SDBA eNews

June 4, 2020

Registration Open for SDBA Virtual Annual Business Meeting

The SDBA’s Annual Business Meeting, traditionally held during the Annual Convention, will take place as a virtual meeting via Zoom on Tuesday, June 9, at 9-10 a.m. CDT. The meeting is being held virtually due to the cancellation of the SDBA/NDBA Annual Convention, which was scheduled for June 8-9.

The agenda of the Annual Business Meeting includes election of SDBA officers, comments from the outgoing and incoming SDBA chairs, an association update from SDBA President Curt Everson and a South Dakota Bankers Foundation update from Halley Lee. The meeting is open to all SDBA members. 

Regarding the SDBA’s election of officers voting policy, each member bank is allowed one vote per member bank per Article 3, Section 2 of the SDBA By-Laws, stating: "A voting delegate must be an officer or other executive of an active corporation member, whether a parent bank or branch bank, and such voting delegate must be an officer or other executive employed on the premises of the active member which he represents. Each voting delegate shall be entitled to one vote only, being the vote of the member, whether parent bank or branch bank that represents. No voting by proxy shall be allowed."

All participants will have the option to include comments or questions during registration. We encourage all members to participate in the virtual meeting. Register for the SDBA Virtual Annual Business Meeting

Registration Open for Virtual Town Hall with FDIC Chair Jelena McWilliams

On Tuesday, June 9, South Dakota bankers are invited to join North Dakota bankers for a Virtual Town Hall with FDIC Chair Jelena McWilliams at 10:30-11:30 a.m. CDT. McWilliams was originally scheduled to speak at the SDBA/NDBA Annual Convention, which was canceled due to the pandemic.

McWilliams was sworn in as the 21st chair of the FDIC on June 5, 2018. She serves a six-year term on the FDIC Board of Directors and is designated as chair for a term of five years.

McWilliams was executive vice president, chief legal officer and corporate secretary for Fifth Third Bank in Cincinnati, Ohio. Prior to joining Fifth Third Bank, McWilliams worked in the U.S. Senate for six years, most recently as chief counsel and deputy staff director with the Senate Committee on Banking, Housing and Urban Affairs and previously as assistant chief counsel with the Senate Small Business and Entrepreneurship Committee.

From 2007 to 2010, McWilliams served as an attorney at the Federal Reserve Board of Governors, where she drafted consumer protection regulations, reviewed and analyzed comment letters on regulatory proposals, and responded to consumer complaints.

Participants will have the chance to submit a question when they register. Register for the Virtual Town Hall with FDIC Chair Jelena McWilliams

Senate Sends PPP Flexibility Bill to President

The Senate last night unanimously passed a bipartisan bill that would provide greater flexibility for Paycheck Protection Program borrowers. Having cleared the House last week, the Paycheck Protection Program Flexibility Act now goes to the President to be signed.

The bill extends the maturity period for unforgiven PPP loans made after the date of enactment to five years; the maturity on previous PPP loans is not automatically extended but may be extended by mutual agreement of the lender and the borrower. The bill also extends the forgiveness period for all PPP loans to 24 weeks from the date of origination.

The bill would also reduce the minimum amount that businesses must devote to maintaining payroll from 75% to 60% in order to receive forgiveness. ABA and the state bankers associations continue to advocate for a more streamlined approach to loan forgiveness.

“ABA appreciates the Senate and House both approving changes to the PPP to make it more flexible for small businesses,” the Association noted on Twitter. “Banks of all sizes will continue to support small businesses in need using this important financial lifeline.”

House Republicans Call for Streamlined PPP Forgiveness Application

A group of House Republicans—led by Reps. Andy Barr (R-Ky.) and French Hill (R-Ark.)—wrote to Treasury Secretary Steven Mnuchin and Small Business Administration Administrator Jovita Carranza last week urging them to simplify the process Paycheck Protection Program borrowers must go through to have their loans forgiven.

With many small borrowers indicating that they would likely need to hire outside counsel to ensure compliance with the PPP forgiveness terms, the lawmakers called for SBA and Treasury to tailor the forgiveness application based on the size and complexity of the loan. For PPP loans under $350,000, the lawmakers recommended a streamlined forgiveness application that “could consist of basic reporting by small businesses on how much they received and a good faith certification that they spent the funds in compliance with the requirements for forgiveness.”

“A streamlined forgiveness application would ease the burden on both borrowers and lenders of smaller PPP loans, consistent with congressional intent, while at the same time allowing Treasury and the SBA to focus its scarce and valuable resources on the program’s higher risk and larger dollar-value loans,” the lawmakers said. Read the letter.

