SDBA eNews

March 5, 2020

Fed Announces Emergency Rate Cut Amid Coronavirus Fears; ABA Updates Bankers on Latest Developments

Acknowledging the “evolving risks” that the coronavirus outbreak poses to the U.S. economy, the Federal Open Market Committee unanimously voted yesterday to cut the target range for the federal funds rate by 50 basis points to a range of 1% to 1.25%. This is the first emergency rate cut the FOMC has made since 2008.

The committee said it would closely monitor the situation as it develops and “will use its tools and act as appropriate to support the economy” in the days ahead. In a press conference, Federal Reserve Chairman Jerome Powell emphasized that the underlying fundamentals of the economy remain strong. “Financial markets are functioning in an orderly manner,” he said, adding that “supervisors will be working with banks to ensure that they work with their borrowers” that may be struggling as a result of the outbreak.

While “the situation remains a fluid one,” Powell emphasized that “the U.S. economy is strong and we will get to the other side of this. I fully expect that we’ll return to solid growth and a solid labor market.”

As more cases of the novel coronavirus are reported in the U.S., the ABA is working to keep its members apprised of the latest developments through a dedicated resource page on Bankers can find new information and resources from the Centers for Disease Control and Prevention, World Health Organization, Occupational Safety and Health Administration, financial regulatory agencies and others. Included is information on frauds and scams that have been reported in conjunction with the outbreak.

The website also includes business continuity planning recommendations and other relevant information from financial regulatory agencies as well as guidance on how to communicate with employees, customers and the public. Banks might be particularly interested in the pandemic planning appendix of the FFIEC’s Business Continuity Planning Booklet, which was assembled after the avian flu outbreak in 2007. 

Visit For more information, contact ABA’s Heather Wyson-Constantine or Paul Benda.

South Dakota Prepares for Coronavirus

State health officials on Feb. 27 outlined South Dakota’s steps to prepare for community spread of COVID-19 (coronavirus), as well as what South Dakotans can do now. To date, no one in South Dakota has tested positive for COVID-19.

“Since the start of this outbreak, South Dakota has taken steps to prepare for and carefully monitor for potential cases of COVID-19 in South Dakota,” said Kim Malsam-Rysdon, secretary of the South Dakota Department of Health.

The Centers for Disease Control (CDC) has advised states to be prepared for community spread of COVID-19. The Department of Health is working with partners to ensure South Dakota is prepared to respond. 

“For the general public, the immediate health risk from COVID-19 is low,” said Dr. Joshua Clayton, state epidemiologist. “However, we know that an ounce of prevention is worth a pound of cure, and the same family emergency plans and kits that we use to prepare for the flu, snowstorms and floods are important now. South Dakotans can help stop the spread of germs by washing your hands often, covering coughs and sneezes, cleaning surfaces regularly and staying home if you are sick.”

Read more about the steps the state has taken on the South Dakota Department of Health's website. More information and updates will also be posted to this website.

SDBA Introduces a Medicare Supplement Group Program

The South Dakota Bankers Benefit Plan Trust, in association with Wellmark Blue Cross Blue Shield, introduced a new employer group retiree program (EGRP) providing Medicare supplement coverage to retirees. This is a program banks can offer at no cost while still providing valuable benefits to retired bank employees and their spouses.

On Jan. 1, 2020, the federal government stopped providing Medicare Plan F in the individual market. Plan F was the most popular plan for both new and existing Medicare enrollees. Now, individuals turning age 65 after Jan. 1, 2020, are no longer able to purchase this popular plan on their own. Fortunately for members of the SDBA, Plan F is now available through the EGRP from Wellmark BCBS, a trusted medical insurance provider in South Dakota for more than 75 years.

Details on how to participate in this new group Medicare program have been mailed to all member banks currently participating in the Association’s health insurance program. If you have any questions about this new program, contact Dean Franzen with the SDBIS at 605.220.4219 or via email. Or read his column on page six of the March SDBanker Magazine.

Iowa Bank Regulator Blocks CU Acquisition of Bank Assets, Branches

The Iowa Division of Banking on Monday blocked the sale of First American Bank’s remaining Iowa-based assets and branches to Green State Credit Union, a $5.8 billion institution based in Iowa City. The agency said the arrangement—in which the Fort Dodge, Iowa-based bank would sell substantially all of its assets and liabilities and go out of business as a bank—did not meet criteria required under state law.

Specifically, the Iowa code requires banks that are voluntarily dissolving to adopt plans for their assets and liabilities to pass to another state or national bank or other FDIC-insured institution. The statute does not refer to credit unions as authorized purchasers.

The sharply worded letter from Iowa Superintendent of Banking Jeff Plagge denying the application said that he was waiting until the close of a comment period that was set to end on March 5 to issue his decision. However, he said, it came to his attention that the transaction had already been finalized without the required approval from the Iowa Division of Banking. Plagge directed the bank and the credit union to maintain separate records until the matter is resolved.

