SDBA eNews: May 4, 2017

In This Issue

The Banking Industry Is Changing--Are You Prepared?

Do you have the tools necessary to manage your bank's balance sheet efficiently, attract valuable customers, free up collateral, and improve asset liquidity—all while providing your customers the protection and service they expect?

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®
can help provide your bank with tools to meet new challenges.

The webinar will be held:

Webinar: CRA Credit That's Worth a Lot More

Discover how your bank can receive guaranteed CRA credit on both the lending and investment test, along with service credit consideration--all through CRA Partners' unique, turnkey program that works in your community. 

CRA Partners is offering a live complimentary webinar "CRA Credit That's Worth a Lot More" on Friday, May 12, at 9 a.m. CDT.

Funded exclusively by the banking industry, the Senior Crimestoppers program is a low-risk, profitable solution that allows banks of all asset sizes and charter types to fulfill their federally-mandated Community Reinvestment Act (CRA) requirements in the form of qualified loans, investments or grants.

CRA Partners' team provides your bank with permanent support and detailed low- to moderate-income documentation for your exam to ensure full credit is received. The only thing for you to do is enjoy the positive publicity you receive for helping your community.

The presentation is supported by the ABA. Register for the webinar.


Question of the Week

Is it permissible to revise a loan estimate for the purpose of passing along an increase in the appraisal fee? The appraiser stated the property is complex and there is a lack of market information, comparables, etc. and the appraisal price is higher than was disclosed on the original LE.

Answer: Yes, it is permissible to revise the loan estimate in this case.

19(e)(3)(iv)(A) Changed circumstance affecting settlement charges.

1. Requirement. For the purpose of determining good faith under § 1026.19(e)(3)(i) and (ii), revised charges are compared to actual charges if the revision was caused by a changed circumstance. See also comment 19(e)(3)(iv)(A)-2 regarding the definition of a changed circumstance. The following examples illustrate the application of this provision:

i. Charges subject to the zero percent tolerance category. Assume a creditor provides a $200 estimated appraisal fee pursuant to § 1026.19(e)(1)(i), which will be paid to an affiliated appraiser and therefore may not increase for purposes of determining good faith under § 1026.19(e)(3)(i), except as provided in § 1026.19(e)(3)(iv). The estimate was based on information provided by the consumer at application, which included information indicating that the subject property was a single-family dwelling. Upon arrival at the subject property, the appraiser discovers that the property is actually a single-family dwelling located on a farm. A different schedule of appraisal fees applies to residences located on farms. A changed circumstance has occurred (i.e., information provided by the consumer is found to be inaccurate after the disclosures required under § 1026.19(e)(1)(i) were provided), which caused an increase in the cost of the appraisal. Therefore, if the creditor issues revised disclosures with the corrected appraisal fee, the actual appraisal fee of $400 paid at the real estate closing by the consumer will be compared to the revised appraisal fee of $400 to determine if the actual fee has increased above the estimated fee. However, if the creditor failed to provide revised disclosures, then the actual appraisal fee of $400 must be compared to the originally disclosed estimated appraisal fee of $200.

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.

Three Elected to SDBA Board of Directors

The SDBA recently held elections for three of the nine seats on its Board of Directors. Elected to serve on the SDBA Board of Directors were:

  • Steve Bumann, Chief Financial Officer, BankWest, Pierre
  • Craig Davis, President/CEO, First National Bank, Pierre
  • Shawn Rost, South Dakota Market President, First Interstate Bank, Rapid City

This is Davis’ first term on the SDBA Board of Directors, and he is representing banks in the Large Community Bank Category. Bumann and Rost are both serving their second terms. Bumann is representing banks in Group IV, and Rost is representing banks in Group V.  They started their three-year terms on May 1, 2017. More information.

Quad States Convention Early Bird Deadline Is May 12

Banking Byong Borders LogoThe early bird deadline to register for the 2017 Quad States Convention is quickly approaching. Those who register by May 12 to attend the four-state event June 4-6 in Rapid City will received a reduced rate.

We will be Banking Beyond Borders at this year's event, which includes bankers from South Dakota, North Dakota, Montana and Wyoming-- we're not in Kansas anymore! As we travel beyond the borders of our communities, we can learn through networking with our banking counterparts from four states and our business partners.

