SDBA to Hold State Legislative Day Virtually

Picture of state seal.The SDBA will hold its 2021 State Legislative Day on Feb. 10 virtually via Zoom. This is your opportunity to stay up-to-date on both state and federal legislation which could affect the banking industry and make sure our industry is heard. 

Featured speaker Joan Woodward, president of Travelers Institute and executive vice president of public policy at Travelers, will present "Woodward on Washington: An Economic and Political Outlook." Prior to working for Travelers and Goldman Sachs, Woodward worked on Capitol Hill for 12 years as deputy chief of staff for the U.S. Senate Finance Committee. She also was the chief economist for the Senate Governmental Affairs and U.S. House Budget committees.

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SDBA to Hold Virtual Cannabis/Hemp Banking 101 Webinar

Picture of cannabis products. With the passage of Amendment A and Initiated Measure 26 legalizing medical and recreational use of marijuana in South Dakota, the SDBA is committed to supporting its member banks during this transition.

The SDBA, in conjunction with the Montana Bankers Association, is hosting the Cannabis/Hemp Banking 101 Webinar on Jan. 20-21. The webinar, which will be held virtually via Zoom, is an opportunity to learn cannabis/hemp banking basics and a chance to ask questions of industry experts. 

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CDC Recommends Bank Workers Be in Third Phase of Vaccinations

A panel of the Centers for Disease Control and Prevention last Sunday voted to include financial services workers in Phase 1c of COVID-19 vaccinations. Under the recommendations of the CDC’s Advisory Committee on Immunization Practices, banking employees would be prioritized for vaccine doses alongside workers in sectors considered essential but with a substantially lower risk of exposure to COVID-19.

ABA strongly urged the committee to include frontline bank employees—such as tellers and loan officers—in Phase 1b, given their regular contact with the public. “We believe these frontline workers face the highest risk of infection, pose the greatest risk of spreading the virus if infected, and are absolutely essential, especially in communities where residents may not have access to electronic banking tools,” ABA said in a letter to the CDC last week.

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Congress Approves COVID-19 Relief Bill, Reauthorizes PPP

House and Senate lawmakers late Monday night passed a $900 billion bipartisan coronavirus relief package. President Donald Trump on Tuesday night suggested he might not sign the bill, calling it a “disgrace” and demanding a boost in payments to households.

The ABA has prepared a staff analysis for bankers of the provisions currently included in the 5,500-page bill that affect the banking industry. Among other things, the bill includes several ABA-backed provisions, including:

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ABA Offers Resources, Talking Points on Relief Bill

The ABA has prepared a resource for banks to help them immediately prepare for the large number of EIPs that could be sent via ACH on the first day of processing—which could come as early as this weekend.

ABA is encouraging banks to take steps including planning to have call center and ACH operations staffing levels ready as well as ordering and moving sufficient cash to meet a surge in ATM and branch withdrawals as EIPs land in customer accounts. ABA has also prepared a set of talking points that address the EIPs, as well as other key provisions of the bill.

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ABA-Advocated Provisions Expected in Bipartisan COVID-19 Package

As negotiations continue on Capitol Hill over a bipartisan, $908 billion coronavirus relief package, draft language released by the congressional negotiators indicates that several ABA-advocated provisions are likely to be included. These key provisions include a $300 billion Paycheck Protection Program reauthorization along with several enhancements: a simplified forgiveness application; language holding PPP lenders harmless; and clarification on agent fees, the deductibility of Economic Injury Disaster Loan advances from PPP loan forgiveness and the tax-deductibility of business expenses paid for with PPP loan proceeds.

Amid the fluid negotiations, ABA continues to advocate for extensions on CARES Act provisions like the treatment of troubled debt restructuring accounting to ensure banks can continue to provide a wide range of forbearance options to borrowers affected by the pandemic. For more information, contact ABA’s James Ballentine.

FDIC Finalizes Changes to Brokered Deposit Rules

The FDIC on Tuesday finalized long-awaited changes to modernize its existing brokered deposit rules and foster greater innovation by financial institutions. The final rule establishes a new framework for designating an entity as a “deposit broker” and amends the methodology for calculating the national rate and national rate cap for specific deposit products.

The final rule narrows the definition of “deposit broker.” It also designates certain business relationships and services that meet the rule’s “primary purpose exemption,” and do not require an application to the FDIC. These designated exemptions include: deposits where the agent has less than 25% of the total “assets under administration” for its customers; health savings accounts; deposits related to certain real estate and mortgage servicing transactions; certain retirement funds; and customer funds held for various regulatory, tax and other government purposes.

