SDBA eNews

June 25, 2020

SDBA Announces Retirement of President Curt Everson

Curt EversonThe SDBA on Monday announced the impending retirement of its president, Curt Everson. Following 20 years of service in state government, Everson has led the 136-year-old Association since September of 2002.

“I am grateful for the privilege I was given to lead this esteemed Association and to work with dedicated bankers and great community leaders for nearly two decades,” Everson said. “By the end of this year, it will be time for me to retire and hand over the reins to someone with new ideas and a fresh approach.”

SDBA Chair Steve Bumann, CFO for BankWest in Pierre, will lead a committee of bankers in the search and selection of a new SDBA president. 

“We are going to take some time finding the person with the right mix of public policy advocacy, communications and proven leadership skills required to manage an ever-changing organization and industry,” Bumann said.  

For information on the position of SDBA president and applying, visit Individuals interested in applying for the position should send a letter of application with a resume, references and salary requirements to: Mr. Steve Bumann, Chair, SDBA Executive Search Committee, PO Box 998, Pierre, SD 57501 or email to [email protected].

Financial Regulators Issue Examiner Guidance for Assessing COVID-19 Effects

Recognizing the significant and long-lasting effects of the coronavirus pandemic on financial institutions, federal and state financial regulators on Tuesday issued joint guidance for how examiners should assess the effects of COVID-19 on the safety and soundness of banks and credit unions. The guidance directs examiners to assess institutions according to existing agency policies and procedures and to consider the appropriateness of management actions to address COVID-19 challenges. It provides specific instructions for examiners when considering an institution’s risk assessment, capital adequacy, asset quality, management actions, earnings, liquidity and market risk sensitivity.‌

“Examiners should assess the reasonableness of management’s actions in response to the pandemic given the institution’s business strategy and operational capacity in the distressed economic and business environment in which the institution operates,” the agencies said. “When assigning the composite and component ratings, examiners will review management’s assessment of risks presented by the pandemic, considering the institution’s size, complexity and risk profile.”

When determining whether a formal or informal enforcement is necessary, examiners should consider whether the institution appropriately planned for resiliency and operational continuity, has implemented prudent policies and is pursuing “realistic resolution of the issues confronting the institution,” they added.

With respect to credit risk, the agencies acknowledged that the pandemic could cause substantial, temporary changes to property values and noted that "examiners will not subject a renewed, extended or modified loan to adverse classification" solely because of such a decline, provided management determines the borrower has an ability to repay according to "reasonable modified terms."  View the guidance. For more information, contact ABA's Josh Stein. ‌

CFPB Proposes Changes to QM Rule, Extension for Temporary 'GSE Patch'

The Consumer Financial Protection Bureau on Monday took a significant step to revise its qualified mortgage rule, issuing a proposal to replace the use of the 43% debt-to-income ratio as a QM qualification standard with a price-based approach. The Bureau concluded that such an approach—which would compare the loan’s annual percentage rate to the average prime offer rate for a comparable transaction—provides “a strong indicator and more holistic and flexible measure of a consumer’s ability to repay than DTI alone.” ‌

Specifically, loans would meet the general QM loan definition only if the APR exceeded APOR for a comparable transaction by less a than two percentage points as of the date the interest rate is set, the Bureau noted. Creditors would still be required to consider the consumer’s income or assets, debt obligations and DTI ratio or residual income, as well as verify the consumer’s current or reasonably expected income or assets other than the value of the dwelling that secures the loan and the consumer’s current debt obligations, alimony and child support. The proposal would also remove Appendix Q.‌

Additionally, the CFPB issued a second proposal that would extend the temporary “GSE patch,” which grants QM status to loans eligible to be purchased or guaranteed by Fannie Me or Freddie Mac, until the QM rule changes are finalized and take effect. The CFPB will accept comments on the proposed changes to the QM rule for 60 days after publication in the Federal Register. The GSE patch extension proposal will have a 30-day comment period.‌

ABA is currently in the process of reviewing both proposals and will submit comments. The Association welcomed this long-awaited action by the CFPB to ensure market viability, provide greater clarity and reach a permanent solution with respect to the GSE patch. Read more. For more information, contact ABA’s Rod Alba.‌

SBA Implements PPP Loan Forgiveness Changes in Rule

The Small Business Administration Monday night issued a new interim final rule implementing in regulation changes made to the Paycheck Protection Program loan forgiveness process by the PPP Flexibility Act and other recent developments, including the SBA’s simplified Form 3508EZ forgiveness application.

The rule conforms previous rules to reflect provisions of the PPPFA, including the covered period for forgiveness, non-payroll costs eligible for forgiveness, reductions in the forgiven amount and the timing of when borrowers must apply for forgiveness to avoid making payments. It confirms that borrowers may submit forgiveness applications any time on or before the loan matures, including before the end of the covered period, provided they have used all of the loan funds for which they wish to apply for forgiveness.

