SD Secretary of State Provides Document to Better Understand UCC Terminations, Notification Process

The SDBA, along with representatives of the ICB of South Dakota, have been actively discussing ways to better assure the ongoing accuracy of UCC filings with the South Dakota Secretary of State. 

The Secretary of State's Office has compiled a slideshow walking through the UCC verification, termination and auditing procedures that are currently available in the central filing system. The slideshow is intended to give users of the system a better understanding of how the system currently works and provides for filings as well as notifications. View the slideshow. 

HB1248 now before the South Dakota Legislature proposes to give the South Dakota Secretary of State some additional authority to either refuse to accept or to reject UCC filings that are materially false, fraudulent or obviously deficient in some respect. The SDBA believes that passage of HB1248 would positively enhance the authorities of the Secretary of State as the administrator of the central filing system. The bill passed the House yesterday on a vote of 63-3 and it headed to the Senate for consideration. View HB1248.

SDBA Taking Orders and Photo Submissions for 2019 Scenes of South Dakota Calendar

The SDBA is offering the 2019 Scenes of South Dakota Calendar. This calendar will feature photos of South Dakota submitted by South Dakota bankers, their family members and customers. These calendars are a great opportunity for banks and associate members to thank their customers for their business and promote your bank or business.

A bank, branch or business' logo and name can be printed on each calendar to display in homes and businesses all year long. The Scenes of South Dakota Calendar is exclusive to SDBA member banks and associate members. Calendar orders are due by Sept. 1, 2018, to get the low price of $1.19 per calendar. Calendar order form. 

If you are an amateur photographer and would like the opportunity to have your creativity displayed in homes and businesses across South Dakota, this is your chance. Send the SDBA your photos of farms, barns, agricultural activities, historical South Dakota locations, county fairs, carnivals, parades or festivals, fall colors, winter snowfalls, spring flowers, or summer fun. Any photo that shows the history and beauty of the great state of South Dakota qualifies. All photos submitted will be judged and the top photos will be featured throughout the 2019 Scenes of South Dakota calendar. The deadline to submit a photo is July 28, 2018. Photo submission form. 

FASB Issues Final Standard to Resolve Accounting Issues after Tax Reform

The Financial Accounting Standards Board yesterday issued its final standard outlining how banks can adjust regulatory capital balances that were affected by the new tax reform law. The issuance of the standard marks a win for ABA, which first raised the issue to FASB in December and participated in a vigorous advocacy effort in support of the change. Companies will be able to apply the standard to their 2017 reporting results. 

Under current tax accounting, the reductions of deferred tax assets and liabilities are recorded entirely within net income, including those applying to items in accumulated other comprehensive income such as unrealized gains and losses on available-for-sale securities. As a result, not only are net income and regulatory capital affected, but this treatment also creates onerous operational burdens to track the related amounts in the future. 

While the new standard will not change the impact to net income, the adjustment between AOCI and retained earnings will allow ending regulatory capital to be appropriately stated and also avoid onerous operational requirements to keep track of the amounts that would have been “stranded” within AOCI. Under the standard, financial statement preparers are required to disclose a description of the accounting policy for releasing income tax effects from AOCI, whether they elect to reclassify the stranded income tax effects from the tax reform bill and information about other income tax effects that are reclassified. View the standard. For more information, contact ABA’s Mike Gullette, Josh Stein or John Kinsella. 

CFPB Seeks Feedback on Supervision Processes

The Consumer Financial Protection Bureau yesterday issued a request for information seeking feedback on its supervision processes--the fourth in an ongoing series of RFIs designed to provide the CFPB with input on how it is fulfilling its statutory obligations and how to improve outcomes for both consumers and covered entities. 

The public is invited to provide comment on the efficiency and effectiveness of its supervision program and whether any changes to the program would be appropriate. The public is invited to comment on the timing, frequency and scope of supervisory exams, the bureau’s information collection requests, the exam manual, the effectiveness of onsite exam work, exam communications including supervisory letters and exam reports, the clarity of matters requiring attention and the appeals process, among other things. Comments are due 90 days after publication in the Federal Register. 

The bureau also announced that over the coming weeks, it anticipates issuing more RFIs on a number of topics including external engagement, complaint reporting, the bureau’s rulemaking processes, bureau rules not under section 1022(d) assessment, inherited rules, guidance and implementation support, consumer education, consumer inquiries and data policy. View the RFI. For more information, or to provide input for ABA’s comments on the RFI on supervision, contact ABA’s Nessa Feddis or Rick Freer. 

Flawed Analysis Misleads about Bank Mortgage Lending

As several media outlets around the country are publishing articles and segments about mortgage lending based on a misleading study, ABA is firmly rebutting the articles with a detailed statement outlining the study’s inadequacies. The articles are drawn from an analysis prepared by a group called Reveal, part of the Center for Investigative Reporting, that uses Home Mortgage Disclosure Act data to claim that racial disparities in mortgage lending outcomes are due to discrimination.

