SDBA eNews: April 20, 2017

In This Issue

The Banking Industry Is Changing--Are You Prepared?


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Join Promontory Interfinancial Network--a trusted partner chosen by 3,000-plus financial institutions--for a free webinar to learn how using Insured Cash Sweep® and CDARS®
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The webinar will be held:


Ag Lenders Invited to Take Part in Ag Land Value Survey


Agricultural lenders, appraisers, assessors, realtors and extension field specialists are invited to participate in the 2017 SDSU Agricultural Land Value Survey. 

The principal purpose of the survey is to obtain market value and cash rental rate information, by type of agricultural land, in different regions of South Dakota.  

Farmers, landowners, investors, lenders, real estate professionals and public officials are the majority users of the data provided by the survey. 
Take the 2017 survey. View the 2016 survey results.


 

Question of the Week

On a small dollar real estate loan, is it acceptable to just use the tax assessed value in lieu of an appraisal or evaluation?

Answer: Unfortunately, no, you can’t just use the TAV without further analysis. While it can be used as part of the evaluation, the value assigned by the county can’t be the only data source you rely on. The interagency guidelines provide:

Tax Assessment Valuations (TAVs): An institution may not rely solely on the data provided by local tax authorities to develop an evaluation unless the resulting evaluation is consistent with safe and sound banking practices and these Guidelines. (See the Evaluation Development and Evaluation Content sections.) Since analytical methods such as TAVs generally need additional support to meet these guidelines, institutions should develop policies and procedures that specify the level and extent of supplemental information that should be obtained to develop an evaluation. Such policies and procedures also should require the use of an alternate valuation method when such information does not support the transaction.

An institution may use a TAV in developing an evaluation when it can demonstrate that a valid correlation exists between the tax assessment data and the market value. In using a TAV to develop an evaluation, an institution should:

Determine and document how the tax jurisdiction calculates the TAV and how frequently property revaluations occur.

Perform an analysis to determine the relationship between the TAV and the property market values for properties within a tax jurisdiction.

Test and document how closely TAVs correlate to market value based on contemporaneous sales at the time of assessment and revalidate whether the correlation remains stable as of the effective date of the evaluation.

Not a Compliance Alliance 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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Questions/Comments

Contact Alisa DeMers, SDBA, at 800. 726.7322 or via email.

Deadline Nearing to Reserve Room for Quad States Convention

 
Banking Beyond Borders: 2017 Quad States ConventionRooms are still available at the Best Western Ramkota Hotel for the 2017 Quad States Convention June 4-6 in Rapid City. While there are not rooms available at the Rushmore Plaza Holiday Inn, attendees can still book rooms at the Ramkota Hotel through May 3, when the room block will be released.

This year's convention theme is BANKING BEYOND BORDERS. The event will include bankers from South Dakota, North Dakota, Montana and Wyoming—we’re not in Kansas anymore!

To stay ahead of the competition, the banking industry must operate efficiently and stay up-to-speed on regulatory requirements within a quickly-changing landscape. There are things banks can take advantage of to stand out from the rest—leadership and communication tools, technology and changing customer service models.

These ideas and more will be explored by nationally-acclaimed speakers at this year’s BANKING BEYOND BORDERS Quad States Convention.


SDBA Board of Director Jerry Nachtigal Passes Away


Photo of Jerry NachtigalJerry Nachtigal, 57, of Sioux Falls, passed away Sunday, April 16, at Sanford USD Medical Center in Sioux Falls. A director on the SDBA Board of Directors, Nachtigal was senior vice president of public affairs for Citibank, Sioux Falls.

Memorial services will be held at 9:30 a.m. on Saturday, April 22, at Gloria Dei Lutheran Church in Sioux Falls. Visitation will be from 5-7 pm on Friday, April 21, also at Gloria Dei Lutheran Church.

Nachtigal grew up in Brookings and received a bachelor's degree in journalism from South Dakota State University in 1981. Shortly after graduation, he joined the Associated Press as a correspondent. His 19-year career with the AP led to assignments in Aberdeen, S.D., Kansas City and Springfield, Mo., and Phoenix, Ariz. In 1999, he was hired as communications director for Gov. Mel Carnahan of Missouri.  While in this position, Nachtigal had the distinction of serving as spokesman for three different governors.

In 2002, Nachtigal moved to South Dakota to serve as press spokesman for James Abbott's unsuccessful bid for governor.  He was subsequently hired as senior vice president of public affairs for Citibank.

In this position, he served on a number of boards, including the Sioux Falls YMCA, South Dakota State University Foundation Council of Trustees, Delta Dental of South Dakota Foundation and as a member of the Sioux Falls 2025 Downtown Plan Advisory Committee. Nachtigal especially enjoyed the philanthropic aspect of his assignment, serving as the face of Citibank in charitable efforts.

Nachtigal is survived by his wife Ann and children Libby, Reid and Jack, all of Sioux Falls. Memorials may be directed to the SDSU Foundation for a scholarship fund in Nachtigal's name. Read Nachtigal's full obituary.


