SDBA eNews

April 9 2020

SDBA Seeking Bankers to Serve on Committees, Work Groups

The SDBA is seeking bankers to serve on four standing committees and two work groups for 2020-2021: Agricultural Credit, Credit Card, Legislative and Trust committees and Education and Technology work groups. Terms are one year beginning May 1, 2020, and ending April 30, 2021, 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 member has made and work hard to ensure the meetings are well run and productive. Committees/work groups meet once or twice a year to initiate activities and recommend policy.

If you are interested in serving on a committee or work group, please complete the committee/work group appointment form. The deadline to apply is April 30, 2020. If you know of someone else at your bank who might be interesting in serving on a committee or work group, please share this information with them. If you have any questions, contact Alisa Bousa.  

NDBA/SDBA 2020 Annual Convention Canceled

The North Dakota Bankers Association has made the decision to cancel the NDBA/SDBA 2020 Annual Convention due to the ongoing coronavirus situation. During this difficult time, both the SDBA and NDBA continue to support and believe in Dakota bankers and the communities we serve. We miss you and look forward to the time when we can come together again.

Please mark your calendars and plan to join us for next year's 2021 Quad State Convention on June 14-15, 2021, at the Rushmore Plaza Civic Center in Rapid City, S.D. Next year's event will include bankers from South Dakota, North Dakota, Montana and Wyoming.

Thank you for your continued involvement and support. Please reach out to Halley Lee with any questions, ideas or suggestions.

Latest SBA Guidance Clarifies PPP Funding Period, Use of Promissory Notes

Newly-added FAQs from the Small Business Administration and the Treasury Department address two challenges with the Paycheck Protection Program that ABA and the state bankers associations have been urgently raising with officials: the promissory note to use with PPP loans and the expectation for a five-day period between loan approval and funding.

Regarding the promissory note, SBA clarified that lenders may use their own note or an SBA form. The agency released its own form last night, but it may be revised following ABA and industry feedback to meet lenders’ operational needs.

Another challenge reported by lenders has been the question of how soon PPP loan funds must be disbursed, and ABA and the state associations have aggressively sought clarity from SBA and Treasury, particularly amid the choppy rollout of the PPP. According to the latest FAQs, the lender must make the first disbursement of the loan no later than 10 calendar days after the loan is approved.

Fed to Create Lending Facility for PPP; Agencies Provide Regulatory Capital Relief

The Federal Reserve is creating a lending facility for banks providing loans under the Paycheck Protection Program. Through the Paycheck Protection Program Lending Facility, the Federal Reserve Banks will extend non-recourse loans to institutions eligible to make PPP loans. PPP loans guaranteed by the SBA that are originated by eligible banks may be pledged as collateral to the Federal Reserve Banks.

In addition, to help banks make use of the new facility, the federal banking agencies issued an interim final rule that will allow institutions to neutralize the regulatory capital effects—with respect to leverage and risk-based ratios—of loans pledged to the PPPL facility. The relief is consistent with the treatment the agencies are applying to banks using the Fed’s money market mutual fund liquidity facility. 

The FDIC approved the interim final rule in a notational vote on Tuesday, and the other agencies are expected to follow suit shortly. The agencies will accept comments on the interim final rule for 30 days after publication in the Federal Register. Read the interim final rule.‌

Agencies Update Guidance on COVID-19 Loan Modifications

The federal banking agencies on Tuesday updated guidance on working with borrowers affected by the coronavirus pandemic. The revised guidance—which replaces a statement issued on March 22—aligns agency expectations on troubled debt restructuring with the CARES Act and articulates their views on the application of consumer protection regulations. “Financial institutions have broad discretion to implement prudent modification programs consistent with the framework included in this statement,” the agencies said in a newly-added line.

In addition to incorporating Section 4013 of the CARES Act, which specifically allowed certain COVID-19-related loan modifications to not be reported as TDRs, the guidance covers accounting for loan modifications made outside of Section 4013 consistent with the previous guidance.‌

While lenders and servicers must adhere to consumer protection requirements, in light of the emergency situation, “the agencies will take into account an institution’s good-faith efforts demonstrably designed to support consumers and comply with consumer protection laws.” The guidance added that “the agencies do not expect to take a consumer compliance public enforcement action against an institution, provided that the circumstances were related to the National Emergency and that the institution made good faith efforts to support borrowers and comply with the consumer protection requirements, as well as responded to any needed corrective action.” Read the revised guidance.‌

ABA Publishes Paper on COVID-19 Surface Contamination Risks

As banks manage the risks associated with physical transmission of the coronavirus, ABA SVP Paul Benda has authored a paper summarizing the current science on the risk of transmission through contaminated surfaces, such as ATM keypads and U.S. currency.

