SDBA eNews: August 11, 2016

In This Issue

Last Chance to Register for Executive Leadership of Cybersecurity

The CSBS's Executive Leadership of Cybersecurity (ELOC) Seminar is a program that addresses the issue of cybersecurity within the financial services industry with a particular focus on community banks.

The ELOC Seminar is a non-technical program designed for bank CEOs, senior executives and bank board members. It brings together bankers, law enforcement, and state and federal regulators to discuss the cyber threat landscape, information sharing, the recently released FFIEC Cybersecurity Assessment Tool, and additional cybersecurity resources for banks.

The CSBS, along with the SDBA, ICBSD and South Dakota Division of Banking, is offering the ELOC Seminar on Tuesday, Aug. 16, at Dakota State University in Madison. Learn more and register.

Understanding Recent Malware and Ransomware

Malware and ransomware incidents are a common occurrence in today's security space, but many people do not understand the basics of malware and how it could effect their organization or relationships. 

Join Secure Banking Solutions (SBS) for Hacker Hour: Malware 101--Understanding Recent Malware and Ransomware as they bring in an expert on malware engineering and learn the basics about how malware works and what you can do to help prevent an incident at your organization. The free webinar will be held Wednesday, Aug. 17, at 2 p.m. CDT. Register for the webinar.

Question of the Week

If the bank does not escrow for taxes or homeowner’s insurance, do we still have to escrow for flood insurance under the rule? If yes, does the bank then have to escrow for taxes and insurance because it’s required to escrow for flood insurance?

Answer: If the bank is required to escrow for flood insurance under the new rules, they are required to do so even if the bank doesn’t or doesn’t have to escrow for taxes or insurance. Note that the bank can always require escrow even when it’s not required.

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

Registration Open for SDBA's 2016 Bank Technology Conference

According to Deloitte & Touche, who recently published “Forward Look at the Top Regulatory Trends for 2016 in Banking," some trends from 2015, such as concerns about credit quality, continued into 2016. Meanwhile, the impact of technology on every aspect of banking operations and strategy can be seen throughout the 2016 regulatory picture—from model risk management to data quality to the focus on preventing and responding to cyber threats.

Using technology as a tool to enhance compliance and credit quality can both decrease and increase risk. Finding the right balance among investment, maintenance and innovation is now an essential part of risk management and compliance.

The SDBA is offering the 2016 Bank Technology Conference on Sept. 20-21 at the Hilton Garden Inn Sioux Falls Downtown in Sioux Falls as a means to provide information to help community banks as they continue the transition to a more technologically-sophisticated institution in this ever-changing world of mobile devices and electronic payment systems.

Registration is now open, and the SDBA is also seeking exhibitors and sponsors for the event. The deadline to reserve a roomfrom the SDBA's hotel block is Aug. 20.

SDBA Looking to Fill Position

The South Dakota Bankers Association is looking to hire an administrative vice president who will also serve as executive director of the South Dakota Bankers Foundation. Deb Gates, who currently holds the position, is retiring at the end of the year.

The full-time, salaried position is responsible for developing, implementing and directing delivery of a broad range of education, using a variety of delivery methods, to the banking industry. The position is also responsible for directing activities of the South Dakota Bankers Foundation and providing leadership and administrative support to assigned SDBA committees and the Board of Directors. Strong written, oral, presentation and computer skills are required.

The position is 40 hours per week and offers a 401(k) plan and health benefits. The starting salary depends on experience. The office is located in Pierre S.D., and working remotely is not an option.

Phone, email or stop by to pick up a complete job description at the South Dakota Bankers Association at 109 W. Missouri Ave., Pierre, SD 57501, phone 605.224.1653 or email [email protected]. The deadline to apply is Sept. 30, 2016.

ABA Pushes Back on White House Claims about Reg Burden

ABA firmly pushed back yesterday against a report from the President’s Council of Economic Advisers claiming that the Dodd-Frank Act and other regulations has had little to no effect on community bank consolidation. “[C]ommunity banks have remained strong as Dodd-Frank reforms have been implemented,” the report found.

“There is a serious disconnect between this report and the daily reality for America’s hometown banks and the communities they serve,” said ABA President and CEO Rob Nichols. “The 1,708 community banks that have disappeared since July 2010 would be best equipped to speak on this topic--except they can’t.”

The White House report stated that “[m]any community banks--particularly those with assets between $100 [million] and $10 [billion]--have continued to grow steadily, as evidenced by their substantial lending growth, increasing market share in agricultural and mortgage lending, and expansion into new counties.” It also stated that “macroeconomic factors” are the principal contributor to reduced de novo activity and community bank growth.