Hensarling's Choice Act Includes Key ABA Priorities


House Financial Services Committee Chairman Jeb Hensarling (R-Texas) yesterday released the latest legislative text of his Financial Choice Act, a 600-page bill aimed at rolling back and reforming parts of the Dodd-Frank Act’s extensive supervisory regime, as well as providing regulatory relief for banks of all sizes. A similar version of the legislation cleared the committee in the previous Congress. The committee is scheduled to hold a hearing on the bill next week.

Title V of the Choice Act contains numerous provisions long sought by ABA as part of the Blueprint for Growth. These regulatory relief measures would provide a Qualified Mortgage safe harbor to mortgage loans held in portfolio, tailor supervision to banks’ risk profiles and business models, raise the small bank holding company policy statement asset threshold to $5 billion, create an independent exam appeals process, provide charter flexibility for thrifts, stop data collection on small business loans, clarify the QM rule’s points and fees test, expand the short-form Call Report, enhance mortgage relief for smaller banks and smaller mortgage originators and prevent future “Operation Choke Point” activities.

The bill further details plans to reform the Consumer Financial Protection Bureau, which would be renamed the Consumer Law Enforcement Agency and would be stripped of examination powers and “UDAAP” enforcement authority. The Choice Act would also repeal the Durbin Amendment, impose more stringent penalties for Wall Street in cases of fraud or deception and repeal sections of Dodd-Frank that limit capital formation, including the Volcker Rule. It would bring the new CLEA, FDIC, OCC, Federal Housing Finance Agency, National Credit Union Administration and supervisory functions of the Federal Reserve into the congressional appropriations process, mandate cost-benefit analyses of regulations and require congressional approval for “major rules.”

Additional regulatory relief would be available for banks maintaining a 10 percent non-risk weighted leverage ratio that elect into the alternative regime. Qualifying banks would be exempt from federal capital and liquidity requirements, blocks on capital distributions, systemic risk regulations and limitations on mergers and acquisitions provided any new entity also maintains the minimum leverage ratio.

Another key component of the Choice Act is ensuring no institution is “too big to fail” by replacing Dodd-Frank’s Orderly Liquidation Authority provision with a new Bankruptcy Code designed to accommodate the failure of a large, complex financial institution. Additionally, it significantly restricts the Federal Reserve’s ability to make discounted loans or bail out financial firms or creditors. ABA will analyze the full text of the Choice Act in coming days and provide further information to members. View the full text of the bill.


Holiday Inn Parent Confirms Data Breach at Nearly 1,200 Hotels


InterContinental Hotels Group has confirmed that front desk payment terminals in at least 1,181 hotel locations nationwide were breached last fall. Malware that successfully stole payment card data was detected between Sept. 29, 2016, and Dec. 29, 2016, at locations accounting for 30 percent of its mostly franchised locations in the Americas.

IHG properties include Holiday Inn, Holiday Inn Express, InterContinental, Kimpton Hotels, Crowne Plaza, Staybridge Suites and Candlewood Suites. While the impact of the breach on financial institutions is as yet unknown, the figures reported by IHG would make this breach one of the largest hotel company data breaches in recent years. While IHG hotels nationwide were affected, the breach primarily affected Holiday Inns and Holiday Inns Express in rural and suburban areas of the South and the Midwest.

Cybersecurity analyst and reporter Brian Krebs, who first broke news about the breach in December, notes that more IHG hotels may be implicated. “[N]ot all property owners have been anxious to take the company up on [IHG’s offer of outside assistance],” he wrote. “As a consequence, there may be more breached hotel locations yet to be added to the state lookup tool.” Read more. View breached locations.


Bankers Urged to Submit Post-Exam Surveys


With a new administration and changes expected to occur at the federal banking agencies, it is important that the voice of bank and savings association CEOs be heard through the Regulatory Feedback Initiative.

To help ensure that regulatory examinations are fair and that examiners apply consistent standards, ABA and state bankers associations, including the SDBA, are encouraging the CEO from every bank across the country to participate in the Regulatory Feedback Initiative by completing a new, streamlined post-exam survey after each safety and soundness and compliance examination.

Since 2011, the goal of the survey has been to aggregate bank and savings association exam experiences, share results with regulators, generate banker-requested reports, and fight for fair and consistent application of all regulations, rules and regulatory guidance. Bankers who have not yet completed a survey since their last exam are urged to do so by May 31. The survey is anonymous, and participants are guaranteed data confidentiality. Learn more and take the survey. For more information, contact ABA's Rick Freer.


Bank Directors' College To Be Held May 2 in Sioux Falls

 
There is still time to register to attend the 2017 Bank Directors' College May 2 at the Sioux Falls Convention Center. The event is being held by the FDIC in partnership with the South Dakota Division of Banking, Independent Community Bankers of South Dakota and the South Dakota Bankers Association.

This one-day educational seminar was designed with outside directors in mind, but the presentations will include up-to-date information on various emerging issues relevant to all bank directors. The presentations will be delivered by a group of experienced FDIC speakers and subject matter experts.

This seminar is a unique opportunity to interact with your bank's regulators and enhance your board's experience and knowledge.board’s experience and knowledge. Learn more and register.