The conference will be held at Westin Kierland Resort & Spa, an AAA four diamond resort located adjacent to Kierland Commons. The conference will also include a golf tournament and programs for spouses and guests. 

The conference is hosted by the NDBA and co-sponsored by the SDBA. Learn more and register

FDIC's 'Supervisory Insights' Details Commercial Real Estate Oversight Concerns

With the volume of commercial real estate loans held by FDIC-insured banks reaching a record of $2.4 trillion in 2019, the FDIC is focusing on CRE risk management. While “supervisory activities at FDIC-supervised [banks] show that concentrated [banks] are generally managing risk adequately,” the FDIC said, the agency issued one or more CRE-related MRBA in about a quarter of its overall supervisory activities at banks rated between CAMELS 1 and 3, according to the FDIC’s Fall 2019 Supervisory Insights publication.

CRE-related supervisory recommendations and MRBAs were most likely to address board and management oversight, portfolio sensitivity analyses, portfolio management and funding strategies, the agency said. More than half of bank reviews included some kind of supervisory recommendation related to board or management oversight, the agency added—most commonly regarding the setting and monitoring of concentration limits and sub-limits, as well as improvements needed in exception tracking and reporting and concerns about strategic planning.

For example, the agency said, some written policies lacked concentration limits or sub-limits, or these limits “appeared inappropriate” considering other factors. And while the agency noted “significant progress” made by FDIC-supervised banks on portfolio-level sensitivity analyses, the agency said that in some cases these analyses are “less evolved” than warranted by a bank’s CRE portfolio. More than four in 10 banks reviewed had supervisory recommendations related to these sensitivity analyses. Read Supervisory Insights

SEC Proposes Updates to Auditor Independence Framework

The Securities and Exchange Commission on Monday proposed changes to its auditor independence framework. These changes would codify consultations by SEC staff and modernize other aspects of the framework last revised in 2003, the commission said. The agency said that the proposed amendments are aimed at preserving auditor objectivity and impartiality without “trigger[ing] non-substantive rule breaches or potentially time consuming audit committee review of non-substantive matters.”

The proposal addresses the definitions of an affiliate of the audit client and the definition of the audit and professional engagement period. It would also add certain student loans and de minimis consumer loans to the categorical exclusions from independence-impairing lending relationships, replace a reference to “substantial stockholders” in the business relationship rule with the concept of “beneficial owners with significant influence” and replace the Rule 2-01(e) transition and grandfathering provision with one to address inadvertent independence violations resulting from M&A.

Comments on the proposal are due 60 days after it is published in the Federal Register. Read more. For more information, contact ABA’s Michael Gullette or Josh Stein.

Agencies Update CRA Asset-Size Thresholds

The federal regulators on Tuesday announced the annual adjustment to the asset-size thresholds they will use to differentiate small and intermediate banks and savings associations under the Community Reinvestment Act.

A “small bank” or “small savings association” will be defined as an institution that, as of Dec. 31 of either of the prior two calendar years, had assets of less than $1.305 billion. An “intermediate small bank” or “intermediate small savings association” will be defined as a small institution with assets of at least $326 million as of Dec. 31 of both of the prior two calendar years, and less than $1.305 billion as of Dec. 31 either of the two prior calendar years. These adjustments took effect on Jan. 1. Read more.

SDBA Offers 2020 Bank Holiday Signs

The SDBA is offering holiday signs that banks can print and display to notify customers when the bank will be closed. 

The signs are set up to be printed on 8.5" x 11" paper and are provided as a high-resolution pdf file. Banks can print the signs and use them how they see fit. 2020 Holiday Signs

If you need the signs in a different format or have any questions, contact Alisa Bousa.

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Contact Alisa Bousa, SDBA, at 800.726.7322 or via email.