Nichols noted that the cumulative regulatory burden imposed by Dodd-Frank and other laws has left an indelible effect. “The more than 24,000 pages of proposed and final rules bely the idea that Dodd-Frank had no impact,” he said, adding that “the rules intended for the largest banks are now considered ‘best practices’ for all banks, compounding the misery for smaller banks. Arbitrary size thresholds are stopping community banks from growing because of the added regulation, thus limiting the services they could provide.”

While defending the implementation of the Dodd-Frank Act to date, the White House report echoed a message ABA has consistently delivered: the importance of “continuing to tailor regulatory requirements to reflect the different needs of community banks and the lower level of financial risk that they pose.” Nichols reiterated calls for “long overdue” comprehensive regulatory relief. “Each day another community bank leaves the field, it makes that community--and our economy--poorer.” Read the White House report. Read Nichols' statement.

ABA Spotlights Advocacy 'Power Player' Mike Mauldin

As ABA continues to urge bankers to engage in grassroots and participate in its “Power Up” initiative, the ABA Banking Journal over the next few months will highlight the work of various “Power Players”--bankers who are particularly effective at building the industry’s clout by engaging their lawmakers, joining BankPac and giving to the Fund for Economic Growth.

This week, Michael Mauldin, president and CEO of First Financial Bank’s Hereford, Texas, region, shared his thoughts on the importance of building strong relationships with lawmakers and becoming trusted advisers on banking issues. When Texas shifted congressional district lines in 2013, Hereford was moved out of Rep. Randy Neugebauer’s district. For Mauldin, that meant starting the relationship-building process from scratch with his new representative, Mac Thornberry, and his staff.

Unlike Neugebauer, who sits on the House Financial Services Committee, most of Thornberry’s prior legislative focus had been on military, intelligence and agricultural issues, and Mauldin saw an opportunity to offer his insights on the banking industry. Over time, their relationship has grown; Mauldin has co-hosted a bank visit with Thornberry two years in a row. “I want to be one of those people they call on,” Mauldin says. “Once you create that relationship, they’ll call on you for advice.” Read more. Learn more about Power Up.

SBA Proposal Would Streamline Business Loan Programs

The Small Business Administration on Tuesday issued a proposed rule amending several regulations relating to the 7(a) and 504 loan programs used by banks. The proposed changes are intended to streamline SBA processes and update or remove outdated provisions--for example, by replacing the Certified Lenders Program with SBA “delegated authority” criteria.

The proposed changes include redefining cooperative businesses as eligible for SBA-backed loans; clarifying terms related to eligible passive companies, including expanding SBA’s discretion to require personal guarantees from minority owners; providing more lender flexibility on when base rates are determined and when variable rates are adjusted; clarifying what fees lenders may or may not collect from loan applicants; and expanding the pool of parties who are permitted access to lender information when needed to avoid case-by-case approvals.

The proposal includes amendments to reflect updated technology or practices, such as revising guidelines for paying guaranty fees to reflect electronic payments and removing language describing “on-site” exams. It would also specify that SBA can charge lenders the actual cost of reviews and assessments associated with additional oversight, rather than apportioning those expenses among all lenders. Comments on the proposal are due Oct. 7. Read the proposed rule.

Agencies Propose Simplified Call Report for Smaller Banks

Along lines long urged by ABA, the federal banking agencies last Friday proposed a new, shorter Call Report with simplified instructions for banks with less than $1 billion in assets and no foreign offices. The new Call Report form would be reduced from 85 pages to 61 as a result of removing 950 data items, or about 40 percent of entries on the current Call Report.

The revised Call Report would also streamline how banks report on their complex activities, with existing schedules on complex or specialized activities--such as derivatives, trading or credit card lending--being replaced with simple questions that ask whether banks engage in the activities and indicate specific data items to fill out if they do. Some schedules would also be filed on an annual or semiannual basis.

The proposal comes after ABA helped over the past several years to facilitate conference calls with community bankers and regulators to explain current Call Report burdens and offer suggestions for streamlining it. ABA anticipates future proposals related to Call Report reform in the future.

If adopted, the new Call Report would take effect with the March 31, 2017, report date. Comments on the proposal are due 60 days after it is published in the Federal Register. Read the proposal. For more information, or to contribute feedback for ABA’s comment letter, contact ABA's Alison Touhey.