SDBA eNews: October 29, 2015

In This Issue

CFPB Releases 2016 Lists of Rural, Underserved Counties


The Consumer Financial Protection Bureau on Wednesday released lists of rural counties and rural or underserved counties to use in 2016 in conjunction with the bureau’s Ability-to-Repay, escrow, HOEPA and appraisal rules.

Rural counties were generally defined by using a U.S. Department of Agriculture classification system, and underserved counties were defined by data collected under the Home Mortgage Disclosure Act, the CFPB said.


GSB Human Resource Management School: April 10-15, 2016


The Graduate School of Banking at the University of Wisconsin-Madison will hold its 2016 Human Resource Management School April 10-15.

The human resource function has a direct impact on a financial
institution’s productivity and bottom-line results. That’s why HR
professionals in the financial services industry require a working
knowledge of the business of banking as well as strong talent
management and leadership skills.

This one-week school is designed specifically for financial services
HR professionals to help tie together these two important areas. Here, you will expand your knowledge of banking, human resource
management and employee performance. Plus, you will establish
a network of colleagues with whom to interact and exchange ideas
for years to come. Learn more and register.


Question of the Week

Can the bank determine the time zone for the rate lock, even if it is different from the borrower’s or the mortgage loan originator’s location?

Answer: The bank may choose any time zone, however, with that being said, we recommend the bank choose the time zone being used and use that time zone consistently.

The regulation, in 1026.37 (a)(13), says that the “creditor must provide the date and time (including applicable time zone) when that period ends.”  In the commentary, 1026.37(a)(13)-3, it states, “the disclosure required by 1026.37(a)(13) requires the applicable time zone for all times provided, as determined by the creditor.”

Learn more by attending one of our live demos:

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.

Registration Open for SDBA 2016 Experienced Ag Lenders School


Registration is now open for the SDBA's 2016 National School for Experienced Ag Lenders June 20-23 at Black Hills State University in Spearfish.

The National School for Experienced Ag Lenders, which is limited to 70 students, targets ag lenders with a good knowledge of financial analysis in ag lending who desire further training in analyzing and troubleshooting more complex and problem credits. It is rare that a school has this caliber of instructors, including ag guru Dr. Dave Kohl and three national award winners for their contributions to the ag industry.

The curriculum includes "The Mega Trends of Agriculture and Agrilending," "The Washington Report," "Futures, Options, Insurance and Your Customer: Are You Ready," "Kitchen Table Strategic Planning," an ag banking best practices panel and a full risk management case study dealing with grain, livestock and value-added production. Learn more and register.


SD Banker Testifies Before Senate Banking Committee


Roger Porch, vice president of First National Bank in Philip and a member of the SDBA Legislative Committee, testified before the Senate Banking Committee hearing entitled “The State of Rural Banking: Challenges and Consequences” on Wednesday, according to the ABA.

Porch, providing a voice for community banks across the country, clarified how unnecessary regulatory burdens limit banks’ ability to serve their communities. To show how these challenges have real costs for banks and the communities they serve, Porch explained that compliance costs amount to more than 18 percent of the banks total overhead, or $222,000.

The testimony continued by noting how these regulations that take the “one size fits all” approach don’t account for the unique relation rural banks play in individuals’ lives and communities. Read the full testimony.


"Banking in South Dakota" Photo Display Opens at Cultural Heritage Center


“Banking in South Dakota” is a new photo display in the Education Room of the Cultural Heritage Center in Pierre featuring 11 images of various bank scenes found online at the South Dakota Digital Archives. In one featured photo, several men and two steam tractors are moving the Lamro State Bank to Winner.

“Banks and banking have always played a major role in South Dakota’s history,” said state archivist Chelle Somsen. “The display images include both internal and external views of banks, as well as showing the significance of banks in their communities.”

The South Dakota Digital Archives, an online resource launched in January 2012 by the South Dakota State Historical Society-Archives, provides researchers digital access to unique historical records. There are currently more than 54,000 photographic images from throughout the state available for viewing by visiting history.sd.gov/archives and clicking on the link to the “South Dakota Digital Archives.”

The Cultural Heritage Center is open Monday through Saturday from 9 a.m. to 4:30 p.m. CT and Sundays and holidays from 1 to 4:30 p.m. There is no fee to view these images, but standard admission fees apply for visitors wanting to go into the museum galleries. Read more.