While much remains uncertain about how the novel coronavirus is transmitted, the available science indicates that indirect transmission, for example by contaminated surfaces, is “exceedingly rare,” writes Benda, who before joining ABA as SVP for risk and cybersecurity policy worked at the Pentagon, leading the response to the 2001 anthrax threats and developing systems to defend against biological and chemical attacks.

“Fundamentally, it appears that it is very difficult to became infected with [coronavirus] via contaminated surface transmission,” Benda writes. “With appropriate precautions, it is likely that the risk from fomites can be de minimis during shopping excursions out of the house, and the focus should be ensuring appropriate social or physical distancing is maintained to minimize the risk from droplet/aerosol-based transmission.” Download the paper.

GBS Wisconsin Offers Banker Resources

The Graduate School of Banking at the University of Wisconsin-Madison is offering flexible, affordable resources to help bankers address today's most pressing concerns.

GSB's online programs--each led by renowned GSB faculty addressing the ways banks are being impacted by recent events--provide flexible distance learning on the issues that matter most today.

When you register for a scheduled program, you'll gain one connection into the live presentation, unlimited access to the recording following completion of the seminar and all handout materials. Recorded programs are available for immediate viewing. For the duration of this crisis, GSB online seminar recordings will remain available without expiration. Learn more

SBS CyberSecurity to Hold Virtual Conference 'Managing Today's Cyber Risks in Banking'

SBS CyberSecurity will hold a virtual conference "Managing Today's Cyber Risks in Banking" on Wednesday, April 15, from 8:30 a.m. to 4 p.m. CDT. This virtual conference is designed to provide interactive training on evolving cybersecurity threats and what your bank should do to build a strong information security program that helps protect against these threats.

SBS will identify components of a comprehensive information security program that enables successful IT examinations and minimizes your risk against real-world threats. This seminar will walk you through various FFIEC, FDIC and OCC resources, as well as other industry best practices. SBS will also review some timely hot topics, including pandemic preparedness, managed service providers and creating a culture of security at your institution. 

Not only will this virtual conference include live video from presenters, but it will include a Virtual Lobby utilizing Discord to allow attendees to interact with one another and with event moderators, as well as share information, best practices and tools you’re using at your organization. An invitation to join SBS's CyberRiskNOW Discord server will be sent to all attendees prior to the conference. The cost for the virtual conference is $249. Learn more and register

SDBA Creates Resource Page of Free Leadership, Motivational Online Seminars

As we are all learning to navigate through these unprecedented and challenging times, the SDBA has created a resource page of free leadership and motivational online seminars being hosted by SDBA business partners and speakers. Learn more.  

Compliance Alliance


Question of the Week

Compliance Alliance Pandemic Resources for Community Banks

Question: I thought that any time a loan balance was increased the bank would have to run a new flood determination. Is that correct?

Answer: Yes, it is the case that if the previous determination is not more than seven years old, and the basis for the previous determination was recorded on the Special Flood Hazard Determination Form, and there were no map revisions affecting the property since the original determination was made, then the original determination can be used to increase, extend, renew or refinance a loan.  

Making a loan is also an acceptable purpose to use a prior determination, if the loan is made to the same borrower, such as in the instance of multiple loans to the same borrower secured by the same property. However, in the event that you made a loan to one borrower on a particular property and three years later you were going to make a loan to another borrower in order to buy this same property, you'd need to pull a new determination because there is a different borrower than was listed on the original determination.

An institution may rely on a prior flood determination, whether or not the security property is located in an SFHA, and it is exempt from liability for errors in the previous determination if: 

  • The previous determination is not more than seven years old, and 
  • The basis for the previous determination was recorded on the SFHDF.

... An institution may also rely on a previous determination, which is not more than seven years old and is set forth on an SFHDF, when it increases, extends, renews, or purchases a loan. FDIC Flood Manual, p. 6.8

Further, if the same lender makes multiple loans to the same borrower secured by the same improved real estate, the lender may rely on its previous determination if the original determination was made not more than seven years before the date of the transaction, the basis for the determination was set forth on the SFHDF, and there were no map revisions or updates affecting the security property since the original determination was made. Interagency FAQ #68, p. 6.33

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.