The rule also incorporates exemptions in the PPP Flexibility Act that preserve loan forgiveness for employers that made good-faith attempts to rehire employees or fill vacant positions (and retained a previous exemption for employers that have reduced employee hours and offered in good faith to restore them) or whose business could not return to normal because of public health directives. SBA interpreted the latter exemption to include “both direct and indirect compliance” with state and local shutdown orders as well as federal guidance. Read the interim final rule

SBA: 4.7 Million PPP Loans Made as of June 20

Lenders nationwide had made approximately 4.7 million PPP loans totaling $515 billion as of last Saturday, SBA reported over the weekend. Forty-four percent of all PPP loans were made by lenders with less than $10 billion in assets, 19% were made by institutions with $10 billion to $50 billion in assets, and 37% were made by institutions with more than $50 billion in assets. The overall average loan size was $110,000.

The data also included an updated list of the top 15 PPP lenders. The top five PPP lenders were JPMorgan Chase, Bank of America, PNC, Truist and Wells Fargo. With the PPP program now in its final days before the program expires on June 30, approximately $128 billion was still available as of the report date. Read more.

ABA, AMBA CEOs Call for Equal Treatment of Banks, CUs on Military Bases 

In an American Banker op-ed last Thursday, ABA President and CEO Rob Nichols and Association of Military Banks of America President and CEO Steve Lepper condemned a recent move by the National Credit Union Administration to designate all active-duty military personnel as low-income. Doing so would effectively allow major credit unions—such as Navy Federal and PenFed—to immediately qualify as low-income institutions and gain the regulatory benefits reserved for true low-income credit unions, such as the ability to seek secondary capital investments, expanded limits on nonmember deposits and the removal of a statutory business lending cap.

“None of these changes offers any tangible benefits to financially struggling service members,” Lepper and Nichols said. “In fact, these gifts make it more likely that the mega credit unions will simply expand their non-military revenues. . . . If Washington truly wants to help struggling military personnel and their families now, there is a far better solution ready and waiting: Congress can expand service members’ financial service choices by incentivizing more banks to operate on military bases.”

Currently, tax-exempt credit unions are permitted to operate rent-free on military bases, while taxpaying banks do not, the CEOs noted. “As the Senate and House begin their work reauthorizing the National Defense Authorization Act, lawmakers must make this sensible change and push back against credit union lobbying that only limits the financial choices for service members and their families.” Read the op-ed

Hacker Hour: Common Questions About Business Continuity Planning

A business continuity plan is a strategic collection of documents, procedures and other information that prepares a business for interruptions that arise from unexpected events or situations. Join SBS CyberSecurity for the free webinar Hacker Hour: Common Questions About Business Continuing Planning on Tuesday, June 30, at 3 p.m. CDT. SBS will address the most common questions/issues that arise when creating and maintaining a strong business continuity plan. Register for the webinar

Watch Jelena McWilliams' FDIC Virtual Town Hall with Dakota Bankers

FDIC Chair Jelena McWilliams held a Virtual FDIC Town Hall with more than 350 South Dakota and North Dakota bankers and business partners on June 9. McWilliams was originally scheduled to speak at the NDBA/SDBA 2020 Annual Convention, which was canceled due to the pandemic. Those who were not able to take part in the live town hall can watch the recording.

 Compliance Alliance

Question of the Week

Question: It is my understanding that the aggregate amount of extensions of credit to executive officers cannot exceed $100,000 for Regulation O purposes. If an executive officer has a loan that is guaranteed by FSA or SBA, is the guaranteed portion of that loan counted in their aggregate debt?

Answer: Extensions of credit secured by guarantees of any department, agency, bureau, board, commission or establishment of the United States are not included in the aggregate amount of extensions of credit restriction calculation (the higher of 2.5 per cent of the bank's unimpaired capital and unimpaired surplus or $25,000, but in no event more than $100,000).

(c) A member bank is authorized to extend credit to any executive officer of the bank:


(3) In any amount, if the extension of credit is secured in a manner described in §215.4(d)(3)(i)(A) through (d)(3)(i)(C) of this part; and

(4) For any other purpose not specified in paragraphs (c)(1) through (c)(3) of this section, if the aggregate amount of extensions of credit to that executive officer under this paragraph does not exceed at any one time the higher of 2.5 per cent of the bank's unimpaired capital and unimpaired surplus or $25,000, but in no event more than $100,000.

Reg. O:

(3) Exceptions. (i) The general limit specified in paragraph (d)(1) of this section does not apply to the following:


(B) Extensions of credit to or secured by unconditional takeout commitments or guarantees of any department, agency, bureau, board, commission or establishment of the United States or any corporation wholly owned directly or indirectly by the United States;


Reg. O:

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