SDBA eNews: August 18, 2016

In This Issue

C & B Operations To Hold Banker Breakfast

C & B Operations LLC, which owns and operates 24 John Deere farm equipment dealerships in five states, is hosting a banker pancake breakfast on Wednesday, Aug. 24, 7:30 a.m., at the Davison County Fairgrounds, 3200 W. Havens, in Mitchell.

Discussed will be alternate financial options, aligning business strategy and evolution of technology. To RSVP, call 605.996.6633.

Doing Well by Doing Good CRA Compliance Bankers Conference

Don't miss this year's Doing Well By Doing Good CRA Compliance Bankers Conference Oct. 6-7, 2016, at the Gaylord Opryland Hotel in Nashville, Tenn., presented by CRA Partners, powered by the Senior Housing Crime Prevention Foundation.

At the event, current bank partners network with prospective partners to discuss strategies for earning guaranteed CRA credit while transforming and protecting the lives of nursing home residents through the Senior Crimestoppers program.

Attendees will hear from regulatory officials to gain insight on updates to CRA examination requirements and learn best practices for their next CRA exam. Attendees will also discover the positive impact banks can have on the lives of our nation's senior citizens. 

Learn more and register.

Question of the Week

Can a bank waive an early withdrawal penalty on a CD for an insider? This is not a normal practice for any customers. Is this a Reg O violation? We also have a reduced fee for employees for wire transfers – can we waive that for a bank insider?

Answer: Waiving these types of fees is not prohibited by Reg O (which discusses not waiving fees for overdrafts in 12 CFR 215.4) but it's just not a best practice to waive fees for bank insiders that you wouldn't waive for your employees or customers as such preferential treatment can be a Regulation O red flag. But, keep in mind, the six day rule for time deposits.

(c)(1) Time deposit means:
(i) A deposit that the depositor does not have a right and is not permitted to make withdrawals from within six days after the date of deposit unless the deposit is subject to an early withdrawal penalty of at least seven days' simple interest on amounts withdrawn within the first six days after deposit. A time deposit from which partial early withdrawals are permitted must impose additional early withdrawal penalties of at least seven days' simple interest on amounts withdrawn within six days after each partial withdrawal. If such additional early withdrawal penalties are not imposed, the account ceases to be a time deposit. The account may become a savings deposit if it meets the requirements for a saving deposit; otherwise it becomes a transaction account.

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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.

SDBA Banks Be Watching for 2017 SD Bank Directory Update Forms

SDBA member banks should be watching for update forms mailed this week for the 2017 South Dakota Bank Directory.

The SDBA has once again retained M. Lee Smith Publishers of Brentwood, Tenn., to publish the 2017 South Dakota Bank Directory. The publisher mailed questionnaires this week to all member banks to obtain information for the 2017 Directory, including correct addresses, telephone numbers, officers and directors.

It is important that banks respond promptly with the information requested. If you receive the update form and assign this responsibility to someone else on your staff, please forward the questionnaire to the appropriate person as soon as it arrives.

In January, all member banks, branches and associate members will receive a complimentary 2017 Directory. Associate member update forms will be emailed in September.

If you have any questions on the 2017 South Dakota Bank Directory, contact the SDBA's Alisa DeMers via email or call 605.224.1653.

ABA Requests Extension to Comment Period on Form 5500 Proposal

ABA wrote to the Department of Labor this week requesting a 105-day extension on the comment period for the DOL’s proposed revisions to Form 5500 (Annual Return/Report of Employee Benefit Plan) that must be filed by all private-sector employers under the Employee Retirement Income Security Act and the Internal Revenue Code.

The association expressed concern that DOL’s 75-day timeframe would not provide sufficient time for banks to review and respond to the complex 900-page rule, especially since many are already maximizing their resources to prepare to comply with the Department’s Fiduciary Rule, which was finalized earlier this year. ABA recommended that the DOL extend its comment period to 180 days, with a due date of Jan. 17, 2017.

“Given the volume, detail and complexity of the proposed changes, it is our hope and expectation that DOL will follow a measured, inclusive and deliberative rulemaking process that will encourage interested parties to participate and engage the DOL on issues and challenges raised by the proposal, as well as on concerns not raised in the proposal,” ABA wrote. The association noted that the additional time would allow for more thorough and informed analysis of the proposal’s effect on the retirement services community and bank customers, as well as an opportunity to consider additional improvements and proposed alternative approaches.