ABA engaged with Reveal and vigorously pointed out that HMDA data cannot be used alone to find fair lending violations. Banks make loans based on a variety of factors--including income, credit scores, debt-to-income ratios and loan-to-value ratios--that validate the applicant’s ability to repay. Reveal’s analysis only took into account income, making it incomplete and misleading.

ABA’s rebuttal also noted that regulators with access to additional applicant data routinely examine banks for potential fair lending violations, and that both bank and regulatory reviews protect against the possibility of “systematic denials” for any protected class. Finally, ABA noted that federal ability-to-repay requirements limit banks’ ability to make exceptions to underwriting standards. As media outlets continue to publish articles based on this misleading analysis, ABA will continue to share its position.

The association has made talking points available to bank members should they be contacted by local media outlets regarding this analysis. Read ABA's statement. Access the talking points (ABA members only). For assistance with media inquiries on this topic, contact ABA's Jeff Sigmund. For more information on HMDA issues, contact ABA's Rod Alba. 

Central South Dakota Compliance Users Group to Meet

The Central South Dakota Compliance Users Group will next meet Thursday, Feb. 22, 11 a.m. CT at the SDBA Office, 109 West Missouri Ave., in Pierre. The group meets quarterly in Pierre to discuss current compliance issues banks are facing.

If you are interested in attending the meeting or receiving notices of future meeting dates, contact the SDBA's Alisa DeMers via email or call 605.224.1653. 

SDBA Offers Bank Holiday Signs

The SDBA is offering holiday signs that banks can print and display to notify customers when the bank will be closed.

The signs are set up to be printed on 8.5" x 11" paper and are provided as a high-resolution pdf file. Banks can print the signs and use them how they see fit. 

View and print the 2018 holiday signs. If you need the signs in a different format or have any questions, contact the SDBA's Alisa DeMers via email or call 605.224.1653. 

The SDBA Office will be closed on Monday, Feb. 19, in observance of President's Day. 

GSB Hot Topic Webinar to Discuss ATM Jackpotting

U.S. Secret Service has issued warnings to financial institutions in the United States regarding the increased likeliness of ATM attacks frequently called “jackpotting.” These attacks involve special software or hardware that trick the computer inside the ATM into spitting out all the cash in the vault, just as you would experience a slot machine spitting out all its coins. These attacks have been seen for years in foreign countries around the world. In fact, these types of attacks were highly publicized in 2010 at the infamous Black Hat conference in Las Vegas. ATM manufacturers like Diebold have issued alerts and guidance for financial institutions to utilize to minimize their risks

The Graduate School of Banking at Wisconsin is offering the hot topic online seminar "Government Warns of ATM Jackpotting" on Feb. 26 at 10 a.m. CT. Facilitator Chad Knutson of SBS CyberSecurity will provide an overview of the current attack trends being used to target ATMs, status report on the overall security utilized today to protect ATMs, risk management principles to make effective decisions and some best practices moving forward.

The webinar cost is $159. Learn more and register. 

GSBC Offers Scholarship to Annual School Session

The Graduate School of Banking at Colorado (GSBC) partners with the SDBA each year to offer the GSBC Future Leaders Scholarship. Awarded to one banker per state per year, recipients receive $1,390 per year for three years to attend GSBC’s annual school session. Scholarship recipients must enter as a first-year student. 

GSBC’s annual school session is a 25-month, graduate school of banking that is hosted each July on the campus of the University of Colorado in Boulder. The 2018 session will be held July 15-27. The deadline to apply for the Future Leaders Scholarship and to apply for the 2018 school session is March 1. Candidates will be notified by March 30 of selection decisions.

Learn more and apply. 

Question of the Week

Question: Under the beneficial ownership rules, if 50 percent of a corporation is owned by a revocable living trust, and that living trust is controlled by two trustees, do we report the trustees as each having a 25 percent beneficial ownership in the corporation?

Answer: No, a trustee does not own the funds in the trust. Further, trusts are not entities covered by the beneficial ownership rule unless they are statutory trusts. Statutory trusts are those created by a statute, such as real estate trusts in Delaware. These trusts are typically registered with a state agency, such as a Secretary of State. The beneficial ownership rule requires the bank to inquire as to ownership of the entity for which the account is created, and to drill down past levels of ownership until either natural persons or entities not subject to the rule are discovered. At that point, the drill down ceases and all natural persons with at least 25 percent ownership are reported. It is possible for the bank to complete the required drill down and discover that there are no beneficial owners as defined by the rule. See: https://www.fincen.gov/sites/default/files/2016-09/FAQs_for_CDD_Final_Rule_(7_15_16).pdf

• Tuesday, Feb. 20, 2018, 10-11 a.m. CT
• Thursday, Feb. 22, 2018, 1-2 p.m. CT

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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Questions/Comments
Contact Alisa DeMers, SDBA, at 800.726.7322 or via email.