Lawmakers Introduce Bipartisan Bill to Stop FHLB Membership Plan

 
Following advocacy by ABA, four House members last Friday introduced bipartisan legislation to stop the Federal Housing Finance Agency from moving ahead with its proposed limitations on Federal Home Loan Bank membership. Sponsored by Reps. Blaine Luetkemeyer (R-Mo.), Denny Heck (D-Wash.), Patrick McHenry (R-N.C.) and John Carney (D-Del.), H.R. 3808 would also require the Government Accountability Office to study the effects the FHFA proposal would have on the FHLBs and their members.

“Congress, not the Federal Housing Finance Agency, has historically decided the membership requirements of Federal Home Loan Banks,” Luetkemeyer said. “Decisions should not be made in a vacuum. They should be made by Congress and based on public input and extensive analysis.”

In a letter to Congress last month, ABA urged a legislative solution, noting that the FHFA approach “will create regulatory burden and drive up costs of membership in the system and ultimately the costs of those communities and individuals served by FHLB members. It will also lead to far less stability in the system, making membership and access to liquidity less certain.”

The FHFA’s proposed changes -- which FHFA Director Mel Watt recently said would be finalized by early 2016 -- would require FHLB members to hold 1 percent of assets in home mortgage loans and require those subject to a 10 percent residential mortgage asset base to maintain that ratio on an ongoing basis. They would also revise insurer eligibility to exclude captive insurers. ABA, its American Bankers Insurance Association affiliate and the state bankers associations have strongly opposed the proposal. Read ABA’s letter.


FDIC Proposes Additional Changes to Deposit Insurance Assessments


The FDIC last week proposed a change in deposit insurance assessments that implements a Dodd-Frank Act provision requiring banks with more than $10 billion in assets to be responsible for recapitalizing the FDIC insurance fund to 1.35 percent of insured deposits after it reaches a 1.15 percent reserve ratio. With the fund expected to be at 1.15 percent in the final quarter of this year, or possibly the first quarter of next year, the rule would go into effect in the first or second quarter of 2016.

Once the DIF reaches 1.15 percent, the assessment rate schedule for all banks is set to decline by more than two basis points. Banks with less than $10 billion be the primary beneficiaries of the lower schedule. As proposed, they would receive credits for any amount above their share of the assessments needed to maintain the fund at a 1.15 percent reserve ratio. The FDIC estimated that the credits would amount to $900 million in the aggregate and banks would use their credits against assessments once the fund reaches a 1.4 percent reserve ratio.

For banks with more than $10 billion in assets, the proposed rule would impose a 4.5 basis point surcharge to bring the fund’s reserve ratio to 1.35 percent by the end of 2018. (There would be a one-time special assessment in first quarter 2019 if this goal was not achieved.) For the surcharge only, the assessment base of subject banks would be reduced by $10 billion to avoid a “cliff effect” on banks just above this size. Moreover, the assets of affiliated banks with under $10 billion would be added to that of surcharged banks. The FDIC estimated that the combination of the lower assessment rate and surcharges would result in lower assessments for nearly a third of larger banks.

ABA staff have for some time been discussing refinements to the assessment system with FDIC staff and released a preliminary summary of the proposed rule. Comments on the proposal are due 60 days after it is published in the Federal Register.


Large Banks Adopt New Standards for Low-Cost Accounts


The four largest nationwide banks -- JPMorgan Chase, Bank of America, Citigroup and Wells Fargo -- have implemented or agreed to implement the Bank On National Account Standards for bank products that are low-cost, low-fee and overdraft-free.

The Bank On standards are for a checking or prepaid account, including checkless checking. The minimum opening deposit is less than $25 and a non-waivable monthly maintenance fee is capped at $5. Overdrafts are not permitted. In-network ATM use, branch access, phone banking, direct deposit, online bill pay, alerts, statements and in-bank check cashing are free, and deposits are federally insured.

The banks’ participation in Bank On was announced at an event on Tuesday in San Francisco, which like many cities is home to a local Bank On coalition that will encourage more depository institutions to offer products that align with the Bank On standards.

“Bringing accounts that meet these standards into more communities, including to low- and moderate-income people, will benefit families, communities and financial institutions,” said FDIC Chairman Martin Gruenberg at the event. “Financial institutions will benefit as they meet the convenience and needs of a broader range of consumers in a way that expands each institution’s ability to grow in a more diverse and dynamic environment.” View the Bank On standards.