The DOL’s proposed rule represents a far-reaching overhaul of Form 5500--which is used to report information about the funding, assets and investments of pensions and other employee benefit plans--to reflect changes in applicable law and accommodate the evolving data needs of the federal regulatory agencies. Proposed changes to the form include an expanded compliance reporting section with new questions about plan operations and management and service provider relationships; and updated questions about benefit plan investments and financial transactions, particularly those related to alternative investments, hard-to-value assets and investments through collective investment vehicles.

In addition, the rule would update the requirements for certifications for limited scope audits that would make the certifications more detailed and informative and enhance the DOL’s ability to review limited scope audits. 

FCC Issues Order on TCPA Exemption for Debt Restructuring Calls

The Federal Communications Commission issued final rules last week regarding non-telemarketing robocalls made to collect debts owed to or guaranteed by the United States. The final rules implement section 301 of the Bipartisan Budget Act of 2015, which exempted from the Telephone Consumer Protection Act’s prior consent requirements autodialed and prerecorded calls “made solely to collect a debt owed to or guaranteed by the United States.”

The final rules impose significant limitations on the use of the exemption--limiting such calls to three within a 30-day period, among other restrictions--and leave open the question of whether the exemption applies to loans owed to or guaranteed by Fannie Mae and Freddie Mac. The rules also extend the FCC’s existing rules regarding calls made to reassigned wireless numbers, such that a caller is liable, after the first call, for calls made to a number that no longer belongs to the distressed borrower.

“We’re pleased the FCC recognized that borrowers are best served if they can communicate with their lender prior to delinquency to prevent missed payments, receive offers for loan modifications and avoid default,” said ABA SVP Virginia O’Neill. “However, we’re disappointed that the Commission has imposed limitations on the exemption, which would prevent lenders from helping borrowers achieve those goals. These limitations are not authorized by the text of the statute and are inconsistent with the rules and standards of other federal agencies.”

ABA also criticized the Commission’s failure to clarify the status of calls made on Fannie Mae and Freddie Mac loans. “These borrowers should receive the same level of beneficial communications from their lenders as borrowers of other loans that are owed to or guaranteed by the federal government,” the association said. “We’re disappointed that the Commission failed to provide clarity on this important question.”

ABA and the Consumer Bankers Association filed a joint comment letter on the proposed rules, urging the FCC to apply the exemption as expansively as Congress intended, including to mortgage loans owed to or guaranteed by Fannie Mae and Freddie Mac. They also urged the Commission to harmonize its rule with well-established mortgage servicing practices and regulatory requirements.

Trades Urge HUD, VA to Allow Comment on PACE Guidance

ABA and several trade groups wrote to the Department of Housing and Urban Development and the Department of Veterans Affairs this week regarding recently issued guidance on Property Assessed Clean Energy loans, which provide homeowners a way to have their homes undergo energy-efficient retrofitting financed through property tax assessments. The groups urged the departments to suspend the applicability of the guidance and instead issue the proposal for comment to provide banks and other interested parties an opportunity to provide feedback.

ABA has previously raised concerns about PACE programs--which are currently operated in 30 states--where the PACE lien is allowed priority over the first mortgage lien. The recently issued guidance allows for the approval of mortgage and refinance options for properties with PACE obligations, provided they meet certain requirements. Among these requirements is the stipulation that the PACE assessment does not take first lien position ahead of the mortgage. However, the guidance does provide that for delinquent or foreclosed loans, PACE loans will retain a first-lien position.

“Allowing any PACE loan amount to hold a senior priority undermines the lender’s (and the government’s) collateral position and disrupts the very nature of secured lending,” the groups wrote.

The associations further pointed out that the guidance raises consumer protection concerns, since PACE financing is classified as a tax assessment rather than a loan, and as such, is not accompanied by various federal disclosures or subject to Ability to Repay standards.

2015 Small Business, Small Farm, Community Development Lending Data Available

The three federal banking agency members of the Federal Financial Institutions Examination Council (FFIEC) with Community Reinvestment Act (CRA) responsibilities--the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency--announced today the availability of data on small business, small farm and community development lending reported by certain commercial banks and savings associations, pursuant to the CRA.

An FFIEC disclosure statement on the reported 2015 CRA data, in electronic form, is available for each reporting commercial bank and savings association. The FFIEC also has prepared aggregate disclosure statements of small business and small farm lending for all of the metropolitan statistical areas and nonmetropolitan counties in the United States and its territories. These statements are available for public inspection on the FFIEC website.

SDBA Bank Tech Conference Hotel Reservation Deadline Nearing

The deadline to reserve a hotel room from the SDBA's block for the 2016 Bank Technology Conference is Saturday, Aug. 20.

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.

The SDBA encourages those planning to attend to make their reservations to guarantee sleeping accommodations. Learn more and register.