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SD Bankers Foundation Scholarship Application Deadline Extended

The application period for the South Dakota Bankers Foundation’s new post-secondary scholarships has been extended to Dec. 31, 2020. SDBA member banks can apply for one of 40, $2,000 scholarships.

The scholarships must be awarded to South Dakota college juniors/seniors with an expressed interest in banking/financial services or second-year South Dakota technical school students with an expressed interest in banking/financial services. There is no match required by member banks, however banks may choose to supplement the $2,000 scholarship to increase its attractiveness. Recipient banks must award the $2,000 as one scholarship.

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Beacom School of Business to Hold Virtual Networking Event

The University of South Dakota Beacom School of Business' Career Success Center is planning a Spring 2021 – Virtual Networking Event on Thursday, Jan. 21, at 3-5 p.m. CST. The event is an opportunity for employers to network, virtually, with students.

Businesses will be able to virtually chat with students individually or as a group. During businesses' time with students, they are welcome to share information about their company and any full-time, part-time or internship opportunities they may have available immediately or in the near future (e.g. spring 2021 or summer 2021). During the event, businesses may collect contact information when they visit with students to keep in touch with them moving forward.

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BHG to Host Webinar Featuring Risk Management Experts

Bankers Healthcare Group (BHG), a new SDBA associate member, is hosting a free webinar “Regulatory Risk Trends in Small Business Lending Today and Under the New Presidential Administration" on Thursday, Dec. 17, at 1 p.m. CST. The session will tackle some of the most relevant regulatory and compliance challenges banks are facing today, including fair lending, UDAAP and data collection rules that impact small business lending, among others.

Join BHG's panel of speakers including former senior examiners of the OCC, FDIC and CFPB and industry leading compliance experts for this informative session. The presentation will be followed by a live Q&A session with audience participation. Register for the webinar.

ABA, State Bankers Associations Call on Congress to Extend TDR Provision

ABA and 51 state bankers associations yesterday called on lawmakers to extend the troubled debt restructuring provisions in the CARES Act that allow banks to suspend generally accepted accounting principles for COVID-19 related loan modifications.

Once a loan is classified as a TDR, the groups said, it often requires twice the regulatory capital of other loans, and is ineligible for consideration as collateral at the Federal Reserve, often requiring the bank to take remedial steps against a loan, including foreclosure. The associations wrote that "[i]t is critically important that the TDR relief in the CARES Act (Section 4013) be extended before the end of 2020 so that America’s banks can continue to fulfil their role as financial first responders in the communities they serve."

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Noem Announces New SDHDA Executive Director

Gov. Kristi Noem announced that Lorraine Polak will be appointed executive director of the South Dakota Housing Development Authority (SDHDA), effective Jan. 8, 2021. Polak will replace Mark Lauseng, who is retiring.

“Lorraine has a great understanding of SDHDA’s programs and all the opportunities that they present,” said Gov. Noem. “She will be a dedicated leader and an invaluable partner as it relates to carrying out SDHDA’s mission for the people of South Dakota.”

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SBA Outlines Procedures for PPP 'Loan Necessity' Questionnaires

The Small Business Administration last Wednesday outlined procedures for lenders in handling the loan necessity questionnaires that SBA is requesting for PPP loans totaling $2 million or more. The procedures were detailed in a user guide and introductory letter sent using SBA’s PPP forgiveness platform.

According to the documents, lenders will receive notice of requests from SBA for questionnaires via the SBA forgiveness platform at forgiveness.sba.gov. The questionnaires—SBA Form 3509 for for-profit borrowers and Form 3510 for nonprofit borrowers—are available there, and the platform now accepts online submission of the completed questionnaires. Lenders must notify the borrower of the request within five business days and should advise the borrower to complete the form within 10 business days, SBA said. Lenders must upload the completed questionnaire, manually enter borrower responses and upload supporting documentation within five business days of receiving it.

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SBA Releases PPP Loan Data; ABA Updates Talking Points and Resources

The Small Business Administration on Tuesday released names, addresses, loan amounts and names of lenders for all Paycheck Protection Program borrowers. The release came after a court order in a lawsuit brought by media organizations seeking the data.

After the data release, ABA heard that some third-party businesses were using the publicly released data to solicit business from PPP borrowers, specifically referencing the name of the lending institution—in some cases not disclosing that they are unaffiliated with the PPP lender, and others are implying a business relationship where none exists. ABA has updated its bankers-only talking points document with information to help bankers respond and provided a free sample email that bankers can adapt to communicate with their clients.

