SDBA eNews: November 12, 2015

In This Issue

FDIC Issues Guidance on Purchased Loans, Participations

Noting an increase in loan purchases and participations that are originated by nonbanks or facilitated by third parties, the FDIC on Friday issued an advisory on risk management practices for purchases and participations. The advisory reiterated previous FDIC guidance and reminded banks that they should approach loan purchases and participations as if they were the principal originating institution.

To that end, the FDIC said, participations and purchases should be subject to the bank’s internal policy guidelines, independent credit and collateral analysis, profitability analysis, written purchase or participation agreements and due diligence.

The guidance also called for management to assess its ability to transfer, sell or assign interest, and to obtain necessary board approvals. Read the guidance.

How to Attract Millennials through a Referral Marketing Program

According to a Digital Scientist report, one in three millennials are open to switching banks in the next 90 days, but they would rather go to the dentist than listen to what banks are saying.

So how do you get this generation’s attention?

The answer could be right in front of you. Learn why Gigaom Research is calling referral marketing a “digital-marketing dark horse” in Deluxe's upcoming webinar “How to Attract Millennials through a Referral Marketing Program.”

During this session, Jeff DeWald, president and founder of CustomerStream, will discuss why the largest generation in the work force poses such a unique challenge to traditional marketing strategies and offer advice to help financial institutions rise to the occasion. The webinar will be held on Nov. 17 at 1 p.m. CT. Learn more.

Question of the Week

So how does a consumer indicate an Intention to proceed, does the regulation prescribe a specific way to indicate this intent?

Answer: Any manner the consumer chooses to inform the bank of the intent to proceed is acceptable, unless the bank has a particular manner required by their internal policy. The bank must document this communication to satisfy the record keeping requirements of §1026.25.

For example, oral communication in person immediately upon delivery of the loan estimate is sufficient to indicate intent to proceed. Oral communication over the phone, written communication via email, or signing a pre-printed form are also sufficient to indicate intent to proceed, if they occur after receipt of the loan rstimate. A consumer’s silence is not indicative of intent. This requirement can be found in1026.19(e)(2)(i)(A) and in the commentary in paragraph 19(e)(2)(i)(A)-2.

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

SD Bankers Foundation Increases High School Scholarship Funding

The South Dakota Bankers Foundation has allocated $90,000 for the High School Scholarship Program for 2016. Matched by recipient banks, the program will result in a total of $180,000 in high school scholarships awarded throughout South Dakota in 2016.

Scholarships are available in $500 increments to the first 180 banks/branches who agree to match an equal amount. Banks who participated in the High School Scholarship Capital Campaign are eligible to apply for funding. 

Students who receive the scholarships must be a high school senior who plans to attend an accredited South Dakota college, university, vocational technical school or community college on a full-time basis. Winners must agree to have their names released to the media.Other scholarship eligibility requirements may apply as determined by the sponsoring bank.

The deadline for SDBA banks to apply for high school scholarship funding is Dec. 18. Learn more and apply.

Farm Service Agency to Hold Regional Meetings in December

Farm Service Agency will be holding five regional meetings across South Dakota in December to discuss its Guaranteed Loan Program. The meetings will cover pressing issues facing ag lenders in 2016, including:

  • Application requirements--primarily loan narratives.  How detailed of a narrative do we need from the lender?
  • Restructuring options for existing guaranteed loans.
  • Handling new loan requests for refinancing debt including the existing lender as well as other creditors.
  • Utilizing guaranteed line of credits, loans outside of the guarantee program and releasing annual grain/calf proceeds.
  • Funding outlook for both our direct and guaranteed program, as well as new programs for partnering in providing credit.

The meetings will held from 9:30 a.m. to noon on the following dates and locations:

  • Dec. 7: Pierre, Casey Tibbs Rodeo Center
  • Dec.  8: Aberdeen, Ramkota
  • Dec. 9: Watertown, Codington County Extension Complex
  • Dec. 10: Mitchell, Ramada
  • Dec. 15: Rapid City, Black Hills State University-Rapid City (University Center)

The Guaranteed Program remains an important part of FSA’s lending program for helping producers in South Dakota.

ABA Runs Radio, Print Ads for Reg Relief

As part of this week’s Pass Reg Relief Now efforts, ABA is running drive-time radio spots on Sirius XM’s CNBC and MSNBC stations to make the case for regulatory relief. “We help our customers save for college, buy their first homes and save for businesses that create jobs,” the ad says. “But outdated and ill-fitting regulations are making it hard for us to do this important work and harder for communities to grow and prosper.”

The ad calls on listeners to tell Congress to pass Sen. Richard Shelby’s reg relief bill, S.1484, “a bill that makes regulation work for you.” ABA is also running ads this week featuring bankers in the Capitol Hill publication Politico.

Earlier this week, ABA launched a grassroots text alert option, which is the quickest way to receive updates and take action on behalf of the industry. ABA members who opt in to receiving text alerts will receive information and calls to action, often with direct links to pre-written emails that can be sent straight to senators or representatives. To sign up for text alerts, bankers can text "ABA" to 74700 or click here.  Listen to the radio ad. Learn more at

FSSCC Releases Automated Cybersecurity Tool

To assist financial institutions in collecting and scoring responses to the Federal Financial Institutions Examination Council's Cybersecurity Assessment Tool, the Financial Services Sector Coordinating Council has released an Automated Cybersecurity Assessment Tool.

Developed with the collaboration of industry trade associations and members -- including from ABA -- the FSSCC tool uses language specific to the inherent risk profile categories and cyber maturity levels articulated in the FFIEC tool and incorporates it into a user-friendly Excel spreadsheet that indicates risk criteria and cyber maturity levels. The spreadsheet can then automatically calculate these results into a series of graphs and charts to illustrate where users may need to improve their preparedness efforts.

ABA staff and members were involved in the development of this industry tool. Download the automated tool. For more information, contact ABA's Heather Wyson-Constantine.

Minneapolis Fed Announces New President

The Federal Reserve Bank of Minneapolis on Tuesday named Neel Kashkari its next president and CEO. Kashkari will replace outgoing president Narayana Kocherlakota on Jan. 1.

A former investment banker, Kashkari served in the Department of the Treasury from 2006 to 2009, where during the financial crisis he was a leading architect of the Troubled Asset Relief Program. After his time in Washington, he was an executive at the global investment firm PIMCO and the 2014 Republican nominee for governor of California. Read more.

Scholarship Available for Graduate School of Banking at Wisconsin

Since 1945, the Graduate School of Banking at the University of Wisconsin-Madison (GSB) has helped develop banking leaders through a program of advanced management education. GSB's Graduate School Program provides a comprehensive course of study of general banking and management subjects especially designed to meet the needs of bankers whose responsibilities and scope of activities are expanding.

Prochnow Educational Foundation/SDBA scholarships will be awarded to two South Dakota bankers attending the 2016 school session. The scholarship amount is $1,300.00 for each year of the student’s attendance (approximately one-third of the annual tuition fees), for a total value of $3,900. 

The 2016 session will be held July 31 to Aug. 12 at the University of Wisconsin-Madison. This scholarship is for people who will be entering their first year at GSB. A separate application for the school must be completed via the GSB website.The deadline to apply for the scholarship is June 1.

In addition, one scholarship to attend GSB's Human Resource Management School will be awarded to a South Dakota banker. The recipient will receive a $925 discount on registration. The school, which will be held April 10-15, is designed specifically for HR professionals in the financial industry, addresses today’s most critical HR issues. The deadline to apply for the scholarship is Feb. 12.