ABA Report: Farm Banks Increased Capital Ahead of Pandemic

Prior to the outbreak of the coronavirus in the U.S., the nation’s farm banks were well-capitalized—with many raising equity capital—a more conservative type of capital—according to ABA’s annual Farm Bank Performance Report released last week. Equity capital at the nation’s 1,715 farm banks rose 11.5% to total $52 billion in 2019. Tier 1 capital, meanwhile, increased by $3.3 billion to $47.9 billion.

Farm banks increased agricultural lending by 3.6%, or $4 billion, to $105 billion in 2019. Almost all—98%—of them were profitable, with 63% reporting earnings increases. The report noted, however, that many ag producers were struggling with difficult conditions in the agricultural economy—from trade uncertainties to natural disasters to weakening farm balance sheets and land values—prior to the outbreak of COVID-19. Farm banks reported non-current ag loans ticking up to 0.84%.

Looking ahead, the report noted that with the onset of the pandemic, the ag sector has seen demand decline and supply chain disruptions and that “as lockdown and the virus persists, pressure will continue to weigh on the agricultural sector in 2020.” Read the report.

ABA Welcomes Temporary Appraisal Relief, Seeks Additional Clarity

In a letter to the federal banking agencies last Thursday, ABA expressed appreciation for a recent interim final rule providing banks that may be facing operational challenges due to COVID-19 with an option to defer appraisals for certain residential and commercial real estate transactions through the end of the year.

The appraisal relief does not apply to loans used for the “acquisition, development and construction of real estate,” and ABA urged the agencies to provide additional clarity on the definition of these loans via an FAQ document or similar statement. Read ABA’s letter. For more information, contact ABA’s Sharon Whitaker

ABA Foundation Launches New Housing Relief Resource Page

As the nation observes American Housing Month in June—and as millions of Americans are now struggling to make monthly housing payments due to COVID-19—the ABA Foundation on Tuesday launched a new housing relief resource page for individuals seeking information. The page provides an overview of the housing-related relief programs included in the CARES Act coronavirus legislation, links to housing and credit counseling, advisories about scams, federal and state resources, mortgage finance tools and downloadable tip sheets.

“America’s banks understand the critical role that housing stability plays in the lives of their customers and communities,” said ABA President and CEO Rob Nichols. “Since the start of the pandemic, banks of all sizes have been offering a range of assistance programs to those facing financial hardship. If you need help, make sure to reach out to your bank.”

In addition to the housing relief webpage, the ABA Foundation will provide bankers with resources throughout the month, including tip sheets in English and Spanish, as well as two webinars on June 8 and June 24 that focus on the housing challenges faced by seniors and military families, respectively. Visit the webpageRegister for the webinars

Minnesota Bankers Association to Hold Preparing for the Future Virtual Conference

How will things look after the coronavirus pandemic is all over? How do I better understand the upcoming 2020 elections? Both of these questions will be addressed at the Preparing for the Future Virtual Conference on June 15 hosted by the Minnesota Bankers Association. 

This virtual, two-hour event is a great way to hear from two nationally-renowned experts and get a better idea of what our future holds---right from your bank or home. Futurist Mark Zinder will explore what may change and what might stay the same in our post-pandemic world. David Schultz, professor of political science at Hamline University and a professor of law at the University of Minnesota, will follow up with a look at all the factors that will determine the 2020 elections.

Two big topics. Two great speakers. Two hours to prepare for the future! Learn more and register

 Compliance Alliance

Question of the Week

Question: An applicant applied for a Paycheck Protection Program (PPP) loan via our website, and in reviewing the application, we determined the business is an ineligible industry.  Would this be considered an application requiring an adverse action notice?

Answer:  While this hasn't been specifically addressed in the PPP context, conservatively the bank would treat this as an application requiring an adverse action notice as the bank communicated the decision to the consumer (they were ineligible based on information related to them).

3. When an inquiry or prequalification request becomes an application. A creditor is encouraged to provide consumers with information about loan terms. However, if in giving information to the consumer the creditor also evaluates information about the consumer, decides to decline the request, and communicates this to the consumer, the creditor has treated the inquiry or prequalification request as an application and must then comply with the notification requirements under § 1002.9. Whether the inquiry or prequalification request becomes an application depends on how the creditor responds to the consumer, not on what the consumer says or asks. (See comment 9-5 for further discussion of prequalification requests; see comment 2(f)-5 for a discussion of preapproval requests.


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