SDBA eNews

May 7, 2020

Four Elected to SDBA Board of Directors

The SDBA recently held elections for four of the nine seats on its Board of Directors. Elected to serve on the SDBA Board of Directors were:

  • Dylan Clarkson, President/CEO, Pioneer Bank & Trust, Belle Fourche
  • Craig Davis, President/CEO, First National Bank, Pierre
  • Timothy Kintner, Regional President—South Dakota, Great Western Bank, Sioux Falls
  • Pete Mehlhaff, President/CEO, Great Plains Bank, Aberdeen

This is Kintner’s first term on the SDBA Board of Directors and Clarkson, Davis and Mehlhaff’s second terms. They started their new terms on May 1, 2020. Read more about those elected to the SDBA Board

SDBA Provides 'Back to Normal' Resource for Banks, Conducting Survey

As South Dakota and our nation begin to emerge from the COVID-19 pandemic, there are many factors for banks to consider when determining when and how to begin getting “back to normal.” So many moving parts will mean this process will look different from county to county and, in some cases, city to city.

The SDBA has provided a resource for banks to use in their discussions about how to best approach this challenge while keeping employees and customers safe. The SDBA will update the "back to normal" resource as new information and guidance becomes available. 

The SDBA is also currently conducting a survey of member banks to gather information on their return to work plans. Be watching for the survey results, which will be anonymous, early next week. 

South Dakota Division of Banking Issues Branch Reopening Memo

On Monday, the South Dakota Division of Banking issued a branch reopening memo following Gov. Noem announcing her “Back to Normal” Plan.

"As you consider re-opening branches and lobbies, I ask that you review the Back to Normal Plan, current CDC guidelines, and local restrictions and conditions," said Division of Banking Director Bret Afdahl. "Prior to reopening, please be sure to have adequate practices in place to ensure the safety of your staff and the public."

As banks consider reopening branches and lobbies to the public, the Division said they should be aware that SDCL 51A-4-19 provides the following: If any bank adopts new hours of operation for its daily business to customers, it shall inform the division prior to the effective date of the change.

"I ask that you disseminate information on reopening branches and lobbies to the public via your normal mediums," Afdahl said. "Please also communicate this information to our office via email ([email protected]) or telephone (605-773-3421) as prescribed in Statute."

Banks should also note that the Pandemic Planning Memo issued on March 12, 2020, remains in effect in the event of future outbreaks. Regarding examinations, division staff will continue to have discussions with bank management in advance of scheduled examinations to determine an appropriate course of action with regard to on- and off-site examination activities. Read the full memo.

19,159 PPP Loans Approved in South Dakota

A total of 19,159 Paycheck Protection Program (PPP) loans in the amount of $1,549,175,802 were approved in South Dakota as of Friday, May 1.

"A huge THANK YOU to South Dakota’s banks and bankers for providing critical working capital to more than 19,000 businesses!" said SDBA President Curt Everson. "You Make a Difference!!"

Round one PPP totals in South Dakota were at 11,324 approved loans in the amount of $1,269,616,339. Round two PPP totals in South Dakota were at 7,835 approved loans in the amount of $279,559,463.

SBA announced that it had approved 2.44 million round two PPP loans nationwide amounting to $183.5 billion as of yesterday afternoon. SBA also released a new interim final rule yesterday addressing PPP applications from businesses exempt from non-discrimination requirements for certain practices under federal law, such as single-sex school admissions and tribal preferences in adoption placement, as well as circumstances when student workers count as employees for determining PPP eligibility. Read the interim final rule.

Help American Farmers Support Our Communities During COVID-19

Farmers and ranchers play a vital role in keeping America’s food supply flourishing. But unfortunately, farms across America are hurting as crop and livestock prices tumble due to the COVID-19 pandemic. With farm income declining, ag producers—now more than ever—need help acquiring credit to help them deal with the pandemic’s impact on the industry.

Congress can help our nation’s farmers and ranchers by passing the ECORA Act—a bill that would promote greater access to credit and reduce borrowing costs for ag producers. Ask our lawmakers to support the vitally important role of America’s farmers and ranchers during this pandemic by making the ECORA proposal part of the next COVID-19 relief package.