ABA Survey: 51% of Ag Borrowers Profitable in 2020

Amid ongoing stresses in the ag sector and economic dislocation from the COVID-19 pandemic, lenders reported that just under 51% of their agricultural borrowers were profitable in 2020, a decline of six percentage points from the prior year, according to the latest agricultural lenders survey conducted by ABA and Farmer Mac. About half of the lenders, 49%, said do not expect borrower profitability to improve in 2021 and respondents expressed the most concern about the grain, dairy and cattle sectors.‌

Credit quality and the deterioration of agricultural loans were ranked as the top concerns facing lenders in 2020 for institutions of all sizes and across all regions. Competition from other lenders and weak loan demand were also ranked as leading concerns. Nearly 60% of lenders said they expect delinquencies to increase for agricultural production loans over the next year. Nearly three in five lenders reported that demand for agricultural production loans was flat over the last six months.

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ABA Calls for Extension of CARES Act Relief

The ABA on Tuesday urged lawmakers to consider extending several banking-related CARES Act provisions that are set to expire at year-end. These include temporary relief from troubled debt restructurings, optional temporary relief from CECL implementation, a temporary lending limit waiver and temporary regulatory capital relief for community banks.

“Banks of all sizes will continue to support their communities as the recovery continues, and we hope your committees can assist by providing additional tools,” the ABA wrote. “Although several other committees are also considering issues important to the customers and communities served by America’s banks, extension of these key, temporary changes is critical to empower banks to continue to assist those in need.” Read the letter.

ABA, Trade Groups Call for Halt to PPP Loan Necessity Questionnaires

The ABA on Tuesday joined a broad coalition of groups from various industries in a letter to the Small Business Administration and Treasury Department raising concerns about the loan necessity questionnaires that SBA is using to evaluate borrowers’ good-faith certification of their economic need for Paycheck Protection Program loans.

SBA rolled out the questionnaires—which included separate versions for nonprofit and for-profit entities—last month to borrowers with loans totaling $2 million or more. However, the groups noted that the forms ask for information—such as quarterly revenue and employee earnings—that is unrelated to what borrowers were asked to consider when they applied for their PPP loan.

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Regulators Exploring Relief for Banks Participating in COVID-19 Programs

Regulators are exploring additional ways to provide temporary relief to banks that may be approaching regulatory asset thresholds that could trigger additional compliance requirements as a result of participation in COVID-19 relief programs like the Paycheck Protection Program.

In testimony before the Senate Banking Committee on Tuesday, Acting Comptroller of the Currency Brian Brooks said that regulators are working on an interagency basis “on a set of rules that would relieve for a period of time certain asset thresholds being tripped that would trigger heightened scrutiny and heightened compliance requirements at different levels.” Brooks signaled that this relief would “cap out at $10 billion, most likely, based on current conversations.”

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ABA, Industry Groups Launch Campaign for Struggling Mortgage Borrowers

With some Americans experiencing difficulties paying their mortgage due to COVID-19, the ABA on Tuesday joined a broad coalition of mortgage industry stakeholders and consumer groups to launch a new national campaign to help raise awareness about consumers' forbearance options. This effort is intended to augment the successful outreach efforts already underway by mortgage servicers and housing counseling groups nationwide and is supported by the Consumer Financial Protection Bureau.

As part of the "COVID Help For Home" campaign, ABA is making creative materials available to member banks to help them reach borrowers who may have missed one or more mortgage payments due to the pandemic and who may be eligible for assistance under the CARES Act or other mortgage payment relief. The national ad campaign also targets borrowers whose forbearance plans are ending and may need to request an extension or additional assistance. Banks participating in the campaign can access a downloadable toolkit that includes customizable communications materials and templates that can be adapted for social media and other advertising platforms.

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With Presidential Race Called, ABA Releases 2020 Election Analysis

With major media outlets calling the 2020 presidential election for former Vice President Joe Biden and Sen. Kamala Harris over the weekend, ABA President and CEO Rob Nichols congratulated Biden and Harris. “We look forward to working with the new administration and the new Congress to address the nation’s challenges,” he said. “ABA and our member banks stand ready to work with the Biden administration and lawmakers from both parties to bolster the economy, increase opportunity and create a brighter future for all Americans.”

The ABA on Monday issued a 2020 election analysis prepared by its government relations and political engagement teams. The analysis covers what to expect from the Biden administration, as well as expectations for Congress, where control of the Senate will be determined by Jan. 5 runoff elections in Georgia. The ABA members-only analysis also covers results of ABA’s political engagement efforts during the campaign.

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