“This is but one more example of a large credit union placing unrestricted growth and tax-free profits ahead of service to Iowans with modest means,” commented Iowa Bankers Association President and CEO John Sorensen. “Policymakers should take note and re-evaluate whether these institutions continue to deserve the growing tax subsidies provided by Iowans.” Amid a recent increase in credit union acquisitions of banks, the Iowa news comes less than two months after the Colorado State Banking Board denied the sale of a bank to a credit union citing state law.

Sen. Thune Urges Greater Regulatory Flexibility for Ag Bankers

In a letter to the federal banking agencies last week, Sens. John Thune (R-S.D.) and Tammy Baldwin (D-Wis.) made a bipartisan appeal for greater regulatory flexibility that would allow community financial institutions to work with farmers and ranchers during a challenging time in the agricultural economy. ‌

The senators raised concerns about policies that could limit banks' and credit unions’ ability to lend to struggling farmers and ranchers, such as arbitrary concentration limits on ag portfolios. “Community financial institutions have a great deal of experience in agriculture lending during downturns in the farm economy,” they wrote. “We urge you to encourage your examiners to continue valuing their judgment when it comes to providing capital to producers.” ‌

They added that additional flexibility need not come at the expense of safety and soundness, emphasizing that “we believe community financial institutions, together with examiners and regulators, can exercise sound judgment until the farm economy rebounds.” Read the letter. ‌

Podcast: The Race to Engage Women in Financial Planning

The wealth management business is in a race—not just a technology race, but a race to engage today’s diverse asset management customers. On the latest episode of the ABA Banking Journal Podcast—sponsored by Reich and Tang Deposit Solutions—top wealth management executive Gunjan Kedia explains what U.S. Bank is doing to better serve women in the marketplace amid sweeping demographic changes

With $21 trillion currently managed by women, “I’m challenging our industry to be ready for them,” Kedia says. She discusses research on how wealth managers can more effectively engage with women. Contrary to surveys, women aren’t actually less confident in wealth management, she says; they just don’t receive messages in language that resonates. “They want to talk more about the purpose of what money can do, rather than just the number.”

Speaking on the sidelines of the ABA Wealth Management and Trust Conference, Kedia also discusses the convergence of four traditional models of wealth management and how U.S. Bank’s “smart DIY” approach to wealth technology is expanding customers’ financial capabilities. “It’s a little bit of a race on who gets to all the positives of the four models first.” Listen to the episode

Tri-State Trust Conference Set for April 20-22

The NDBA will hold the 2020 Tri-State Trust Conference on April 20-22 in Fargo at the Hilton Garden Inn. 

Highlights of this year's conference include: disrupting for good, federal tax update, retirement insights , fixed income outlook, digital assets, SECURE Act, reading body language, business succession planning and 31 exhibitors. Content has been submitted for continuing education credit with: CFP, ABA (CTFA and CRSP), ND Insurance, SD Insurance, ND CLE and MN CLE. 

The deadline to reserve a hotel room is March 18. See the full agenda and register to attend

GSBC Scholarship Deadline Extended to March 15

The Graduate School of Banking at Colorado's Future Leaders and Alumni Association scholarships deadline, which was March 1, has been extended to March 15. This year's school session will be held July 19-31 at the University of Colorado, Boulder. 

The Future Leaders Scholarship is offered through co-sponsoring state banking associations, including the SDBA, and is typically awarded to one banker per state, per calendar year. Applicants’ banks must be members of GSBC’s co-sponsors.

The GSBC Alumni Association awards scholarships to 10 community bankers annually. Applicants must complete an online application, and the best-qualified applicants are selected by the Alumni Advisory Board. Applicants need not be from a specific state, nor be affiliated with any particular banking association to qualify.

Learn more about the scholarships and apply

Compliance Alliance

Question of the Week

Question: In some cases, our bank pulls an automated underwriting system (AUS) report, but ultimately not used in making the credit decision. Instead, the application is manually underwritten, and those results are used to make the credit decision. For HMDA purposes, do we still have to report the AUS that was pulled?

Answer: If the bank used the AUS results to evaluate the application, even if it was not used in the underwriting to make the credit decision, the bank should still report the AUS.

1. Automated underwriting system data - general. Except for purchased covered loans
i. A financial institution that uses an AUS, as defined in § 1003.4(a)(35)(ii), to evaluate an application, must report the name of the AUS used by the financial institution to evaluate the application and the result generated by that system, regardless of whether the AUS was used in its underwriting process. For example, if a financial institution uses an AUS to evaluate an application prior to submitting the application through its underwriting process, the financial institution complies with § 1003.4(a)(35) by reporting the name of the AUS it used to evaluate the application and the result generated by that system.

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.