America’s farmers and ranchers are critical components of the supply chain that helps all Americans. They should remain a top priority and should have the capital they need to continue farming. Make your voice heard and contact our lawmakers today!

SBA Offers Clarity for PPP Borrowers Attempting to Rehire Employees

The Small Business Administration and the Treasury Department confirmed that Paycheck Protection Program borrowers who attempt to rehire employees that were laid off will not have their loan forgiveness amounts reduced if those employees decline the offer to return to work.

In updates to the PPP FAQs late Sunday night, SBA and Treasury said they would issue an interim final rule in the coming days codifying that a borrower must have documented that they made a good faith, written offer of rehire to the employee for the same wages and number of hours. Borrowers must also document the employee’s rejection of the offer.

In addition, the updated FAQs provide clarification about the treatment of nonprofit hospitals under the CARES Act. A nonprofit hospital may qualify for PPP funding if it “reasonably determines” and maintains documentation that it meets the criteria of a 501(c)(3) under the Internal Revenue Code and is therefore tax exempt under section 501(a), SBA and Treasury noted. They added that these entities should also review all other applicable eligibility criteria.

The FAQs also provide additional guidance for seasonal employers making borrower certifications to obtain PPP funding. Read the updated FAQs.

FHFA to Provide Additional Loan Origination Flexibility

As part of its ongoing effort to provide relief to mortgage borrowers during the coronavirus pandemic, the Federal Housing Finance Agency on Tuesday announced that it would extend until at least June 30 several previously announced loan origination flexibilities for customers of Fannie Mae and Freddie Mac.

Specifically, FHFA said it would continue to offer alternative appraisals on purchase and rate term refinance loans, alternative methods for verifying employment before loan closing and flexibility for borrowers to provide documentation instead of an inspection to allow renovation disbursements. FHFA also said it would expand the use of power of attorney and remote online notarizations to facilitate loan closings. 

Fannie Mae and Freddie Mac both issued their own communications highlighting the changes.

IRS Updates FAQs to Address Payments to Deceased, Other Non-Eligible Recipients

The IRS has updated its FAQs on the CARES Act economic impact payments to reflect that the deceased (as well as heirs receiving payments in their name), non-resident aliens and incarcerated individuals are not eligible to receive EIPs and must return them. The obligation to return funds is on the ineligible recipients, not on banks.  Read the FAQs. For more information, contact ABA's Steve Kenneally. ‌

Hacker Hour: Innovation Through a Pandemic Round Table

The COVID-19 pandemic has caused abrupt changes in operations for organizations around the world. The result has been the implementation of a variety of innovative solutions to continue to serve customers and allow employees to work from home.

Collaborate with SBS CyberSecurity and your peers for an interactive round table discussion Hacker Hour: Innovation Through a Pandemic Round Table on Wednesday, May 13, 2-3 p.m. CDT. The round table will focus on sharing innovative ideas and ways of leveraging technology that have kept our businesses running in a mostly virtual world. Register for the Round Table.

Compliance Alliance

Question of the Week

Question: Are banks required to report SBA Paycheck Protection Program (PPP) loans to the credit bureaus? I thought that SBA 7(a) loans are required to be reported, but I don’t know if this extends to PPP loans. 

Answer: You are right that there is a general requirement to report SBA loans. That being said, this requirement was not specifically cross referenced in the PPP rules, so it’s currently still not clear whether this requirement extends to PPP loans. While the intent does not appear to be to require institutions who currently do not report to begin the reporting process for PPP loans, the bank will ultimately have to make an internal judgment call until further guidance is issued.  

2. Reports to Credit Reporting Agencies In accordance with the Debt Collection Improvement Act of 1996, Lenders are required to report information to the appropriate credit reporting agencies whenever they extend credit via an SBA loan. Thereafter, they should continue to routinely report information concerning servicing, liquidation, and charge-off activities throughout the life-cycle of the loan. (See Chapter 26 for more information regarding credit reporting requirements for loans in charge-off status.)
SBA SOP 50 57 2, p. 28:

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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 and ask for our Membership Team.

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