To see the full convention program and register to attend, visit the Quad States Convention website.

There is still time for vendors to sign up to participate in the exhibit hall. The deadline to sign up to exhibit is Friday, May 5. Learn more.

Farm Banks Report Ag Lending Gains in 2016

Farm banks increased their agricultural lending by 5.3 percent in 2016 and held $103.4 billion in ag loans at year’s end, according to ABA’s annual Farm Bank Performance Report released yesterday. Despite overall declines in farm income, farm banks continued to maintain healthy asset quality and capital levels. More than 97 percent of farm banks were profitable in 2016, with 60 percent reporting increased earnings.

“We’re continuing to see a decline in farm income, but the good news is farm banks are in good shape to assist their farm and ranch customers as the ag economy takes a turn,” said Brittany Kleinpaste, ABA’s director of economic policy and research. “Banks hold nearly half of all farm loans and will remain an important source of ag credit in good times and bad.”

Farm banks reported continued improvement in asset quality in 2016, with the median noncurrent loan ratio falling 5 basis points to 0.54 percent, well below the industry-wide ratio of 1.41 percent. They also continued to build high quality capital, with equity capital rising 3.7 percent to $48.4 billion. In addition, loan-to-deposit ratios for farm banks rose to 79.8 percent as farm banks saw deposits grow to $15.5 billion, a 4.4 percent year-on-year increase.

The nation’s 1,912 farm banks--defined as those whose ratio of domestic farm loans to total domestic loans is greater than or equal to the industry average--added more than 2,600 jobs and employed more than 91,000 rural Americans. Since 2007, employment at farm banks has risen 24.3 percent. Read more.

Omnibus Spending Bill Includes ABA Farm Loan Priorities

The House yesterday passed a $1 trillion compromise spending bill that funds the government through the end of the fiscal year on Sept. 30. The bill is expected to be passed by the Senate and signed by President Trump.

ABA advocacy secured key increases in funding for agricultural and rural loan guarantee programs. The Department of Agriculture’s Guaranteed Farm Ownership Loan Program will see funding rise from $2 billion to $2.75 billion and the Guaranteed Farm Operating Loan Program will see a boost from $1.43 billion to $1.96 billion.

Meanwhile, the Business and Industry Guaranteed Loan Program will grow in funding from $892 million to $919 million, while the Rural Community Facilities Program will see an increase from $146 million to $148.3 million. The spending bill also includes ABA-advocated language allowing the secretary of agriculture to transfer funds

Treasury Designates Acting Comptroller of the Currency

Comptroller of the Currency Thomas Curry will step down tomorrow and will be replaced by Keith Noreika, who is to be named first deputy comptroller by Treasury Secretary Steven Mnuchin. In that capacity, Noreika will serve as acting comptroller of the currency until President Trump appoints and the Senate confirms a new comptroller. Curry’s five-year term expired on April 9.

Noreika is currently a partner in the financial institutions practice at Simpson Thatcher and Bartlett LLP and was a member of the Trump transition team for the Treasury Department. Throughout his career, he has focused on banking regulation, advising financial institutions on compliance-related matters including the Volcker Rule, CFPB regulations and BSA/AML rules, and representing national banks before the Supreme Court. Read more.

Moran, Tester, Tillis, Heitkamp Introduce Limited Reg Relief Bill

Sens. Jerry Moran (R-Kan.), Jon Tester (D-Mont.), Thom Tillis (R-N.C.) and Heidi Heitkamp (D-N.D.) on Tuesday introduced the Community Lending Enhancement and Regulatory Relief Act (S. 1002), a package of financial regulatory relief measures targeted at community banks.

Incorporating aspects of provisions in play in the House, the bill would allow banks with less than $10 billion in assets to receive Qualified Mortgage designation for loans held in portfolio, exempt banks with less than $10 billion in assets from the Consumer Financial Protection Bureau’s escrow rule and the Volcker Rule, allow creditors to extend second offers of credit with a lower annual percentage rate without triggering the three-day waiting period under the TILA-RESPA integrated disclosures and exempt banks with less than $1 billion in assets from Sarbanes-Oxley internal control certification requirements.

ABA remains supportive of legislative regulatory relief efforts as part of its Blueprint for Growth. The association is engaging with members of Congress from both parties in discussions about measures that would help banks of all sizes better serve their customers and communities.